QuantyPhi Quarterly
A Message from the President
As we close the second quarter of 2025, I am thrilled to share some exciting developments at QuantyPhi that will significantly enhance our service offerings and support your credit union's strategic goals.
We are on the brink of launching our new Integrated Balance Sheet Management Platform. This innovative platform will revolutionize how you manage your balance sheet by integrating ALM modeling, liquidity risk management, CECL modeling, a loan trading marketplace, and an investment trading marketplace. By utilizing the same data and analytics across these functions, your credit union will be empowered to make more informed and strategic decisions. This comprehensive approach ensures that all aspects of your balance sheet are aligned and optimized for performance and risk management.
In addition to this groundbreaking platform, we continue to offer our CECL Validation Service. This service is designed to ensure your credit union's compliance with the Current Expected Credit Loss (CECL) accounting standard. Our thorough review and validation process will help you navigate the complexities of CECL implementation with confidence, ensuring accuracy and regulatory compliance.
Our commitment to providing exceptional consulting services remains unwavering. Whether it's ALM Modeling, ALM Validations, Liquidity Framework Reviews, Non-Maturity Deposit Studies, or Mortgage Servicing Rights Valuations, our team of experts is here to support you every step of the way. We understand the unique challenges credit unions face and are dedicated to delivering tailored solutions that enhance your financial stability and performance.
At QuantyPhi, our dedication to serving our members is at the heart of everything we do. We are proud to offer innovative solutions that not only meet your needs but also help you thrive in an ever-evolving financial landscape. Your success is our success, and we are committed to being your trusted partner in achieving your strategic objectives.
Thank you for your continued trust and partnership. We look forward to working with you and supporting your credit union's growth and success.
Warm regards,
Adam Stone
President of QuantyPhi
Innovative Solutions for a Thriving Credit Union
CECL Validations from a CUSO you trust.
QuantyPhi's CECL Validation service is designed to ensure your credit union's compliance with the Current Expected Credit Loss (CECL) accounting standard. This comprehensive service includes a thorough review and validation of your CECL processes, helping you navigate the complexities of CECL implementation with confidence.
A better analysis for mortgage servicing rights.
Mortgage servicing rights (MSR) let loan originators sell mortgage loans while keeping the administrative tasks, providing a steady revenue stream. This helps financial institutions focus on creating and disbursing new loans. QuantyPhi’s advanced MSR analysis model calculates the value of a credit union’s mortgage loan servicing income on sold loans, while retaining the servicing rights as a revenue stream. A case study using real credit union loan data shows the model's benefits, highlighting its focus on asset/liability management and interest rate risk.
Is your credit union’s less expensive funding likely to remain available?
Understanding our cheapest source of funding, which typically accounts for 70% of the liability side of the balance sheet, is critical to identifying and acting upon performance opportunities and potential risk threats in both the short and long term. With possible Fed rate cuts in the future, now is the time to revisit your Non-Maturity Deposit Analysis to recalibrate your models’ assumptions.
Market Commentary
Fed Funds Futures and the Grand Prize Game: A Surprisingly Accurate Analogy
By: Wade Cooper, MBA, Financial Strategist
The Fed Funds Futures market and the Grand Prize Game from The Bozo Show might seem worlds apart—one is a financial instrument used by traders and economists, the other a beloved children's game show segment. But they share a surprisingly apt metaphorical connection when it comes to predicting outcomes over increasing distances.
The Grand Prize Game: A Quick Refresher
In the Grand Prize Game, a child would toss ping pong balls into a series of buckets, each placed farther away than the last. The fabulous prizes increased in value with success—the final bucket containing a crisp $50 bill and the promise of a brand-new Schwinn bicycle. The first few buckets were relatively easy, but as the distance increased, the difficulty—and the likelihood of missing—grew dramatically. The sixth and final bucket was rarely hit, despite the contestant’s best efforts and the audience’s encouragement.
Fed Funds Futures
A similar pattern, Fed Funds Futures work in a remarkably similar way. These contracts reflect market expectations for where the federal funds rate will be at specific points in the future. Like the first few buckets in the game, near-term contracts are relatively accurate. The market has access to current economic data, Federal Reserve communications, and other timely indicators that help shape a reasonable short-term outlook.
As the forecast horizon extends—three, six, or twelve months out—the accuracy of these predictions drops sharply. Just like trying to land a ping pong ball in the sixth bucket, predicting the federal funds rate a year from now becomes a game of probabilities. Economic conditions can shift rapidly due to inflation surprises, labor market changes, geopolitical tensions, or financial instability. The Fed may pivot unexpectedly, rendering earlier market expectations obsolete.
A current example illustrates this well. As of this writing, Fed Funds Futures predict a 97.8% probability that rates will remain unchanged at the June 18 FOMC meeting, with only a 2.2% chance of a 25-basis point rate cut. Just one month ago, the market was far less certain: it priced in a 6.6% chance of a 50-basis point cut, a 57.2% chance of a 25-basis point cut, and only a 36.7% chance of no change. This rapid shift in expectations underscores how volatile and reactive the Fed Funds Futers market can be—even over short timeframes.
The Takeaway
Just like a child tossing a ping pong ball toward a distant bucket, traders and analysts are making educated guesses about where interest rates will land months or years from now. And just like in the Grand Prize Game, the further out they aim, the more likely they are to miss. So, while the Fed Funds Futures market is a useful tool, it’s important to remember: it’s not a guarantee—it’s a game of probabilities. And the farther the bucket, the harder the shot.
Events
Navigating Interest Rate Risk | Webinar Series
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Managing interest rate risk remains a key focus for credit union managers due to its significant influence on performance and risk. This webinar series addresses the challenges posed by rate uncertainty and provides practical tools and strategies for navigating a range of interest rate scenarios effectively.
QuantyPhi's monthly series features 45-minute sessions held on the third Thursday of each month at 2:00 p.m. CT. Each session will explore challenges facing credit union managers and share practical approaches to navigating today’s financial landscape.
Session highlights:
- Balance Sheet Optimization Overview: Understand the foundational process for aligning strategies with credit union goals.
- Asset Liability Management: Explore techniques for effectively managing assets and liabilities.
- Investment Portfolio Alignment: Learn how to align your investment portfolio with balance sheet objectives.
- Performance Analytics: Gain insights into measuring, monitoring, and managing risk to support informed decision-making.
- Market Insights and Strategies: Review trends, implied interest rate paths, and approaches to portfolio management for a resilient strategy.
Register today to explore actionable strategies and insights for optimizing balance sheet performance in an evolving economic environment.
Join the QuantyPhi team in 2025 to support our partners and clients at these important events:
- Michigan Credit Union League Annual Convention & Exposition
June 3 to June 6 in Grand Rapids, MI | Register here - Nebraska Credit Union League Annual Convention
June 4 to June 6 in Omaha, NE | Register here - Iowa Credit Union Foundation Golf Classic
June 11 in Coralville, IN | Learn more - The Wisconsin Credit Union League Foundation Invitational
June 26 in Wisconsin Dells, WI | Learn more - ICUL Small Asset Size Conference
August 25 to August 26 in Naperville, IL | Register here - Indiana Credit Union League’s Annual Meeting and Convention
October 1 to October 3 in Indianapolis, IN - Corporate Central’s Momentum 2025
October 7 to October 9 in Wisconsin Dells, WI | Learn more
QuantyPhi is Hiring
Seeking an ALM & Investment Analyst.
QuantyPhi is seeking a highly skilled ALM & Investment Analyst to join our team. The ideal candidate will have experience in Asset/Liability Management (ALM), liquidity risk management, fixed income investment analytics, and the CECL accounting standard. The individual will be responsible for developing a deep understanding of Corporate Central’s integrated balance sheet management and optimization platform, as well as conducting in-depth analysis and validations of credit union balance sheet risk management functions.
We consider our employees to be our most valuable assets and create a work experience that is balanced, healthy, rewarding, and wildly thrilling.
Financial Reads
Are you looking for some good reading that might help you at work too?
The Game That Wasn’t: GameStop, Reddit, and the Fleecing of Small Investors
Author, Spencer Jakab, explores the 2021 GameStop stock surge, examining how online communities, trading platforms, and market forces collided during the meme stock frenzy. The book provides a detailed look at what the event meant for everyday investors and the broader financial system.
The Snowball: Warren Buffett and the Business of Life
In this book, author Alice Schroeder offers an in-depth look at the life, philosophy, and financial career of Warren Buffett, one of the most influential investors of all time. The book blends personal anecdotes with insights into his business strategies and values.
The Currency of Politics: The Political Theory of Money
In this book, author Stefan Eich explores the historical evolution of money, focusing on how different thinkers have shaped our understanding of money as both an economic tool and a societal force.
Spotlight on SimpliCD
SimpliCD Investments
Are you paying safekeeping fees for DTC CDs? Many CD providers charge additional fees for safekeeping, which can erode your investment returns. With SimpliCD, there are no safekeeping charges - allowing you to retain the full yield on your investment.
SimpliCD offers exclusive custodial rates from banks and credit unions, making it the optimal choice for managing your CD portfolio. Contact QuantyPhi to learn more.
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