Dear Boards of Directors and Chief Executive Officers:
This letter provides an important update pertaining to low-income credit unions participating in the U.S. Department of the Treasury’s Emergency Capital Investment Program (ECIP). Low-income credit unions may receive 30-year subordinated debt investments from the ECIP. A low-income credit union may also treat this ECIP funding as secondary capital in accordance with the NCUA’s regulations provided that any low-income credit union receiving secondary capital treatment has an NCUA-approved secondary capital plan by December 31, 2021.
Low-income credit unions that have already had their secondary capital plans approved for issuances under the ECIP must notify in writing their respective NCUA regional office, and state supervisory authority for federally insured, state-chartered credit unions, to include the following information no later than 30 days from the date this Letter to Credit Unions is issued:
- The stated maturity of the ECIP subordinated debt note (choose 15 years or 30 years);
- The length of regulatory capital treatment for the ECIP issuance;1 and
- A statement indicating that the credit union will not materially deviate from the strategies outlined in the previously approved secondary capital plan. If a credit union chooses a maturity that is longer than the maturity used in the originally approved secondary capital plan and the longer maturity will cause the credit union to materially deviate from the strategies documented in the approved plan, then the credit union must submit a revised secondary capital plan in accordance with 12 C.F.R. §701.34(b), for federally chartered credit unions, or 12 C.F.R. §741.204(c) for federally insured, state-chartered credit unions.
If you have any questions, please contact your NCUA Regional Office or state supervisory authority.
Todd M. Harper
1 As of the date of this letter, under the final subordinated debt rule, secondary capital issued under the current secondary capital rules will receive regulatory capital treatment for a period up to 20 years from January 1, 2022 (86 FR 11060, 11074 (Feb. 23, 2021)). In addition, the NCUA Board has proposed to extend the starting period of the 20 years for ECIP issuances to the later of the date of issuance or January 1, 2022.