Skip to main content

NCUA Identifies Supervisory Priorities for 2024

ALEXANDRIA, Va.–In a new Letter to Credit Unions, NCUA has outlined its supervisory priorities and other updates for its 2024 examination program.

The agency said the areas identified are those with the highest risk to credit union members and the insurance fund.

As CUToday.info has previously reported, growing financial strains and liquidity risks are cited by the agency, as well as the growth in the number of composite CAMELS code 3, 4, and 5 credit unions. 

The agency further noted:

NCUA 2
  • Its exam flexibility initiative will continue in 2024, extending the exam cycle for certain credit unions.
  • It will continue its Small Credit Union Exam Program in most federal credit unions with assets of $50 million or less.

Supervisory Priorities for 2024

Below is an overview of the areas where NCUA said it will focus its examinations this year:

Credit Risk

“Economic conditions continue to change the credit risk environment in the credit union industry, as inflation, high interest rates and borrowing costs, declining savings levels, and the end of pandemic-era stimulus and relief programs have negatively impacted some members’ ability to repay their debts. Credit unions’ loan portfolios expanded faster during 2022 than any year within the last 30 years, while aggregate loan performance began showing signs of deterioration in 2023,” NCUA said. 

Examiners will review:

  • Existing lending programs’ soundness
  • Credit union risk management practices, including any adjustments a credit union made to loan underwriting standards, portfolio monitoring practices, modification and workout strategies for borrowers facing financial hardships, and collection programs. 
  • Policies and procedures related to the Allowance for Credit Losses (ACL), documentation of the ACL reserve methodology, the adequacy of ACL reserves, and adherence to generally accepted accounting principles.

Liquidity Risk

The agency said pressure in deposit pricing and the use of wholesale funding is accelerating as alternative funding options, while new lending, participations, and loan sale markets may slow. In addition, member behaviors and risk relationships are also changing,  combining to create liquidity challenges and increased risk to earnings and capital.

“Increased liquidity risk and uncertainty heighten the need for credit unions to prepare for contingency funding needs. Section 741.12 of the NCUA’s regulations contains scaled credit union contingency funding plan expectations,” NCUA said. 

It noted that in previously released Letter to Credit Unions 23-CU-06, Importance of Contingency Funding Plans, adding an addendum to the 2010 Interagency Policy Statement on Funding and Liquidity Risk Management, reinforcing the need to adjust to changing market conditions. 

“In evaluating the “L” component of CAMELS to determine the adequacy of a credit union’s liquidity risk management framework, examiners will continue to consider the current and prospective sources of liquidity compared to funding needs,” NCUA said.

The agency said examiners will:

  • Review the credit union’s policies, procedures, and risk limits
  • Evaluate the adequacy of the credit union’s liquidity risk management framework relative to its size, complexity, and risk profile.

It will also continue to assess liquidity management by evaluating:

  • The effects of changing interest rates on the market value of assets and borrowing capacity.
  • Scenario analysis for liquidity risk modeling, including possible member share migrations (for example, shifts from core deposits into more rate-sensitive accounts).
  • Scenario analysis for changes in cash flow projections for an appropriate range of relevant factors (for example, changing prepayment speeds).
  • The cost of various funding alternatives and their impact on earnings and capital.
  • The diversity of funding sources under normal and stressed conditions.
  • The appropriateness of contingency funding plans to address any plausible unexpected liquidity shortfalls.

Consumer Financial Protection

The NCUA said it will continue assessing federal credit unions’ compliance with applicable consumer financial protection laws and regulations, including:

  • Overdraft Programs. In 2024, examiners will continue an expanded review of credit unions’ overdraft programs, including website advertising, balance calculation methods, and settlement processes. NCUA said it will also continue to evaluate adjustments credit unions made to their overdraft programs to address consumer compliance risk and potential consumer harm from unexpected overdraft fees.
  • Fair Lending. Examiners will review policies and practices for redlining, marketing, and pricing discrimination risk factors.
  • Auto lending. Examiners will review credit unions’ disclosures, policies, and practices to assess compliance with the Truth in Lending Act as implemented by Regulation Z. Examiners will also review credit unions’ policies regarding Guaranteed Asset Protection insurance.
  • Policies and procedures governing compliance with flood insurance rules.

Information Security/Cybersecurity

With cybersecurity, the agency said examiners will continue to assess whether credit unions have implemented robust information security programs to safeguard both members and the credit unions themselves. 

“Examiners will continue to utilize the information security examination procedures in 2024, ensuring a thorough evaluation of cybersecurity measures,” NCUA said. 

NCUA further noted it implemented a new Cyber Incident Notification Reporting Rule, effective Sept. 1, 2023, mandating federally insured credit unions swiftly — within 72 hours — notify the NCUA after the credit union reasonably believes that a reportable cyber incident has occurred. 

Credit unions should also notify the NCUA if a third-party provider experiences a cyber incident affecting the credit union.

NCUA said key steps to consider when implementing the reporting rule are found in the NCUA Letter to Credit Unions 23-CU-07, Cyber Incident Notification Requirements, and include:

  • Updating response plans
  • Reviewing third-party contracts
  • Training employees
  • Monitoring and documenting incidents.

Interest Rate Risk (IRR)

In evaluating the “S” CAMELS component, the agency said its examiners will continue to evaluate whether a credit union proactively manages its IRR and the related risks to capital, asset quality, earnings, and liquidity. In particular, NCUA said its examiners will review a credit union’s IRR program for the following key risk management and control activities:

  • Key assumptions and related data sets are reasonable and well documented
  • Back testing and sensitivity testing of the assumption set
  • The credit union’s overall level of IRR exposure is properly measured and controlled
  • Results are communicated to decision-makers and the board of directors
  • Proactive action is taken to remain within safe and sound policy limits.

Other Updates

In the Letter to Credit Unions, NCUA said additional updates include:

Bank Secrecy Act (BSA) Compliance

“A credit union’s deficiency in or failure to comply with the BSA’s programmatic, recordkeeping, and reporting requirements can pose a significant risk to the institution, its members, and the Share Insurance Fund,” NCUA said, adding it will provide updates to credit unions regarding any regulatory changes to the BSA throughout 2024, as well as updates to supervisory expectations and examination procedures. 

Support for Small Credit Unions and Minority Depository Institutions

In 2024, NCUA said it will remain committed to supporting and preserving small credit unions and minority depository institutions (MDIs) through its Small Credit Union and MDI Support Program (Support Program). Small credit unions and MDIs face unique risks and hurdles, and the NCUA will continue to offer custom support to eligible credit unions. 

“Credit unions with less than $100 million in assets and MDIs of all asset sizes are eligible and can request assistance through their examiner or regional office,” the agency said. “The NCUA recognizes the value small and MDI credit unions bring to members in underserved communities by offering access to safe, fair, and affordable loans and other financial products and services.”

According to NCUA, the benefits of this program are expected to include:

  • Expanded opportunities for qualifying credit unions to receive support through NCUA grants, training, and other initiatives
  • Furthered partnerships with organizations and industry mentors that can support small credit unions and MDIs
  • Added support to credit union management in addressing operational challenges.

The full letter, including links to additional resources, can be found here.

Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

Ramp Up Cyber Spending As AI Reshapes Industry Priorities

NEW YORK—Artificial intelligence is rapidly becoming the defining force shaping banking strategy, with 80% of banking executives now expecting AI to significantly disrupt their business and operating models within the next three to five years, according to KPMG's 2026 Banking Technology Survey. The survey of 200 U.S. banking executives found institutions are responding by accelerating investments in cybersecurity, payments modernization and technology-driven acquisitions. "AI, payments modernization, cybersecurity, and tech-driven M&A are no longer separate agendas," said Peter Torrente, KPMG's U.S. Banking Sector Leader, who said banks are increasingly being challenged to keep pace across technology, risk and growth simultaneously. Cybersecurity remains a top concern. More than three-quarters (76%) of banking leaders reported an increase in cyberattacks over the past year, while 92% said they are boosting cybersecurity budgets. In addition, 84% are increasing cyb...
Post a Comment
Read Complete Article HERE>»

White Paper from WOCCU Examines How Stablecoins are Reshaping Financial Infrastructure

WASHINGTON– World Council of Credit Unions (WOCCU) has released a new white paper that examines how stablecoins are reshaping the financial infrastructure that credit unions and other cooperative financial institutions rely on to serve their members.  According to WOCCU, the white paper, How Digital Money Is Impacting Credit Unions, Part 1: Focus on Stablecoins , is the first in a planned three-part series exploring how emerging forms of digital money are affecting the global credit union movement.  “The report begins by noting that stablecoins are no longer a niche fintech development, but part of a broader structural shift in how money is stored, moved and regulated,” WOCCU explained. “As commercial banks, payment networks, technology firms and retailers build stablecoin offerings or integrate stablecoin rails into their platforms, credit unions must consider how these changes could affect deposits, payments, member relationships and long-term institutional relevance.” For ...
Post a Comment
Read Complete Article HERE>»

Half of Credit Union & Bank CEOs are Now Older Than 65, Up From 20% Two Decades

NEW YORK — At a time when there are some generational changes in credit union leadership taking place, a new analysis has found the nation’s bank CEOs are getting older, with half of the chief executives leading banks now older than 65, compared with fewer than 20% two decades ago. The KBW Bank Index from Truist Securities found that the median age of bank CEOs has increased by 10 years since the early 2000s, mirroring a broader aging trend among corporate leaders across the United States. However, bank executives remain older on average than their counterparts in many other industries, according to the analysis by Truist Securities Managing Director John McDonald and associates Peter Nicolo and John Manahan. One reason is tenure. Bank CEOs typically remain in their positions longer than executives in many other sectors. According to data from CristKolder Associates cited in the report, financial-services CEOs average nine years in the role, compared with 5.4 years in the energy secto...
Post a Comment
Read Complete Article HERE>»

What Credit Unions Can—And Can't—Do With New Trump Accounts

07/02/2026 09:36 am         WASHINGTON--With Trump Accounts set to officially launch July 4, America’s Credit Unions updated its frequently asked questions document to clarify the role of credit unions now and in the future. Credit unions do not have a role to play yet, as the Treasury has not announced steps to transition accounts from initial provider BNY Mellon to other authorized institutions, ACU noted. Trump Accounts are tax-deferred accounts that can be established on behalf of a child under the age of 18. Account contributions begin after July 4, with contributions up to $5,000 a year allowed. Created by H.R. 1, the law also established a pilot program to deposit a one-time $1,000 grant into accounts of children born between Jan. 1, 2025 and Dec. 31, 2028. Once the child turns 18, the account funds are available for educational expenses, home ownership, entrepreneurship, and other designated purposes. Once guidance is available from Treasury, credit unions ...
Post a Comment
Read Complete Article HERE>»

Sunday Reading - We Hold These Truths to Be Self-Evident

We Hold These Truths to Be Self-Evident .  The Declaration of Independence is the founding document that formally announced the American Colonies' break from British rule. Adopted on July 4, 1776, it laid the philosophical and moral foundation for American self-governance, asserting that individuals possess inherent rights and that governments must be accountable to the people. While it didn't create a government or legal framework, the Declaration marked the birth of the United States as a sovereign nation. >  Hear why the Continental Congress decided to declare independence, how the text took shape...
Post a Comment
Read Complete Article HERE>»

What You Might Not Know About July 4th.

Post a Comment
Read Complete Article HERE>»

NCUA Tells FICUs Crypto Trading is OK — If Big Exchanges Provide the Service

When it comes to reading between the lines of financial regulators’ advisory letters, tone matters. Take last week’s letter from the National Credit Union Administration (NCUA) which gave the federally insured credit unions (FICUs) it oversees permission to partner with digital asset providers to allow retail customers to buy, sell and trade in cryptocurrencies. Now compare it to the one issued by Comptroller of the Currency Michael Hsu’s agency to the national banks and federal savings associations it regulates a month earlier. On the surface, both said much the same thing: Financial institutions can provide cryptocurrency services (albeit with some notable differences: the OCC’s letter dealt with more back-end services, including custody services as well as holding and using dollar-pegged stablecoins for transaction settlement). Neither was enthusiastic. The NCUA’s letter said it “does not prohibit FICUs from establishing these relationships” — which is not as enthusiastic as “are a...
Post a Comment
Read Complete Article HERE>»

Emerging Risks and How to Mitigate Them

5 Emerging Risks and How to Mitigate Them With each technological advance emerges new risk. Think about it: Every technology upgrade, new mobile device and new payment method brings exposure that wasn’t identified previously. The real threat occurs when these risks aren’t anticipated or communicated within your organization. Here are five emerging risks every credit union should have on their radar right now: Social media. Employees posting comments on social media that are inaccurate or appear incomplete or disparaging can threaten your organization’s reputation. Be careful when taking disciplinary action, as the National Labor Relations Board can classify social media activity as “protected concerted activity.” Mistakes here can lead to retaliation, wrongful termination claims and expensive litigation. Internet of Things (IoT) era . The IoT offers new tools and technologies that provide constant connectivity. It also creates new opportunities for data compromises. Workplace ...
Post a Comment
Read Complete Article HERE>»

Twenty-Five Years of Showing Up

www.NCOFCU.org/Tucson-AZ-2026    Attendee Registration Schedule at a Glance ...
Post a Comment
Read Complete Article HERE>»

The Federal Open Market Committee (FOMC) voted to raise the target range for federal funds

WASHINGTON–Although debate has increased recently over whether it should do so, as expected, the Fed has moved to raise interest rates. The Federal Open Market Committee (FOMC) voted to raise the target range for the federal funds rate to 2%-2.25% to 2.25%-2.50%. “Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate,” said the FOMC in a statement following today’s meeting. “Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2%. Indicators of longer-term inflation expectations are little changed, on balance.” Fed watchers have bee...
Post a Comment
Read Complete Article HERE>»