ATLANTA - Ceto and Associates, a national consulting firmproviding revenue enhancement solutions for the financial industry,announced that it has increased its credit union DepositReclassification clients by more than 400% this year. Here's howdeposit reclassification works: interest and non-interest checkingaccounts are segmented into separate subaccounts unique to eachaccount. The savings subaccount of the combined account balance isnot subject to the 10% reserve requirement. The net impact is acredit union's reserve requirements fall to "insignificant levels."While the process is invisible to members, Ceto said, financialinstitutions are required to provide disclosure that checking andsavings subaccounts will be created and maintained and thattransfers may occur between these sub accounts. The accounts areevaluated daily. Funds are automatically transferred from thesavings sub-account to the checking subaccount if required to coveractivity in the account. Concurrent with the sixth such transferduring a calendar month, the entire balance is transferred to thechecking subaccount to remain in compliance with restrictions onsavings accounts imposed by Regulation D. Ceto reports the solutionallows CUs to report an average of 80% of their transactionalaccounts as savings deposits, resulting in a low reserverequirement and enabling them to increase their interest earningassets by $2 million to $10 million per day. CUs still remain incompliance with Regulation D, which especially impacts thoseoffering checking accounts linked to accounts restricted to theFederal Reserve Bank's six transfer rule. The company said it hasalready matched the number of new CU clients signed in 2004 whichnow include more than 30. Among Ceto's clients are $1.5 billionCoastal FCU in Raleigh, N.C., which considers depositreclassification "one of the most cost effective and easy projectimplementations that we have ever undertaken," said Ralph Reardon,Coastal FCU's CFO.