Blog · Finance metrics and formulas · Retail banking
Credit union liquidity measures compare cash, short-term investments, loans and funding balances. Follow an NCUA-defined ratio through a worked balance-sheet example, then connect the result to cash availability and ownership of the follow-up.
A credit union liquidity ratio compares specified liquid balances with assets or funding, but the definition must travel with the number. Start with NCUA's cash and short-term investments-to-assets measure, then examine loan funding and cash timing. A percentage on a quarter-end balance sheet cannot establish whether cash is available for the next payment.
The NCUA Financial Performance Report Ratio and Formula Guide defines cash and short-term investments divided by assets. It describes the numerator as cash on hand, cash on deposit and cash equivalents, plus investments with less than one-year remaining maturity.
Cash and short-term investments / Assets = Specified cash and short-term investment balances / Total assets × 100
The guide also warns that the reported investment maturity distribution may be based on repricing intervals rather than actual maturity. Match the applicable Call Report instructions before mapping an investment schedule into the numerator. A security that reprices soon is not necessarily cash that will mature soon.
This is a specified reporting measure. A separate management schedule should identify restrictions, pledges and settlement constraints that affect usable funds. Do not silently alter the reporting numerator and continue to label it as the same NCUA ratio.
For the broader set of performance measures, see credit union ratios. This article focuses on liquidity, funding and the checks behind them.
Use the balance sheet, investment maturity report, loan balance report and shares-and-deposits report for the same cycle date. Retain account labels, statement dates, currency and source references. Add a funding workbook showing borrowings, pledged collateral, maturities and committed loan disbursements.
The balance sheet establishes the reported ratio. The supporting schedules explain what can be used, when it becomes available and which funding sources have already been drawn. An undrawn borrowing line is not existing cash and should not be inserted into the cash numerator.
The NCUA FPR reporting page describes financial summaries generated from validated Call Report data and explains that peer ratios are available after the reporting cycle. Record the cycle date and the report date so that a fresh internal report is not compared with an older peer cycle without explanation.
Consider a fictional US credit union at June 30 and September 30, 2026. All amounts below are USD. In this example, the short-term investment balances meet the reporting definition, and the cash balances are unrestricted.
| Balance-sheet row | June 30 (USD) | September 30 (USD) |
|---|---|---|
| Cash, deposits and cash equivalents | 20,000,000 | 15,000,000 |
| Eligible short-term investments | 25,000,000 | 20,000,000 |
| Other investments | 45,000,000 | 45,000,000 |
| Total loans before allowance | 110,000,000 | 125,000,000 |
| Less allowance for credit losses | (2,000,000) | (2,500,000) |
| Other assets | 2,000,000 | 2,500,000 |
| Total assets | 200,000,000 | 205,000,000 |
| Shares and deposits | 175,000,000 | 174,000,000 |
| Borrowings | 5,000,000 | 10,000,000 |
| Other liabilities | 2,000,000 | 3,000,000 |
| Equity | 18,000,000 | 18,000,000 |
| Total liabilities and equity | 200,000,000 | 205,000,000 |
First, compute the liquid numerator. June cash and short-term investments total $20,000,000 + $25,000,000 = $45,000,000. September's total is $15,000,000 + $20,000,000 = $35,000,000.
| Measure | June calculation | June result | September calculation | September result |
|---|---|---|---|---|
| Cash and short-term investments / assets | 45,000,000 / 200,000,000 | 22.50% | 35,000,000 / 205,000,000 | 17.07% |
| Total loans / assets | 110,000,000 / 200,000,000 | 55.00% | 125,000,000 / 205,000,000 | 60.98% |
| Total loans / shares and deposits | 110,000,000 / 175,000,000 | 62.86% | 125,000,000 / 174,000,000 | 71.84% |
Each calculation is multiplied by 100 to express a percentage. Results are rounded to two decimal places after division. The loan numerator is the total before allowance, consistent with the stated total-loan measure; the allowance remains deducted in total assets.
The three measures tell a consistent story. Liquid balances fell, loans grew and shares and deposits declined. Borrowings increased at the same time. That combination prompts a funding review; it does not, by itself, prove a liquidity failure.
Reconcile September assets independently:
15,000,000 + 20,000,000 + 45,000,000 + 125,000,000 − 2,500,000 + 2,500,000 = 205,000,000
Then reconcile the other side:
174,000,000 + 10,000,000 + 3,000,000 + 18,000,000 = 205,000,000
Tie the $35,000,000 numerator to the cash and eligible investment schedules. Tie total loans and shares and deposits to their respective reports. A balanced statement alone does not prove that the cash and investment classification is correct; balance-sheet analysis explains the wider reconciliation work.
Keep the full-precision ratio in the workbook. Multiplying that ratio by assets must recover the liquid numerator before rounding. When comparing peers, use the same numerator definition and confirm how the peer average is calculated.
The NCUA FPR User Guide describes reports containing current and previous cycles and discusses peer comparisons. Use that history to investigate changes rather than treating one reporting date as the complete picture.
Treasury or the finance manager should own a dated cash schedule. The asset-liability committee reviews funding assumptions and actions under the credit union's governance process. Accounting owns the ties to reported balances.
For illustration, the September cash balance supports this forecast interval. Expected collections and payments are separate management assumptions, not additional reported assets.
| Forecast step | Cash effect (USD) | Running cash (USD) |
|---|---|---|
| Opening usable cash | 15,000,000 | 15,000,000 |
| Expected loan collections | 3,000,000 | 18,000,000 |
| Investments maturing during the interval | 4,000,000 | 22,000,000 |
| Expected share withdrawals | (8,000,000) | 14,000,000 |
| Committed loan funding | (5,000,000) | 9,000,000 |
| Borrowing repayments | (2,000,000) | 7,000,000 |
The closing balance is $15,000,000 + $3,000,000 + $4,000,000 − $8,000,000 − $5,000,000 − $2,000,000 = $7,000,000. Check each day's sequence: positive closing cash can still conceal a shortfall before a maturity settles. Review borrowing availability and adverse withdrawal assumptions separately.
Upload your balance-sheet and funding workbooks; Covirage maps the columns, and its tools compute and check the specified ratios and supplied cash-schedule totals. The external AI model explains the funding changes with every figure traced to its rows. Create a free Covirage account and bring a sample of your own reports.
See Covirage for retail banking for the supporting industry context.
Assess the ratio against the credit union's own policy, funding structure, trends and comparable peers. The same percentage can support different conclusions when deposit concentration, loan commitments or access to funding differs. A ratio alone does not establish adequate liquidity or regulatory compliance.
The FPR Ratio and Formula Guide describes cash on hand, cash on deposit and cash equivalents, plus investments with less than one-year remaining maturity, divided by total assets. Match the relevant Call Report instructions because the investment distribution can reflect repricing intervals.
It shows that loans are large relative to shares and deposits under the stated definition. It does not show withdrawal timing, loan collections or available borrowing capacity. Investigate the funding mix and cash forecast before concluding that the credit union cannot meet obligations.
No. Check maturity, settlement timing, pledges, restrictions and potential sale proceeds. A reported investment balance can belong in a specified balance-sheet ratio while still being unavailable for an immediate payment. Keep the reporting calculation separate from the schedule of usable funds.