RALEIGH, N.C. – North Carolina State Employees’ Credit Union reported it has completed its internal 2014 financial stress testing using Federal Reserve-based protocols and economic scenarios, with positive results in all scenarios.
This adverse economic scenario testing completes SECU’s 2014 validation cycle of risk and capital management practices to assure safety and soundness.
The Comprehensive Capital Analysis and Review (CCAR) is an annual exercise required by the Federal Reserve to ensure that larger financial institutions have “robust,” forward-looking capital planning processes that account for their unique risks. Dodd Frank Annual Stress Testing (DFAST) is an analytical tool designed to evaluate whether a financial institution is holding sufficient capital to survive adverse economic events which may arise. The Dodd-Frank Act requires larger financial institutions with more than $10 billion in assets to conduct these annual stress tests.
In past years, SECU said it has been using the Federal Reserve Bank stress requirements as a guide to measure the effects of challenging environments on credit union capital. SECU has also historically benchmarked its balance sheet to FDIC and BASEL capital standards to measure capital and risk comparability with FDIC insured banking institutions.
In anticipation of the new credit union stress testing requirements in 2015, State Employees’ enlisted the national financial consultancy Promontory Financial Group to help design an updated capital plan to provide a firm base for future capital planning and risk management at the Credit Union. Additionally, KPMG, was brought in to conduct formal analyses of SECU’s capital and risk measurements under a variety (BASEL I, BASEL III, FDIC and NCUA RBNW) of alternative financial requirements. KPMG separately evaluated and confirmed the stability of SECU deposits as a long-lived, reliable source of funding, SECU said.
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