ALEXANDRIA, Va.-NCUA issued a Letter to Credit Unions (03-CU-11) last week to help credit unions manage risk associated with non-maturity shares. The agency emphasized that it merely wants to create a best practices framework to guide credit unions, and not micromanage. "Understanding the behavior of non-maturity shares is integral to understanding the risks, particularly interest rate and liquidity risk, inherent in the balance sheet as a whole," the letter read. Appropriate policies and practices need to be established by the credit union, as well as maintaining documentation relative to the institution's circumstances. "It is not possible to predict with any degree of certainty what the future balances in non-maturity accounts will be, how long they will remain open, or what future rates will be paid to members on these accounts," NCUA warned. The agency outlined best practices in its letter for properly managing balance sheets, including adopting sound and prudent policies, procedures, and practices when measuring non-maturity share behavior and documenting their non-maturity share behavior assumptions. "Failure to adhere to these principles may result in reduced earnings and capital, and is considered unsafe and unsound," according to the letter. Guidance regarding non-maturity shares will be incorporated into the Interest Rate Risk Questionnaire and Liquidity Risk Questionnaire to help examiners evaluate credit unions' analysis.