With today's high deposit balances, it may not be as important as it is during cycles of tighter liquidity, but tiering may nonetheless cost your credit union critical basis points. Be sure you are receiving a competitive return on your overnight funds–no matter what your balance. As with some other corporates, First Carolina, pays competitive rates on its overnight accounts with no tiering, allowing credit unions of all asset sizes and available balances to take advantage of these options. We also offer some very flexible short-term accounts, which have become the most popular location for our members to store their short-term liquidity. These types of accounts pay even higher rates with no balance minimums, so credit unions can take advantage and maximize earnings on their liquid funds. If you find your credit union isn't earning a competitive rate on excess liquidity, check out your corporate or another source that either pays a competitive rate without tiering or provides other options to ensure you can maximize your overnight earnings. Look at your term investments.

It's also vital to review your credit union's term investments to make sure they are maximizing yield. Some credit unions like to diversify term investments into agency securities. However, the basis points sacrificed compared with similar corporate investments have become even greater in recent years. Most corporate credit unions now have an expanded selection of various structured offerings, currently offering eight to 10 callables at one time, so your credit union can choose from an array of structures that best fit your ALM needs. More importantly, most corporate structures have yields that are consistently above the comparable agency callables. With this variety and basis-point spread, along with being priced at par and having no safekeeping requirements, the agency market can't compete, making it harder to justify going elsewhere with your investable funds.

Look at your broker.

For those credit unions that decide to purchase marketable securities for diversification issues, now is also a good time to review your broker and/or purchasing procedures. One way credit unions often leave money on the table is by not getting a second quote on a bond they are buying from their primary broker. It's ironic. Most consumers comparison-shop various retailers to find the best price before purchasing a major item for themselves; but when it comes to making a purchase to add to their credit union's investment portfolio, some managers take the first price given to them. If you're buying a secondary piece, getting a second quote not only ensures you're paying a fair price for the bond, but it allows you to "bid back" the initial broker to possibly get an even better price than you were quoted originally. You might be amazed at how much markup there is built into some of these pieces, and going through this process ensures your credit union will get the best price for the bond.

Look at your corporate.

As "credit unions for credit unions," corporates have a high stake in seeing their members succeed. Most corporates have the ability to provide brokerage services and thus can provide you with a fair price on any marketable security you may be looking to buy. If needed, your corporate can also review the structure of the bond to ensure it is an appropriate fit in your overall investment strategy. You want to ensure your credit union is getting the best overall deal–not only on your overnight funds and term investments, but also on your capital investments made at your corporate. Make sure your credit union is getting the best rates on all of your accounts. Whether you choose your corporate or another source, make sure you use a provider that you can rely on to assist your credit union in developing a sound investment strategy–one that allows you to properly prepare for future needs while maximizing earnings at the same time. It may be even more important today, as the cycle shifts in favor of higher liquidity.