c. myblog

January 26, 2017

Interest Rate Risk Management: Timing of Earnings Matters

Would it surprise you that some interest rate risk mitigation strategies actually add risk for a period of time?  In the end, these strategies may be effective at mitigating interest rate risk but it may take years for the effectiveness to be felt.  The challenge is that many methods used to test mitigation options, like […]

January 5, 2017

Some Things to Consider About a Rising Rate Environment

The Federal Reserve increased the federal funds target rate to a range of 50-75 bps at its mid-December meeting.  In its forecast (the “dot plot” shown below), the Fed indicates further tightening in 2017. While credit unions have certainly lived through rising rate environments in the past, few have managed a credit union through a […]

November 3, 2016

6 Dos and Don’ts of the NCUA’s NEV Supervisory Test

Consider the following as you implement the NCUA’s NEV Supervisory Test: DO make sure to understand your answers by running NEV with the non-maturity deposit caps the test uses (currently 1% and 4%) before NCUA comes into your credit union. DON’T forget why NCUA decided to standardize. One of many reasons is that there is […]

October 20, 2016

c. notes – Evaluating Risk/Return Trade-offs When Margins Are Razor Thin

It is no secret that decisions today are more complex and far-reaching than ever before, and margins are razor thin. Traditional and non-traditional competitors on the battlefield keep multiplying and plotting to get more of consumers’ business, all while credit unions have to throw resources toward protecting their flank from attacks such as the CFPB, […]

October 14, 2016

The Importance of Isolating Variables within Stress Tests

Stress testing is an important function of long-term interest rate risk modeling and risk management processes. As with any long-term interest rate modeling, stress testing requires both skill as well as an ability to fully understand and determine which assumptions influence the outputs and which assumptions are driving the results of the stress test. During […]

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