Fortunately, banks that are members of IntraFi



CBA’s SB157 Approaches $200 Million Threshold! In a little over a year, CBA’s signature legislation has now closed in on $200 million of deposits placed using reciprocal deposit services. Nearly half of Georgia’s community banks have either signed up with a third-party provider or are in the queue to do so with their core processor. “This is truly an amazing milestone-especially considering the events of the past several months,” stated John McNair, President & CEO of CBA of GA. “The success of the legislation illustrates the demand. CBA was proud to champion this legislation through the general assembly and secure the signature of Governor Kemp at CBA’s headquarters.”“For years, large banks have had an unfair advantage with respect to competing for municipal deposits. Community banks, with limited securities portfolios and record-keeping capabilities, were forced to pledge collateral in order to accept deposits from their local municipalities,” explained Mr. McNair. “SB157 allows banks to place deposits using reciprocal deposit services of approved third-party providers and insure the deposits with FDIC insurance. This has been a game changer for Georgia’s community banks and clearly illustrates the advocacy strength of CBA and Georgia’s community banking industry.” ???????According to Kelly Stone, President/CEO, Community Bank of Georgia in Baxley, “The biggest way that this legislature has helped our bank was to increase our liquidity. After that it allowed us to go after other local municipal deposits that we have not been able to go after in the past. Being the only locally owned and operated bank in town, we want to be the “go to” bank for our local funds.”“When we first approached our current municipal clients with the idea of changing how we handled their deposits they had a lot of questions. Once we explained everything to them and they had time to do their research on SB157, they were on board.”When asked about the process, Mr. Stone explained that once the conversion was complete, the process has worked very well and made the record keeping easy.“I think one of the biggest benefits of using the ICS service is being able to tell the client that 100% of their funds are eligible for FDIC insurance. They no longer have to worry about the bonds,” stated Mr. Stone. Use ICS? to Improve the Profitability of Public DepositsGovernor Kemp signed SB157 into law on May 2, 2019, enabling local governments to invest public funds (deposits from city and county treasurer offices, fire districts, and school districts, among others) through ICS. Such funds are an important source of deposits for many small- to medium-sized institutions. Prior to SB157, acquiring public funds could be too costly for community banks as uninsured deposits had to be secured by assets pledged as collateral, such as Treasuries. These mandates often made public funds less attractive for a bank, as the requirement to collateralize public funds deposits could restrict the bank's use of assets.As bankers know, in addition to the opportunity cost associated with pledging assets, there are administrative burdens and related costs to tracking collateral and marking pledged securities to market. These costs eat into a bank's bottom line.Fortunately, banks that are members of IntraFi’s network of institutions (formerly the Promontory Network) have a great tool – ICS, the Insured Cash Sweep? service – at their disposal. Using ICS, banks can offer public fund managers access to multi-million-dollar FDIC insurance on funds placed into demand deposit accounts, money market deposit accounts, or both. Georgia banks that offer ICS can use the service to improve the profitability associated with public deposits by reducing collateralization (and associated costs) for deposits placed through ICS; generating additional revenue and increasing asset liquidity by repurposing previously collateralized deposits; retaining existing public fund customers more profitably and attracting new ones, if desired; and keeping public fund deposits local so they can be used to help strengthen communities. For more information about SB157 and ICS, contact John McNair or Lori Godfrey at CBA of Georgia. To request more information about ICS, contact Danny Capitel at (866) 776-6426, ext. 3476, or dcapitel@, or visit . ................
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