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Four problems, one solution: SimpliCD Institutional Investor Program

By: Jeff Duesler, Senior Investments Services Representative

Spreading funds around can be cumbersome for investors. Multiple accounts, multiple statements, multiple trips to financial institutions. In fact, we could say that all these multiple steps involved in placing funds is equivalent to the pain and annoyance of a root canal, especially for smaller businesses that might only have part-time volunteers running their organizations. What if I told you there was a way your credit union could help local businesses/public institutions conveniently diversify their investments through your credit union versus chasing money around town? Consider these four scenarios credit unions might face with some of their business (institutional) members, and continue reading for the one solution that can help solve all four problems.

Scenario 1

A school credit union has several members that work for the school system. The treasurer of the school district, Emily, is not only a member of the school credit union but also volunteers as a credit union board member. Emily would like to invest some of the school district’s funds in the school credit union but cannot because state law prevents public fund deposits. Instead, Emily must purchase CDs from community banks. She also does investment business with a couple of Wall Street brokers, buying approved investments, including negotiable certificates of deposit. If only there were a way to help the school district place funds while remaining compliant with state law.

Scenario 2

A church credit union has a high share-to-loan ratio (which means their share growth has outpaced their loan growth). While the credit union is happy that some of the other churches in the area use their credit union to deposit funds, these large deposits negatively affect the church credit union’s profitability. If only the church credit union could continue to help these churches place funds while keeping these same funds off their balance sheet.

Scenario 3

A university credit union serves several of the university’s financial needs, including housing some of the foundational and endowment accounts for its hospital and the university itself. There is a concern over keeping more funds at the credit union than the NCUA insurance limits allow. Therefore, the university’s board of trustees must seek other places to put funds to fulfill the fiduciary responsibilities of the institution. This is a necessary but somewhat annoying activity because the placement of funds elsewhere requires multiple statements, resolutions, phone calls, etc. And, the rate of return is “modest” at best.

Scenario 4

ABC Credit Union just hired two new business development officers who are focused on starting and sustaining business lending and banking, including opportunities in the non-profit space. While assessing their credit union, these new officers believe that while the underwriting standards and service level are solid, some of the product offerings are a little light. One of their main concerns is how to compete with the regional banks that offer a suite of fixed-income, off-balance-sheet investment options to help manage their organization’s cash.

The solution for each of these dilemmas is the SimpliCD Institutional Investor program. Why is this the solution? Because the Institutional Investor program expands credit union investment offerings without a substantial investment of the credit union’s time or resources, and credit unions can gain market share from institutional members in a way that wasn’t possible before this solution was available.

Like the sample dilemmas above, most credit union institutional members – unions, public funds, trusts, hospitals, foundations, churches, corporations – may be depositing funds in CDs with area banks, savings and loans, or other brokerage firms to maintain their insurance requirements and to diversify their investment portfolio. Not a simple process and usually quite time consuming. But through SimpliCD’s Institutional Investor program, you can allow your institutional members to invest in SimpliCD through your credit union, offering your institutional members a convenient way to diversify funds, saving them time and energy, and keep them working with your credit union.

Benefits for your institutional members include:

  • Safety. SimpliCD only uses issuers offering FDIC or NCUSIF insurance.
  • Convenience. Purchases take only one phone call to Corporate One’s investment department. Once the order is received, Corporate One and Primary Financial take care of the rest.
  • Access to the same unique names your credit union has, including some credit union issuers.
  • Flexibility. Terms from 90 days to five years are available and your member can set the issuer criteria, such as Veribanc ratings and geographic locations.
  • Performance. Rates come from a competitive pool of nationwide issuers and are quoted “net to the investor" with no extra fees or charges.

Benefits for your credit union:

  • Compete with other financial institutions by offering a full suite of products to business members and potential new business members.
  • Offer a turn-key service with no start-up costs.
  • Earn fee-based income based on the purchase activity of the member.

Want to learn more? Give me or one of our other senior investments services representatives a call at 800/366-2677. We’ll be happy to answer any questions you may have.