In 2015, the NCUA Board approved the risk-based capital rule to fulfill the Federal Credit Union Act’s requirement for NCUA to design a risk-based system consistent with and comparable to the federal banking agencies’ systems while taking the cooperative character of credit unions into account. The overarching intent is to reduce the likelihood of a relatively small number of high-risk outliers exhausting their capital and causing systemic losses, which, all federally insured credit unions would have to pay through the National Credit Union Share Insurance Fund. In 2018, the risk-based capital rule was revised so that it only applied to complex credit unions with $500 million or more in assets.
Additionally, there have been several legislative, regulatory, and marketplace developments since the risk-based capital rule was approved. In 2018, Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act directed the other federal banking agencies to propose a simplified, alternative measure of capital adequacy for certain federally insured banks. That effort became known as the Community Bank Leverage Ratio framework, which became effective in January 2020.
The Complex Credit Union Leverage Ratio for federally insured credit unions is comparable to the Community Bank Leverage Ratio. Both standards strike a balance among several objectives, including maintaining strong capital levels, protecting safety and soundness, and simplifying compliance. Under the rule, a complex credit union that maintains a minimum net worth ratio that meets other qualifying criteria is eligible to opt into the complex credit union leverage ratio (CCULR) framework if they have a minimum net worth ratio of nine percent. The rule also includes amendments to the 2015 risk-based capital final rule, including addressing asset securitizations issued by credit unions, clarifying the treatment of off-balance sheet exposures, deducting certain mortgage servicing assets from a complex credit union’s risk-based capital numerator, revising the treatment of goodwill, and amending other asset risk weights.
Risk-Based Capital Rule
Risk-Based Capital Rules
- 2015 Final Rule
- 2018 Supplemental Rule
- 2019 Delay Rule
- 2021 Final CCULR Rule and Revisions to Final RBC Rule
- Part 702 of NCUA Rules and Regulations for Capital Adequacy
- Report to the House Financial Services Committee on the Final Risk-Based Capital Rule
Board Action Memorandums
Tools
Complex Credit Union Risk-Based Capital Calculator
NCUA has provided a Calculator to help credit unions understand how the risk-based capital rule will affect them individually. Credit unions can privately and independently input their own financial data into the Calculator to estimate what their risk-based capital ratio would be.
The Calculator is available in Excel format:
The formulas in the file have been updated as of August 18, 2022.