January 23, 2025—The NCUA’s January 2025 Letter to Credit Unions (25-CU-01) outlines their supervisory priorities for the year and changes made to its examination program. The agency states that this year’s supervisory focus allows them to address the areas of the strained economic landscape posing the highest risk to credit unions. The NCUA identifies several financial stressors on credit union balance sheets including deteriorating loan performance and delinquencies which rose to their highest point in over a decade. They state, “the return of average assets continues to experience pressure from the interest rate environment and provision for loan and lease loss expense.” The agency does, however, call the credit union system “stable and relatively resilient.”
Under this year’s supervisory priorities, the NCUA:
- Offers comprehensive guidelines on credit risk and loan performance, risk management, and borrower assistance for credit unions underscoring they must have a robust credit risk rating system to manage this risk effectively. The NCUA reiterates the importance of a well-balanced risk/reward relationship for stable profitability and increased net worth.
- Looks closely at a credit union’s balance sheet management framework, policies, procedures, and risk limits.
- Places a strong emphasis on cybersecurity due to the significate risks cyberattacks pose to the financial system. As a supervisory priority, NCUA will focus on a credit union’s methods for cyber incident identification, monitoring, and risk mitigation to ensure the safety and soundness of the overall credit union system. They have reinforced the need for accurate and timely reporting.
- Ensure credit unions remain dedicated to protecting consumers, ensuring fair treatment of members and ensuring compliance with consumer protection guidelines.
Also included in the January 2025 letter were the NCUA’s updates on its exam flexibility initiative, its Small Credit Union Exam program, and its Minority Depository Institution Preservation program. The NCUA reminds credit unions that while some areas may receive additional attention, the credit union is still responsible to review all areas under examination. This may include its internal controls over lending, recordkeeping, third party risk, and technology. Credit unions must also be aware of regulatory requirements related to anti-money laundering and countering the financing of terrorism.
For more information, extensive resources, and the updated Examiner’s Guide, please visit the NCUA website.
If you are a current member with questions about your credit unions metrics, or if you are interested in accessing these services, please contact EasCorp’s investment, liquidity, and ALM professionals using our Request Information form.