NCUA provides updates regarding renewal of PCA regulation

A recent letter to credit unions outlines updates regarding the renewal of the temporary modification and relief of NCUA’s prompt corrective action regulation.

The NCUA board in June 2020 approved regulatory relief measures related to the PCA regulations in anticipation that some credit unions might experience temporary reductions in earnings and regulatory capital ratios due to COVID-19 response efforts. Those temporary modifications expired on Dec. 31, 2020.

Due to the continued impact of the pandemic, the agency introduced two temporary changes in an effort to prevent operational disruptions caused by temporary COVID-19-related conditions. The first temporary change to the PCA regulations enables the NCUA board to issue an order applicable to all federally insured credit unions to waive the earnings-retention requirements under § 702.201 for any federally insured credit union that is classified as adequately capitalized.

The second temporary change modifies § 702.206(c) regarding the submission of a net worth restoration plan by a federally insured credit union classified as undercapitalized predominantly because of share growth.

The New York Credit Union Association has strongly advocated for the NCUA to provide PCA and other relief to credit unions that have experienced significant share growth as a result of the pandemic. In March, the Association joined with CUNA and other state leagues in penning a letter that urged the NCUA to provide temporary relief. In April, Association President/CEO William J. Mellin called the agency’s interim final rule on PCA relief “a timely and much-needed victory for credit unions.”

The changes will remain in effect until March 21, 2022, according to the agency. Read the full letter on the NCUA website.

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