CetoLogic, a leading provider of software and analytics for financial institutions and retailers, announced that Advia Credit Union, a $1.1 billion asset-sized credit union headquartered in Parchment, Mich., leveraged CetoLogic’s Deposit Reclassification solution to reduce its Federal Reserve balance from $27.5 million to zero.
Advia Credit Union had funds tied up at the Federal Reserve Bank and wanted to convert these Fed-held funds earning minimal interest into assets for diversified loans and investments. To achieve this, the credit union selected CetoLogic’s Deposit Reclassification, a Regulation D retail sweep program that reclassifies transaction accounts as savings deposits, which are not subject to reserve requirements.
“We sought to reduce our reserve requirement without impacting our membership,” said Jeff Fielder, Executive Vice President of Finance at Advia Credit Union. “CetoLogic’s Deposit Reclassification proved to be an effective tool in this regard, as it enabled us to convert a $27 million non-earning asset into earning assets.”
Following the implementation of Deposit Reclassification, Advia Credit Union began working with CetoLogic’s sister company Ceto and Associates, a management consulting firm, to further strengthen its profitability through its revenue enhancement solution, Market View.
“Maintained reserved balances are an illiquid asset, but once removed, these funds represent real capital that can be used to fund loans to local businesses and individuals within the credit union’s community,” said Douglas Ceto, President of CetoLogic. “With interest rates poised to change in the near future, and by leveraging Deposit Reclassification, credit unions are better situated to improve their liquidity positions and be primed for the opportunities to deploy the liquidity into profitable loan and investment portfolios.”