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Guidance on HELOCs Nearing End-of-Draw Periods

Call it Christmas in July, because we all just received the gift of an additional ALLL consideration. On July 1, 2014 Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw Periods was released.

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Twenty Twenty Analytics Secure Server SSL encryption is NOT impacted by Heartbleed Bug

The Federal Financial Institutions Examination Council released an alert Thursday urging credit unions and banks to take steps now to mitigate the “Heartbleed” issue, which the regulators termed a “material security vulnerability” affecting Web servers using OpenSSL.

Twenty Twenty Analytics’ Secure Server, NetFirm CS does NOT utilize OpenSSL Encryption and therefore is NOT IMPACTED by the threat. NetFirm CS has addressed the issue through a press release, which can be viewed here.

At Twenty Twenty Analytics we take your data security very seriously, and will continue to monitor the impact of new threats as they present themselves.

-Dan Price, CPA, CFA
Twenty Twenty Analytics Blogger

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NCUA Supervisory Focus 2014

As the weather threatened to cancel a particularly awkward family reunion of mine, my Uncle John famously shouted out “It looks like a storm is coming! Everyone! Get under a tree!”. We all stood laughing as he sprinted away from the volleyball courts towards the tree line.

Clearly not the best advice, unless you know which tree(s) the lightning is most likely to strike. In this example, the NCUA is the lightning, and The 2014 Supervisory Focus gives detail on which trees they plan to strike. It may have been silly to follow my Uncle John to the trees, but it would be equally silly not to heed the NCUAs warning.

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Double Bubble: Understanding the Impact of a Correction in the Real Estate Market

On March 13 Twenty Twenty Analytics hosted a free webinar “Double Bubble” Understanding the Impact of a Correction in the Real Estate Market. Click here to download the webcast. Here are the cliffnotes from that presentation in regards to the Real Estate Market:
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What to Expect (Regarding ERM) When You’re Expecting (an NCUA Exam)

The NCUA recently issued Supervisory Letter 13-12 on Enterprise Risk Management (ERM). Enterprise Risk Management has been a hot topic. Usually when I’m at a conference and someone brings up ERM, the conversation goes like this:

Attendee: “I just left a session on Enterprise Risk Management. That stuff is really interesting!”

Me: “Oh cool. How does that process work?”

Attendee: “It’s not just looking at a single individual risk, it’s looking at all of the risks and how they interrelate to come to an enterprise wide assessment of risk.”

Me: “Well ya, but how do you do that?”

Attendee: “Well, it’s all of the risks…”

Me: “I get it now… Let me tell you a little about Twenty Twenty Analytics where we use data to quantify risk as opposed to practicing the dark arts.”

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Components of the ALLL – Breaking Down the Assumptions

Calculating your allowance for loan losses involves projecting future results using historical information as a baseline. Why does this seem counter intuitive to everything we’ve learned?

Anyone presenting historical information should tell you that historical data is not necessarily indicative of future results. Our best guess on future loss reserves involve adjusting that historical information to account for changes between then and now. The primary assumptions used to do this involve the level of disaggregation, the duration of historical charge offs to use and evaluating the effect of qualitative characteristics.

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How an Investment Advisor Might Approach Constructing a Loan Portfolio

If you step far enough back, a loan portfolio starts to look a whole lot like a basket of fixed income securities. However, there is a wealth of academic research and practical knowledge that is utilized in the investment industry that very rarely is carried over and applied to loan portfolio management, at least from a credit union perspective.

I recently completed the Chartered Financial Analyst program (partially explaining the five month hiatus from blogging!) which, among other things, thoroughly examines the investment planning and implementation process. I constantly found myself brainstorming how the processes used to construct a portfolio of securities could be applied to the construction of a loan portfolio that is not only successful, but also is constructed to avoid undue concentrations of risk.

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Redefaulted HAMP Mortgage Modifications Reinforce Need to Carefully Structure Modifications

On April 24, 2013 the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) issued their Quarterly Report to Congress. Included in the report was a summary of the TARP homeowner relief programs, including the Home Affordable Modification Program (HAMP). The summary focused on alarmingly high re-default rates on HAMP Modifications, which, in a world with a very limited sample size, especially as it relates to modifications made at the individual credit union level, provides valuable information.

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Letter to Credit Unions 2013-3 Supervisory Guidance on Troubled Debt Restructurings

On April 2, the NCUA released Letter 13-3 “Supervisory Guidance on Troubled Debt Restructurings”. The letter discusses the May 2012 updated requirements of TDR reporting and internal controls, which the blog has covered previously.

Included in the 20+ page letter are examiner responsibilities as they relate to TDRs. Below are some excerpts you may be interested in when preparing for your exam.

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Twenty Twenty Analytics Featured on Editions w/ Terry Bradshaw

Twenty Twenty Analytics’ Steve Miller and Dan Price recently visited GTE Financial in Tampa, FL to film a segment for Editions, hosted by Four Time Super Bowl Champion Terry Bradshaw. The segment, which also features Kim Yarnelli, VP Member Home Loan Programs at GTE Financial focuses on how Twenty Twenty has helped financial institutions like GTE to better understand the makeup of their loan portfolios.

The segment will air on Bloomberg and Fox News, but we’ve obtained an advanced copy, which can be seen below!

Dan Price (Left) and Steve Miller (Right)