“Wait…What? My balance sheet structure really hasn’t changed in the last few months, yet the National Credit Union Administration’s net economic value supervisory test now shows that we went from low/moderate risk to high risk, teetering on extreme. Why is there such a dramatic shift in results?”
This is an example of recent conversations we’ve had with credit union CFOs and CEOs. We are seeing this on a larger scale as well. Our first glance at asset/liability management results for March balance sheets shows that on average the current NEV ratio (using NCUA deposit values) has declined roughly 1.6%, and the resulting NEV ratio in a shocked +300 scenario is roughly 1.85% lower. These results will change as more balance sheets come in.
Meanwhile, all the credit unions in this data set made money in the first quarter, adding to their dollars of net worth.
Our recommendation to them is dig in right now and start messaging with other key stakeholders about why there is such a dramatic difference in results.
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