In today's environment, many credit unions are experiencing record high loan volume. In many cases, loan demand has exceeded the supply of available deposits. On the other end of the scale, there are credit unions, for whatever reason, that have a very low-loan-to-deposit ratio.

With these wide gaps in loan activity among Tennessee credit unions, VolCorp saw a need for a program that would match credit unions with liquidity needs, as a result of high loan volume, with credit unions having excess liquidity, as a result of lower loan demand. As a result, VolCorp's Loan Participation Program was established.

Through this program, VolCorp acts as a loan-participation facilitator or "broker" by bringing together credit unions with excess funds with those with excess loan demand. But we don't stop there! We assist the participants in preparing the required paperwork including policies and procedures. VolCorp also helps analyze the loan portfolio and price it for sale.

VolCorp's Loan Participation is a win-win situation for both seller and buyer. The seller avoids using short-term borrowing to fund longer-term loans and continues to meet member loan demand. The buyer is able to invest excess liquidity in higher yielding assets offsetting the lower loan demand. The following is some additional benefits you may not have considered:

In order to participate in the Loan Participation program, the seller must have a least a $500,000 pool of loans to sell. An individual buyer can purchase up to 90% of the loan portfolio. The buyer must be able to underwrite the type of loans within the pool. In other words, if your credit unions loan policies do not authorize mortgage lending, you would not qualify to purchase a pool of mortgage loans.

If you're interested in selling or buying loans, contact Phillip Cochran, Investment Services Manager at extension 234.