Credit unions are expected to experience moderate loan growth in 2026 as members focus on paying down debt and increasing savings. The combination means your credit union is likely to have extra liquidity on your hands this year.
Make your capital work for you
Driving higher returns can be hindered by poor returns on overnights. Every dollar sitting in a low-yield overnight account represents opportunity cost. LaCorp’s experienced team can help you optimize your portfolio and overnights with top rates among corporates.
When you miss out on opportunities to invest your liquid dollars, you are losing money you could have made for the best returns to your members. The impact on your ROA affects your competitive position, your ability to pay competitive member dividends and your capacity to invest in technology and services.
Why liquidity remains a challenge
Several forces are converging to suppress loan growth, from rising student loan delinquencies and tight auto lending conditions to a housing market frozen by mortgage rate lock-ins. Members who refinanced mortgages at 3% aren’t eager to trade them in for a 6.2% rate.
On the auto lending side, vehicle prices remain elevated, and many members are keeping their cars longer rather than taking on new debt.
Meanwhile, deposits are flowing in. Members are being cautious, building emergency funds and reducing discretionary spending. This is wise for your members and creates liquidity challenges for credit unions trying to deploy capital productively.
The member dividend dilemma
Surplus liquidity creates pressure on your ability to pay competitive rates. If you're paying 3% on savings but only earning 1% on excess cash, the math doesn't work.
Some credit unions respond by reducing dividend rates, risking member dissatisfaction and prompting members to move their money elsewhere. Others maintain dividend rates to stay competitive, accepting compressed margins as the cost of member loyalty.
We think it’s better to address the root cause by ensuring your extra funds are earning solid returns. LaCorp’s Money Market Maximizer sits at 3.72% as of 11:40 am ET on Feb. 12, 2026. LaCorp is a credit union, and like you, we work hard to return the most to our members.
Strategic capital solutions
Identify your excess liquidity and consider your deployment strategies.
A properly structured certificate ladder allows you to capture higher yields on funds not needed for immediate liquidity while ensuring regular maturities provide ongoing access to capital. Investment diversification also matters; agency securities, bonds and other fixed-income instruments offer attractive yields.
We work with credit unions nationwide to heighten their liquidity position. Our investment options, from overnight Money Market Maximizer accounts to structured certificate ladders, provide choices that match your credit union’s specific liquidity profile and risk tolerance.
How to plan for the unknown and constraints
Credit union loan growth is expected to remain below the long-run average of 7% for 2026. This makes active liquidity management essential for maintaining financial performance.
The credit unions navigating this environment most successfully are treating liquidity management as a strategic priority rather than a tactical afterthought. And they’re working with trusted partners who can provide both products and guidance. As a former NCUA examiner and accountant, our longtime CEO David Savoie is an excellent resource on these matters.
They're also recognizing that regulatory concentration limits, such as the NCUA's 704.8(k) rule currently under review, can create artificial constraints that drive funds outside the credit union system. Staying informed about regulatory developments and advocating for sensible rules that support efficient capital deployment benefits the entire credit union movement.
What you need to do now
Every basis point matters when you're managing excess capital. The difference between actively managing that liquidity and letting it sit idle can mean tens to hundreds of thousands of dollars in earnings.
At LaCorp, we specialize in helping credit unions turn liquidity challenges into opportunities for improving financial performance. Whether you need short-term liquidity optimization, structured investment solutions or strategic guidance on asset-liability management, we're here to help.
To discuss strategies to optimize your credit union's excess liquidity and improve returns, contact LaCorp at (800) 421-7030.