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The NCUA Board during its May meeting unanimously approved a NAFCU-sought interim final rule on prompt corrective action (PCA) to provide temporary regulatory capital relief to federally-insured credit unions (FICUs). NAFCU sent members a Final Regulation Alert yesterday highlighting how the rule will impact credit unions.

Earlier this year, NAFCU urged the agency to provide capital relief during the pandemic, including changes to PCA requirements.

The interim final rule amends the agency’s existing PCA rules. In the alert, NAFCU notes that the amendments in general grant FICUs greater operational flexibility and relief should net worth levels decline. It will also temporarily:

• permit the NCUA Board to issue an order to waive the earnings retention requirement for any FICU that is classified as adequately capitalized; and
• permit FICUs to submit simplified net worth restoration plans after attesting that a reduction in capital was caused by share growth resulting from a temporary condition due to the coronavirus pandemic.

These modifications will be in place until Dec. 31, 2020.

Credit unions are encouraged to send comments to NAFCU Senior Counsel for Research and Policy Andrew Morris via email at amorris@nafcu.org. Comments are due to the NCUA June 29.

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