12 C.F.R. § 702.106 Standard calculation of risk-based net worth requirement.
Title 12 - Banks and Banking
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. [65 FR 44966, July 20, 2000, as amended at 67 FR 71088, Nov. 29, 2002; 68 FR 56547, Oct. 1, 2003]
Title 12: Banks and Banking
PART 702—PROMPT CORRECTIVE ACTION
Subpart A—Net Worth Classification
§ 702.106 Standard calculation of risk-based net worth requirement.