SCOTTSDALE, Ariz.--Bill McGuire has some advice for credit unions looking to assess the potential volatility of their deposit base.
"The share certificates are going to move where the highest money is," said McGuire, president of McGuire Performance Solutions. "You are just renting that money, so you can take that off the table. But MMDAs are something to be concerned about," McGuire said. "The only money that will stick by you for sure is money driven by service, convenience, or product such as share drafts.
"McGuire advised CUs to examine the long-term pattern of supply in their shares, before the Lehman Brothers crash when regular shares were not growing much. "Then, after the crash, regular shares started taking off. Anything that came in late 2008 above the prior trend growth, I would be worried that money might be parking and those funds should be identified.
"Still, if deposits begin to flow out, McGuire noted credit unions can avoid a liquidity crisis by paying up. "I can get all the money I want if I pay. But then you face an earnings crisis.