Search: "interest rate risk"

Excerpt: Silo Risk Management Needs To Stop

Many credit unions are beefing up their risk management process.  However, a critical component of the risk management process that is missing for many is evaluating and managing risk in aggregate. According to conventional wisdom, risk is quantified and managed in silos—including interest rate risk (IRR), credit risk, concentration risk, etc.  External forces no longer […]

Auto Lending: The Concerning Slow Decline

Traditionally, auto loans have been the “bread and butter” of credit union loan portfolios.  However, 1st mortgages have claimed that honor with short- and long-term trends showing continued declines in auto loans as a percent of total loans for the credit union industry’s balance sheet.  Auto loans have been consistently decreasing from roughly 40% of […]

Some Examiner Requests Conflict With Written Guidance – Make Sure to Get Clarity of Reasoning

We are curious as to why some examiners are requesting that credit unions establish risk limits based on 12-month net income simulations. This request is interesting in light of what was outlined in the Interagency Advisory on Interest Rate Risk Management.  The guidance states:  “When using earnings simulation models, IRR exposures are best projected over […]

U.S. Debt Downgrade?

Six days before the deadline to raise the national debt limit, 30 of 53 economists surveyed by Reuters news service believed the United States will lose its AAA debt rating in the near future.  Some would argue that kind of action is overdue with the national debt standing at about $14.5 trillion and growing.  However, […]

NEV And Net Worth Are Not The Same

Reminder: While net economic value (NEV) and net worth represent two completely different concepts, they are often used incorrectly as interchangeable terms.  Even NCUA sometimes adds to the confusion.  In the April 2011 NCUA Report¹, an article on rising interest rate risk gives an example of a credit union with $5.5M in long-term, fixed-rate mortgages […]

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