Who: Headquartered in Bloomington, Minn., Venture Bank is a $493 million institution that proudly serves the small business communities throughout Bloomington, Eagan and Golden Valley, Minn.
Daniel Johnson, accountant for Venture Bank.
What: Venture Bank leveraged logicpath’s Deposit Reclassification retail sweep program to reduce its reportable transactional deposits for FR 2900 filing, eliminating what would have been a $13 million Federal Reserve balance as well as maximizing the utilization of the bank’s core deposits.
Venture Bank was approaching the threshold for weekly filing of the FR 2900 rather than quarterly reporting. As a result, Venture Bank was looking for a solution that would help reduce its reportable transactional deposits. In addition to reducing reportable transactional deposits, maximizing working liquidity was a top priority for Venture Bank.
“Venture Bank has always had the fortunate position of being flush with loans and demand, so we wanted to maximize the utilization of our core deposits as funding sources,” said Daniel Johnson, accountant for Venture Bank. “We didn’t have a large amount of excess deposits where liquidity wasn’t a consideration for us, so any solution that would reduce the amount that we would have to hold in reserve as strictly pure excess was certainly beneficial to us.”
Venture Bank’s research on deposit reclassification led it to logicpath’s solution. Compliant with Regulation D and Federal Reserve Board requirements, logicpaths’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 bank.
Venture Bank reports a smooth implementation process, with logicpath supporting the bank by providing correspondence early on and maintaining that communication long after completion. logicpath provided Venture Bank with a procedural checklist and would update the bank regularly on items that were in progress and any items that still needed to be completed.
“logicpath held our hand throughout the entire process,” said Johnson. “Fortunately our implementation was not complex, but it was clear that logicpath is prepared to handle complex issues if needed.”
Additionally, logicpath provided all documentation required by the Federal Reserve Bank, as well as the necessary internal and external communication materials for Venture Bank’s customers and employees. While Venture Bank anticipated inquiries from its customers about the disclosures they received regarding the deposit reclassification process, the bank actually received dozens of questions from its internal staff who were preparing themselves for customer questions.
“Going through each step was like following a rubric, which made the process more relaxed and straightforward for our staff and mitigated any concerns they had, and we were pleasantly surprised that not one of our customers had any questions or concerns about the change,” said Johnson. “We were thoroughly impressed with the level of information and support provided by logicpath.”
Since Venture Bank implemented Deposit Reclassification at the same time that it became a weekly reporter for the FR 2900, it reduced its reportable reserve requirement below vault cash holdings and gave them permanent access to their estimated $13 million Federal Reserve balance by successfully reclassifying its checking accounts as savings accounts.
“By reducing our reserve requirement and reclaiming these funds from the Fed, the bank is able to lend that $13 million in excess funds, translating into additional income for the year,” said Johnson. “In addition to utilizing those funds for alternative investments, there are savings simply because we are not borrowing them.”
Johnson continued, “Based on this additional liquidity, the lack of need to borrow funds and the ability to invest in other areas, we certainly recuperated our investment in the Deposit Reclassification software within the first year.”
Venture Bank is a commercial bank that proudly serves the small business community in the Minneapolis metropolitan area. Venture Bank offers flexibility in loan structures and customizable plans tailored specifically to your unique business needs. You’ll get real conversations and common sense solutions with experienced professionals who make things happen. For more information about Venture Bank, visit their website at www.venturebankonline.com.
Atlanta, Ga-based logicpath provides software solutions and analytics to financial institutions and retail organizations. CetoLogic 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 is also responsible for Deposit Reclassification, a Regulation D retail sweep program designed to eliminate reserve balances. logicpath’s solutions improve earnings, efficiencies, risk management and operations. For more information about logicpath’s solutions, call 1.877.495.0687.