SECU “stress testing” results positive in all scenarios!

RALEIGH, NC (December 12, 2014) — North Carolina State Employees’ Credit Union has just 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.  The National Credit Union Administration Board, earlier in 2014, determined it is equally important for federally-insured credit unions of comparable size to undergo stress testing.  Credit union stress testing will officially begin in 2015.

In past years, SECU has been using the Federal Reserve Bank stress requirements as a guide to measure the effects of challenging environments on credit union capital.  The Credit Union 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, a global accounting advisory firm 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 for the Credit Union.

SECU also used outside experts to evaluate its liquidity position – which measures the ability of an institution to meet member funding needs.  CliftonLarsonAllen, LLP (CLA), a national accounting and professional services firm, reviewed the analysis and planning by the Credit Union to meet regulatory liquidity coverage ratios and the adequacy of the allowance for loan loss calculations to accommodate potential loan losses in the lending portfolio.  CliftonLarsonAllen confirmed that SECU’s methodology and estimations “are reasonable in relation to the consolidated financial statements as a whole and are in accordance with GAAP.”

SECU Chief Financial Officer Mike Lord noted, “While SECU’s member-owners should be confident in the ability of their not-for-profit financial cooperative to withstand severe economic conditions, similar to those experienced in the Great Recession over the past five years, it is always wise for the Credit Union to also have the confirmation from outside industry experts.  We look forward to the new NCUA stress testing program in 2015.  Having benchmarked with the experience-tested Federal Reserve guidelines required of other financial institutions, our highly positive results should be an excellent signal as to the strength of State Employees’ Credit Union’s overall capital and financial position.  Credit unions, including SECU, came through the recent recession with few problems.  The credit union member-owned, cooperative model helps assure safe, sound, fair financial “best practices” under all economic scenarios.  Fair dealing for the consumer is, after all, what credit unions are all about!  That’s why we exist!!”

About SECU
A not-for-profit financial cooperative owned by its members, SECU has been providing employees of the State of North Carolina and their families with consumer financial services for 77 years.  With more than 1.9 million members, SECU provides services through 254 branch offices, 1,100 ATMs, 24/7 Contact Centers and a website,

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