A liquidity coverage ratio is a bank industry measurement assessing the adequacy of short-term liquidity of large banks under runoff stress scenarios over a 30-day period. Credit unions as a rule are not subject to LCR, but benchmarking to banking standards can be a prudent way to measure financial stability.
According to an independent study by consulting firm CliftonLarsonAllen, the LCR for the $29.1 billion State Employees' Credit Union based in Raleigh, N.C., is 20 times the minimum banking requirement. The study, which also measured SECU's risk-based net worth, is another in an ongoing series of independent evaluations the credit union is undertaking in preparation for revised NCUA capital requirements and stress tests for larger credit unions slated for February 2015.
"Based on my review, the methodology applied by SECU in determining their LCR ratios under base and stressed scenarios is in compliance with the guidance provided by the bank regulators," Bryan W. Mogensen, assurance principal for CliftonLarsonAllen said.
The NCUA's current RBNW capital calculation is a part of the quarterly call report and is automatically determined from individual credit union financial data. Following reviews by the NCUA and the North Carolina Credit Union Division for Accuracy, the consultant also examined SECU's call report data for a 24-month period to determine the credit union's RBNW.
An RBNW of less than 6% is the preferred ratio, and anything over that amount signifies a credit union with a complex balance sheet. CliftonLarsonAllen's review of the 24-month SECU call report data showed the credit union had an RBNW ratio of 3.98% in October 2014, compared to 3.82% in October 2013 and 4.86% in October 2012.
"SECU is pleased that CliftonLarsonAllen's review results concurred with SECU management findings relative to LCR and RBNW, providing the credit union's member-owners with assurance of the positive financial position and strength of their cooperative," SECU CFO Mike Lord said.
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