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The NCUA Tuesday summarized its interim final rule on prompt corrective action (PCA) in a new Letter to Credit Unions and released an attached order to generate PCA-related relief. The modifications – permitted under an interim rule that was unanimously approved during the board's May meeting – will be in place until Dec. 31.

Earlier this year, NAFCU urged the agency to provide capital relief during the pandemic, including changes to PCA requirements. The association also highlighted how the rule will impact credit unions in a recent Final Regulation Alert.

As finalized, the rule provides temporary regulatory capital relief by relaxing the earnings retention requirement and streamlining the contents of net worth restoration plans (NWRP).

Under the attached order, adequately capitalized federally insured credit unions are temporarily allowed to decrease their earning retentions requirements to zero.

Additionally, the letter clarifies the responsibilities of credit unions whose net worth becomes "undercapitalized" due to losses, highlighting that Regional Directors will take into account the impact of the coronavirus pandemic when approving or denying NWRPs.

"Less than adequately capitalized credit unions that continue experiencing capital deficiencies, whether a result of share growth or other factors, may be required by the Regional Director to submit a revised NWRP that meets the criteria outlined in § 702.206(c)," the agency added.

Credit unions with questions regarding regulatory changes in relation to the interim rule are encouraged to contact their regional office.