November 2022

A Note from Chris

Thank you to those who participated in our annual Economic Outlook Conference. I hope you found the presenters and topics relevant and helpful in your planning efforts for the new year. I am thankful to our expert presenters for their time, insights, and advice. I am also thankful for the networking aspect we were able to add back into this year’s conference. The time we spend together, in-person, having discussions and sharing ideas is invaluable!

Providing our members with educational opportunities and easy access to industry expertise is a high priority at Corporate Central. As we plan for 2023, please provide us with your recommendations on educational topics and your credit union’s specific needs. We strive to provide quality educational offerings surrounding relevant topics and aim to deliver engaging events. We have a diverse group of credit union experts here at Corporate Central and can deliver presentations based on a variety of topics. For a full listing of topics, view our Speakers Guide.

Sincerely,

Chris Felton
President/CEO

What’s Trending?

Expanded 2021 Statistical Report features several new categories of data.
Despite year-to-year growth in overall membership and total assets for the global credit union movement, World Council of Credit Unions’ (WOCCU) 2021 Statistical Report shows major gaps in key product and service offerings have resulted in different priorities and risk concerns for credit unions in different parts of the world.

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Technology Solutions

Train your members to be cyber smart.
Nearly half (46%) of U.S. financial customers who took part in a FICO study claim to have been victims of fraud and “nearly one in five (19%) have suffered account takeover fraud scams.” Think|Stack Director of Cybersecurity, Michael Seidelman, CCISO, CISSP, shares ways credit unions can train members to mitigate risk in this latest article published by CUInsight.com.

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Employee Benefit Resources

Small credit unions can now offer employee benefits.
Competitive health plans are finally available for you and your employees! Small credit unions and their employees continue to pay more for health insurance while the carriers continue to make big profits. Big insurance brokers struggle to scale down and deliver competitive products for small credit unions. Small insurance brokers often deliver un-tailored products that don’t fit the needs of small employers.

InterLutions, a CUSO specializing in employee benefits, recently launched a solution to broker competitive medical plans for small credit unions. After thorough evaluation with our credit union advisory council, along with a detailed healthcare feasibility study, InterLutions truly understands the challenges small credit unions face with rising medical insurance costs and has developed customized solutions to help.

The customized solutions available for credit unions include:

• Flexibility with several plan designs and options at competitive rates
• Access to a nationwide network of doctors and pharmacies
• Unlimited major medical coverage for groups with 1 to 25 employees
• An experienced, trusted team specializing in credit union health insurance

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Financial Services Consulting

Are you keeping pace with the anticipated rates in your model?
It is hard to believe that ten months have already peeled off the calendar this year. It’s harder to believe how much has changed in that short time span. It was in January 2022 when the Federal Reserve Open Market Committee voted nine to nil to maintain their Fed Funds target at zero to 0.25%. On November 2 that committee is expected to raise that target by 75 basis points for the fourth consecutive meeting bringing it to 4.00-4.25%. In the words of Ron Burgundy, “that escalated quickly.”

In that ten-month time frame, we have witnessed the yield curve shifting shape as rates climbed. One-year treasuries have jumped 410 basis points to 4.48%, five years from 1.26% to 4.10%, and the ten year from 1.51% to 3.95%. So as shorter rates climbed in sync with the Fed’s fed fund rate hikes, the longer maturities climbed but to a lesser extent creating an inverse yield curve. The inverted yield curve is a show of optimism that the Fed will be successful bringing down inflation by mid-2023 and anticipation that they will shift into an accommodative role at that point. This explains why buyers of the intermediate section of the yield curve are willing to accept lower yields than the two and three year are paying.

We will have to wait and see how this plays out. In the meantime, we need to look at another consequence of the Fed’s historic tightening program. It doesn’t take a rocket scientist to observe that there has been a dramatic shift in liquidity. This time last year, we all remained flooded with cash. Now, that excess liquidity has faded.

If Joey Tribbiani was in the room, we know what he would ask – “How you doin’?” The economic back drop we are experiencing is different than most for a rising rate environment. Normally, we expect that the Fed is pushing rates higher to slow down an overheated economy. This generally translates to heavy loan demand and increased margins. In this case, the Fed is hitting the brakes to slow down economic growth, but chiefly to squash demand to rein in inflation. Loan demand has not been strong, so margins have not benefited as much.

The large rate spike provides a good environment to back test your ALM model assumptions. Where do your rates sit, both deposit and loan rates, compared to the model’s forecast in an up 300 rate scenario? We pointed out several months ago that many credit unions had been slow to raise auto loan rates. Earlier this month we continued to see many posting rates on auto loans below the offered side of the treasury market. Are you keeping pace with the anticipated rates in your model? If not, your margins and profitability could provide an unpleasant surprise.

One of our goals at QuantyPhi is to help you avoid surprises. Our analytics began pointing to US treasuries over alternatives in March of 2021 and suggested keeping risk dialed down versus the benchmarks early this year when the risk adjusted yield curve showed no incentive to add risk. The analytics that have aimed toward investment options can be turned around to look at the best funding structures for your balance sheet as well. Need some help on this front? Call us. We are your corporate and are here to help.

Contact Us

Did You Know?

Corporate Central has officially launched Beastro!
On Tuesday, October 11, Corporate Central officially launched a newly built and designed member platform called Beastro. Corporate Central built the new corporate credit union platform in-house with many features and functions designed to improve digital financial services and online operations experience with enhanced security, business intelligence, and open API architecture – making the possibilities for integrations, robotic learning, and AI features endless.

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Credit Unions Connect

Stories that exemplify the movement

Building up the community.

Marine Credit Union volunteered with Habitat for Humanity La Crosse Area to restore an old home for a new, deserving family. Over the course of two days, 38 employees volunteered to remodel the home. The team had both new and veteran volunteers who all said they enjoyed the experience and would do it again.

Spreading credit union kindness.

Gas & Electric Credit Union celebrated CU Kind Day, an initiative led by the Illinois Credit Union League, to give back to the communities they serve. On October 10, the credit union took a day of service and staff members volunteered at Quad City Animal Welfare Center, Quad City Botanical Center, River Bend Food Bank, and Rock Island Parks and Recreation. The credit union stated, “We are happy to participate and look forward to it each year!”

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What’s New and Who’s Who

Michele Randall has earned her Accredited ACH Professional Designation
We are very proud to announce that Michele Randall, Member Services Representative, has passed the Accredited ACH Professional (AAP) exam. According to NACHA — The Electronic Payments Association, “An AAP is an individual who has a comprehensive knowledge of all areas of ACH, a deep understanding of, and experience in, one or more specific ACH subjects, and a broad knowledge of concepts that relate to the payments system as a whole.” With her expanded expertise, Michele can help members develop a deeper understanding of ACH processes, and work to strengthen members’ comfort levels with the evolving and challenging ACH world. Congratulations, Michele!

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Learn More About Our Team