CMS Municipal Investment Trust
The CMS Municipal Trust was created to provide credit unions with access to an NCUA eligible asset class in a manner that provides diversity with an above average yield. Taxable Municipal Bonds have risk characteristics similar to government agency bonds. The yield on the municipal portfolio is substantially higher than government agency bonds with similar risk characteristics. Credit unions that invest in this pool are not only receiving a higher yield but are also helping communities fund necessities all over the U.S.
Manufactured Home Loans (MHL)
The CU Capital Market Solution’s Manufactured Home Loans (“MHL”) were created to provide credit unions with a high quality asset, with an above average interest rate, to increase net interest income and provide broad diversification to credit union’s current auto and mortgage loan concentrations. The MHL is a diversified pool of Manufactured Home Loans. The MHL provide a singular method for credit unions to purchase and participate in a diversified pool of loans with an above average yield and high credit quality. Note Holders receive monthly principal and interest payments. The manufactured home loan portfolio is comprised of manufactured home loans geographically diversified nationally. This high-yielding loan pool is now available as an investment for credit unions. The benefit for credit unions is that risk is mitigated in any one loan and the yield is substantially higher than comparable investments available today. Credit unions and financial institutions have been investing in these types of loans since the 1950’s.
DTC Brokered CD’s
DTC-eligible CDs are time deposits issued by insured financial institutions (primarily FDIC-insured financial institutions) and are underwritten by Financial Industry Regulatory Authority (FINRA)-registered broker-dealers. These CDs are typically referred to as “brokered deposits,” offered to investors by issuing institutions looking to raise funding through the wholesale institutional markets. Unlike traditional CDs issued in a physical certificate form, DTC-eligible CDs are issued in book entry form and use the CUSIP system for identification and trading in a primary and secondary market. DTC CDs are federally insured and offer an alternative to traditional agency securities.
USDA Loan Portfolio
USDA loans carry the backing of the United States Federal Government. The CMS USDA Loan Pools allow credit unions to participate in high-yielding loans as an investment. USDA loans carry a high variable yield with safety characteristics similar to government agency bonds because the portfolio is comprised of government guaranteed loans.
CU Capital Market Solutions offers loan participation services to credit unions nationally and acts as an agent to credit unions by linking buyers and sellers. CMS maintains relationships with over 125 credit unions nationally and believes that the most important component of its loan participation service is to match buyers with sellers in a professional and friendly manner. CMS offers participation services that include both member business loans, including USDA and SBA loans as well as consumer loans, including auto and mortgage loans. CMS has assisted in loan participation transactions with credit unions from the East Coast to the West Coast. CMS believes that the continued development of loan participations will drive credit unions to garner a larger share of the loan market nationally and will assist in serving credit unions’ members wherever they work, live or worship.
Why Do Loan Participations
CMS believes that proper balance sheet management includes maintaining proper balance sheet liquidity, while credit union specific challenges, such as slow loan growth and limited loan portfolio diversification, can be addressed by utilizing loan participations.
Yield Enhancement through Loan Participations
Credit unions can participate in loan rates that are substantially greater than investment yields currently available.
CU Capital Market Solutions Loan Participation Group provides assistance in the planning of both the purchase and sale of participations. We are in touch with the current market conditions for both sides of the loan participation process.