NEW YORK–Liquidity management and NCUA exam issues were at the top of a list of subjects discussed by more than 80 CU finance execs who participated who met as part of The CFO Exchange during the CUNA Finance Council’s annual meeting here.
The session was moderated by SECU CFO Steve Arbaugh, chair of the CUNA Finance Council.
The primary points of discussion:
Liquidity Management
Those in attendance said certificate promotions and reverse money market accounts, where the lowest balances receive the highest dividends, are two of the most popular strategies being deployed by credit unions as they chase deposits to fund strong loan volumes.
“We all share the same pain” regarding liquidity challenges, Arbaugh said.
Among the other ways credit union finance execs said they are working to attract deposits:
- Digital analytics at the account level to identify funds likely to leave the credit union
- Calling members to attract and retain deposits
- Promoting emergency savings accounts, where the first $2,000 earns the highest rate
- Checking account packages that for a higher monthly fee offer additional premiums and perks, such as free cell phone insurance, coffee, and movie tickets
NCUA Exam Issues
According to one attendee, the top three regulatory demands being felt are “Liquidity, liquidity, and liquidity.”
The opinion was shared as attendees discussed NCUA requirements for credit unions to have access to contingency lines of credit in the event of a liquidity shortfall.
But not everyone is happy with the NCUA attention. “How much cash do you want me to sit on?” asked one attendee.
Board Communications
During the CFO Exchange attendees noted many CUs are in the same position, with tight liquidity and ratios that may cause concern among some board members. That requires finance professionals to better explain why they may recommend an increase loan-to-share limits.
“We went to the board to bump up our loan-to-share limit, and it scared the heck out of them to go to 100% loan to share,” one attendee shared.
Among the strategies discussed for addressing boards’ concerns was to demonstrate the credit union has the ability to borrow money if needed.
One attendee said his CU conducts board training each year around liquidity issues and details its plan to address any liquidity shortages. It also tests its ability to access its line of credit on a quarterly basis.