§ 702.102 - Capital classification.

§ 702.102 Statutory net worth categories.

Cross Reference

Link to an amendment published at 86 FR 72804, Dec. 23, 2021.

Capital classification.

(a) Net worth Capital categories. Except for credit unions defined as “new” under subpart B of this part, a federally insured credit union shall be deemed to be classified (Table 1 of this section) -

(1) Well capitalized if it :

(i)

(A) Net worth ratio. The credit union has a net worth ratio of

seven percent (7%)

7.0 percent or greater

and also meets any applicable risk-based net worth requirement under §§ 702.103 through 702.108; or

(2) Adequately capitalized if it

; and

(B) Risk-based capital ratio. The credit union, if complex, has a risk-based capital ratio of 10 percent or greater; or

(ii) Complex credit union leverage ratio.

(A) The complex credit union is a qualifying complex credit union that has opted into the CCULR framework under § 702.104(d) and it has a CCULR of 9.0 percent or greater; or

(B) The complex credit union is a qualifying complex credit union that has opted into the CCULR framework under § 702.104(d), is in the grace period, as defined in § 702.104(d)(7), and has a CCULR of 7.0 percent or greater.

(2) Adequately capitalized if:

(i) Net worth ratio. The credit union has a net worth ratio of

six percent (6%) or more but less than seven percent (7%), and also meets any applicable risk-based net worth requirement under §§ 702.103 through 702.108 below; or

(3) Undercapitalized if it

6.0 percent or greater; and

(ii) Risk-based capital ratio. The credit union, if complex, has a risk-based capital ratio of 8.0 percent or greater; and

(iii) Does not meet the definition of a well capitalized credit union.

(3) Undercapitalized if:

(i) Net worth ratio. The credit union has a net worth ratio of

four percent (4%)

4.0 percent or more but less than

six

6.0 percent; or

(

6%), or fails to meet any applicable risk-based net worth requirement under §§ 702.103 through 702.108; or

ii) Risk-based capital ratio. The credit union, if complex, has a risk-based capital ratio of less than 8.0 percent.

(4) Significantly undercapitalized if it :

(i) Has The credit union has a net worth ratio of two percent (2%) 2.0 percent or more but less than four percent (4%)4.0 percent; or

(ii) Has The credit union has a net worth ratio of four percent (4%) 4.0 percent or more but less than five percent (5%)5.0 percent, and either -

(A) Fails to submit an acceptable net worth restoration plan within the time prescribed in § 702.206110; or

(B) Materially fails to implement a net worth restoration plan approved by the NCUA Board; or

(C) Receives notice that a submitted net worth restoration plan has not been approved.

(5) Critically undercapitalized if it has a net worth ratio of less than two percent (2%).

(

2.0 percent.

Table 1 to § 702.102 - Capital Categories

Capital classification	Net worth ratio		Risk-based capital ratio, if applicable		CCULR, if applicable	And subject to following condition(s) . . .
Well Capitalized	7% or greater	And	10% or greater	Or	9% or greater *
Adequately Capitalized	6% or greater	And	8% or greater	Or	N/A	And does not meet the criteria to be classified as well capitalized.
Undercapitalized	4% to 5.99%	Or	Less than 8%	Or	N/A
Significantly Undercapitalized	2% to 3.99%		N/A		N/A	Or if “undercapitalized at <5% net worth and (a) fails to timely submit, (b) fails to materially implement, or (c) receives notice of the rejection of a net worth restoration plan.
Critically Undercapitalized	Less than 2%		N/A		N/A

^* A qualifying complex credit union opting into the CCULR framework should refer to 12 CFR 702.104(d)(7) if its CCULR falls below 9.0 percent.

(b) Reclassification based on supervisory criteria other than net worth. The NCUA Board may reclassify a “well capitalized” well capitalized credit union as “adequately capitalized” adequately capitalized and may require an “adequately capitalized” adequately capitalized or “undercapitalized” undercapitalized credit union to comply with certain mandatory or discretionary supervisory actions as if it were classified in the next lower net worth capital category (each of such actions hereinafter referred to generally as “reclassification”) in the following circumstances:

(1) Unsafe or unsound condition. The NCUA Board has determined, after providing the credit union with notice and opportunity for hearing pursuant to § 747.2003 of this chapter, that the credit union is in an unsafe or unsound condition; or

(2) Unsafe or unsound practice. The NCUA Board has determined, after providing the credit union with notice and opportunity for hearing pursuant to § 747.2003 of this chapter, that the credit union has not corrected a material unsafe or unsound practice of which it was, or should have been, aware.

(c) Non-delegation. The NCUA Board may not delegate its authority to reclassify a credit union under paragraph (b) of this section.

(d) Consultation with State state officials. The NCUA Board shall consult and seek to work cooperatively with the appropriate State state official before reclassifying a federally insured Statestate-chartered credit union under paragraph (b) of this section, and shall promptly notify the appropriate State state official of its decision to reclassify.

[65 80 FR 858466706, FebOct. 1829, 20002015, as amended at 65 86 FR 44966, July 20, 2000; 67 FR 71087, Nov. 29, 200272804, Dec. 23, 2021]