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New Risk-Based Capital (RBC2) Proposal Released

The Missouri Credit Union Association (MCUA) and Missouri credit union leaders, along with the rest of the credit union community, are reviewing the highly anticipated revised Risk-Based Capital (RBC2) proposal from the National Credit Union Administration (NCUA). The proposal was released on January 15, and credit union representatives will have the opportunity to weigh in on the changes during a comment period.

MCUA Regulatory Compliance staff will submit a comment letter on behalf of credit unions in Missouri. Credit unions in the state are also encouraged to participate. In the weeks ahead, watch for more Missouri-specific information and talking points to assist your credit union with the comment process.

A few key points regarding the new proposal:

  • The asset size threshold for Risk-Based Capital coverage was raised from $50 million to $100 million. This reduces the number of credit unions potentially affected.
  • The PCA threshold level for risk-based capital for well-capitalized credit unions was lowered from 10.5% to 10%.
  • Risk weights have been lowered, including those in the areas of mortgage loans, member business loans and long-term investments.
  • Interest rate risk was removed from the RBC2 proposal. However, it is anticipated NCUA will introduce a separate rule on interest rate risk.
  • The “individual minimum capital” requirement was removed, but the NCUA Board retains its existing authority to take action on capital levels beyond the confines of the proposed rule.
  • The time to comply with the new rule is nearly four years (January 1, 2019), versus the original proposal of only 18 months.

In advance of Missouri-specific information from MCUA, there are RBC2 resources currently available from the Credit Union National Association: