ATLANTA – People's Trust Federal Credit Union has turned to Ceto and Associates for its deposit reclassification solution and as a result, was able to reallocate $4.4 million to interest earning assets.
With more than $300 million in assets, deposit reclassification enables People's Trust to restructure its checking transaction accounts, considerably reducing its non-interest earning reserve requirement by $5.8 million, Ceto said. Reallocating $4.4 million from the Federal Reserve Bank into interest earning assets will earn the credit union an estimated $352,000 a year, the company said.
Vernon Babilon, senior vice president and CFO of People's Trust, said the solution provided the credit union "with millions of dollars that it is allocating to short-term investments such as our auto loan market while ensuring that its compliance to Regulation D gives it the ability to offer members more liquid money market accounts."
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Deposit reclassification restructures checking and other transaction accounts to convert non-interest earning reserve requirement balances sitting at the Federal Reserve into interest earning assets. Ceto said deposit reclassification was approved by the Board of Governors in 1994 and represents a change in the method by which transaction accounts are reported to the Federal Reserve Bank for reserve requirement purposes.
Ceto said it has worked with more than 1,000 financial institutions across the country.
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