ALEXANDRIA, Va. — The National Credit Union Administration's new risk-based capital calculator received more than 2,200 unique visits the day it was launched last week and a total of 5,400 through Friday.
The agency released its highly anticipated proposed risk-based capital rule at its
Federally insured credit unions with assets of $50 million and above, with concentrations in real estate loans, member business loans or delinquent loans, would have to maintain additional capital requirements under the new rule. Those CUs with less than $50 million in assets will follow current capital rules, with the current 7% leverage capital standard remaining the floor.
NCUA told Credit Union Journal that the
"It's a complicated rule and we wanted a way that makes the rule easier to digest and understand its major components, as well as quickly let a credit union know where its stands," said Ronnie Levine, NCUA CIO.
The risk-based capital calculator provides users a comprehensive overview of a credit union's capital ratio and Prompt Corrective Action category under both the current rule and the proposed regulation. After selecting a credit union to review, users can see each component of that particular credit union's risk-based capital ratio, and also learn what data from the call report are used and how the proposed risk-weights are applied at each point in the ratio calculation.
Levine said the agency thinks this level of clarity will lead to a better final rule. "This way we think credit unions can provide more meaningful comments so we can get the rule right," she added.
Greg Smith, CEO of the $4.2 billion Pennsylvania State Employees CU in Harrisburg, said NCUA was wise to release the calculator.
"A significant change like this is made a lot easier when CUs are reassured that they won't be impacted in a negative way," said Smith, whose credit union shows 16.37% risk-based capital under the proposed rule. "I suppose those credit unions with heavy mortgage and MBL concentrations will have concerns, but PSECU is well positioned for the new rules."
At the $464 million-asset SeaComm FCU in Massena, N.Y., CEO Scott Wilson agrees the calculator is a "useful resource" that will help credit unions better monitor and manage their capital status.
The calculator shows SeaComm at 12.45% risk-based capital.
The calculator will remain in place until the final rule is issued, after which the risk-based capital calculation will simply become part of the call report data, according to JeanMarie Komyathy, director of risk management, Office of Examination and Insurance.
"In addition to providing credit unions with an immediate view of where they stand under the proposed rule, we hope the calculator, for those that are anticipating changes to the balance sheet, can be a nice management tool," Komyathy said. "They can look at all the data the calculator gives them and say, 'OK, if I change this number, maybe increase MBLs from 3% to 5% over the next six months, what will that do to my risk-based capital calculation?'"
