A letter to credit unions today outlines the administrative order the NCUA approved pursuant to § 702.201 that reduces the amount of earnings retention required for credit unions classified as adequately capitalized. The letter also clarifies credit unions’ authority to submit a streamlined net worth restoration plan if their net worth ratio declined to undercapitalized, predominantly due to temporary share growth during the COVID-19 pandemic.
The letter follows the unanimous approval of an interim final rule at the NCUA Board’s May meeting that makes two temporary changes to the agency’s prompt corrective action regulations that provide relief to credit unions that temporarily fall below well capitalized.
“Because of the pandemic, I am concerned that credit unions may temporarily fall below the well-capitalized level and become subject to various prompt corrective action requirements,” said NCUA Chairman Rodney Hood, following approval of the interim final rule. “This rule provides relief to those that experience a decline in their net worth ratio because of efforts to help their members or because they have experienced a rapid increase in shares because of the flight to safety.”