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Fed completes exit strategy, market begins to contemplate higher rates, Corporate One helps members raise liquidity

By: Bob Post, VP, Chief Investment Officer

Bob PostJanuary 14, 2015 -- The economic backdrop improved throughout much of 2014, led by better employment and manufacturing data, driving GDP to rebound from a weak first quarter. In October 2014, the Fed completed and exited their bond buying program as expected. Interestingly, as the Fed tapering played out this year, the Treasury yield curve flattened. Two-year Treasury yields began the year at .38% and have risen to .62% by mid-December, while ten-year Treasury rates began the year at 3.03% and have dropped to 2.20% by mid-December. Much attention now turns to the Fed and the language they are using as they communicate to the markets. Market expectations of rate hikes will likely be the focus for most of 2015.

Understanding how the economy impacted credit unions, growth of SimpliCD

So how did these economic conditions impact credit unions and their investment and liquidity needs in 2014? One big impact was how many credit unions turned to the SimpliCD brokered CD solution. Overall CD rates offered by banks and credit unions in this program surpassed other fixed-rate investment options utilized in one-to-five-year investment terms. This resulted in the addition of 34 new SimpliCD relationships for Corporate One.

As many of you know, SimpliCD provides credit unions with a turnkey solution to achieving better returns. Additionally, this program offers a unique way to help credit unions raise liquidity by offering non-member deposits to the network of SimpliCD investors. This gives credit unions another avenue to raise liquidity to help them meet their members’ needs and help manage the credit union's balance sheet. During 2014, we added 13 new credit union issuers to the marketplace and to date have raised approximately $143 million in liquidity for our member users.

Offering educational, empowering learning opportunities

SimpliCD is certainly a great option for credit unions in a rate environment like the one we’ve had. In addition to SimpliCD, Corporate One offers a host of other investment options. During the year, we also provided various educational opportunities, such as our Investments 101 Boot Camps and Lunch & Learn sessions, where credit unions could learn more about investing and/or liquidity options, empowering them to make decisions that impact their credit union. During our Lunch & Learn sessions we provided members a financial update on Corporate One, keeping them informed of various financial performance metrics achieved during the year.

From everyone here in the Investment Department, we wish you all a safe and happy holiday and look forward to continuing to serve your needs in 2015.

Bob Post can be reached at bpost@corporateone.coop or at 866/MyCorp1, ext. 9302.