An important first step in assessing a credit union’s liquidity is identifying the credit union’s current liquidity level.
Prerequisites
Review the items requested list that the EIC sent to the credit union for a list of liquidity-related documents that were requested.
People to Interview
People typically are not interviewed during the initial assessment unless examiners determine they have not been provided adequate material to complete their assessment of liquidity. In that instance, the examiner may request information from the following credit union personnel:
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President/Manager
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Chief Financial Officer
Documents to Review
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Review the credit union’s liquidity ratios found in the FPR. Ratios that are significantly different from peers may indicate that a credit union has either too little or too much liquidity.
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Access RADAR, NCUA’s offsite application dashboard, to observe trends in key ALM related ratios over time. The RADAR Dashboard Guide includes links to access the site and detailed information on navigating the RADAR application.
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Review documentation requested from the credit union, which may include, but is not limited to:
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cash flow projections, backtesting of projections, and related stress tests
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FHLB, corporate credit union, and FRB statements showing credit lines (used and available), securities holdings, and pledged collateral reports
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ALCO minutes and packets
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external borrowing statements and agreements
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budget forecasts
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unfunded commitments report
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non-member deposits report
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summary of whole loans or participations purchased or sold since the preceding examination review period
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proof of testing of federal and contingency funding sources and
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any internal or external audit reports of ALM processes and procedures and management’s responses
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Questions to Consider
Are the provided documents sufficient to assess the level and nature of the credit union’s liquidity risk?
Last Updated on August 30, 2021
