Credit Union

FCXoptions

FCXoptions

I work at a very small credit union ( $11m with only 5 employees). We only have one office, but we have members all across the US approx (2000 members). I started working here at the end of 2011. Before I got here they had been at a significant loss for the past 3 years. In 2012 I had several ideas that have helped us be significantly more profitable. I cut several major costs, boosted marketing significantly, came up with new programs to generate more revenue and quite a few other things. I have gotten little recognition for any of it (apart from a very small bonus), but thats part of life I guess. The way I see it, I am building my resume at least for later on once I am finished with school.

But to get to my main point, we have a good bit of cash sitting aside that hasn't been loaned out and isn't invested. Does anybody on here know anything about what credit unions can and can't invest in? Everyone in our office, including the CEO, does not know the answer to that question. And I can't seem to find much help with it. So just curious if anyone knew if we are allowed to invest in corporate bonds or what our rules are? Just looking for some input!
 
Don't you guys have lawyers? How big is the credit union?

Quote from FCXoptions:

But to get to my main point, we have a good bit of cash sitting aside that hasn't been loaned out and isn't invested. Does anybody on here know anything about what credit unions can and can't invest in? Everyone in our office, including the CEO, does not know the answer to that question. And I can't seem to find much help with it. So just curious if anyone knew if we are allowed to invest in corporate bonds or what our rules are? Just looking for some input!
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Quote from CT10Gov:

Don't you guys have lawyers? How big is the credit union?
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We have a lawyer on the board, I haven't discussed with him. I was trying to find out on my own kind of then to get back with the CEO. I didn't want him thinking I was going behind his back contacting board members.

And we are tiny. We are an $11m credit union.
 
I see. $11mm is damn small for anything financial. I'm curious, since I know next to nothing about credit unions - where do you guys usually park your money when not lent to you members? tbills?

Anyway, given credit union's usual mission, it's hard to see the board approving an aggressive investment mandate.

Quote from FCXoptions:

We have a lawyer on the board, I haven't discussed with him. I was trying to find out on my own kind of then to get back with the CEO. I didn't want him thinking I was going behind his back contacting board members.

And we are tiny. We are an $11m credit union.
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Haha yea it is tiny. They managed roughly a $100k loss three years in a row until this year. So I was pretty happy with everything I have accomplished. But all our money not lent out is in a sweep account just sitting there collecting minimal interest. I found some business savings accounts at larger institutions paying .7% which is much better than just sitting there doing nothing but not great by any means. And you are right, they more than likely wont approve anything aggressive. They are very conservative after those consistent losses (the prior CEO made big unsecured loans to anybody and everybody).

The only investments we have made is they had money in a CD with another bank when i first started, but it has already matured. We could conservatively invest $1m in a CD or whatever right now. I might just go with that savings account so we can access it anytime
 
Are these CDs covered by FDIC? I imagine not, right? How do you guys deal with default risk if you are just putting the cash into another bank?

Maybe you can do some basic money market stuff like TBAs and agency debentures... but I doubt you'll earn that much more than 70bps for all your trouble.

(It's always funny that occupy wall street wanted everyone go to credit unions; when in reality credit unions are doing cash management with a normal bank).

Quote from FCXoptions:

Haha yea it is tiny. They managed roughly a $100k loss three years in a row until this year. So I was pretty happy with everything I have accomplished. But all our money not lent out is in a sweep account just sitting there collecting minimal interest. I found some business savings accounts at larger institutions paying .7% which is much better than just sitting there doing nothing but not great by any means. And you are right, they more than likely wont approve anything aggressive. They are very conservative after those consistent losses (the prior CEO made big unsecured loans to anybody and everybody).

The only investments we have made is they had money in a CD with another bank when i first started, but it has already matured. We could conservatively invest $1m in a CD or whatever right now. I might just go with that savings account so we can access it anytime
More...
 
Quote from CT10Gov:

Are these CDs covered by FDIC? I imagine not, right? How do you guys deal with default risk if you are just putting the cash into another bank?

Maybe you can do some basic money market stuff like TBAs and agency debentures... but I doubt you'll earn that much more than 70bps for all your trouble.

(It's always funny that occupy wall street wanted everyone go to credit unions; when in reality credit unions are doing cash management with a normal bank).
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I belive the CD's were FDIC insured, but I am not 100% as I had nothing to do with them. We have a decent amount(for our size) in retained earnings as well despite those recent losses. More than enough to cover any loss. But yea I think that savings account will be the best route unless I can find something else.

And yea occupy wall street was stupid lol, most of those people didn't understand how everything works. We don't normally invest with anyone, just our loan portfolio, but it is killing me having a decent amount of cash not being put to work. I wish we could invest in the stock market HAHA I would lose my job quickly for that one I am sure
 
No, I mean how to do you protect your sweep account from losses due to the failure of the bank with whom you have the sweep account?

Quote from FCXoptions:

I belive the CD's were FDIC insured, but I am not 100% as I had nothing to do with them. We have a decent amount(for our size) in retained earnings as well despite those recent losses. More than enough to cover any loss. But yea I think that savings account will be the best route unless I can find something else.
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