A February memorandum counts balance sheet management, “redefinining” regulatory and supervisory approaches, and agency realignment following a 23% reduction in staff among the top management and performance challenges for the National Credit Union Administration (NCUA) in 2026.
The memorandum, posted on the NCUA website among “other reports” from the Office of Inspector General (OIG), shows five such top challenges in all. They’re listed below with excerpts from the seven-page memorandum, dated Feb. 24:
Balance Sheet Management
Credit unions must continue to be prudent and proactive in managing interest rate risk and the related risks to capital, asset quality, earnings, and liquidity. This is particularly the case for those credit unions whose assets are concentrated in fixed-rate long-term mortgages that originated when interest rates were at record lows. Since April 2022, the NCUA has been using the revised CAMELS rating system that includes the S component (Sensitivity to Market Risk), which we believe has continued to help the agency focus on these risks to ensure they remain within safe and sound policy limits.
The NCUA also identified lending as a supervisory focus because loan performance has declined within federally insured credit union portfolios. We agree with the agency’s focus on credit union lending and related risk-management practices, including reviewing the sufficiency of credit administration, portfolio monitoring, and assessing third-party risk management practices as appropriate.
Redefining Regulatory and Supervisory Approaches
The NCUA has proposed changing or removing regulations that are obsolete, duplicative of statutory requirements, intended to serve as guidance, not requirements, or overly burdensome, to align with Executive Order 14192, Unleashing Prosperity through Deregulation.
As far as new regulations, the NCUA will issue a new regulation to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which requires financial regulators to issue implementing regulations for financial institutions’ participation in the stablecoin market. The OIG’s 2026 Work Plan identifies audits addressing these new developments, such as the NCUA’s strategies related to crypto-asset risk.
Cybersecurity – Protecting Systems and Data
For 2026, the NCUA should continue to prioritize this area as a key examination focus and continue to assess whether credit unions have implemented robust information security programs to safeguard both members and the credit unions themselves. The NCUA should remain focused on advancing consistency, transparency, and accountability within its information technology and cybersecurity examination program. NCUA’s supervisory priority of operational risk management related to payment systems identifies the growing number of cybersecurity breaches targeting payment systems.
The NCUA itself also should manage cybersecurity threats that could affect its ability to operate. The OIG’s 2026 Annual Work Plan includes two audits to address cybersecurity-related issues. One will assess the agency’s ransomware readiness and the other will determine whether the NCUA’s information security examination program adequately assessed credit unions’ information security and cybersecurity programs.
Implementation of Artificial Intelligence
The Financial Stability Oversight Council, of which the NCUA Chairman is a member, recommends monitoring the rapid developments in AI, including generative AI, to ensure that oversight structures keep up with or stay ahead of emerging risks to the financial system while facilitating efficiency and innovation. To support this effort, the Council recommends financial institutions, market participants, and regulatory and supervisory authorities further build expertise and capacity to monitor AI innovation and usage and identify emerging risks. On January 22, 2025, NCUA Chairman Hauptman announced among his priorities promoting the appropriate use of AI as a tool for NCUA employees to enhance productivity and noting that regulators who use AI technologies are more apt to understand why regulated entities use them.
The NCUA is uniquely positioned to support or hinder innovative financial technologies in the credit union sector through fostering an environment that enables access to financial services and responsible innovation, which could include the use of AI by credit unions. To do so, the NCUA should continue to identify emerging trends, support the safe adoption of new technologies, and reduce unnecessary burdensome barriers to chartering, expansion, and service delivery while protecting the Share Insurance Fund and members.
The 2026 OIG Work Plan includes an audit on AI implementation.
Agency Realignment
The NCUA must maintain strong internal capabilities and performance to effectively carry out its statutory responsibilities. To do this, the NCUA should optimize enterprise systems and technology, align organizational structures with core responsibilities, and strengthen workforce capabilities to improve accountability, execution, and results.
Through the voluntary separation program, the agency reduced the number of employees by approximately 23 percent. The NCUA is redefining operations by simplifying policies, refining processes, aligning staff with strategic priorities, and modernizing tools and technologies to enable operational effectiveness and resources to meet statutory responsibilities. With the reduced workforce, the agency should continue to manage its exposure to risk and prioritize strengthening capabilities to continue to meet its mission.
The OIG’s 2026 Work Plan identified proposed and mandated audits that evaluate the agency’s abilities to support its mission effectively and manage its internal operations. Currently, the OIG is auditing the NCUA’s enterprise risk management risk profiles, which address the NCUA’s approach to analyzing risk to achieve its strategic objectives and options for addressing significant risks at the enterprise-level.
During this time of change, agency should focus on its operations to support the NCUA mission to enable access to financial services by facilitating safe, sound, and resilient credit unions.
Memorandum on NCUA’s 2026 top management, performance challenges
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