April 30, 2026
When the NCUA’s 2026 Supervisory Priorities were announced in January, it was a reminder to credit unions everywhere that balance sheet expectations have fundamentally changed.
Delinquency rates and rolling 12-month loan losses are at their highest point in over a decade, and examiners are placing greater emphasis on forward-looking balance sheet resilience, wanting to know how your management team evaluates risk before it materializes.
Clearly, the credit unions coming out ahead will be the ones that treat their balance sheet as a strategic asset rather than a byproduct of whichever loans they happened to close last quarter.
How Loan Cycles Are Impacting Portfolios
As TruStage Chief Economist Steve Rick noted recently, credit unions are experiencing the after-effects of the low-rate lending boom from just a couple of years ago. Older, lower rate loans are being paid down quickly as they near the end of their lifecycle, and those loans are being paid off faster than they’re being replaced, likely due to higher interest rates and affordability challenges.
This environment has the potential to create looser underwriting standards as credit unions look to boost loan growth in the face of decreased consumer demand and increased credit quality concerns, which is likely why the NCUA’s 2026 priorities are emphasizing the importance of credit risk management practices, underwriting standards, and liquidity planning.
NCUA examiners will likely focus on:
- How you measure and monitor interest rate and liquidity risk
- How risk management is built into your board governance and decision-making
- How your balance sheet is structured (i.e., funding composition and risk appetite)
Staying Resilient During Market Fluctuations
Concentrated portfolios can be at greater risk in this type of environment. If your portfolio is already heavy in auto or real estate and those segments come under pressure, you suddenly have concerns around credit risk and earnings, and even capital adequacy and liquidity.
Examiners want to see that your board and management team can articulate how your balance sheet holds up under stress, which means accounting for earnings volatility, making contingency funding plans, and having an intentional loan portfolio strategy.
Diversification is an obvious solution to create a buffer and reduce your exposure to risk, but building that diversity often requires origination capacity many credit unions don’t have in-house. This is where loan participations can help – they are an often underutilized tool that credit unions can use to expand diversification quickly and efficiently, without having to build origination infrastructure from scratch.
Lending Strategy as Balance Sheet Strategy
Both the NCUA’s 2026 priorities and recent changes to NCUA’s deregulation posture offer a clear opportunity for credit unions to revisit their lending strategies.
A well-constructed lending strategy does more than generate yield – it shapes your IRR profile, feeds your liquidity position, and determines how much capital you’re consuming relative to the income you’re producing. Plus, with the right level of diversification, it reduces concentration risk by putting different loan types to work alongside each other, with different durations, yields and credit qualities.
The Moment to Get Ahead of It
The NCUA’s 2026 priorities are a roadmap for the industry, and credit unions that act now can get ahead of the regulatory curve, strengthen their institutions, and build resilience for years to come.
ALIRO, LendKey’s loan participation platform, helps credit unions build diversified, high-quality loan portfolios that boost balance sheet performance and hold up under supervisory scrutiny.
Let’s discuss your lending strategy and how LendKey can help strengthen your balance sheet for 2026 and beyond – contact our team today.