WASHINGTON—NCUA’s revised supervisory approach to interest rate risk becomes effective Jan. 1, and the agency recently released guidance and resources to assist credit unions in preparing for the change via a Letter to Credit Unions (16-CU-08).
CUNA reported that key changes include:
- A newly developed Interest Rate Risk Review Procedures workbook;
- Updated tolerance thresholds (low, moderate, high, and extreme) in the Net Economic Value Supervisory Test;
- A new tool that generates an estimated net economic value for credit unions with total assets of $50 million or less; and
- A revised interest rate risk chapter in NCUA’s Examiner’s Guide.
The following resources released with the letter include:
- IRR Review Procedures Workbook;
- Guide to Using NCUA’s Interest Rate Risk Exam Procedures Workbook;
- Revised Examiner’s Guide; and
- Fact Sheet: Revised Interest Rate Risk Supervision
“A key component of the revised examination and supervision process is an overhaul of the examination platform (AIRES questionnaires). The new interest rate risk workbook highlighted in the letter offers a peek at what the templates look like—at least for interest rate risk—as the agency revises its approach to supervision,” CUNA reported.
NCUA noted that the Examiner’s Guide has been updated, but only for the following review areas: Interest Rate Risk, Fidelity Bond Coverage, Risk-Focused Examination Program and Total Analysis Process. “Until content for other review areas is finalized, existing supervisory guidance (available on NCUA's public website) remains in effect,” NCUA stated.