Updated: Jun 10, 2019
Defense Wins Championships
Legendary football coach Paul “Bear” Bryant famously quipped, “Offense sells tickets. Defense wins championships.” Bryant’s axiom has been advocated widely in sports media, and debated fiercely in sports bars across the land.
The thinking is that while offense may be flashy and exciting, solid defensive play – more steady and predictable – forms the foundation of successful teams. This week’s NCAA Men’s Basketball Championship offered the most recent example of the wisdom in Bryant’s statement – with Tony Bennett’s Virginia Cavaliers, the nation’s top defense, squeaking out an OT win over the third ranked defense of Texas Tech.
In credit union land, the flashy offensive side is dedicated to growing members and making loans. Less fanfare surrounds the grinding work of ensuring that the institution is properly capitalized and has the appropriate liquidity alternatives to withstand any number of eventualities and scenarios.
In our most recent whitepaper, Olden Lane examines liquidity risk management and contingency planning. In our experience, the best funding teams employ non-member or “wholesale” funding sources, including both FHLB advances and brokered deposits as a method to diversify funding and liquidity sources. Our whitepaper examines brokered share certificates, non-member funding programs and Federal Home Loan Bank advances in some depth before suggesting that:
“Sound liquidity management requires that a credit union avoid funding source concentration, especially in the current environment of elevated liquidity pressure across the industry.”
If defense does, in fact, win championships, we only hope you play like a champion today.
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