The NCUA board of directors on Friday approved an interim final rule that will provide important relief to credit unions.
In a message to credit unions, William J. Mellin, New York Credit Union Association president/CEO, said that the passage of the interim final rule is a timely and much-needed victory for credit unions.
“The Association has heard from credit unions across the state about how deposit increases have skewed balance sheets and driven down net worth ratios,” Mellin said. “That’s why last month we joined with CUNA and other state leagues in urging NCUA to adopt a new interim final rule — just like this one — that would provide relief to credit unions experiencing prompt corrective action issues related to an increase in share growth.”
Specifically, the interim final rule temporarily reduces the earnings retention requirement for federally insured credit unions classified as adequately capitalized, and temporarily permits an undercapitalized credit union to submit a streamlined net worth restoration plan if it becomes undercapitalized predominantly because of share growth.
The interim rule is similar to the rule that the NCUA board previously approved in May 2020, which expired at the end of the year. Because of the pandemic’s continued financial and economic disruptions, the board determined it was necessary to reintroduce these two temporary relief measures related to earnings transfer waivers for adequately capitalized credit unions and net worth restoration plans for certain undercapitalized credit unions, according to the NCUA.