QuantyPhi Quarterly

March 3, 2025

A Message from the President

Adam Stone

Welcome to the latest edition of the QuantyPhi Quarterly! We are excited to share some significant updates and new offerings designed to support your credit union's success.

First, we are thrilled to introduce our new CECL Validation service. This comprehensive service ensures your credit union's compliance with the Current Expected Credit Loss (CECL) accounting standard. Our CECL Validation service includes a thorough review and validation of your CECL processes, helping you navigate the complexities of CECL implementation with confidence. With QuantyPhi’s expertise, you can be assured that your CECL processes are robust, compliant, and effective.

In addition, we launched a new webinar series titled Navigating Interest Rate Risk. This monthly series features 45-minute sessions held on the third Thursday of each month. Each session will explore challenges facing credit union managers and share practical approaches to navigating today’s financial landscape. Topics will include balance sheet optimization, asset liability management, investment portfolio alignment, performance analytics, and market insights and strategies. We invite you to join us for these informative sessions and gain actionable strategies for optimizing your balance sheet performance in an evolving economic environment.

At QuantyPhi, we remain committed to helping credit unions with their balance sheet risk management programs. Our team of seasoned experts brings invaluable insights and a deep knowledge of regulatory changes and industry trends to help you proactively manage your balance sheets and stay ahead in an ever-evolving financial landscape. Whether it's through our consulting services, risk modeling, investment options, or liquidity solutions, we are here to support your credit union's financial stability and growth.

Thank you for your ongoing partnership. We look forward to continuing to provide you with the tools and expertise needed to navigate the complexities of the financial world.

Warm regards,

Adam Stone
President of QuantyPhi

Innovative Solutions for a Thriving Credit Union

QuantyPhi now offers CECL Validation services tailored to credit unions.
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.

Wade Cooper, Financial Strategist, recently authored an article discussing the importance of having your CECL process independently validated by an experienced third party. Contact QuantyPhi to discuss the CECL Validation service and read Wade’s article linked below.

Read the Article

Drive peak performance with QuantyPhi’s ALM Validation service.
The ultimate tune-up, QuantyPhi’s ALM Validation, reviews your interest rate risk process, pinpoints areas that are not currently optimized for peak performance, and suggests methods and practices to help improve your process. The validation includes IRR policy reviews, model results validation, a review of your ALM assumptions, along with your processes, controls, and regulatory compliance.

Historically the majority of ALM Validation requests were driven by examiners. In the past year, we have seen a sharp increase in requests from members looking to ensure their ALM reports are capturing the best possible picture of income and risk across the interest rate spectrum.

Build a strong financial foundation with QuantyPhi’s Benchmarking services.
QuantyPhi’s Benchmarking analysis takes your ALM model results and calibrates the optimal investment portfolio structure that supports your balance sheet. Once established, your benchmark paves the way to meeting your goals not only for your investment portfolio, but also for your entire balance sheet. It enables you to make solid strategic decisions quickly and easily. It can help determine the best pathway to success. Contact QuantyPhi to learn more about how we can help you optimize your ALM strategy.

Contact QuantyPhi

Market Update

Anything can happen!
By: Danny McIntyre, Vice President Investment Services

There certainly has been a lot for the bond market to absorb since our last update in December. The Federal Reserve lowered its target funds rate by 25 basis points in December then left policy unchanged in January. Analysts’ biggest challenge has been the change at the White House. The new administration has come out of the gate firing on all cylinders, forcing analysts and market participants to gauge the likely economic impact. With Fed policy remaining in a data determinant mode, the impact of initiatives must be measured for their effect on inflation and employment. On inflation, the new administration aims to provide significant budget savings, especially longer term. However, large government layoffs would certainly have a negative impact on the employment numbers. Increased tariffs remain in question as well with the expectation of increased import prices leading to inflationary bumps in the short term. Overall, the abundance of change and activity generates uncertainty for the markets. Generally, markets have a difficult time with uncertainty. So far, we have seen continued volatility but overall, little has changed in the market. The short end extending to three-year maturities has seen yields fall close to the 25 basis points that the Fed eased in December. Intermediate and long-term yields have crept slightly higher, rising five to ten basis points since our last update.

Currently, the Fed fund futures market is signaling almost three rate cuts over the next twelve months. Our other market sentiment indicator, the Treasury forward yield curve (12-month horizon), is currently pricing in two rate cuts coming in the next year. The forward curve is projecting very little change in rates for intermediate maturities and a small increase for five year and longer maturities.

We will continue to warn about the uncertainty of the rate path ahead while encouraging continued focus on ALM for balance sheet and portfolio management. The number of initiatives in play that could have significant economic impact magnifies the need for that warning today. We typically insert the phrase that anything can happen and prepare for all scenarios. Last month, that was made clear. The picture above shows a little over eight inches of snow outside my office window. For many of you that wouldn’t mean much. However, my office is located in New Orleans, LA.

Anything can happen! Keep ALM front and center on your dashboard. We’re here to help when you need us.

Market Update and Security Offerings Email
This weekly communication provides an update on key market rates, as well as indicated offering levels for Treasuries, Agencies, Mortgage-Backed Securities, and select other investment types available through Corporate Central’s Broker/Dealer program. It includes robust fundamental analysis and total return analytics to help credit union members identify characteristics in the market sectors that meet their needs.

Subscribe Now

Events

Navigating Interest Rate Risk | Webinar Series

2025 Webinar Series

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:

America’s Credit Unions Government Affairs Conference
March 2 to March 6 in Washington, D.C. | Register here
Minnesota Credit Union Network ACCELERATE 25
April 21 to April 23 in Prior Lake, MN | Register here
Wisconsin Credit Union League 2025 League Convention & Expo
May 7 to May 9 in Wisconsin Dells, WI | Register here

Financial Reads

Are you looking for some good reading that might help you at work too?

The Money Culture
Author, Michael Lewis, examines the financial world of the 1980s, focusing on Wall Street's culture of excess, risk-taking, and the pursuit of wealth. Through interviews and personal observations, the book offers a critical look at the behaviors and mindset shaping the industry during that time.

Soul in the Game: The Art of a Meaningful Life
Author, Vitaliy Katenelson, explores personal growth, purpose, and fulfillment, blending insights from Stoic philosophy, art, and the author’s own life experiences. It offers practical wisdom on navigating challenges, embracing creativity, and finding deeper meaning in everyday pursuits.

The Five Dysfunctions of a Team: A Leadership Fable
Author, Patrick Lencioni, explores five common dysfunctions that hinder team performance and provides a model for overcoming these challenges to achieve better collaboration and results.

Spotlight on SimpliCD

SimpliCD Investments

Not feeling the liquidity crunch? Fantastic! It's a great opportunity to consider becoming a SimpliCD investor yourself. Why let the extra liquidity sit idle when it can work harder in a high-yielding certificate of deposit portfolio? Plus, you will enjoy access to both common DTC rates and exclusive SimpliCD rates, all without any safekeeping fees - so what you see is truly what you earn.