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FOR IMMEDIATE RELEASE

Credit Unions Will Take $6 Billion Hit with NCUA's Proposed Rule on Risk-Based Capital

Washington (Feb. 11, 2014) - National Association of Federal Credit Unions (NAFCU) Chief Economist and Director of Research Dr. David Carrier analyzed the impact of NCUA's proposed rule on risk-based capital and determined that credit unions withmore than $50 million in assets will have to hold $6.3 billion more in additional reserves to achieve the same capital cushion as before.

Carrier analyzed the data by asset size and credit unions and found that all asset classes will be affected.

"This rule as proposed will have unpredictable consequences for loan and share growth, as individual credit unions will need to adjust their balance sheets to meet the new requirements," said Carrier. "Because credit unions cannot just raise capital from the open market, this cost will undoubtedly be passed on to credit union members."

Capital cushion is the difference between a credit union's net worth ratio and the minimum required to be adequately capitalized under the proposed system.

• Credit unions with assets from $50 million to $100 million will need to hold a total of $192 millionmore in additional reserves in order to have the same capital cushion under the proposed system.
• Credit unions with assets from $100 million to $250 million will need to hold a total of $346 millionmore in additional reserves in order to have the same capital cushion under the proposed system.
• Credit unions with assets from $250 million to $500 million will need to hold a total of $1.05 billionmore in additional reserves in order to have the same capital cushion under the proposed system.
• Credit unions with assets from $500 million to $1 billion will need to hold a total of $1.28 billionmore in additional reserves in order to have the same capital cushion under the proposed system.
• Credit unions with assets above $1 billion will need to hold a total of $3.47 billionmore in additional reserves in order to have the same capital cushion under the proposed system.
• Credit unions as a whole will be required to hold more than $6.3 billionmore in additional reserves in order to have the same capital cushion under the proposed system.

For more information on capital reform, go to www.nafcu.org/capitalreform/. NAFCU will maintain this page as a resource for credit unions and the public to find additional links and references on this topic.

The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.

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Contact: Patty Briotta | 703-842-2820 | pbriotta@nafcu.org