ALEXANDRIA, Va. (Jan. 17, 2024) – Over the last year, the credit union system’s performance has been stable and resilient overall. The NCUA, however, continues to see growing liquidity stresses within the system. For those credit unions experiencing lower share growth, high loan growth, and declining levels of available liquidity as a result, liquidity management needs to be conducted with the necessary frequency and sophistication of methods used, closely monitored by the credit union’s senior management, and one of the board of directors’ top areas over which to provide good governance.

In general, the key areas of focus for credit unions to manage liquidity effectively are:

  • Managing and forecasting cash flows under normal operating and stressed conditions. Sensitivity analyses of cash flow and deposit assumptions are of heightened importance given recent trends in deposit movement, which underscores the importance of having a strong liquidity policy and viable contingency funding plan. During periods of uncertainty, it is imperative credit union management identify and measure its sources and uses of funds, reevaluate assumptions and risk relationships, and modify the frequency that it projects cash flows. It is also prudent to ensure staff have relevant experience and training in managing liquidity in various market conditions.
  • Controlling asset composition such as lending quality and volume, including pricing, limits for lending personnel and loan types, and originating loans eligible for future sale. Balance sheets with high levels of credit risk or long duration with an inadequate amount of short-term liquid assets will require management to implement a more robust risk management framework.
  • Structuring liabilities to be congruent with asset growth. Liabilities that can be relied upon for funding under a broad range of macro and microeconomic conditions are considered more stable and contribute to reducing liquidity risk. Examples of stable funding sources include regular shares and share drafts. More volatile funding sources, such as brokered deposits and uninsured shares, should serve specific needs and be well controlled and monitored.
  • Developing governance and monitoring structures suitable for the credit union’s size, complexity, and financial condition. Governance structures should clearly state roles and responsibilities, create appropriate levels of accountability and ensure the segregation of duties. Liquidity monitoring systems must adequately identify and quantify risk exposure. These systems must also ensure that reporting processes communicate accurate, timely, and relevant risk information.
  • Maintaining diversified liquidity sources that can be accessed in various situations. This funding diversity includes having access to at least one contingent federal liquidity source during times of financial emergency and distressed economic circumstances. Section 741.12 of NCUA regulations requires access to either the Central Liquidity Facility (CLF) or the Federal Reserve’s Discount Window (Discount Window) for all credit unions with $250 million or more in total assets; however, all credit unions should consider having a federally sourced liquidity backup when other market funding sources prove inadequate. The ability to access funding at a predictable rate through the CLF or Discount Window should be part of credit unions’ contingency liquidity risk management plans under a range of scenarios, not just in times of crisis.

The NCUA will continue to ensure credit unions conduct liquidity and asset-liability management planning to address current challenges and future uncertainties.

The NCUA website contains a comprehensive Liquidity Risk Resources page. The Examiner’s Guide chapter on liquidity also contains valuable information to support credit unions’ efforts to strengthen liquidity positions and risk management. In 2024, the NCUA will host webinars to provide more information for credit unions on liquidity risk management approaches and expectations.


Explore on-demand liquidity risk and asset-liability management resources available on the ALM First Education Hub at

For a deeper dive into foundational asset-liability management principles tailored for analysts, Board Directors, and everyone in between, join us at the 2024 ALM First Financial Institute, being held March 24-27, 2024 in Dallas, TX. Learn more at