NASHVILLE, Tenn. -
But it also has a frank assessment when it comes to credit union awareness of those capabilities.
"It's mediocre," admitted David Marks, chief investment officer. "This is new for CUNA Mutual so there is a learning curve for credit unions and CUNA Mutual. Credit unions are learning how they can partner with CUNA Mutual on the investment side."
Marks described the technology now available to CUNA Mutual and credit unions as better than what was available to him when he managed some $55 billion in funds while at Citigroup's Travelers unit.
"We can put a security in a portfolio before it is ever purchased and see how it would impact that portfolio's performance," said Marks.
Why are credit unions slow to embrace CUNA Mutual's expertise in ALM and investments? Mark said credit unions are simply risk-averse.
"Change has been a four-letter word in the credit union space, but at some point in time if you do not do something different that train will roll over you," Post said. Post referred to the yield increases CUNA Mutual says it can deliver on excess funds as "free money.
As ROA shrinks you would think credit unions would look to places where there is free money, as credit unions do not want to increase fees and do want to offer better rates."
Marks shared that one Michigan credit union with which he had met had bought a "funky" mortgage-backed security on which it had paid 1.75 points to the broker. "We showed them a comparable bond that pays better and is less volatile and they would pay two basis points," Marks said. "They were blown away."
According to Post, "CFOs and treasurers are smart but they are part-time investment people. Remember we are a $16-billion buyer; they may be a $200-million credit union and buying in tranches of $200,000 or $1 million."
Post added that CUNA Mutual has recently hired away from Mass Mutual an executive in sales/distribution who "has brought in some new ideas."
"The other thing the credit union gets is immediate access with CUNA Mutual," said Post. "Even if we not manage the whole portfolio, which we don't even want. We just want the longer duration, excess part of the portfolio. All they have to do is call and we will model it for them."
As he did in an earlier interview with the Credit Union Journal, Post stressed that CUNA Mutual is not interested in the overnight investments of credit unions, noting that market is well-served by the corporate network.
