A message from Bank of Jackson Hole CEO Peter Lawton:
JACKSON, Wyo. — As treasurer of the Jackson Hole Children’s Museum, Brendan McDermott has three priorities: keep the nonprofit’s money safe, keep it liquid and make sure it earns a good return.
Federal deposit insurance only covers the first $250,000, and the museum could open accounts at multiple banks to expand its coverage. But there is an easier way to get all the protection needed, whether it’s for a nonprofit, the town, a business, or even a high net-worth individual.
The Bank of Jackson Hole belongs to a nationwide network of around 3,000 community banks that cooperate to provide additional deposit insurance. Here’s how it works: Say the museum got a $1 million donation, and Brendan came to the Bank of Jackson Hole, looking for a way to ensure those funds were protected until they could be deployed. We would offer to take $250,000 and send the rest to three other banks, which in turn would each “reciprocate” by depositing $250,000 in our bank.
This process is seamless for the customer; they continue to get one statement and deal solely with us. But now that entire $1 million is insured, it’s completely safe and liquid, and it earns a solid yield.
But there is one other important benefit. Rather than having that $1 million deposited in a large, out-of-state bank, the money remains here, where it can be lent out to local businesses and residents.
“The tool provides a very healthy balance for the safety, liquidity, and yield. It balances those three really, really well,” McDermott told me. “And the Bank of Jackson Hole is a local institution that supports our community philanthropically. We want to support those who support us.”
Another client, the CFO of a local trust company, must protect funds held in trust accounts. Security is his number one concern.
“It’s not our money. It’s a trust, and so a bank failure would mean we would die, too,” this CFO told me. He added, “We like Bank of Jackson Hole because we get great customer service. I call and they address me by name and ask how they can help. It’s not a 1-800 number.”
Community banks understand that. It’s what makes us special.
Reciprocal deposits have been a great product for us and for our customers, who get the confidence that their money is protected while also getting personalized service.
“We keep our money in local banks because, like us, they serve the community,” said Alison Lee, project development director at Jackson Hole Community Housing Trust. “They really understand the local housing problems and will go the extra mile to make a project work.”
It’s worth repeating: all the money remains available to us to lend out here, fueling our local economy. We use that money to support businesses, which creates jobs. We pay a good rate on these deposits and do not charge the customer any fees.
If you’d like more information, get in touch with me or anyone on my team or even ask another local bank, many of whom also belong to this network. Reciprocal deposits keep your money safe while making our banks and our community stronger.
