Supervisory Focus for 2013

NCUA issued a letter to federally-insured credit unions regarding its supervisory focus for 2013.

In the letter, NCUA wrote that examiners will evaluate credit union’s capacity to manage risk in the following two areas -- operational risk and balance sheet management.

According to the letter, "[o]perational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events." The two areas that it will focus on are technology and internal controls.

With regard to balance sheet management, NCUA examiners will focus on three areas -- interest rate and liquidity risk, concentration risk, and less established products. In the case of less established products, NCUA examiners are going to verify whether credit unions have "the appropriate expertise and risk-mitigation controls over such products with which credit unions have historically had limited experience."

In addition , NCUA stated that it plans to issue a supervisory letter this year to address the process and expectations for member business loan rule waiver requests, in particular waivers for personal guarantees and blanket waivers versus individual loan waivers.

NCUA will also provide guidance for alternative standards replacing credit ratings when assessing the creditworthiness of securities.

Credit unions should expect additional information related to troubled debt restructurings.

Read the letter.