Consider the following as you implement the NCUA’s NEV Supervisory Test:
DO make sure to understand your answers by running NEV with the non-maturity deposit caps the test uses (currently 1% and 4%) before NCUA comes into your credit union.
DON’T forget why NCUA decided to standardize. One of many reasons is that there is “a significant amount of uncertainty surrounding valuation methods” for non-maturity deposits. If you are going to continue to use results of core deposit studies to determine non-maturity deposit values, it will be critical for your board and management to be absolutely clear on how these results will be used, if at all, in decision-making. For example, when testing what-ifs, which assumptions set will drive decisions if one set gives the green light and the other the red light?continue reading »