After two months, three outside consultants and about $1 millionin consulting fees, the $29.1 billion State Employees' Credit Unionin Raleigh, N.C., said it is ready for the rigors of NCUA-mandatedstress testing.

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SECU, one of five credit unions with more than $10 million inassets required by the NCUA to undergo stress testing similar tothat applied to banks, undertook its own testing to createbenchmarks against which the regulator's test can be measured.

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SECU's results follow on the heels of the Nov. 21 deadline forsubmitting financial information to the NCUA to be measured againstthree prospective scenarios to see how well the credit union wouldwithstand economic shocks to its system.

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In past years, SECU has been using Federal Reserve Bank stressrequirements as a guide to measure the effects of challengingenvironments on credit union capital, according to SECU CFO MikeLord.

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The credit union has also historically benchmarked its balancesheet to FDIC and Basel capital standards to measure capital andrisk comparability with FDIC-insured banking institutions.

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“While SECU's member-owners should be confident in the abilityof their not-for-profit financial cooperative to withstand severeeconomic conditions, similar to those experienced in the GreatRecession, it is always wise for the credit union to also have theconfirmation from outside industry experts,” Lord said.

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In October, SECU hired financial consultancy PromontoryFinancial Group to help design an updated capital plan toprovide a firm base for future capital planning and riskmanagement.

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In addition, global accounting advisory firm KPMG was brought in to conduct a formal analysis of SECU'scapital and risk measurements under a variety of alternativefinancial requirements. KPMG separately evaluated and confirmed thestability of SECU deposits as a long-lived, reliable source ofcredit union funding.

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CliftonLarsonAllen LLP, a national accounting and professionalservices firm, reviewed SECU's analysis and planning to meetregulatory liquidity coverage ratios and the adequacy of theallowance for loan loss calculations to accommodate potential loanlosses in the lending portfolio. CLA confirmed that SECU's methodology and estimations arereasonable in relation to the consolidated financial statements asa whole and are in accordance with GAAP.

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“Having benchmarked with the experience-tested Federal Reserveguidelines required of other financial institutions, our highlypositive results should be an excellent signal as to the strengthof SECU's overall capital and financial position,” Lord said. “Welook forward to the new NCUA stress testing program in2015.”

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