Capital Categories for Covered Credit Unions
The “risk-based net worth (RBNW) requirement” is replaced with a “risk-based capital ratio requirement.” Whereas the current RBNW requirement imposes different
capital requirements on different assets (6% for average risk assets, more or less than 6% for low-risk or high-risk assets) the proposed risk-based capital ratio
would assign varying weights to different assets, and then calculate the ratio of net worth to total risk-weighted assets. Unlike the Basel system, which
assigns weights exclusively on the basis of credit risk, NCUAs risk weights would cover, in addition to credit risk, interest rate risk, concentration risk
and other risks. The statutory Tier I net worth ratios would remain unchanged.
Well Capitalized (All risk based capital ratios are for covered credit unions only)
A credit union must maintain a net worth ratio of 7 percent or greater and a risk-based capital ratio of 10.5 percent or greater.
A credit union must maintain a net worth ratio of at least 6 percent and a risk-based capital ratio of 8 percent or greater.
A credit union with a net worth ratio of 4 percent to 6percent or with a risk-based capital ratio less than 8% if the net worth ratio exceeds 6%.
(This is essentially unchanged from the current rule.) A credit union has a net worth ratio of less than 5 percent, and has received notice that its net worth
restoration plan has not been approved; (2) the credit union has a net worth ratio of 2 percent or more but less than 4 percent; or (3) the credit union
has a net worth ratio of 4 percent or more but less than 5 percent, and the credit union either fails to submit an acceptable net worth restoration plan
within the time prescribed in §702.111, or materially fails to implement a net worth restoration plan approved by NCUA.
(This is unchanged from the current rule.) A credit union is classified as critically undercapitalized if it has a net worth ratio of less than 2 percent.
Calculation of the Current Net Worth Ratio
This is unchanged from the current rule.