United Federal Credit Union

Case Study



United Federal Credit Union Reduces Reserve Balance and Expands Lending by Leveraging logicpath’s Deposit Reclassification Solution

Who:  Headquartered in St. Joseph, Mich., United Federal Credit Union (UFCU) is a $1.83 billion institution serving more than 130,000 members worldwide. UFCU has branches located throughout Arkansas, Indiana, Michigan, Nevada, North Carolina and Ohio.

Barb Najacht, Accounting Manager for UFCU and
Robb Zurawski, Project Manager, Business Applications for UFCU.

What: With $20 million held at the Federal Reserve Bank, UFCU wanted to reduce its reserve requirements and recover these non-liquid funds for diversified lending and higher-yield investment opportunities. logicpath’s Deposit Reclassification solution significantly reduced UFCU’s reserve balance by reclassifying interest and non-interest bearing transaction accounts, converting idle funds into interest-earning assets.

The Challenge

UFCU offers its members an “Interest Plus Checking” product, which pays a high interest reward rate on balances up to the first $25,000. To capitalize on this high interest payout, several of UFCU’s members began using this product as their primary savings account. Consequently, as members’ deposits increased, so did UFCU’s Federal Reserve balance.

“Many of our members changed their banking behaviors following the Great Recession,” said Barb Najacht, accounting manager for UFCU. “More and more members were making deposits and then letting those funds sit and earn interest over time. This flush of deposits resulted in a higher reserve balance, but unfortunately we could not capitalize on these illiquid, Fed-held funds.”

The Solution 

UFCU was already familiar with logicpath and agreed to receive a demo on the company’s Deposit Reclassification solution. Compliant with Regulation D and Federal Reserve Board requirements, logicpath’s Deposit Reclassification is a retail sweep program that reclassifies transaction accounts as non-transaction accounts, which are not subject to reserve requirements. This allows Fed-held funds earning minimal interest to become accessible for diversified loans and investments, permanently increasing returns for the credit union.

“At first, logicpath’s Deposit Reclassification system almost seemed too good to be true, but I am happy to report that was not the case,” said Najacht. “I was extremely impressed with the logicpath staff and their presentation of Deposit Reclassification – they 100 percent convinced me. It was clear that this solution was the real deal.”

Throughout the implementation process, logicpath provided UFCU with any documentation required by the Federal Reserve Bank, as well as the necessary communication materials for UFCU’s membership. logicpath’s onboarding checklist provided UFCU’s product managers with a detailed project schedule and a timeline of when tasks needed to be completed. UFCU also leveraged logicpath’s communication guides to prep its call center to field any calls from its membership regarding the Deposit Reclassification process.

“The entire implementation went incredibly smoothly. logicpath did a phenomenal job of providing us with all of the documentation that we would need in a format that was easy to understand,” said Robb Zurawski, project manager of Business Applications for UFCU. “I wish more vendors would go through the implementation process like logicpath. They could not have done a better job.”

The Results

According to Najacht, Deposit Reclassification has reduced UFCU’s reserve balance to practically zero by reclassifying its checking accounts as savings accounts, enabling the credit union to leverage funds previously held at the Federal Reserve Bank for other purposes.

“If UFCU had to borrow $15 million a year at a borrowing rate between 43 and 45 basis points, that would cost us about $67,500 a year alone,” said Najacht. “Deposit Reclassification automatically saves us this cost by eliminating our reserve balance, and that is strictly cost savings — we can further increase our revenue by reinvesting these funds in mortgage and consumer loans.”

“We just conducted our annual audit and thanks to logicpath, we did not run into any issues,” said Zurawski. “Their team was instrumental in helping us navigate this process. They provided us with the letters we needed for the Federal Reserve Bank – we simply had to sign and send. logicpath even knew the necessary verbiage for each specific federal reserve district, which made an otherwise stressful process incredibly easy for our team.”

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About United Federal Credit Union

United Federal Credit Union (UFCU) has served its Members since 1949 by helping them to build a sound financial future. UFCU consists of more than 130,000 Member/owners worldwide, and manages assets in excess of $1.83 billion. Its corporate offices and main branch are located in St. Joseph, Michigan, with additional branches in Arkansas, Indiana, Michigan, Nevada, North Carolina and Ohio. UFCU has been named the Michigan Credit Union League Outstanding Credit Union of the Year 2013. UFCU has also been named the National Federal Credit Union of the Year 2013 by the National Association of Federal Credit Unions.

About logicpath

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 Solution 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 retail sweep program designed to eliminate reserve balances. logicpath’s solutions improve earnings, efficiencies, risk management and operations.