SAN FRANCISCO - Banc Investment Group, the broker-dealer unit of Pacific Coast Bankers' Bancshares (PCBB), has introduced an ATM funding program to help independent banks generate fee-based income from excess liquidity on their balance sheets.
Known as ATM Cash Advantage, the program enables independent banks to advance up to $400 million in currency to more than 17,000 non-bank ATMs throughout the United States, according to a news release.
In return, independent banks can generate fee income equal to Federal Funds, plus a substantial spread, according to the release.
In addition to fee income, participating independent banks may also be able to reduce their own vault cash balances under Regulation D, pending a review from the Federal Reserve recently requested by PCBB. The program may also help banks comply with the Community Reinvestment Act under the Service Test provision.
Banc Investment Group and PCBB will raise cash from banks participating in ATM Cash Advantage, and manage its strategic partnership with Palm Desert National Bank (PDNB), a vault cash provider and sponsor bank for a number of ISOs.
"ATM Cash Advantage unlocks frozen assets on the balance sheet without incurring credit risk and enables banks to generate fee income in this challenging environment," said Chris Nichols, chief executive of Banc Investment Group, in the release.
Kevin McGuire, PDNB's chairman, said, "ATM Cash Advantage will provide greater liquidity and more efficiency to the nation's ATM system by leveraging the collective network of independent banks. This program is truly innovative, as it allows owners of ATMs to take advantage of immediate economies of scale."
According to the release, participating banks will retain the title and interest to their cash and may treat the cash as an asset until it is dispensed from ATMs. Banks participating in the program can go online, check advance status and get reports by individual ATMs.
To mitigate operational risk, ATM Cash Advantage has multiple layers of insurance from national insurance carriers and employs PDNB's proprietary software platform, which allows for near real-time reconciliation of ATMs, armored carriers and cash vaults, according to the release.
In addition, the program utilizes leading technology vendors, such as Concord EFS, Genpass, Fiserv, Brinks, Loomis, Bantek and Premium Armored/EfMark.
ATM locations will also vary by geography, vendor and type to help minimize risk, according to the release.
