Magazine article American Banker

A Postal Route for Deposit Boost

Magazine article American Banker

A Postal Route for Deposit Boost

Article excerpt

Community banks in need of a liquidity lift have a chance to share the bank deposits of U.S. Postal Service offices in California.

Through May 3 the USPS will solicit proposals from one or several financial institutions to house up to $431 million of deposits a year from more than 2,000 post offices statewide. Each contract will last three years, and the winning institutions will have a chance to extend their contracts up to eight years.

Large banks including Wells Fargo & Co. and Bank of America Corp. have handled much of the deposit services for California's post offices in the past decade, but smaller ones are encouraged to bid, said USPS spokesman Gerry Kreienkamp.

"As long as a community bank has the capability to process these type of deposits daily and has state-of-the-art, same-day cash management services, it's certainly possible," he said.

Feather River State Bank, in Yuba City, had a contract throughout the mid-1990s to house the deposits of post offices in two Northern California counties.

Larry D. Hartwig, the president and chief executive officer of $310 million-asset Feather River, said the Postal Service program provides a reliable source of deposits for community banks at a time when conventional deposits are scarcer and competition for them is fiercer.

"There are now several programs around that give an opportunity for community banks to share deposits" from government agencies, programs that historically have been offered mainly to larger banks, Mr. …

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