Feb. 20, 2013 – NCUA Chairman Debbie Matz, noting volunteers’ critical role in their institutions’ safety and soundness, is calling on volunteer directors to be especially attuned to emerging risks, particularly interest rate risk and third-party risk.
In the “Chairman’s Corner” of The NCUA Report, Matz said the agency’s past exams for interest rate risk focused primarily on loans, but she said the most significant growth in liabilities today is in interest-sensitive deposits. She said credit unions are also still increasing their concentrations of fixed-rate real estate loans and long-term investments.
“We urge all directors to understand the interest rate risk on their books, then weigh the impact of future interest rate shocks,” she write.
Matz also notes the importance of monitoring the potential impact of third-party providers on the institution’s credit risk and reputation risk. Additionally, she points to the rise in the average age of credit union members – 47, up from 42 several years ago – and the opportunities presented by an as-yet untapped market. Some 33 percent of the U.S. population is under age 20, she notes, and the peak borrowing age is 25-44.
Challenges and opportunities for credit union directors will be discussed in detail during NAFCU’s Credit Union Board of Directors and Supervisory Committee Conference, May 15-17 in Asheville, N.C. The conference will provide training in general board and committee responsibilities, regulatory compliance, and, among other things, director financial literacy training and Bank Secrecy Act training. (Learn more about NAFCU’s certificate programs.)
A NAFCU webcast is slated March 13 on “An Inside Guide to a Credit Union’s Board of Directors.”