Who: Tradition Capital Bank is a $350 million asset-sized institution headquartered in Edina, Minn. Tradition Capital Bank is a full-service bank focused on building strong, one-on-one client relationships and providing a total solution approach to the Twin Cities market.
Tyler Campion, finance assistant for Tradition Capital Bank.
What: To fund an increase in loan demand, Tradition Capital Bank leveraged logicpath’s Deposit Reclassification solution to reduce its Federal Reserve balance from $7 million to zero.
Tradition Capital Bank experienced a tremendous growth in its loan portfolio. While an increase in loan demand was certainly a positive trend for the bank, it realized it would need to strengthen its liquidity position in order to keep up with this demand, especially with interest rates expected to increase.
“We have always had a high Federal Reserve balance, but we really did not see a need to use these funds in the past,” said Tyler Campion, finance assistant for Tradition Capital Bank. “Once we started to experience rapid growth and our loan demand continued to pick up, we realized we could really use our $7 million reserve balance to fuel that loan demand.”
Tradition Capital Bank was hoping to reduce its high reserve balance and free up those funds for lending. The bank had previously spoken with logicpath about its Deposit Reclassification solution, a Federal Reserve Board-acknowledged practice that reclassifies a financial institution’s transaction accounts as savings deposits, which are not subject to reserve requirements. Reducing reserve balance requirements enables Tradition Capital Bank to convert idle Fed-held funds into higher interest-earning assets.
“We spoke with logicpath a few years ago and they walked us through the Deposit Reclassification process, and while we were impressed with its capabilities, the timing just wasn’t right,” said Campion. “When it became apparent that we needed to free up liquidity in order to grow our loan portfolio, we knew logicpath could point us in the right direction and help us reduce our reserve balance.”
logicpath conducted an introductory call with Tradition Capital Bank to walk through the Deposit Reclassification process in detail, including how it works and what steps the bank needed to take throughout the process. Campion reports that the bank had to do some coding work on the back-end to integrate within the Deposit Reclassification system, but that the implementation process was incredibly fast and smooth and it only took about two hours to move over all of its files. In fact, the day Tradition Capital Bank implemented Deposit Reclassification was actually the first day of its FR2900 filing, and the bank was able to go live that same day.
“logicpath completely tailored the implementation process to our bank and our specific needs,” said Campion. “Since so many other banks had done this successfully, our staff was onboard and did not have any concerns regarding Deposit Reclassification, which was a relief and helped make the whole process an easy one.”
logipath’s Deposit Reclassification enabled Tradition Capital Bank to reduce its reserve balance from $7 million to zero, converting low-earning, non-liquid funds held at the Federal Reserve into new and permanent revenue streams.
Additionally, logicpath helps Tradition Capital Bank navigate its FR2900 filing by creating any reports the bank is required to provide regulatory agencies. Campion said the bank can simply print the reports and send them off, which has been especially helpful.
“Deposit Reclassification is a powerful tool that enables us to reclaim idle funds that we can use to support lending growth today, but also be better positioned to react to any increases in interest rates in the future,” said Campion. “By taking a more proactive approach to managing our assets, we have the flexibility to pursue additional growth opportunities and continue to meet the lending needs of our customers.”
Tradition Capital Bank specializes in what business and private banking clients really want – relationship banking with highly experienced, responsive and resourceful partners committed to your success. We value personal relationships and devote extraordinary know-how, energy and networking strategies to accomplish your banking objectives. We have one focus at Tradition Capital Bank – helping you reach your goals. A commitment to personal service from our highly-experienced banking experts means you can count on us to be your dedicated financial partner. We pride ourselves on bringing a new level of service and success to banking. After all, we work for you. At Tradition Capital Bank we get it, and get it done with integrity. For more information, visit www.traditioncapitalbank.com or call us at 952-806-6600.
Atlanta, Ga.-based logicpath provides software solutions and analytics to financial institutions and retail organizations. logicpath proudly services the needs of more than 1,500 clients in 50 states and Canada by providing “Smart Solutions that Make Dollars and Sense.” logicpath is the designer of C3 Financial, a web-based cash forecasting and management software. logicpath also pioneered Deposit Reclassification, a Regulation D retail sweep program designed to eliminate reserve balances. logicpath’s pALMs is a web-based asset/liability management simulation software that provides accurate and detailed analysis asset-by-asset and liability-by-liability. These solutions improve earnings, efficiencies, risk management and operations.