ALEXANDRIA, Va.–NCUA has reintroduced two temporary changes to its Prompt Corrective Action regulations.
In a letter to credit unions, the agency said it moved to extend the changes to prevent operational disruptions caused by temporary COVID-19 related conditions, adding its Interim Final Rule on Temporary Regulatory Relief in Response to COVID-19-Prompt Corrective Action addresses those temporary changes.
Specifically, the changes involve updates pertaining to the renewal of the temporary modification and relief of NCUA’s prompt corrective action (PCA) regulation.
“In June 2020, the NCUA Board approved regulatory relief measures related to the NCUA’s PCA regulations in anticipation that some federally insured credit unions may experience a temporary reduction in earnings and regulatory capital ratios due to their COVID-19 response efforts,” the agency stated in a Letter to Credit Unions. “These temporary modifications expired on December 31, 2020. Due to the continued impact of the COVID-19 pandemic, however, the NCUA Board decided to reintroduce the two temporary changes to NCUA’s PCA regulations described below to prevent operational disruptions caused by temporary COVID-19 related conditions. NCUA’s Interim Final Rule on Temporary Regulatory Relief in Response to COVID-19-Prompt Corrective Action addresses those temporary changes.”
Also in Letter
The letter notes:
- The first temporary change to the NCUA’s PCA regulations enables the NCUA Board to issue an order applicable to all federally insured credit unions to waive the earnings-retention requirements under § 702.201 for any federally insured credit union that is classified as adequately capitalized. On April 26, 2021, the NCUA Board issued an Administrative Order that amended § 702.201 to waive the earnings-retention requirement for adequately capitalized credit unions.
“Under this change, an adequately capitalized credit union that is unable to meet the earnings-retention requirement will not have to submit a written application requesting approval to decrease the amount of its earnings-retention requirement, NCUA said.
- The second temporary change to the PCA regulations modifies § 702.206(c) regarding the submission of a net worth restoration plan (NWRP) by a federally insured credit union classified as undercapitalized predominantly because of share growth. “Under this change, a credit union that experienced a decline in its net worth ratio due predominantly to temporary share growth may submit a streamlined NWRP,” NCUA said.
Both orders remain in place until March 31, 2022.