"Liquidity Management: Reading Between the Lines of NCUA's Latest Guidance"

In this insightful episode, Mark Treichel and former NCUA Capital Markets Specialist Todd Miller analyze NCUA's April 2023 liquidity webinar and provide their expert take on the agency's current perspective on liquidity management.

Episode Highlights:

• Todd Miller shares his 34-year experience at NCUA, including his roles as a regional capital market specialist and director of special actions
• Key liquidity guidance documents discussed: 2010 Interagency Policy Statement on Funding and Liquidity Risk Management, 2013 CU 10 guidance on Regulation 741.12, and the 2023 addendum on contingency funding plans
• Analysis of credit union deposit composition changes: from 55% in money markets, CDs, and wholesale funding in 2009 to 52% currently
• Discussion of "reversion to the mean" in deposit mix and how credit unions have adapted to the rate environment
• Examination inconsistencies: varying liquidity ratios and expectations from examiner to examiner
• The importance of forward-looking liquidity management versus "rear-view mirror" approaches
• Disconnect between NCUA's public statements (e.g., "supervisory test is not how credit unions should manage interest rate risk") and examiner actions
• How improved analytics allow credit unions to operate with lower cash holdings while still managing risk effectively
• The appropriate use of wholesale funding, borrowings, and non-member deposits in liquidity management
• Why well-capitalized credit unions with good asset quality will generally maintain access to liquidity

Resources Mentioned:

• 2010 Interagency Policy Statement on Funding and Liquidity Risk Management
• 2013 CU 10 guidance on NCUA Regulation 741.12
• 2023 addendum to the 2010 interagency statement on funding and liquidity risk

If you're concerned about your credit union's next NCUA exam, visit marktreichel.com to learn how Credit Union Exam Solutions can help you navigate the examination process successfully.