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Veribanc ratings information
COST COMPARISON
SimpliCD vs. other CD Sources
SimpliCD – A custodial CD program designed to help credit unions invest their excess funds efficiently in the national CD market. The rate quoted is the rate to the purchasing credit union with no other fees involved.
Rateline – Pay monthly fee for rates, but get no service. Fees typically will vary based on the asset size of the credit union. Once you place the trade, you are on your own.
Brokers – Pay a basis point upfront fee per placement that is typically 15 basis points. If you assume an average of 1 year, the fact that it is paid upfront will likely cost you another 1 basis point. As with the Rateline, once you place the trade, you are on your own.
Purchasing (Rateline or Broker)
• |
Call nationally to verify top rates. |
• |
If an odd term is required, this must be verified. |
• |
Review the financial information on the issuer. |
• |
Send setup sheets to issuers. |
• |
Call corporate (or provider) with wire out instructions on each issuer. |
• |
Spend $5 (on average) for wire out fees from the correspondent bank to the issuer. |
Purchasing (SimpliCD)
• |
One call is all it takes – no wire fees or transaction charges. |
• |
No wires – all transactions are settled via national settlement. |
Account Verification (Rateline or Broker)
• |
Verify safekeeping receipts – call issuer if receipts are incorrect or not received. |
• |
Sign signature cards for each placement and return to the issuer. |
• |
Keep original certificates when applicable. |
Account Verification (SimpliCD)
• |
Review transaction statement mailed the day of the trade. |
• |
Sign only one set of agreements for SimpliCD. |
Monitor Interest Payments (Rateline or Broker)
• |
Receive monthly interest checks at various times throughout the month. |
• |
Verify accuracy of the interest amounts and call the issuers for any discrepancies. |
• |
Deposit the interest checks in the appropriate accounts. |
• |
Post each interest check separately. |
Monitor Interest Payments (SimpliCD)
• |
Receive one monthly interest amount automatically deposited in your account at the corporate on the 3rd business day of each month. |
• |
Receive one interest posting representing a total for the interest earned on your entire portfolio the previous month. |
• |
A breakdown is supplied in an interest summary statement mailed at the beginning of each month. |
Maturity Processing (Rateline or Broker)
• |
Call issuer for rollover rates if applicable. |
• |
Give the issuer wiring information if maturing certificate. |
• |
Pay up to $30 for wire out fees from the issuer. |
• |
Deal with issuers who do not send funds back in a timely manner. |
Maturity Processing (SimpliCD)
• |
Call Corporate with details on the maturity. |
• |
SimpliCD deals with any late wires, not the credit union. |
Other Intangible Benefits
• |
SimpliCD deals with all issuer failure requirements. |
• |
SimpliCD notifies customer on all issuer mergers and issuer name changes. |
Costs |
SimpliCD |
% |
Rate Service |
% |
Referral Broker |
% |
Gross Rate |
|
3.05% |
|
3.25% |
|
3.25% |
Usage Fee |
None |
.00 |
$125/
month |
.05 |
Ave. 15 bpts |
.15 |
Issuer Wire Fees |
None |
.00 |
$0-$30 ($20) |
.02 |
$0-$30 |
.02 |
Corr. Wire Fees |
None |
.00 |
$0-$25 ($10) |
.01 |
$0-$25 |
.01 |
Intrinsic
Labor Costs |
Purchasing |
Minimal |
|
1 hour |
.020 |
45 minutes |
.015 |
Account Verification |
Minimal |
|
30 minutes |
.010 |
30 minutes |
.010 |
Monitor Interest Payments |
Minimal |
|
3.5 hours |
.070 |
3.5
hours |
.070 |
Maturity Processing |
Minimal |
|
45 minutes |
.015 |
45 minutes |
.015 |
Net Effective Rate |
|
3.05% |
|
3.05% |
|
2.96% |
*Intrinsic Labor Costs are estimates of what the
cost would be over that of using SimpliCD.
All assumptions on the fees were based on an average portfolio size of $3 million with an average term of 365 days (30 - $100,000 CD placements). Under Rate Service, a usage fee of $125 per month ($1,500 per year) equates to $50 per placement or 5 basis points. Labor costs were based on an average salary with benefits of $20/hour. The effective time involved to monitor interest payments when managing your own portfolio was calculated as 17.5 minutes per month or 3.5 hours per certificate per year.
After taking out all related costs, the SimpliCD rate is likely as good a rate, if not better. When one considers its ease of use, its function as a quality portfolio management tool, and the fact that it is done through the investor’s corporate, SimpliCD is a much better way to manage CD investments.
The custodian for SimpliCD is Primary Financial Company, LLC,
a credit union service organization (CUSO) owned jointly by
corporate credit unions throughout the U.S.
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