Search: "credit risk"

Net Interest Margin and Risk Limits

A/LM measurement systems, policies and defined risk limits are intended to help ensure that credit unions do not take unacceptable risks relative to their insurance—which is net worth. While this sounds straightforward, much depends on the measurement system and policies in place. Consider the example of a credit union that uses net interest income (NII) to […]

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 […]

Planning For PLL

Given the economic experience of the past couple of years, many credit unions were forced to beef up their loan loss reserves.  Now, as things appear to be getting better, we are seeing that some credit unions feel they are “overfunded” and are not adding to their reserves.  While this may provide some temporary relief […]

Does Your NEV Analysis Really Capture Fair Value Of Assets?

If your credit union runs a Net Economic Value (NEV) analysis as part of the A/LM process, how do you determine the credit union’s loan discount rate assumptions? Sometimes we hear credit unions say that their current loan offering rates are used as the discount rates in their NEV models.  We do not believe this […]

Are Your Second Mortgages Secured?

As we discussed in our April post, Bankruptcies on the Rise and the Evolving U.S. Debt Burden, bankruptcies have been rising at an alarming rate this year. The trend is likely to continue—it will be interesting to note how the situation evolves (since 1st quarter) when the U.S. Judiciary releases second quarter figures in the […]

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