c. myblog

April 29, 2011

Caution: NCUA’s Proposed Regulation On IRR Could Have Unintended Consequences

You think you are already doing everything required in the proposed Regulation.  You think your policy limits are appropriate for your strategy and business model—but will the examiner making the judgment as to whether your credit union is in compliance think the same? NCUA’s proposed shift from Advisory to Regulation is concerning. It raises several […]

April 26, 2011

Proposed Interest Rate Risk Regulation

Newly proposed regulations would require federally insured credit unions to not only have an effective interest rate risk management program, but also a written policy addressing interest rate risk management.  The NCUA has taken this step due to concerns about the level of interest rate risk being taken by many institutions, as material concentrations in […]

April 19, 2011

NEV Shares At Par

Q: Does assuming NEV non-maturity deposits at par isolate changes in balance sheet structure? A: No. Some people think that valuing non-maturity deposits at par is more conservative and isolates changes in balance sheet structure simulation to simulation.  This is not the case.  NEV with non-maturity deposits at par shows exactly the same result whether […]

April 7, 2011

Static Income Simulation – Things To Consider

One of the traditional approaches to income simulation is to use a static balance sheet, which assumes that a credit union’s mix of assets and liabilities remains constant, regardless of external forces.  In other words, static analysis assumes that every dollar of mortgages that matures is immediately put back into a new mortgage at the […]

March 31, 2011

Lower Earnings Or Increased Interest Rate Risk?

If there is one thing to be said infallibly about risk management, it is never black and white.  The historically-low rate environment coupled with mostly-anemic consumer loan demand has put increased pressure on credit union margins across the nation; moreover, many are reaching their floor with regard to lowering deposit rates.  In light of the […]

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