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Federal Register / Vol. 86, No. 244 / Thursday, December 23, 2021 / Rules and Regulations
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complex credit union to hold net worth in dollars equal to seven percent of its total assets. Second, for purposes of computing the MBL cap,66 the riskbased capital ratio requires a complex credit union to hold net worth in dollars equal to 10 percent of the credit unions risk-weighted assets as calculated under 12 CFR 702.104. The complex credit union would then compare the two net worth amounts as calculated in the preceding discussion.
The credit union would take the larger of the two net worth amounts, which is the minimum amount of net worth necessary to be well capitalized under either the net worth ratio or the riskbased capital ratio and compare that to actual net worth. The lesser of these two net worth amounts is used to compute the complex credit unions MBL cap, which would be 1.75 times the lesser of these two net worth amounts. While the 2015 Final Rule is not yet effective, the agency currently implements this approach for the small number of complex credit unions that are required to hold more net worth under the current risk-based net worth requirement than the net worth ratio.
The Board continues to find this approach reflects the correct reading of sections 107A and 216 and re-affirms this interpretation over any prior interpretation that disregarded the riskbased net worth requirement for this purpose.67 For complex credit unions, the amount to be well capitalized under section 216c1A is seven percent of total assets the net worth ratio or the amount required by the risk-based net worth requirement, which could be either the risk-based capital ratio under the 2015 Final Rule or the CCULR
framework. A complex credit union must satisfy both of these requirements to be well capitalized under section 216c1A, which means that, in section 107As terms, the minimum net worth required to be well capitalized is the higher of the amount required by the net worth ratio or the risk-based net worth requirement. The Board finds this is a clear, plain language reading of both provisions. Section 107Aa points to section 216c1A to determine the 66 The Board notes that the amount of capital a complex credit union needs to be well capitalized under the 2015 Final Rule for PCA purposes is a different calculation than the amount of net worth required to be well capitalized for purposes of the MBL cap. The reason is the 2015 Final Rule permits complex credit unions to include several forms of capital for purposes of determining its PCA status that do not meet the statutory definition of net worth. The MBL cap, however, is limited by statute to net worth.
67 Thus, the current language in part 723 remains valid, and the Board is not currently adopting any changes to part 723.

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minimum net worth required for complex credit unions, and in turn, section 216c1A includes both the seven percent net worth ratio and the net worth required by any applicable risk-based net worth requirement.
Reading section 107Aa to exclude the net worth required for complex credit unions under section 216c1Aii would ignore a key component of the plain language of section 216c1A
contrary to principles of statutory interpretation.
The Board also finds that even if sections 107A and 216c1A were considered ambiguous or unclear, it would interpret them in the same way.
For instance, the Board observes two key textual indicators that Congress did not intend to limit this calculation to the seven percent net worth ratio. First, section 107A was enacted in the same legislation as section 216. Thus, Congress was aware that section 216c1A set a seven percent net worth ratio to be well capitalized. Yet in section 107Aa, Congress chose not to specify that the MBL limitation is determined by the amount of net worth required to achieve a seven percent net worth ratio. Instead, Congress provided more broadly that the limitation is determined by reference to the minimum net worth required under section 216c1A. Second, Congress could have limited this calculation to the seven percent net worth ratio by providing the MBL limitation is determined by reference only to the minimum net worth required under section 216c1Ai, which would have excluded the risk-based net worth requirement. Instead, section 107A
points to section 216c1A, which encompasses both applicable net worth requirements for complex credit unions.
The Board acknowledges that the Senate Report associated with the legislation that enacted sections 107A
and 216 refers to the MBL limitation as being based on the seven percent net worth ratio in a parenthetical statement.
A statement by an individual Senator also refers to the limitation as being determined by the seven percent net worth ratio.68 But this discussion in the Senate Report is brief and does not touch upon the risk-based net worth requirement or explain how the Senate believed the MBL limitation should work for complex credit unions, which are subject to additional net worth requirements. In any event, this general discussion does not expressly contradict the language and structure of sections 107A and 216, which the Board finds to 68 S.

2. Capital Adequacy Under the 2015 Final Rule, a complex credit union must have a process for assessing its overall capital adequacy in relation to its risk profile and a comprehensive written strategy for maintaining an appropriate level of capital.69 While a qualifying complex credit union opting into the CCULR
framework is required to have a comprehensive written strategy for maintaining an appropriate level of capital, this strategy may be straightforward and minimally state how the credit union intends to comply with the CCULR framework, including minimum capital requirements and qualifying criteria. In contrast, complex credit unions that do not opt into the CCULR framework will be required to have a more detailed written strategy.
One commenter expressed concern about the subjective nature of this provision, and whether the agency has the statutory authority to adopt the provision if it would require individual credit unions to hold capital above those required by the rule or the FCUA.
The Board disagrees. As discussed in the 2015 Final Rule, the NCUA has a long-established policy that FICUs should hold capital commensurate with the level and nature of the risks to which they are exposed. In some cases, this may entail holding capital above
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be better indicators of the meaning and purpose of these provisions.
Applying this approach to the CCULR
framework, qualifying complex credit unions opting into the CCULR
framework would calculate a different limitation on MBLs from their current calculation under the seven percent net worth ratio. This is because, as discussed previously in the Legal Authority section, the CCULR is considered a risk-based net worth requirement, and thus falls under section 216c1Aii as a measure of the minimum net worth required to be well capitalized. Accordingly, under the final rule, a qualifying complex credit union that opts into the CCULR
determines its MBL limitation by reference to the amount of net worth required to be well capitalized under the CCULR. Complex credit unions that do not qualify or do not opt into the CCULR framework determine their MBL
limitation by reference to the 10 percent risk-based capital ratio, as described in the 2016 MBL final rule. In either scenario, if a complex credit union has actual net worth below those measures, its actual net worth would determine its MBL limitation.

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CFR 702.101b2 effective Jan. 1, 2022.

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