The National Credit Union Administration (NCUA) issued a proposed new regulation on February 27, 2014, entitled Prompt Corrective Action (PCA)—Risk-Based Capital. The proposed new regulation applies to all credit unions with over $50 million in total assets. The capital requirements for “new” credit unions (credit unions that have been in operation for less than 10 years and have $10 million or less in total assets) and credit unions with $50 million or less in assets would remain relatively unchanged from the current rules.
Under the proposed regulation, in addition to meeting the current requirement of maintaining a net worth ratio of 7% or above to be considered well-capitalized, affected credit unions would also need to maintain a risk-based capital ratio of 10.5%. The new risk-based capital ratio would essentially replace the current risk-based net worth (RBNW) requirement.
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