Importance of Contingency Funding Plans

Dear Boards of Directors and Chief Executive Officers:

On July 28, 2023, the NCUA joined with three federal financial institution regulatory agencies to issue the enclosed Addendum to the Interagency Policy Statement on Funding and Liquidity Risk Management: Importance of Contingency Funding Plans.1 The addendum reminds credit unions about the importance of a strong and viable contingency funding plan.2 The agencies expect all depository institutions to maintain actionable contingency funding plans that consider a range of possible stress scenarios.

The events of the first half of 2023 have further underscored the importance of liquidity risk management and contingency funding planning. The level and speed of deposit outflows at a few firms was unprecedented and contributed to acute liquidity and funding strain at those institutions. These events are a reminder to depository institutions that depositor behavior and broader market conditions can evolve over time, and sometimes without warning.

Additional information for Liquidity Resources is now available on NCUA’s website, including information about the NCUA’s Central Liquidity Facility and the Federal Reserve’s Discount Window. Please contact your NCUA regional office or state supervisory authority if you have questions about this important topic.

Sincerely,

/s/

Todd M. Harper
Chairman