Risk Weights at a Glance with Comparison to FDIC

Numerator

Equity Risk Weights FDIC Risk Weights Comparable
Undivided earnings 100% 100% Y
Regular reserves 100% 100% Y
Appropriations for non-conforming investments 100% 100% Y
Other reserves 100% 100% Y
Equity acquired in merger 100% 100% Y
Net income 100% 100% Y
Additions Risk Weights FDIC Risk Weights Comparable
Allowance for credit losses 100% (no cap) 100% (capped) N1
Subordinated debt in accordance with §702.407 100% 100% Y
Section 208 assistance included in net worth as defined in §702.2 100% 100% Y
Deductions Risk Weights FDIC Risk Weights Comparable
NCUSIF capitalization deposit -100% N/A Y
Goodwill (less excluded goodwill) -100%2 -100% Y
Other intangible assets (less excluded other intangible assets) -100%2 -100% Y
Identified losses not reflected in the RBC numerator -100% -100% Y
Mortgage servicing assets in excess of 25% of RBC numerator (carry value) -100% -100% Y

Denominator

Cash or Deposits in Financial Institutions Risk Weights FDIC Risk Weights Comparable
Cash, currency and coin, including vault, ATM, and teller cash 0% 0% Y
Insured balances at FDIC-insured depositories or FICUs 0% 0% Y
Uninsured balances at FDIC-insured depositories, FICUs, and balances at privately-insured CUs 20% 20% Y
Balances due from uninsured institutions or deposits not risk-weighted 0% or 20% 100% 20% - 150% N3

Investments 

Securities Risk Weights FDIC Risk Weights Comparable
Direct unconditionally guaranteed obligations of U.S. (government, central bank, agency) 0%4 0% Y
Obligations of supranational entities and multilateral development banks 0% 0% Y
Conditionally guaranteed obligations of U.S. (government, central bank, agency) 20%5,6 20% Y
Obligations of GSEs other than equity or preferred stock 20%5,6 20% Y
Securities issued by PSEs that represent general obligation securities 20% 20% Y
Part 703-compliant securities holding only 0% or 20% risk weight investments 20% 7 Y
Securities issued by PSEs in the U.S. that represent revenue obligation securities 50%6 50% Y
Other non-U.S. government agency or non-GSE guaranteed RMBS 50%5,6 8 Y
Industrial development bonds 100% 100% Y
Interest-only MBS strips 100% 100% Y
Part 703-compliant investment securities 100%7 N/A N/A
Corporate debentures and commercial paper 100% 100% Y
GSE equity exposure or preferred stock 100% 100% Y
Non-subordinated tranche of any investment security 100%8 N/A Y
Publicly-traded equity investments (non-CUSO) 100% or 300% 300% Y
Investment securities not compliant with Part 703 300%7 7 Y
Subordinated tranche of any investment security 1,250%8 8 Y
Other Investments Risk Weights FDIC Risk Weights Comparable
Federal Reserve Bank stock and Central Liquidity Facility stock 0% 0% Y
Part 703-compliant funds holding only 0% or 20% risk weight investments (non-security) 20% 7 Y
Federal Home Loan Bank stock 20% 20% Y
Part 703-compliant investment funds (non-security) 100%7 N/A N/A
Corporate non-perpetual capital (membership capital) 100% N/A N/A
Charitable donation accounts 100% 100% Y
Corporate perpetual capital (paid-in capital) 100%9 or 150% N/A N/A
Equity investments in CUSOs 150% N/A N/A
Investment funds not compliant with Part 703 (non-security) 300%7 7 Y
Non-publicly traded equity investment (non-CUSO) 100% or 400% 400% Y
Subordinated tranche of any investment fund (non-security) 1,250%8 8 Y
Non-security beneficial interests (includes CEIO equity tranche of securitization) 1,250% 10 Y11

Loans

First Liens Risk Weights FDIC Risk Weights Comparable
Current 1st-lien residential real estate loans < 35% of assets 50%12 50% Y
Current 1st-lien residential real estate loans > 35% of assets 75%12 50% N13
Non-current 1st-lien residential real estate 100% 100% Y
Junior Liens Risk Weights FDIC Risk Weights Comparable
Current junior real estate loans < 20% of assets 100%12 100% Y
Current junior real estate loans > 20% of assets 150%12 100% N13
Non-current junior real estate loans 150% N/A N13
Consumer Loans Risk Weights FDIC Risk Weights Comparable
Share-secured loans (deposits held in-house) 0% 0% Y
Share-secured loans (deposits held in another financial institution) 20% 20% Y
Government-guaranteed portion of loan balances 20% 20% Y
Current secured, non-guaranteed consumer loans 75% 100% N14
Current unsecured, non-guaranteed consumer loans 100% 100% Y
Non-current consumer loans 150% 150% Y
Commercial Loans Risk Weights FDIC Risk Weights Comparable
Paycheck Protection Program loans 0% 0% Y
Commercial loan balances secured by compensating balances 20% N/A N/A
Current commercial loans < 50% of assets 100%15 100% - 150%16 Y
Current commercial loans > 50% of assets 150%15 100% - 150%16 N13
Non-current commercial loans 150% 150% Y

Other Assets

Denominator Deductions Risk Weights FDIC Risk Weights Comparable
NCUSIF capitalization deposit 0%17 N/A N/A
Goodwill 0%17 0% Y
Other intangible assets (excludes mortgage servicing assets) 0%17 0% Y
Mortgage servicing assets in excess of 25% of RBC numerator (carry value) 0%17 0% Y
Other Assets Risk Weights FDIC Risk Weights Comparable
Loans to CUSOs (unconsolidated only) 100% 100% Y
General account permanent insurance 100% 100% Y
All other assets listed on the statement of financial condition without a specified risk 100% 100% Y
Equity investments in CUSOs (unconsolidated only) 100%18 or 150% 100% - 600% N19
Mortgage servicing assets up to 25% of RBC numerator (carry value) 250% 250% Y
Separate account insurance 300%20 20 Y
Subordinated tranche of any investment classified as other assets 1,250%21 21 Y

Off-Balance Sheet Exposures

Loans Transferred Credit Conversion Factors / Risk Weights FDIC Credit Conversion Factors / Risk Weights Comparable
1st-lien residential real estate loans transferred with recourse 100% / 50% 100% / 50% Y
Junior-lien real estate, commercial loans, and all other unsecured loans transferred with recourse 100% / 100% 100% / 100% Y
All other secured consumer loans transferred with recourse 100% / 75% 100% / 100% N22
Loans transferred to FHLB under the Mortgage Partnership Finance Program 20% / 50% N/A N/A
Commitments Credit Conversion Factors / Risk Weights FDIC Credit Conversion Factors / Risk Weights Comparable
Conditionally cancelable unfunded commercial loan commitments 50% / 100% 20%-50% / 100%23 Y
Conditionally cancelable unfunded 1st-lien residential real estate loan commitments 10% / 50% 0%-50% / 50%23 Y
Conditionally cancelable unfunded junior-lien real estate loan commitments 10% / 100% 0%-50% / 100%23 Y
Conditionally cancelable unfunded secured consumer loans 10% / 75% 0% / 100%23 Y
Conditionally cancelable unfunded unsecured consumer loans 10% / 100% 0% / 100%23 Y
Other Off-Balance Sheet Exposures Credit Conversion Factors / Risk Weights FDIC Credit Conversion Factors / Risk Weights Comparable
Financial standby letters of credit 100% / 100% 100% / 100% Y
Forward agreements that are not derivative contracts 100% / 100% 100% / 100% Y
Sold credit protection through guarantees 100% / 100% 100% / 100% Y
Sold credit protection through credit derivatives 100%24 100%24 Y
Off-balance sheet securitization exposures 100% / 100% or Gross-up or 1,250% 100% / 1,250% or SSFA or Gross-up Y
Off-balance sheet securities borrowing/lending and repurchase transactions 100% / 100%24 100% / 100%24 Y
Other off-balance sheet exposures not listed (meeting definition of commitments) 100% / 100% N/A N/A
Over-the-counter or centrally-cleared derivatives 25 25 Y

 FDIC Risk Weights


Footnotes


1 FDIC caps allowance for credit losses at 1.25% of risk-weighted assets.

2 Special handling for allowing goodwill and other intangibles related to supervisory mergers incurred prior to 2015.

3 FDIC uses country risk classifications and NCUA uses a simplified approach of 100% for all deposits in non-FDIC insured banks.

4 Exclude detached security coupons and ex-coupon securities.

5 Exclude interest only.

6 Non-subordinated.

7 FDIC is subject to look-through approach; NCUA has option of using the look-through approach.

8 FDIC is subject to gross-up or simplified supervisory formula approach (SSFA); NCUA has option of using gross-up approach.

9 Subject to the non-significant equity exposure measure.

10 Simplified approach used due to limited securitization activity by credit unions.

11 FDIC subtracts CEIO exposure in the numerator; NCUA addresses CEIO exposure in the denominator. The effect to the RBC ratio is comparable.

12 Includes 1- to 4-family, non-owner occupied real estate loans.

13 NCUA takes a more conservative approach for loans that have historically caused greater losses to the NCUSIF.

14 Secured consumer loans have lower credit risk than unsecured consumer loans and therefore a lower risk weight.

15 Excludes 1- to 4-family, non-owner occupied 1st- or junior-lien real estate loans and any loans secured by a personal use vehicle.

16 FDIC identifies certain loans as High Volatility Commercial Real Estate and assigns a 150% risk weight.

17 Deducted from the RBC numerator.

18 Subject to the non-significant equity exposure measure.

19 Specific to credit unions.

20 FDIC is subject to look-through approach; NCUA has option of using the look-through approach.

21 FDIC is subject to gross-up or simplified supervisory formula approach (SSFA); NCUA has option of using gross-up approach.

22 Secured consumer loans have lower credit risk than unsecured consumer loans and therefore a lower risk weight.

23 CCF is 20% if loan commitment is conditionally cancelable within 1 year and 50% if conditionally cancelable beyond 1 year.

24 Alternatively, as defined by 12 CFR 324.

25 Risk weight determined by factors such as product type, maturity, and collateral type.

Last modified on
04/14/22