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Accessing term funding outside of the traditional credit line

By Perry Jones, VP Portfolio Manager

Over the last few years, Corporate One has been working to expand liquidity options for our members. We have developed a funding solution suite of products, increased our term-loan product offerings to include amortizing and floating-rate advances, and helped many credit unions issue non-member deposits through our SimpliCD issuance program.

But, did you know that we can also issue term loans outside of the traditional credit line?

Many credit unions are reluctant to use their Corporate One issued credit line for term funding for two reasons. The first is to preserve their borrowing capacity, and the second is due to the potential negative regulatory perception. However, the ability to access term funding outside of the traditional credit line largely solves each of these issues.

The use of term funding outside the credit line, whether through term loans or term-certificate issuance, preserves your ability to access your credit-line funding for settlement and overnight needs. And, the ability to access your credit line is paramount for the day-to- day operation of meeting your members’ settlement needs. In addition, ensuring short-term sources of liquidity are available to maintain operations is the foundation of a contingency funding plan.

It is important to add that when the use of external funding is documented, planned for, and accessed in a thoughtful manner, the regulatory perception is generally more favorable. A thoughtful approach to external funding is periodically evaluating all of your sources of liquidity, and, when needed, accessing the source of funding that provides the most cost-effective funding or the greatest risk mitigation. Remember, having a diversity of funding sources will help mitigate liquidity risk at your credit union and will also help satisfy regulatory requirements.

Corporate One remains committed to being your preferred liquidity provider and finding solutions that best serve your individual needs. If we can help you evaluate your sources of liquidity, or if you have questions about liquidity offerings through Corporate One, please contact me at 866/MyCorp1, ext. 4030, or your senior investment services representative at 800/366-2677. We are ready to serve your liquidity needs.