UNITED STATES OF AMERICA
NATIONAL CREDIT UNION ADMINISTRATION BOARD
Section 702.201(b)(2) of the NCUA’s regulations (12 C.F.R. § 702.201(b)(2)) authorizes the NCUA Board to issue a temporary order specifying temporary revisions to the earnings-retention requirement for credit unions that are adequately capitalized to the extent the NCUA Board determines that such lesser amount: (a) is necessary to avoid a significant redemption of shares; and (b) would further the purpose of the prompt corrective action regulations.
Furthermore, § 702.201(b)(2) provides that despite the issuance of such an administrative order, the Regional Director retains the authority to require a credit union to submit an earnings transfer waiver if the credit union poses an undue risk to the National Credit Union Share Insurance Fund (NCUSIF) or exhibits material safety and soundness concerns.
In light of the economic circumstances caused by the COVID-19 pandemic, the Board has determined that decreasing the earnings-retention requirements set forth in the NCUA’s regulations is necessary to avoid a significant redemption of shares and would further the purposes of the prompt corrective action regulations.
Accordingly, the Board hereby orders that any natural-person federally insured credit union whose net worth classification, as defined in part 702 of the NCUA’s regulations, is adequately capitalized between March 31, 2020, and December 31, 2020, may decrease its earnings-retention requirement to zero as set forth in part 702. This order is effective from the date of this order through and including December 31, 2020. After that time, the requirements of part 702 apply as before, including the earnings-retention requirement and the associated case-by-case waiver application procedures. This order does not apply to any credit union whose net worth classification falls below adequately capitalized.
Notwithstanding this order, the appropriate Regional Director retains authority to require any individual federally insured credit union to submit an earnings transfer waiver if the credit union poses an undue risk to the NCUSIF or exhibits material safety and soundness concerns.
NATIONAL CREDIT UNION ADMINISTRATION BOARD:
By Gerard Poliquin, Secretary of the Board
Dated June 5, 2020