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Samantha: Hello, this is Samantha Shares.

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This episode covers N C U A’s
2026 Supervisory Priorities,

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Letter to Credit Unions.

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The following is an audio
version of that document.

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This podcast is educational
and is not legal advice.

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We are sponsored by Credit Union
Exam Solutions Incorporated, whose

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team has over two hundred and
forty years of National Credit

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Union Administration experience.

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We assist our clients with N C
U A so they save time and money.

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If you are worried about a recent,
upcoming, or in-process N C U A

00:00:34.041 --> 00:00:38.351
examination, reach out to learn how they
can assist at Mark Treichel dot com.

00:00:38.851 --> 00:00:43.401
Also check out our other podcast called
With Flying Colors, where we provide tips

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on how to achieve success with N C U A.

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And now the document.

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Date, January 2026.

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Letter number 26 C U dash zero one.

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N C U A’s 2026 Supervisory Priorities.

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N C U A Letter to Credit Unions.

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National Credit Union Administration,
seventeen seventy-five Duke

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Street, Alexandria, Virginia,
two two three one four.

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To federally insured credit unions.

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Subject, N C U A’s 2026
Supervisory Priorities.

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Dear boards of directors and
chief executive officers.

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This letter outlines N C U A’s
supervisory priorities and other

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2026 examination program updates.

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Our priorities focus on areas posing the
highest risk to credit union members, the

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credit union industry, and the National
Credit Union Share Insurance Fund.

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Consistent with the agency’s no
regulation by enforcement policy,

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this letter is meant to assist credit
unions as they plan for this year.

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In 2025, the agency reexamined how
we carry out our mission, laying the

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foundation for improved efficiency
by reducing burdensome work for both

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credit unions and N C U A staff.

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Moving forward, the agency will be
focused on creating a more efficient and

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tailored examination program, as well as
continued implementation of presidential

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executive orders and other laws, including
the Guiding and Establishing National

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Innovation for U S Stablecoins Act,
Public Law one one nine dash two seven.

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N C U A will continue conducting defined
scope exams in most federal credit

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unions with assets of fifty million
dollars or less, and risk-focused exam

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procedures for all other credit unions.

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The priorities described below are meant
to provide credit unions with insight into

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the general focus of N C U A examinations.

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N C U A examiners are expected
to shift the areas of supervisory

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focus based on a credit union’s
risk profile when appropriate.

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The agency will continue to enforce
all laws and regulations applicable

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to credit unions, such as those
related to consumer financial

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protection and information security.

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N C U A examiners will continue to focus
on areas of risk where and when needed.

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Supervisory priorities for 2026.

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Balance sheet management.

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Lending.

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Loan growth has moderated in recent years,
while loan performance has declined.

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The overall delinquency rate and rolling
twelve-month loss rate within federally

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insured credit union loan portfolios is
at its highest point in over a decade.

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Asset quality deterioration and
elevated loan losses remain material

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contributors to balance sheet stress,
especially where higher-cost funding

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such as share certificates and
borrowings limit margin recovery.

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To assess lending practices and overall
credit risk, N C U A examiners will

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focus on credit union lending and
related risk management practices.

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Specific review areas will focus on
institution-specific risks and may

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include the sufficiency of credit
administration, including loan

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underwriting, loss mitigation programs,
including loan modifications and workouts,

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allowance for credit loss reserves and
methodologies, and charge-off practices.

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N C U A examiners will review portfolio
monitoring, including the management of

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any material credit risk concentrations.

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When lending, servicing, or collection
functions are outsourced, examiners

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will also assess third-party risk
management practices as appropriate.

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For lending-related resources, refer to
the Examiner’s Guide and the following.

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Twenty-three C U dash zero five,
Commercial Real Estate Loan

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Accommodations and Workouts.

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Twenty-three C U dash zero four,
Update to Interagency Policy Statement

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on Allowances for Credit Losses.

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Fourteen C U dash zero eight,
Home Equity Lines of Credit

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Nearing Their End-of-Draw Period.

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Zero seven C U dash one three,
Evaluating Third Party Relationships.

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Zero three C U dash zero one,
Loan Charge-off Guidance.

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Supervisory Letter ten dash
zero three, Concentration Risk.

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Sensitivity to market risk and liquidity.

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Sensitivity to market risk, particularly
interest rate risk, and liquidity risk

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remain key supervisory priorities as
credit unions continue to adjust to

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a higher-rate environment following
an extended period of balance

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sheet expansion and repricing.

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While recent declines in interest
rates have lessened some pressures,

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elevated funding costs, asset quality
challenges, and structural liquidity

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constraints continue to affect
earnings and balance sheet resilience.

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In this environment, replacing
defaulted or lower-yielding assets has

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become more challenging, increasing
reliance on higher-yielding loans

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and heightening sensitivity to both
upward and downward rate movements.

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While interest rates have begun to
decline, many loans and funding costs

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have not yet fully repriced, resulting
in continued, albeit less, pressure on

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consumers compared with peak rate levels.

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Recent liquidity challenges have
reinforced the importance of

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diversified funding strategies and
robust liquidity risk management.

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Accordingly, credit unions should
expect continued supervisory focus

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on these areas to ensure institutions
can withstand a range of interest

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rate and funding stress conditions.

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N C U A examiners will continue
to review a credit union’s ability

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to identify, measure, monitor, and
control interest rate and liquidity

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risks through sound modeling
practices, reasonable assumptions,

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and appropriately tiered scenarios.

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Reviews will focus on how credit unions
incorporate these risks into governance

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frameworks, contingency funding plans,
and strategic decision-making, including

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alignment between balance sheet structure,
funding composition, and risk appetite.

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For more sensitivity to market
and liquidity risk information,

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refer to the resource list below.

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Examiner’s Guide, Liquidity
and Sensitivity to Market Risk.

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Twenty-two C U dash zero nine, Updates to
Interest Rate Risk Supervisory Framework.

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Supervisory Letter twenty-two
dash zero one, Updates to Interest

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Rate Risk Supervisory Framework.

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Webpage, Liquidity Risk Resources.

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Earnings and capital adequacy.

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Earnings and capital adequacy remain
central supervisory priorities as asset

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quality pressures, elevated funding costs,
and interest rate risk volatility continue

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to affect balance sheet performance.

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Asset quality deterioration and higher
allowance expenses remain the primary

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drivers of earnings pressure, while
elevated funding costs constrain margin

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recovery and capital accumulation.

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Although regulatory capital levels,
as measured by the net worth ratio,

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have improved for many credit unions,
earnings have shown less resilience.

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Further, equity capital continues to
reflect unrealized losses associated

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with long-duration securities credit
unions acquired during the recent

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low-rate environment, which may limit
balance sheet flexibility under stress.

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When evaluating a credit union’s earnings,
N C U A examiners will assess whether

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the current and prospective sources of
earnings are sufficient to support capital

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targets under a range of interest rate,
credit, and liquidity stress scenarios.

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N C U A examiner reviews may focus on
policies, procedures, risk limits, and

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capital planning practices, including
how credit unions incorporate interest

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rate risk, funding constraints,
and concentration risks into their

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capital adequacy assessments.

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This supervisory approach will
emphasize forward-looking analysis

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aligned with a credit union’s
size, complexity, and risk profile.

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For more earnings and
capital-related information,

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refer to the resource list below.

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Examiner’s Guide, Earnings.

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Supervisory Letters zero nine dash
zero three, Reviewing Adequacy

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of Earnings, and zero six dash
zero one, Evaluating Earnings.

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Webpage, Regulatory and
Compliance Resources.

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Operational risk management.

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Payment systems.

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The payments environment continues to
evolve rapidly as consumer expectations

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shift toward more efficient methods
that provide for immediate access

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to funds and funds transfers.

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Payment systems rely on increasingly
complex integrations of applications,

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information systems, interfaces,
security features, and internal controls.

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This complexity introduces the
potential for added operational

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and security risk exposures.

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The risks of fraudulently induced
payments, illicit use of consumer data,

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and cybersecurity breaches targeting
payment systems continue to grow.

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N C U A examiners will continue to assess
whether credit unions have effective

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governance, risk assessments, vendor
management, and security frameworks

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in place to support payment system
operations, protect member data, and

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ensure resilience against fraud and cyber
threats inherent in payment ecosystems.

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For more payment systems information,
refer to the retail payment systems

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and the wholesale payment systems
topics in the Federal Financial

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Institutions Examination Council’s
I T Examination Handbook Infobase.

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Fraud prevention and detection.

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Fraud remains a pervasive and elevated
risk in the U S financial system.

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N C U A examiners will continue to
review credit union efforts to deter

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and detect fraud, including the adequacy
of internal controls and separation of

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duties to guard against insider abuse.

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In 2026, the agency will review its
examination procedures to ensure internal

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control and other review areas align
with the ever-changing fraud landscape.

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N C U A will continue to work with
key stakeholders in the credit union,

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regulatory, and law enforcement
communities to enhance fraud

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prevention and detection awareness
and capabilities where possible.

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Visit N C U A’s Fraud Prevention Resources
page for fraud prevention information.

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Compliance risk management.

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Bank Secrecy Act compliance and
anti-money laundering and countering

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the financing of terrorism programs.

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The B S A landscape will continue
to evolve throughout 2026.

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The Financial Crimes Enforcement
Network and the federal financial

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institution regulators, including N C U
A, continue to implement provisions of

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the Anti-Money Laundering Act of 2020
designed to modernize and strengthen

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the U S A M L and C F T regime.

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Concurrently, F I N C E N and the
regulators will continue to evaluate

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ways to reduce B S A compliance
burdens while helping financial

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institutions maintain effective,
risk-based A M L and C F T programs.

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Significant developments and
changes in the regulatory

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system are expected in 2026.

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N C U A will notify credit unions
of regulatory changes, and credit

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union personnel may also sign up
to receive F I N C E N updates.

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Regardless of the notification method,
credit unions should stay informed

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to ensure their B S A policies,
procedures, internal controls, and

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overall A M L and C F T programs
remain in compliance with changes.

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The emphasis in 2026 will be on evaluating
your credit union’s risk-based approach

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to B S A compliance and how well the A
M L and C F T program is tailored to the

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credit union’s specific risk profile.

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N C U A examiners will consider whether
credit unions focus their resources on

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the areas of greatest money laundering
and terrorist financing risk and

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whether policies, procedures, and
controls are effective at mitigating

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illicit financial activity risks.

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For more information and
resources, visit the agency’s B

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S A and A M L resources webpage.

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Conclusion.

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N C U A is dedicated to supporting credit
unions, developing right-sized regulations

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and policies that safely advance
innovation within the credit union system,

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and protecting member deposits and the
Share Insurance Fund through productive,

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streamlined credit union supervision.

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Focusing on these priorities,
along with reviewing areas of risk

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specific to each credit union, N C
U A’s examination and supervision

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program will continue to facilitate
a safe and sound credit union system.

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We welcome your feedback as we
navigate the ever-changing economic

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and technological ecosystems together.

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As a reminder, credit unions may find
it useful to record their N C U A final

00:13:04.066 --> 00:13:08.156
exit meeting or joint conference for
documentation and training purposes.

00:13:08.706 --> 00:13:11.526
We ask that this recording
be shared with N C U A.

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We encourage state-chartered credit
unions to consult their regulators

00:13:15.496 --> 00:13:17.116
prior to recording meetings.

00:13:17.846 --> 00:13:22.276
Please direct any feedback or questions
concerning the 2026 supervisory

00:13:22.276 --> 00:13:27.346
priorities to your N C U A examiner,
regional office, or Ask N C U A.

00:13:28.071 --> 00:13:29.501
Sincerely, Kyle S.

00:13:29.911 --> 00:13:30.931
Hauptman, Chairman.

00:13:31.599 --> 00:13:32.959
This concludes the document.

00:13:33.756 --> 00:13:38.026
If your credit union could use assistance
with your exam, reach out to Mark Treichel

00:13:38.026 --> 00:13:40.526
on LinkedIn or at Mark Treichel dot com.

00:13:41.086 --> 00:13:43.776
This is Samantha Shares, and
we thank you for listening.