# 12 CFR § 702.106: Prompt corrective action for adequately capitalized credit unions

> Federal · Regulations · In force

URL: https://www.frixlaw.com/law-library/statutes/ecfr-12-702.106

## Section

- **Citation:** 12 CFR § 702.106
- **Heading:** Prompt corrective action for adequately capitalized credit unions
- **Jurisdiction:** Federal
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** September 22, 2026
- **Source:** Publisher's official text
- **Location:** Title 12—Banks and Banking > CHAPTER VII—NATIONAL CREDIT UNION ADMINISTRATION > SUBCHAPTER A—REGULATIONS AFFECTING CREDIT UNIONS > PART 702—CAPITAL ADEQUACY > Subpart A—Prompt Corrective Action

## Text

(a) Earnings retention. Beginning on the effective date of classification as adequately capitalized or lower, a federally insured credit union must increase the dollar amount of its net worth quarterly either in the current quarter, or on average over the current and three preceding quarters, by an amount equivalent to at least 1/10th percent (0.1%) of its total assets (or more by choice), until it is well capitalized.
(b) Decrease in retention. Upon written application received no later than 14 days before the quarter end, the NCUA Board, on a case-by-case basis, may permit a credit union to increase the dollar amount of its net worth by an amount that is less than the amount required under paragraph (a) of this section, to the extent the NCUA Board determines that such lesser amount:
(1)(i) Is necessary to avoid a significant redemption of shares; and
(ii) Would further the purpose of this part.
(2) Notwithstanding paragraph (a) of this section, from February 28, 2022, until March 31, 2023, for a credit union that is adequately capitalized:
(i) The NCUA Board may issue an administrative order specifying temporary revisions to the earnings retention requirement, to the extent the NCUA Board determines that such lesser amount—
(A) Is necessary to avoid a significant redemption of shares; and
(B) Would further the purpose of this part.
(ii) Despite the issuance of an administrative order under paragraph (b)(2) of the section, the Regional Director may require a credit union to submit an earnings retention waiver under paragraph (b)(1) if the credit union poses an undue risk the National Credit Union Share Insurance Fund or exhibits material safety and soundness concerns.
(c) Decrease by FISCU. The NCUA Board shall consult and seek to work cooperatively with the appropriate state official before permitting a federally insured state-chartered credit union to decrease its earnings retention under paragraph (b) of this section.
(d) Periodic review. A decision under paragraph (b) of this section to permit a credit union to decrease its earnings retention is subject to quarterly review and revocation except when the credit union is operating under an approved net worth restoration plan that provides for decreasing its earnings retention as provided under paragraph (b) of this section.
[80 FR 66706, Oct. 29, 2015, as amended at 87 FR 10950, Feb. 28, 2022]

## Nearby sections

- [12 CFR § 702.101 § 702.101 Capital measures, capital adequacy, effective date of classification, and notice to NCUA.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.101.md)
- [12 CFR § 702.102 § 702.102 Capital classification.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.102.md)
- [12 CFR § 702.103 § 702.103 Applicability of risk-based capital measures.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.103.md)
- [12 CFR § 702.104 § 702.104 Risk-based capital ratio.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.104.md)
- [12 CFR § 702.105 § 702.105 Derivative contracts.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.105.md)
- [12 CFR § 702.106 § 702.106 Prompt corrective action for adequately capitalized credit unions.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.106.md)
- [12 CFR § 702.107 § 702.107 Prompt corrective action for undercapitalized credit unions.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.107.md)
- [12 CFR § 702.108 § 702.108 Prompt corrective action for significantly undercapitalized credit unions.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.108.md)
- [12 CFR § 702.109 § 702.109 Prompt corrective action for critically undercapitalized credit unions.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.109.md)
- [12 CFR § 702.110 § 702.110 Consultation with state officials on proposed prompt corrective action.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.110.md)
- [12 CFR § 702.111 § 702.111 Net worth restoration plans (NWRP).](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.111.md)
- [12 CFR § 702.112 § 702.112 Reserves.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.112.md)
- [12 CFR § 702.113 § 702.113 Full and fair disclosure of financial condition.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.113.md)
- [12 CFR § 702.114 § 702.114 Payment of dividends.](https://www.frixlaw.com/law-library/statutes/ecfr-12-702.114.md)

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/ecfr-12-702.106. Check the current official text before relying on it. Not legal advice.