Helena Branch History
85th Anniversary—1921-2006

The Challenges of the Early Electronic Age (1981-1996)

In its long and rich history, the Helena Branch of the Federal Reserve Bank of Minneapolis has existed in a dynamic environment. The period from 1981 through 1995 was no exception. From implementing the Monetary Control Act (MCA) in 1980 to planning and building a new facility in 1990 to embarking on a historic reengineering project in 1996, the Helena Branch rose to the challenges of a changing business environment.

Monetary Control Act drives services and cost containment

Installation of a new Burroughs computer system in 1981 facilitated the Branch's efforts to comply with the requirements of the MCA for pricing and expanding Federal Reserve services. The Act also applied new reserve requirements to all financial institutions, which meant that the Branch had to monitor and control reserve funds for all Montana depository institutions. The Montana Expedited Check Clearing Arrangement (MECCA) was also implemented by the Branch in 1981 in order to expedite the transportation and delivery of checks around the state.

One of the requirements of the MCA was that the Branch price its financial services to recover all costs plus a private sector adjustment factor (PSAF). The PSAF was intended to create a more level playing field for competition with other financial service providers by taking into account the return on capital that would have been realized and the taxes that would have been assessed and paid had a private firm provided the services. This requirement resulted in new operating costs. To address these costs, the Branch reduced salary expenses through management downsizing; aggressively marketed new accounts, products and services; and implemented new cost avoidance measures in the Check Department to reduce support and overhead. These changes, in conjunction with the MECCA transportation system change, resulted in a 16.2 percent increase in overall check volume.

In June 1981, Paul A. Volcker, chairman of the Board of Governors, visited the Branch. According to Betty Lindstrom, then Helena Branch manager, Mr. Volcker was on his way to a fishing vacation at a ranch near Two Dot, Montana, and decided to stop at the Branch for a short visit. While in Helena, he spoke at a seminar for Montana bankers held at the Montana Club.

Two services were added in 1983 to bring in new revenue. Wrapped coin, which had been discontinued in 1980, was reinstated as a priced service in the Money Department in 1983. Over 5 million pieces were wrapped that year. In addition, the Quick Draw program was instituted in the Check Department to expedite the collection of checks drawn on out-of-state financial institutions. This program was enabled by an enhanced, cooperative transportation system. In its first year of operation, 43 percent more out-of-state check items (approximately 5 million items) were processed through the Quick Draw program.

Computerized services and processing grow dramatically

A new automated clearinghouse (ACH) service, known as Quick Pay, was introduced by the Branch in January 1984. Pioneered by the Helena Branch, this service was unique in the Federal Reserve System and allowed participating financial institutions to offer electronic payment services to their customers.

Upgrades to equipment, software and other systems were also implemented in 1984 to accommodate projected increases in check volume. The first of three new reader-sorters for check processing arrived in May, and an additional central processing unit and peripheral equipment were installed in November to provide backup capability in the event of equipment failure. And the first phase of a long-term project to install a new item processing system began.

In other areas of Branch operations, a stand-alone Burroughs B25 System, online with the two medium systems already in use, automated all of the data processing and reporting requirements of the Cash Services Department, and a natural gas-powered backup generator was installed to back up Branch operations in the event of a power failure.

New Bank services and efficiencies take center stage

The Branch avoided any price increases in 1985 and still recovered all costs plus the private sector adjustment factor for its priced services. This financial success was largely attributed to a general marketplace acceptance of new and existing Branch financial services, which resulted in a 9 percent year-to-year volume increase.

Two of the new services offered during 1985 were a Payor Bank Service package, which included electronic transmission of MICR line data, individual check sorts by account, and telephone notification of account totals; and the Quick Draw II Program, designed to speed the collection of checks drawn on more out-of-state paying institutions. A comprehensive, cooperative air and ground courier system operating daily between Helena and the rest of the state was sponsored by the Branch as part of this latter program. The air portion of the system connected Helena with 15 other Montana cities.

The Branch upgraded to a Burroughs 2900 series computer and a more complete backup system in 1985 in order to insure against service interruption. Various building alterations and the adoption of more stringent software control procedures increased security for the Branch's data systems, and Helena's disaster recovery plan was tested successfully at an off-site location in Seattle.

New quality control systems were implemented during 1986 that added to the increased efficiency and effectiveness of the Branch's operations and service: an automated proof and balancing system in the high speed section of the Check Department, and automated quality control systems to monitor the quality of work received from customers and the accuracy of employees and equipment assigned to priced services.

These new systems and upgrades allowed the Check Department to improve its efficiency during 1986 and 1987. Productivity increased by 20 percent in 1986, while unit costs were reduced by 6 percent and 11 percent. Montana financial institutions also benefited from substantial price cuts in the wrapped coin and check services.

In 1987, another new check service was introduced: return item reclearing, which allowed banks to automatically redeposit dishonored items under $100 for collection. In addition, Branch staff spent many hours preparing for the 1988 introduction of the Branch's Canadian Check Service.

A new building program

As had occurred in the 1970s, Branch operations had outgrown their facilities, both at the main Branch building on Park Avenue and at the other leased locations by 1986. Thus, the Helena Branch Building Committee was resurrected to make a recommendation on Branch space needs to senior management and the Board of Governors in 1987.

On July 10, 1987, the Board of Governors approved a plan calling for the construction of a new 70,000 square foot, $12 million facility on Neill Avenue to replace the existing facilities. This location offered aesthetic appeal with its southern orientation, facing Last Chance Gulch, which was full of historic buildings and was significant as the site of the first gold discovery in the Helena area. The new building would also satisfy the Branch's need to consolidate its operations in one location for the first time in 15 years.

An attempt was made to incorporate the existing Great Northern Depot building, constructed in 1913 on the Neill Avenue site, into the new branch facility. However, a comprehensive engineering study showed that the depot could not feasibly be incorporated into the design and still meet the Branch's security and operational needs

Planning proceeded at a breakneck pace. The initial design phases, all of the site preparation work and the resolution of outstanding legal issues were concluded without any major obstacles. The final design was submitted by CTA Architects and Engineers of Billings, Montana. It called for an exterior design that would be a blend of the architectural genre found in many of the downtown's historic buildings along with a contemporary sophistication. Local government and community groups received these plans in a positive light, and many expressed appreciation for the design as well as the planned facility's fulfillment of the Helena city government's goal of having a suitable anchor for the northern boundary of the downtown area. Plans called for the new facility to be completed in 1990.

Service innovations continue

In January 1988, the Branch instituted the Canadian "Quick Cheque" processing program. Despite lower-than-projected initial volume, the program received attention from other Federal Reserve districts, several of which expressed an interest in clearing their Canadian checks through the Branch.

The first phase of the Expedited Funds Availability Act was implemented September 1, 1988, requiring the Branch to liberalize its deadlines for dishonored items and to adopt high-speed processing methods for these types of items, similar to those used in the forward collection process.

In addition, the Branch increased its fees for the Branch-sponsored air courier system for the first time since 1981. However, this was the only fee increase for priced services that year.

New building construction begins

Groundbreaking for the new Helena Branch building took place in 1989. Martel Construction Inc. of Bozeman, Montana, was awarded an $8.5 million general construction contract in January. The major subcontractors on the project included the following Montana firms:

  • Shipman Brothers Masonry—Helena
  • Smitty's Plumbing and Heating—Bozeman
  • Yellowstone Electric—Billings
  • Metalworks of Montana—Missoula
  • Structural Systems—Missoula

Materials and design plans by CTA Architects called for a dark cherry-red brick facade, trimmed with contrasting light gray limestone caps, and topped by a copper roof, representative of the impact of copper mining on Montana's history. Contractors applied a special treatment to artificially age the copper roof to a deep, rich blue-green patina. Other external design features for the new building included arched windows, peaked dormers, and an open atrium.

Moving day arrives at last

In December 1990, the Branch was finally reunited in one location when, after 15 years of separation, the move to 100 Neill Avenue was completed. With a final cost of $12.2 million, the project was finished ahead of schedule and within budget.

After months of careful planning by the move committee, valuables, files, equipment, and all other Branch items were transferred to the new facility without mishap. A ribbon cutting ceremony occurred on Monday, December 3, 1990, officially opening the new building for business.

Bank staff, subcontractors and families, and the public participated in open houses, and more than 5,000 visitors toured the new building during December.

The Branch continues to expand

During the early 1990s, the Branch saw steady growth in all of its operations areas, including Check, electronic payments, and Cash. Cash installed its first high-speed automated currency processing machine, increasing its productivity and efficiency. In addition, the availability of the Branch's Canadian check clearing service was expanded to all Federal Reserve districts, and net revenue in the Branch's priced services exceeded projections.

1991 marked the first full year for the Branch in its new facility, and the building was formally dedicated in May of that year. Wayne Angell, member of the Federal Reserve System Board of Governors, and Montana Governor Stan Stephens addressed directors, staff, and guests. The bank's plaza was dedicated to the memory of Hugh Galusha, a Helena native and president of the Minneapolis Fed from 1965 until his death in 1971. In addition, a joint meeting of the Minneapolis and Helena Boards of Directors was conducted at the Branch in conjunction with the dedication.

Three Federal Reserve System subcommittee meetings were hosted by the Branch in 1991, and Branch staff participated in several System work groups and studies. Also, during 1991, employees of 78 financial institutions attended an Operations Conference hosted by the Branch, which featured some of the first generation of electronic check products and services.

During 1992, the Branch continued to experience solid growth in its Cash and Check departments. The volume of currency received and of wrapped coin sold increased by 14 percent and nearly 9 percent, respectively. The Check Department processed nearly 5 percent more checks, and overall, the Branch recovered more than 100 percent of its costs in all of its priced services combined. Canadian check volume increased by over 50 percent, while Payor Bank Services and Fedline, the Fed's online connection with financial institutions, also experienced significant growth. Advances in the state-of-the-art technology used by the Branch were evident in the conversion of all Montana automated clearinghouse endpoints to electronic delivery. These developments were in line with the Branch's primary focus of serving its customers in the most cost-effective manner, a strategy that would serve Helena well into the new century.

In May 1992, the Branch dedicated its auditorium to the memory of Clement Van Nice, former Helena Branch manager (1960-1969) and first vice president of the Federal Reserve Bank of Minneapolis, renaming it the Van Nice Auditorium.

As it had in 1991, the Branch hosted three System meetings in 1992, including the Conference of First Vice Presidents. Also, during June 1992, the Branch participated in Helena's first Annual Spring Art Walk. Featuring over 30 artists and their current works, along with the Branch art collection, the event drew more than 475 art enthusiasts.

The Branch experienced continued success in 1993. The Money and Check departments were the fastest growing departments. The volume of currency ordered and wrapped coin sold increased 12 percent and 14 percent, respectively, while check processing volume increased by nearly 10 percent. Overall, the Branch continued to fully recover costs in the combined priced services.

Software upgrades and new services

During 1993, the Branch became the first nondevelopment site in the Federal Reserve System to install new check processing software called IPS 811. The Branch also implemented a new version of its IAS (Integrated Accounting System) and installed a new Automated Cash Entry System in the Cash Department.

The Branch successfully tested a return item image notification system (RIINS) in 1993, along with adding 18 financial institutions to Payor Services, setting new records for currency volume and increasing the number of Canadian check service users to include nine Federal Reserve districts and 28 Federal Reserve offices.

In April 1993, the Branch also acquired a gold display for the Branch lobby, loaned by local resident and modern-day gold prospector, Bud Guthrie.

Even though the Helena Branch is located in the smallest city of any of the Federal Reserve branches in the System, during 1994 the Branch processed greater volumes than 10 of the 46 other Federal Reserve check processing offices. For the Helena Branch, 1993 volume levels were exceeded in check processing by 6.2 percent, in Canadian items by 23.3 percent, in wrapped coin sold by 8.6 percent, in currency shipped by 15.7 percent, and in coin shipped by 7.7 percent. For 1994, the Branch achieved a recovery rate in Check services of nearly 103 percent and in Cash services of over 101 percent. Branch management attributed these accomplishments to quality service and products, close adherence to procedures and controls, and an energetic and innovative staff.

FASTRAC, a computer system that allows for automated check and return adjustments processing, along with a Fedline adjustments module, was installed in 1994, as was an integrated benefits processing system that enabled employees to access their Thrift Plan account information.

Service innovations in the mid-late 1990s

The Branch continued to expand its electronic services as it approached the middle of the decade. New check processing software was installed to accommodate the electronic cash letter (ECL) processing, allowing financial institutions to present their items electronically, resulting in greater efficiencies at the Branch and lower costs to the institutions. The Branch also took a giant step forward in electronic check processing by adding an image capture system, the first in the Federal Reserve System to use a local process for capturing images while transporting those images to a centralized database at the Minneapolis office for archiving.

Canadian check volume continued to grow, and overall check processing volume increased 2.5 percent over 1994, bucking the nationwide trend of fewer checks processed. Helena Check Clearinghouse members also began sending their settlement totals by fax to the Helena Branch, so that the Branch could settle totals for all clearinghouse members. The banks then made delivery arrangements among themselves, alleviating their need to send staff to the Branch daily to perform the check exchange function.

As 1995 ended, the Cash Department prepared to replace its older high-speed currency sorter with a new model early in 1996.

 
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Narayana Kocherlakota