RALEIGH, N.C. — With NCUA mandating last year that all federally insured CUs with assets of $10 billion or more begin "stress tests" this year, State Employees' CU (SECU) here has published results of its own internal stress testing.
SECU used Federal Reserve Bank stress test macro-economic model assumptions from September 2014 as a guide in its stress testing, the same scenarios used by the largest U.S. banks and NCUA. Under these variables, capital must remain above 5% over a nine-quarter projection, even under the "severely adverse" scenario.
Moody's Analytics also created six unique credit loss models for SECU, and the results of all tests showed that the credit union is strongly capitalized and can withstand even a "severely adverse" environment.
"Results of applying large bank 'stress tests' to SECU balance sheets reflect that our Credit Union's capital levels currently exceed the capital requirements imposed on large banks," SECU CFO Mike Lord said in a statement. "The voluntary publication of our internal stress test results provides assurance to the member-owners of SECU of our ability to withstand severe economic conditions similar to those experienced in our country over the past 5+ years."
Lord added that the CU has also conducted capital comparisons using FDIC and BASEL standards applied to U.S. banks, showing that the credit union already exceeds proposed capital requirements it must meet by 2019.
"A strong capital and liquidity foundation are key elements of a safe and sound financial institution," he said. "We are pleased with our positive results in these new capital/stress test exercises."