The RATE tool is available to NCUA examiners through NSPM Tools, and formalizes the quarterly risk trending and surveillance review process where examiners analyze FPR, risk reports, and Call Report data. The RATE dashboard aggregates information from the most recent FPR, risk reports, key ratios, and most recent contact, including the scope module final risk assessments, and CAMELS codes. The information in the RATE tool can help examiners develop an exam scope and identify red flags in a credit union’s operations or financial position.
Examiners are required to complete the RATE review each quarter. (See District Management>Call Report, Trending Analysis, and RATE>exam staff Responsibilities in the NSPM.) As part of this review, examiners should focus on any red flags on the risk report or emerging risk areas. Examiners will comment on any changes in risk and document any resulting changes in supervision plans in the appropriate comment fields in the RATE dashboard. Examiners may also identify the need to add an SME at the next contact based on their observations.
An important component of the RATE dashboard is the risk report section, which lists various risk thresholds and identifies potential areas of risk or regulatory violations. When a risk is identified in the risk report section, examiners should review the relevant risk report by clicking on the current quarter or previous year to determine what triggered the threshold. (See Risk Reports for more information.)
Typical items reviewed during the RATE process include:
- FPR and Call Report data
- Credit Union Profile
- Previous exam reports
- Risk report triggers
- Fraud indicator score
- Current supervision plans
- Annual audit, if review of the Profile reveals an audit was completed recently (See Audits, Recordkeeping, and Fraud > Audit Report Review in the NSPM for audit review requirements.)
- Any applicable outstanding administrative actions, such as LUAs or Cease & Desist orders
- Management reports, such as high-risk pipeline reports
The NSPM requires examiners to include comments about significant changes in risk and/or changes in supervision plans. At a minimum, an examiner’s RATE comments should address the following:
- What specific items did you review, and what did you notice? Examples may include:
- Risk report triggers
- Unusual and/or concerning financial trends
- New products or services
- Key management changes
- Increases in the fraud indicator score
- Material exam concerns
- What is your conclusion?
- Discuss risk report triggers and whether or not they represent a material concern
- Discuss the anticipated direction of the credit union’s risk (increasing, decreasing, or unchanged)
Examiners should immediately notify their SE by email, phone, or other method outside of the RATE tool if they identify are any critical changes in risk during the RATE review that necessitate changes to supervision plans.
Last updated December 18, 2017
