12 C.F.R. § 704.19 Wholesale corporate credit unions.
Title 12 - Banks and Banking
(a) General. Wholesale corporate credit unions are subject to the preceding requirements of this part, except as set forth in this section. (b) Earnings retention requirement. A wholesale corporate credit union must increase retained earnings if the prior month-end retained earnings ratio is less than 1 percent. (1) Its retained earnings must increase: (i) During the current month, by an amount equal to or greater than the monthly earnings retention amount; or (ii) During the current and prior two months, by an amount equal to or greater than the quarterly earnings retention amount. (2) Earnings retention amounts are calculated as follows: (i) The monthly earnings retention amount is determined by multiplying the earnings retention factor by the prior month-end moving daily average net assets; and (ii) The quarterly earnings retention amount is determined by multiplying the earnings retention factor by moving daily average net assets for each of the prior three month-ends. (3) The earnings retention factor is determined as follows: (i) If the prior month-end retained earnings ratio is less than 1 percent and the core capital ratio is less than 3 percent, the earnings retention factor is .15 percent per annum; or (ii) If the prior month-end retained earnings ratio is less than 1 percent and the core capital ratio is equal to or greater than 3 percent, the earnings retention factor is .075 percent per annum. (4) The OCCU Director may approve a decrease to the earnings retention amount set forth in this section if it is determined a lesser amount is necessary to avoid a significant adverse impact upon a wholesale corporate credit union. (5) Operating management of the wholesale corporate credit union must notify its board of directors, supervisory committee, OCCU Director and, if applicable, the state regulator within 10 calendar days of determining the retained earnings ratio has declined below 1 percent. If the decline in the retained earnings ratio is due in full or in part, to a decline in the dollar amount of retained earnings and the retained earnings ratio is not restored to at least 1 percent by the next month end, a retained earnings action plan is required to be submitted within 30 calendar days. (6) The retained earnings action plan must be submitted to the OCCU Director and, if applicable, the state regulator and, at a minimum, include the following: (i) Reasons why the dollar amount of retained earnings has decreased; (ii) Description of actions to be taken to increase the dollar amount of retained earnings within specific time frames; and (iii) Monthly balance sheet and income projections, including assumptions for the ensuing 12-month period. [62 FR 12938, Mar. 19, 1997, as amended at 67 FR 65657, Oct. 25, 2002]
Title 12: Banks and Banking
PART 704—CORPORATE CREDIT UNIONS
§ 704.19 Wholesale corporate credit unions.
