QuantyPhi Quarterly | September 2024
A Message from the President
As we navigate the current economic and regulatory environments, our commitment to the credit union philosophy of “people helping people” remains steadfast. At QuantyPhi, we are dedicated to serving our members by providing the tools and expertise needed to optimize your balance sheets and effectively measure and monitor balance sheet risks. We understand the importance of staying compliant while maximizing financial performance. Our goal is to empower you with the knowledge, resources, and tools to make informed financial decisions that benefit your credit union and your members.
QuantyPhi offers a comprehensive suite of products and services designed to enhance your financial strategies and improve your balance sheet risk management techniques. From ALM validations, liquidity framework reviews, and non-maturity deposit studies to capital market investment products and balance sheet optimization strategies, our team is here to support you every step of the way. We are proud to offer innovative solutions tailored to meet the unique needs of each credit union, ensuring you can thrive in any economic climate. Our commitment to regulatory compliance ensures that your credit union remains resilient and well-positioned for future growth. Thank you for your continued trust and partnership.
Warm regards,
Adam Stone
President of QuantyPhi
Market Update
QuantyPhi is here to help you shore up your ALM strategy so you can weather any shifts in the market.
By: Danny McIntyre, Vice President Investment Services
All signs are pointing to the Fed’s long-awaited pivot arriving this month. Market pricing currently reflects confidence that the Fed will shift into an accommodative mode starting with a 25-basis point rate cut at their September 18 meeting. The yield curve echoes this sentiment while implying we will see a transformation from its current inverted slope into a positive slope in the next twelve months.
With the possibility of a major market shift and a “flip” of the yield curve, do you know how your balance sheet would be affected? To be able to effectively navigate your way through these waters it is critical to ensure that your ALM model is running on all cylinders. QuantyPhi can help look under the hood to recalibrate your model to give you confidence in your model’s results.
ALM Validation
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.
Non-Maturity Deposit Analysis
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. Given the volatile nature of deposit flows post COVID, it is a good idea to revisit your Non-Maturity Deposit analytics to recalibrate your models’ assumptions.
Benchmarking
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.
Current market conditions represent an ideal time to establish your benchmark. Once established, QuantyPhi will continue to crunch the numbers to measure where you are and identify optimal securities to optimize portfolio, as well as holdings that no longer are adding to your balance sheet performance.
Our mission at QuantyPhi mirrors that of Corporate Central – build the expertise and resources to help you succeed. Our state-of-the-art technology and in-house expertise are here for you. Who you use for financial services matters. Partner with someone you know always has your best interest in mind.
Contact QuantyPhi to learn more about how we can help you optimize your ALM strategy.
Market Update and Security Offerings Email
This weekly communication will provide an update on key market rates, as well as provide indicated offering levels for Treasuries, Agencies, Mortgage-Backed Securities, and select other investment types available through Corporate Central’s Broker/Dealer program. It will include robust fundamental analysis and total return analytics to help credit union members identify characteristics in the market sectors that meet their needs.
Financial Reads
Are you looking for some good reading that might help you at work too?
Thinking, Fast and Slow
Why do rational human beings often make irrational decisions? Author and Nobel Prize winner Daniel Kahneman explores the psychology of thinking and how our thinking irrationally disrupts the rational science of economics. Kahneman reveals the two types of thought and how we can focus on the rational when we are inclined to rely on the reactive. He also reminds us that what we see is not all there is.
Misbehaving: The Making of Behavioral Economics
Nobel Prize winner Richard Thaler reveals how the science of behavioral economics developed over years; extending pioneering work by Kahneman and Tversky through his work at University of Chicago. This book can help readers think like an economist and understand why most people simply don’t think that way, despite what traditional economic models presume.
Getting to Know Your CUSO Team
Meet Danny McIntyre, our seasoned VP Investment Services with a wealth of experience and a heart for the credit union movement.
With over 40 years in the industry, Danny’s journey began in the vibrant city of New Orleans, LA, where he cut his teeth trading fixed income for regional banks and a small brokerage firm. His career took him to Dallas, TX, in 1987, where he made his mark by establishing and managing a taxable trading desk for a regional brokerage firm.
In 2003, Danny found his true calling when he began working for a corporate credit union. It was here that he “discovered” a passion for the credit union movement, dedicating the past 21 years to helping credit unions optimize their investment portfolios and support lending operations. Danny is also a strong advocate for education, dedicating much of his time to training credit union professionals and volunteers to enhance efficiency and service.
Danny's academic background includes studies in business at Loyola University, Delgado College, and Tulane University in New Orleans, and he holds Series 7 and 63 licenses. But if you ask Danny about his greatest accomplishments, he’ll likely tell you it’s convincing his wife, Diana, to marry him 37 years ago, raising their son Chase, and witnessing the New Orleans Saints’ unforgettable Super Bowl win in 2009 (although he humbly admits he didn’t have much to do with that one).
Connect with Danny on LinkedIn.
Events
Investments 201 | Webinar Series
Join us for the Investments 201 Webinar Series, a monthly deep dive into the world of balance sheet and investment portfolio management. Webinars will be held on the third Thursday of each month at 2:00 p.m. CT for 45-minutes. These sessions will be tailored for managers seeking valuable insights to optimize their investment strategies.
Session highlights:
- Market sentiment analysis: get a comprehensive overview of the current market sentiment. Our strategists will analyze key factors influencing the financial landscape, providing you with valuable insights into market trends.
- Implied interest rate paths: understand the implied interest rate paths and their impact on your investment decisions. We will delve into the factors shaping interest rates, helping you stay ahead of market dynamics.
- Spotlight on investment products: each month we will shine a spotlight on specific investment products that hold significant value in the current market. Explore opportunities and gain a deeper understanding of products that align with your portfolio.
- Portfolio management strategies: navigate the complexities of portfolio management with our expert guidance. Discover effective strategies to optimize your investment portfolio, ensuring a balanced and resilient approach.
2024 Economic Outlook Conference
Thursday, September 12, 2024
Corporate Central's Economic Outlook Conference will be held on Thursday, September 12. The event will take place at The Ingleside Hotel in Pewaukee, WI. QuantyPhi is a proud sponsor of the Economic Outlook Conference. Attendees will learn valuable information about the current and upcoming economic environment from a diverse speaker lineup that will assist with your 2025 planning efforts. Corporate Central is pleased to offer eligible attendees the opportunity to earn CPE credits for this event.
Registration closed Friday, September 6.
Spotlight on SimpliCD
SimpliCD makes it easy to turn your excess liquidity into a high yielding certificate of deposit portfolio.
With SimpliCD, your credit union can:
- Purchase multiple CDs in a single transaction with no fees
- Eliminate the need for multiple wire transfers - Corporate Central makes the transfers for you
- Receive one consolidated interest payment to your Corporate Central account
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