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Regulatory pressure surrounding liquidity continued in 2024, driven primarily by low on balance sheet liquidity and higher reliance on non-core funding. Last January, the NCUA released an Advisory letter on Liquidity Risk Management and many of ALM First’s clients reported increased focus on liquidity risk management during recent regulatory examinations.
Is Relief Coming in 2025?
This trend of increased regulatory scrutiny is likely to continue in 2025. Industry wide liquidity metrics improved modestly in 2024; however, on balance sheet liquidity continues to be pressured by monetary policy (high rates), a competitive deposit landscape and strong loan demand.
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