Capital Assets Loan Market Update

Mitchell Redd
Developing a Plan for Interest Rate Risk

Managing interest rate risk (“IRR”) has become the most critical element of credit union regulatory exams. The NCUA will be paying close attention to the plans credit unions have in place for the Liquidity and Sensitivity to Market Risk elements of their review. The first step in the formation of a solid plan is identifying the loans that have the greatest embedded risk and determining which ones can be sold in the secondary market. Additionally, the utilization of available funding to add higher-yielding loans through organic origination and purchase will help enhance portfolio yield and minimize NIM compression moving forward.

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