MARIETTA, Ga. — Debbie Walker remembers the drudgery of endless paper, phone, and fax streams when connecting credit unions and banks to financial institutions looking for high-yield certificate of deposits.

Walker has been with QwickRate since 1988 and is now the director of regulatory and compliance. Formed in 1986, the company serves as a forum to match institutional buyers and sellers of jumbo CDs. As a non-brokered “matchmaker,” QwickRate counts more than 570 credit unions, including several corporate credit unions, and nearly 1,200 banks among its clientele. Up to 350 financial institutions are updating rates at qwickrate.com on a daily, real-time basis, according to the firm.

“It was a tedious process,” Walker recalled of the old school way of linking CD seekers. “Automation has all but eliminated that process.”

The 17-employee firm headquartered 15 miles northwest of Atlanta has essentially stayed close to its founding matchmaking premise. Rather than jumping on the bandwagon as other vendors have recently started to do, credit unions were strategically courted by QwickRate 22 years ago at a time when third-party entities often placed them at the bottom of their business development priority lists.

“We started out serving credit unions,” said Shawn O'Brien, president of QwickRate during a recent visit by Credit Union Times to the company. “Our niche was and still is trying to provide national, unbiased rate information.”

QwickRate works exclusively with “non-consumer” investors consisting not only of financial institutions but also political subdivisions, nonprofit organizations, and medium-size corporations, according to Walker. Investors in this market are looking to place some or all of their liquid assets in CDs with federally insured financial institutions. Many of the consumer regulations such as Truth in Savings, privacy disclosure requirements and restrictions on deposit gathering are not applicable to institutional investors, Walker explained.

On the flip side, credit unions and banks should know that regulators may consider non-consumer and non-brokered deposits as a “volatile source of funding,” Walker pointed out. Examiners will expect policies and tools that will identify, monitor, and control risks associated with this type of funding volatility.

Brokered CDs were center stage when the now defunct Bentley Financial Services, acting as a third-party safekeeper, was charged with securities fraud in 2001 by the Securities and Exchange Commission for selling supposed bank-issued, federally insured certificates of deposits that were actually uninsured securities. Hundreds of credit unions, banks, and individuals invested more than $370 million in the CDs.

NCUA urged credit unions to exercise due diligence when dealing with safekeepers of CDs and other investments. Rate listing firms are not subject to federal or state securities registration laws and typically receive little or no regulatory oversight, according to NCUA. As an alternative, NCUA has said direct CD purchases “can be a safe way for credit union to invest in CDs” because the credit union and the issuer are the only transaction participants. If a CD issuer were to fail, the credit union listed as the beneficial owner would make it easier for the FDIC to ascertain ownership interest in the CD for insurance purposes, NCUA said.

“One of the first questions I'm asked by credit unions are 'how safe are the banks' [listed with QwickRate],” said David Suri, account executive at QwickRate, adding the company provides a link to the FDIC's Web site (www.fdic.gov) to verify financials. “And then some banks won't work with brokers but will work directly with credit unions.”

The $150 million Library of Congress FCU continues to get calls from brokers even though it's been a QwickRate customer since 1994, said Bill Dubit, vice president and chief financial officer. Half of the credit union's $35 million investment portfolio is comprised of jumbo CDs.

“Some people have wondered 'isn't it awkward to buy a block of CDs,'” said Dubit during the credit union's year-end NCUA audit occurring at the time of this interview. “We often get asked by other credit unions and NCUA why our yield is so good. We say most of this is from jumbo CDs.”

The Hyattsville, Md.-based Library of Congress FCU pays between $2,500 to $3,000 each year for QwickRate's service but the daily interest checks and higher yields “more than pays for that.” QwickRate annual subscriptions range from $600 to $4,000 depending on the size of the investment portfolio. Discounts are given for multi-year contracts.

O'Brien said there is no “sweet spot” within its credit union clientele. QwickRate provides services to those from as small as $5 million to nearly $1 billion in assets. The day-to-day challenges are just as prevalent for credit unions as they are for banks.

“It's the challenges of technology, the challenge of people. The challenges are great whether you're small or not–not whether you're a bank or credit union,” O'Brien said.

Being able to reach a live person is important for $6 million Sugar Land Employees FCU in Sugar Land, Texas, said Rebecca Christopoulos, CEO. The credit union recently signed its second contract with QwickRate after initially hearing about the company from another credit union manager.

“They have great customer service,” Christopoulos said. “If you need something, you're not going to be put on hold forever.”

With the launch of eContact in March 2007, QwickRate has taken its client service outreach to a more automated level. All communication, document retrieval and data entry are now handled automatically through the company's interface. Since its debut, 969 clients have signed on to eContact and more than $1 billion in CD transactions have been conducted this way.

Over the past few years, the $49 million United Methodist FCU in Montclair, Calif. has eliminated working with brokers because it became too expensive, said Ramon Noperi, CEO. The 10-year plus QwickRate relationship has been made easier through eContact.

“We do everything online now,” Noperi said.

While the relationship QwickRate has with credit unions is a strong one, O'Brien acknowledges that reaching more of them is an ongoing goal. They are still viewed as competitors even among the corporate credit union network, he said. Suri emphasized that “they are not looking to replace anyone.” Walker said there is still the perception that going direct is more of a challenge than partnering with a broker.

“We're happy but never satisfied,” O'Brien said. “eContact has removed the need for phone calls and faxes, which has done a lot to streamline the process. Many of the changes we make are based on what we're hearing from [our clients].”

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