What is the Power CD?
The Power CD is a FDIC-insured* deposit of the bank credited to the referring branch or bank unit’s balance sheet. Power CDs are sold by registered representatives of the bank’s broker dealer for maximum client suitability, with referrals from all bank advisors. Power CDs protect the client’s principal if held to maturity, and provide a return linked to the performance of a basket of selected stocks, major stock market index, or basket of indicies. Terms are typically 5 to 7 years.
What is the Power CD Program?
Navial Capital’s proprietary Power CD program contains a complete set of tools and services to successfully rollout your Market-Linked CD product in your bank’s name within 30 days. We work with all of the key functional areas of your institution to establish the initial setup, as well as ongoing procedures.
Key Features of the Program
- Treasury, Accounting & Bank Operations
Our team provides successful process tools and a complete ongoing reporting package, reducing bank staff time to approximately six hours per month - Marketing Kit
A complete set of custom-labeled materials in your bank’s name including brochures, branch posters, statement inserts, print ads, and website content for initial and ongoing marketing campaigns. - Legal and Compliance
Product documents and disclosures for each monthly offering are included, as well as online compliance testing and continuing education for registered representatives. - Sales Training & Relationship Management
Our relationship management team provides on-the-ground support across the country. In addition to this, they deliver extensive product training and education to ensure an organization-wide understanding of structured products.
Why Do Banks & Credit Unions Issue Power CDs?
- Marketplace distinction provides clients with a FDIC-insured bank deposit and potential for higher returns than traditional CDs.
- Substantial new fee income for your bank’s investment program.
- Ongoing long-term deposits for the bank at net funding cost below alternative fund resources.
- Significant increase in branch referrals resulting in more sales of all investment products.
- Stronger partnership among the bank’s retail and investment groups.
Target Clients for Power CDs
Target clients for your bank’s Power CD may vary. From baby boomers seeking growth potential without the downside risk, to CD and IRA depositors seeking higher returns, the Power CD is an option for many different types of investors. In addition, the Power CD may be ideal for stock market investors seeking principal protection, to college savings and custodial accounts needing long-term growth with FDIC-protection.
Additional Considerations
Each Power CD issuance has a 30-day offering period and is executed monthly. The aggregate deposit is transferred to the bank’s balance sheet once a month. All client accounting is handled within a brokerage or investment account. Each offering is hedged by the bank with a pre-approved counter party. The bank controls the hedge pricing and counter party approval. To minimize hedge cost, Navian Capital aggregates numerous issuers in the hedge bidding process. Banks are not required to issue CDs on a given month, have no minimum issuance amount and may stop issuance any time.