Liquidity issues top CFOs' concerns

Liquidity issues top CFOs' concerns

Regulators are requiring access to contingency lines of credit in the event of liquidity shortfalls.

May 20, 2019

More than 80 credit union finance leaders gathered at the 2019 CUNA Finance Council Conference Sunday in New York City to discuss ideas, best practices, and challenges for today’s chief financial officers (CFOs).

The CFO Exchange, moderated by SECU CFO Steve Arbaugh, chair of the CUNA Finance Council, focused primarily on these pressing issues:

Liquidity management

Certificate promotions and reverse money market accounts, where the lowest balances receive the highest dividends, are two ways credit unions attract core deposits.

“We all share the same pain” regarding liquidity challenges, Arbaugh says.

Other ways attendees attract deposits:

  • Digital analytics at the account level to identify funds likely to leave the credit union.
  • Calling members to attract and retain deposits.
  • Emergency savings account, where the first $2,000 earn the highest rate.
  • A checking account that provides a variety of benefits such as free cell phone insurance, coffee, and movie tickets, for a $6 monthly fee.

NCUA exam issues

The top three regulatory demands, according to one attendee: “Liquidity, liquidity, and liquidity.”

NCUA is requiring credit unions to have access to contingency lines of credit in the event of a liquidity shortfall.

Liquidity questions are a regular part of credit union examinations, “but they’re really focusing on it this year,” one attendee says. “How much cash do you want me to sit on?”

Board communications

Given many credit unions’ liquidity struggles, high loan-to-share ratios are much more common. This may cause concern among board members, requiring finance professionals to explain why they may need to 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,” says one attendee.

One way to address boards’ concerns is to demonstrate the credit union has the ability to borrow money if needed.

One credit union 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.

Visit CUNA News for more conference coverage, and get live updates on Twitter via @CUNA_News@cumagazine, and @CUNACouncils, and by using the #FinanceCouncil hashtag. Learn more about the CUNA Finance Council, a member-led professional society for credit union finance executives, at