NCUA Issues Letter to Credit Unions on Interest Rate Risk

The National Credit Union Administration (NCUA) recently issued a Letter to Credit Unions on interest-rate risk (IRR) highlighting the Sept. 30 deadline for impacted credit unions to adopt a written IRR policy and implementation program.

Signed by NCUA Board Chairman Debbie Matz, the NCUA letter highlights that while it impacts 45 percent of credit unions, those credit unions hold 96 percent of assets. Impacted credit unions will be those exceeding $50 million is assets and those with assets between $10 million and $50 million holding first mortgage loans and investments with maturities exceeding five years totaling 100% or more of net worth at quarter end.

The letter addresses some key questions about the policy, including guidance on how the NCUA will implement the rule. The NCUA stated, “Examiners will be expected to consider the size, complexity and risk exposure of each FICU when evaluating written IRR policies and risk-management programs.” The NCUA’s goal is consistent implementation “while taking into account differences among institutions.”

While many credit unions already have IRR policies and programs that meet the new requirements in place, the Northwest Credit Union Association (NWCUA) has provided a model policy for those that do not, which can be found on the Model Policies page on InfoSight.

Read the NCUA letter to credit unions and see the exam questionnaire here.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance, NCUA.