702.106—Standard calculation of risk-based net worth requirement.

A credit union's risk-based net worth requirement is the aggregate of the following standard component amounts, each expressed as a percentage of the credit union's quarter-end total assets as reflected in its most recent Call Report, rounded to two decimal places (Table 4):
(a) Long-term real estate loans. The sum of:
(1) Six percent (6%) of the amount of long-term real estate loans less than or equal to twenty-five percent (25%) of total assets; and
(2) Fourteen percent (14%) of the amount in excess of twenty-five percent
(25%) of total assets;
(b) Member business loans outstanding. The sum of:
(1) Six percent (6%) of the amount of member business loans outstanding less than or equal to fifteen percent (15%) of total assets;
(2) Eight percent (8%) of the amount of member business loans outstanding greater than fifteen percent (15%), but less than or equal to twenty-five percent (25%), of total assets; and
(3) Fourteen percent (14%) of the amount in excess of twenty-five percent (25%) of total assets;
(c) Investments. The sum of:
(1) Three percent (3%) of the amount of investments with a weighted-average life (as specified in § 702.105 above) of one (1) year or less;
(2) Six percent (6%) of the amount of investments with a weighted-average life greater than one (1) year, but less than or equal to three (3) years;
(3) Twelve percent (12%) of the amount of investments with a weighted-average life greater than three (3) years, but less than or equal to ten (10) years; and
(4) Twenty percent (20%) of the amount of investments with a weighted-average life greater than ten (10) years;
(d) Low-risk assets. Zero percent (0%) of the entire portfolio of low-risk assets;
(e) Average-risk assets. Six percent (6%) of the entire portfolio of average-risk assets;
(f) Loans sold with recourse. Six percent (6%) of the entire portfolio of loans sold with recourse;
(g) Unused member business loan commitments. Six percent (6%) of the entire portfolio of unused member business loan commitments; and
(h) Allowance. Negative one hundred percent (−100%) of the balance of the Allowance for Loan and Lease Losses account, not to exceed the equivalent of one and one-half percent (1.5%) of total loans outstanding.

Code of Federal Regulations

Code of Federal Regulations 521
[Please see PDF for image: ER01OC03.055 ]

Code of Federal Regulations

[65 FR 44966, July 20, 2000, as amended at 67 FR 71088, Nov. 29, 2002; 68 FR 56547, Oct. 1, 2003]