I know the rules regarding transfers from business checking to savings and doing a sweep. Is it permitted to re-classify the savings account as a transaction account and reserve for it. The call report would be affected? I have heard of some banks engaging in the process.

Any thoughts?

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Allan D. Virr, CRCM

My understanding is that you could re-classify the account as a Transaction Account - HOWEVER, unless the business is a sole proprietorship or a non-profit entity, then you cannot pay interest on the Transaction Account!

In other words, you can convert a Savings Account to a non-interest bearing checking account, however you should have already communicated this to your customer. The other option is to close the account.

Bonnie is correct. Under the current regulatory constraints we cannot pay interest on these business transaction accounts. Now, we have been successful in setting up daily sweeps to off balance sheet investments but this has it's own implications...

Of course, we may see the constraint lifted next year and then we'll likely be doing sweeps for ALL of our business customers! Say goodbye to free funds!

Good Luck!
Dean