NCUA 5300 for Credit Unions CUNA CFO Council 2014

Transcription

1 NCUA 5300 for Credit Unions CUNA CFO Council 2014 Kevin Durrance Texans Credit Union 1

2 Using the Instructions When in doubt, read the instructions. Always look for any changes to the instructions and/or forms. Frequently asked questions can be found on the NCUA website. 2

3 Historical Warnings Report View Historical Warnings : Real time (you no longer have to submit to see these) You should carefully read and check these warnings to identify if you have made an error. If you find any errors: Correct them. 3

4 Status of Call Report Pending Submit..Processing..Submitted Under Review (no changes while here) Validated (Available to public) How to Correct..when to correct? Take to pending, re-submit, must be re-validated There are 16 Cycles available for correction 4

5 Prepping for the Call Report Collecting the information: Make copies of individual schedules for distribution to appropriate personnel. Insist on deadlines. Check for reasonability Always compare to the previous Call Report. 5

6 Prepping Segregation of Duties and Exercising Reasonable Controls. Use the Working Copy of the Call Report. Building Spreadsheets KEEP ALL BACKUP! 6

7

8 STATEMENT OF FINANCIAL CONDITIONS Assets Cash and Cash Equivalents 1. Cash on Hand. Includes the change fund (change fund includes coin and currency), vault cash, vault funds in transit, currency supply for automatic teller machines (ATMs). 2. Cash on Deposit (Amounts Deposited in Financial Institutions). Includes balances on deposit in financial institutions and deposits in transit. These amounts may or may not be subject to withdrawal by check and may not bear interest. Examples include overnight accounts at a bank or corporate credit union, corporate credit union daily accounts, and checking / money market accounts. 2A = Corporate Credit Unions 2B = Other Financial Insitutions 8

9 Assets Cash and Cash Equivalents 3. Cash Equivalents. Cash equivalents include short-term highly liquid investments: 1. with original maturities of 3 months or less (at the time of purchase) 2. readily convertible to known amounts of cash 3. used as part of the CU s cash-management activities Examples of highly liquid investments include Fed Funds Sold and Certificates of Deposit. However, if the asset is a security (as defined by GAAP), it is reported on lines 4, 5, or 6 regardless of whether it has the characteristics of a cash equivalent. 9

10 Investments 4. Trading Securities. Report the amount of investments that were bought and are held principally for the purpose of selling in the near term. This account should reflect frequent buying and selling. Report these investments at fair value. These must be reported based on maturity or call, not on the basis of intent to sell. 5. Available for Sale Securities. Report the amount of ASC 320 (formerly SFAS 115) investments that your credit union has classified as available for sale. Report these investments at fair value. 6. Held-to-Maturity Securities. Report the amount of investments that the credit union has the positive intent and ability to hold to maturity. Report these investments at amortized cost. Include all ASC 320 investments that are not classified as either available for sale or trading. Do not report investments which are not subject to ASC 320. (Do not include Cash Equivalents, Cash on Deposit, CLF Stock, or shares, deposits, and certificates invested in other financial institutions.) 10

11 7. Deposits in Commercial Banks, S&Ls, Savings Banks. Report the amount of deposits in commercial banks, savings and loan institutions and savings banks at their remaining maturity. Do not include those short-term investments that are reported on line 2 as Cash on Deposit or on line 3 as Cash Equivalents, or negotiable certificates of deposits reported on lines 4, 5, or 6 as securities. (Example for #7: SimpliCD s.) 8. Loans to and investments in Other Natural Person Credit Unions. (Do Not include Corporate Credit Unions) Do not report short term items that are reported elsewhere (such as Cash Equivalents). Normally, these are certificates invested in another natural person credit union. Any loans reported here must qualify as an investment. True written loans should be reported under loans. 11

12 9. Membership Capital at Corporate Credit Unions / Nonperpetual Capital Accounts. Report the total of Membership (MCS) and nonperpetual Capital Accounts (NCA) at a Corporate Credit Union (as defined in 704.2). The Membership Capital (MC) may also be called the Permanent Capital Base (PCB) or Permanent Capital Shares (PCS). Must be reported in the 1-3 year range (NCUA ). 10. Paid-in Capital at Corporate Credit Unions / Perpetual Contributed Capital. Report the total of Paid-in Capital (PIC) and Perpetual Contributed Capital (PCC) at a Corporate Credit Union (as defined in 704.2). Must be reported in the 1-3 year range ( ). 12

13 11. All Other Investments in Corporate Credit Unions. Report the amount of all corporate credit union investments, excluding MCS, PIC, NCA, PCC, MC, PCB, PCS of Corporate Credit Unions reported in lines 9 and 10, at their remaining maturity. Do not report amounts reported as Cash on Deposit on line 2 A or B, or Cash Equivalents on line 3 above. (EX: Corporate Certificates) 12. All Other Investments. Report the amount of all other investments not included in lines 4 to 11. Do not report amounts reported as Cash on Deposit on line 2 A or B, or Cash Equivalents on line 3 above. Include CLF stock, FHLB stock, common trust investments, and any other investments not listed above in the same maturity classification as shown in the WAL Investment Schedule. An investment not listed in the schedule should be reported at their remaining maturities. (CFL and FHLB stock should be reported in the 1-3 year bucket.). Do not include loans to and investments in CUSO s. Report loans to and investment in CUSO s on line 32 C..which is All Other Assets. 13. Total Investments. Sum of lines 4 to

14 14. Loans Held for Sale. Report the amount of outstanding loans either identified for sale at origination or subsequently for which there has been a decision to sell. Do not include these balances in lines 15-24, Loans and Leases. o If the credit union originated any real estate loans year-to-date classified as Loans Held for Sale, complete the Real Estate Loans, Section 2 on Schedule A Specialized Lending (non-real estate would be reported on the Section 3 on Schedule A). o If the credit union originated any member business loans year-todate classified as Loans Held for Sale, complete the Business Loans, Section 4 on Schedule A Specialized Lending. o Loan commitments to originate (interest rate lock commitments) or acquire (forward loan sales commitments) mortgage loans that will be resold as part of the credit union s mortgage banking operations are derivatives and must be recorded at fair value in Other Assets (Page 2, line 32 C) or Other Liabilities (Page 3, line 8). 14

15

16 16

17 Loans and Leases Collateral Codes: Loans are to be reported by collateral code. For example, if a new or used vehicle is secured by real estate, i.e., home equity loan, include it with real estate loans. If a member business loan or business purpose loan is secured by real estate, it should be reported as a real estate loan. Otherwise, report business loans on the Total All Other Loans / Lines of Credit line. Report the portion of any loan participation or purchase that remains on the credit union s balance sheet according to the applicable collateral code. 17

18 Interest Rates: Report loan interest rates being offered as the reporting period for each loan category. Report the actual rate (i.e., 6.5% = 6.5). If more than one rate applies, report the most common rate in each category. (Not the aggregate weighted rate.) For each loan category, report only those loans which have an outstanding balance. Loans reported should be shown net of loan origination fees (costs) which shall be recognized over the life of the related loan as an adjustment of yield. Loan fees, certain direct loan origination costs, and purchase premiums and discounts on loans shall be recognized as an adjustment of yield generally by the interest method based on the contractual terms of the loan. Participation Loans: Report the number of individual loans in each pool not the number of pools. 18

19 15. Unsecured Credit Card Loans. Include the rate, number and dollar amount of outstanding credit card loans. 16. All Other Unsecured Loans / Lines of Credit (other than credit cards). Include the rate, number and dollar amount of outstanding unsecured loans and lines of credit other than credit card loans. Also, report overdrawn share draft accounts here (EX: courtesy pay or bounced check protection extension of credit). 17. Short-Term, Small Amount Loans (STS) FCU only: Do not include these with All other Unsecured Loans (unless you are a state chartered CU). STS amount loans are alternatives to predatory payday lending loans and permits FCU s to offer a higher interest rate. These are closed-end, fully amortizing loans that are between $200 and $1,000; with a min. maturity of 1 month and a maximum of 6 months. The application fee may be no greater than $20 and a maximum of 20% of net worth may be in this type of loan. (Other restrictions apply 1 at a time per member, no more than 3 during a 6 month rolling period per member, minimum length of membership of at least one month, etc.)

20 18. Non-Federally Guaranteed Student Loans: Report non-federally guaranteed or private student loans. If guaranteed and granted prior to July 1, 2010 (Stafford, Perkins, PLUS) report in All Other Loans below (#24). 19. New Vehicle Loans. Include the rate, number, and dollar amount of new vehicle loans where the new vehicle is pledged as security. (ATV s, RV s, and boats are NOT reported here, but should be included in Line 24 below) 20. Used Vehicle Loans. Include the rate, number and dollar amount of used vehicle loans where the used vehicle is pledged as security. 21. Total 1 st Mortgage Real Estate Loans / Lines of Credit. Include the rate, number, and dollar amount of outstanding loans and lines of credit secured by a first lien on property. Include member business loans secured by real estate.

21 22. Total Other Real Estate Loans / Lines of Credit. Include the rate, number, and dollar amount of outstanding real property loans and lines of credit secured by an interest on the property other than a first lien. Typically, this would include home equity and second mortgage loans. Include member business loans secured by real estate in a junior position. If the credit union has any real estate loans outstanding (i.e., if there is an amount reported on lines 21 or 22) or if the credit union has originated any real estate loans during the reporting period, complete Schedule A Specialized Lending. If the credit union has any member business loans outstanding or has originated any member business loans during the reporting period, complete Schedule A Specialized Lending. 21

22 23. Leases Receivable. Include the rate, number, and dollar amount of outstanding direct financing leases as defined by GAAP (credit union is lessor). Credit unions that lease personal property such as vehicles to members make direct financing leases. 24. Total All Other Loans / Lines of Credit. Include the rate, number and dollar amount of outstanding loans not already included in lines 15 to 23. Typically, this would include member business loans and business purpose loans (including agricultural loans) not secured by real estate, share secured loans, guaranteed loans, federally guarantee student loans (prior to July 1, 2010), etc. Here is where you would also report loans secured by ATV s, RV s, and boats. 22

23 25. Total Loans & Leases. Sum of line 15 to 24. Loans to other credit union should normally be excluded from Total Loans and reported as an investment. 26. Allowance for Loan & Lease Losses. Amount set aside to absorb possible losses on loans and leases (excludes the Regular Reserve). 23

24 Other Assets 27. Foreclosed and Repossessed Assets. Report long-lived assets intended for sale and acquired through, or in lieu of foreclosure or repossession in the applicable category (i.e. Real Estate, Autos, or Other). Initially record the asset at fair value (less costs to sell) at the date of foreclosure or repossession. The FV (less cost to sell) becomes the cost of the foreclosed or repossessed asset. The amount, if any, by which the recorded amount of the loans exceeds the FV (less costs to sell) of the asset is a loss which must be charged off to the ALLL at the time of the foreclosure or repossession. After foreclosure or repossession, re-value the assets periodically to the lower of carrying amount or FV (less costs to sell) through a separate valuation account. Changes in the valuation allowance are included in net expenses from foreclosed and repossessed assets. If a long-lived assets is not sold shortly after it is received, any declines in value after foreclosure and any gain or loss from the sale or disposition of the asset shall NOT be reported as a loan loss or recovery and shall NOT be debited or credited to the ALLL. 24

25 # 27: Foreclosed / Repossessed Assets A: Real Estate B: Automobiles C: Other D: The Total Losses and Declines in Value What do you report in Misc. Operating Expenses and what do you report in the Gain/Loss of Fixed Assets?

26 Losses / Declines in FV (after initial hit to ALLL) If writing down an OREO once on the books of the credit union (after the initial hit to ALLL); further declines in value (by revaluing the OREO) actually hit Misc. Operating Expenses (Page 5 line 29).

27 28. Land and Building. Land and building, less depreciation on building, if any. 29. Other Fixed Assets. All other fixed assets such as furniture and fixtures, and leasehold improvements, less related depreciation, if any. In addition, include leased assets under capital lease. (Credit union is leasing assets and granted a lease from an outside entity.) 30. NCUA Share Insurance Capitalization Deposit (NCUSIF). Enter the amount of the National Credit Union Share Insurance Fund deposit. 27

28 INTANGIBLE ASSETS 31. a: Identifiable Intangible Assets: Report the amount of indentifiable intangible assets obtained through a merger or other business combination. 31. b: Goodwill: An asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. 31. c: Total Intangible Assets: The total of 31-a and 31-b. 28

29 32. Other Assets (A,B,C). Report accrued interest on loans (A) and accrued interest on investments (B) separately. All other Assets (C) include prepaid expenses, accounts receivable, loans to and investments in CUSOs, purchased participations with substantial recourse (not qualifying for "true sales accounting"), and any other assets not previously included. Report any private insurance capitalization deposit here. Any investments purchased and identified to fund deferred compensation agreement obligations must be reported in the Investment Schedule on Page 1 of the Call Report. If this amount includes loans or investments to CUSOs, complete Schedule C CUSO Information and- the Profile Form (NCUA Form 4501A). If the credit union wholly owns the CUSO or owns the majority of the CUSO (controlling interest), the CUSO should not be reported as an asset. Rather, the CUSO s books and records should be consolidated with the credit union s in accordance with GAAP. Complete Schedule C CUSO Information, regardless of the ownership interest. 29

30 32 D Non-Trading Derivative Assets All Non-Trading Derivative assets, net exclusive or inclusive of accrued interest. You must complete Schedule D (Derivatives Transaction Report) 30

31 32 E: is the total of other assets (A + B + C + D) 33: Total Assets. Sum of all assets. This must also equal the sum of Liabilities, Shares, and Equity. 31

32 34: Loans Granted Year-to-Date: Report the number and dollar amount of loans granted year-to-date. Include all loans of all types granted including real estate loans sold on the secondary market. Count each line of credit as a single loan granted if one or more advances were made on that line year-to-date, even if it is an existing LOC approved in a previous year. For all other loans, report each new loan or refinanced loan as a loan granted. The dollar amount should include all new advances and all balances which were refinanced. Report the number and the portion (amount) of Participation Loans participated in or retained by the credit union. 34-a (FCU s only): Report Short-term small dollar amount (STS) loans granted year-to-date. (These should also be included in #34 Loans Granted YTD)

33 35. Non-Federally Guaranteed Student Loans in Deferred Status: Report the number and dollar amount of non-federally guaranteed student loans in deferred status. 36. Loans Outstanding to Credit Union Officials and Senior Executive Staff. Report the number and dollar amount of all loans to credit union officials, including the board of directors, committee members and senior executive staff (credit union s chief executive officer typically titled as President or Treasurer / Manager, any Assistant Chief Executive Officer, e.g. Assistant President, any Vice-President, any Assistant Treasurer / Manager and the Chief Financial Officer). The dollar amount should be the total outstanding loan balances as of the current report date. 33

34

35 Liabilities, Shares and Equity Liabilities - Borrowings 1. Draws Against Lines of Credit: Report the amount of borrowed funds from all sources of credit in the appropriate stated time frames. (Includes Corporates, FHLB LOC s, etc.) 2. Other Notes, Promissory Notes, and Interest Payable: Report by maturity the amount of all promissory notes, certificates of indebtedness and all other notes and interest payable. This includes borrowings from the FRB Discount Window, other government agencies and- installment loans from the Corporate CU. Do not include draws reported in the line above. 3. Borrowing Repurchase Transactions: Report by maturity the amount of all borrowing repurchase transactions. 35

36 Special instructions for lines 4 and 5, Subordinated Debt and SD included in Net Worth: In accordance with Section 702.2(f)(4): permits only qualifying Section 208 assistance with a remaining maturity in excess of 5 years to be reported as Subordinated Debt included in Net Worth. 4: Subordinated Debt that cannot be counted towards Net Worth (that part that has less than 5 years to maturity). 5: Subordinated Debt included in Net Worth (that part of the SD with a maturity of greater than 5 years or Uninsured Secondary Capital ( for low income designated credit union). SD in NW has a "cliff" of 5 years. Buckets are now: <1 year; 1-3 years; and > than 3 years 36

37 5. #5 will also include: This line item will also include "Uninsured Secondary Capital" that can still be counted towards Net Worth. However, "Uninsured Secondary Capital" is for low-income designated credit unions only. (The "Miscellaneous Information" - Page 6, #9 contains more detail on this item. However, the percentages that count toward net worth and the percentages that do not are contained in the instructions in this area.) Again, this is for "low income designated credit unions only pursuant to (c). 6. Total Borrowings (each column). 37

38 New #7 Non-Trading Derivatives Liabilities Include all non-trading derivative liabilities, net exclusive or inclusive of accrued interest.

39 8. Accrued Dividends / Interest Payable on Shares / Deposits. Accrued dividends and interest declared but not yet distributed. 9. Accounts Payable and Other Liabilities. Other liabilities not listed above (including, but not limited to, taxes payable, undistributed payroll deductions, draft clearings and unposted suspense items). 39

40 Shares / Deposits Dividend / Interest Rates: Report the rate paid on these credit union share accounts as of the last date of the reporting period. Input the actual rate (i.e. 6.5% = 6.5). In situations where more than one rate applies, use the most common rate according to the dollar volume of business. Report the rate even if the share program is no longer offered as long as there are outstanding member deposits as of the reporting date. Deposit Account Sweeps Affecting Transaction and Non-Transaction Accounts: In an effort to reduce their reserve requirements, some credit unions have established sweep arrangements that involve transfers of member deposits between two sub-accounts. One sub-account is a transactional account (subject to reserve requirements) and the second a non-transactional account (such as a money market account). The credit union shifts funds from the transactional account to the non-transactional account or vice versa. The Call Report should reflect the position of the swept funds at the end of the reporting period, and should match reporting on the FR (IF YOU HAVE A SWEEP PROGRAM, IT IS IMPORTANT THAT IT QUALIFIES. READ THE INSTRUCTIONS TO THE CALL REPORT!!!!!!) 40

41 Shares / Deposits (cont) Overdrawn Accounts: Overdrawn or Negative share account balances should NOT be reported here. Why? Because it mis-states your total share accounts... If you overdraw an account as an extension of credit (whether by intent - as part of an organized courtesy pay program or an "informal" courtesy pay program - or by "accident"), you have created a negative share account. Adding NEGATIVE SHARES will mis-calculate your total shares... SO, WHERE DO THEY GO????? 41

42 This section should be filled out to indicate the remaining maturity of credit union savings accounts. For savings with an adjustable rate, the maturity reported should be the earliest of the next rate change date or actual remaining maturity. 10. Share Drafts. Report the rate, number and dollar amount of credit union share drafts. Overdraft balances should be reported on Page 2, line 16 (All Other Unsecured Loans / Lines of Credit). 11. Regular Shares. Report the rate, number and dollar amount of credit union regular shares, including regular share Christmas, vacation, and other club accounts. 12. Money Market Shares. Report the rate, number of accounts, and outstanding balance of all credit union money market shares. 13. Share Certificates. Report the rate, number of accounts, and outstanding balances of credit union share certificates by remaining maturity. 42

43 14. IRA/KEOGH Accounts. Report the rate, number of accounts, and outstanding balance of credit union IRA/KEOGH accounts by maturity (including both regular IRA/KEOGH accounts and IRA/KEOGH certificates). 15. All Other Shares. Report the rate, number of accounts, and outstanding balance of all other credit union shares not already included in lines 10 to 14 above by maturity. (Such as Escrow Accounts) Include HSA s on this line. 16. Total shares. Sum each of the columns by maturity, and the number of accounts. Do not include non-member deposits. 43

44 17. Non-Member Deposits (including Brokered Deposits). Report the rate, number of accounts, and outstanding balance of non-member deposits, including brokered deposits by maturity. 18. Total Shares and Deposits (each column). Sum each of the columns by maturity including non-member deposits and the total number of accounts. 44

45 Additional share information (already reported above): 19. Accounts Held by Member Government Depositors. Report the outstanding balances of all accounts held by member government depositors. 20. Accounts Held by Non-Member Government Depositors. Report the outstanding balances of all accounts held by non-member government depositors. 21. Employee Benefit Member Shares and Deposits. Report the outstanding balances of shares of an employee benefit plan held by the credit union. A credit union that is not adequately or well capitalized may not accept such deposits. 45

46 22. Employee Benefit Nonmember Shares and Deposits. Identical to the above, except nonmembers Plan Member Deposits. Report the outstanding balances of all 529 Plan Deposits held by the credit union. 24. Non-dollar Denominated Shares and Deposits. Report the outstanding balances of all non-us dollar denominated accounts. These MUST be valued and listed in US dollar equivalent according to the 12:00 PM Federal Reserve Exchange rates on the last working day of the end of the quarter. (FRB-NY) 25. Health Savings Accounts. Report the outstanding balances of all HSA accounts. 46

47 26. Dollar Amount of Share Certificates equal to or greater than $100,000 (excluding brokered share certificates participated out by the broker in shares of less than $100,000). Report the total outstanding balances of all certificates equal to or greater than $100, Dollar amount of IRA/Keogh Accounts equal to or greater than $100,000. Report the total outstanding balances of all IRA/Keogh Accounts that are equal to or greater than $100,000 (This includes both IRA shares AND- certificates.) 28. Dollar Amount of Share Drafts Swept to Regular Shares or Money Market Accounts as Part of a Sweep Program. List the dollar amount that the credit union actually transferred to qualify as having a legitimate sweep program with the Federal Reserve. 47

48 29.Dollar Amount of Business Share Accounts: Report the total amount of business share accounts. (Do not include Trust Accounts) These can be corporations, LLC s, companies, and/or individuals Doing Business As ( DBA s ) 30.Dollar Amount of Negative Shares Included in All Other Unsecured Loans/LOC on page 2: Report the total amount of negative shares included in all other unsecured loans/lines of credit on page 2. 48

49 Equity 31. Undivided Earnings. Represents the accumulated surplus net income remaining after the books have been closed. 32. Regular Reserves. Statutory reserves as required by NCUA or the State Supervisory Authority. The amount reported here should not include the Allowance for Loan & Lease Losses account. 33. Appropriation for Non-Conforming Investments (SCU Only). Reserves set aside from Undivided Earnings to cover the excess of Book Value over Fair Value for investments not authorized by NCUA (part 703). Required in accordance with NCUA Rules and Regulations Part 741.3(a)(2). This account is only necessary for reporting reserves for non-asc 320 investments and ASC 320 investments classified as Held to Maturity. 34. Other Reserves. Include any reserves originating from undivided earnings not reported elsewhere. Any amounts the credit union reports here must have been first closed into Undivided Earnings from Net Income. 49

50 35. Equity Acquired in Merger. The acquisition date fair value of equity interests acquired in the acquisition(s) of another credit union(s) as measured consistent with GAAP 36. Miscellaneous Equity. Include any equity not reported elsewhere that did not originate from net income and was not closed into undivided earnings. For example, donated equity accounted for under regulatory accounting practices. 37. Accumulated Unrealized Gains (Losses) on Available for Sale Securities. Report unrealized and unrecognized gains and losses (net) on securities that are classified as available for sale. 50

51 38. Accumulated Unrealized Losses for OTTI (Due to Other Factors) on HTM Debt Securities. Report the cumulative amount of the total remaining unrealized losses for OTTI due to other market factors on HTM debt securities. Such amounts must be appropriately displayed (disclosure only, not an actual expense entry on the Income Statement) through either a previous, or current period s, Statement of Income Item 14b. 39. Accumulated Unrealized Net Gains (Losses) on Cash Flow Hedges. Report the effective portion of the accumulated change in fair value (gain or loss) on derivatives designated and qualifying as cash flow hedges in accordance with ASC 815, Derivatives and Hedging (formally SFAS 133, Accounting for Derivative Instruments and Hedging Activities ). 51

52 40. Other Comprehensive Income. Report any items of other comprehensive income that are not already included above. An example of Other Comprehensive Income would include amounts related to single employer defined benefit postretirement plan (such as pension, health, etc.). 41. Net Income. The amount remaining after all expense have been met or deducted prior to being transferred to the Undivided Earnings account. Do not report net income which has been closed to Undivided Earnings. 42. Total Liabilities, Shares, and Equity. Sum of liabilities, shares and equity. Must equal Total Assets. If the credit union has any unused commitments, loans sold or swapped with recourse, or pending bond claims, complete Page 10 Liquidity, Commitments and Sources. 52

53 NCUA Insured Savings Computation (Part 745) A. Uninsured IRA and Keogh Member. Report only the amount of uninsured member shares and deposits. (Insured to $250,000 per legally determined individual member account.) A1 Uninsured KEOGH Member Shares for Employee Benefit Plans: Keogh accounts established by an employer as part of an employee benefit plan insured up to only $250,000 per legally determined individual member account. B. Uninsured Employee Benefit Member Shares and Deposits. Report only the amount of uninsured. C. Uninsured Member 529 Plan Deposits. Report uninsured amount. D. Uninsured Accounts Held by Member Government Depositors. Report only the amount of uninsured ($250,000). E. Uninsured All Other Member Shares and Deposits. Report only the amount of uninsured. F. TOTAL UNINSURED MEMBER SHARES AND DEPOSITS. 53

54 G. Uninsured Nonmember Employee Benefit Member Shares and Deposits. Report only the amount of uninsured (Insured up to $250,000 per legally determined individual non-member account). H. Uninsured Accounts Held by Nonmember Government Depositors. Report only the uninsured amount. I. Uninsured All Other Nonmember Shares and Deposits. Report only the uninsured amount. J. TOTAL UNINSURED NONMEMBER SHARES AND DEPOSITS. K. TOTAL UNINSURED SHARES AND DEPOSITS. L. TOTAL INSURED SHARES AND DEPOSITS (The total insured shares is the amount on which the operating fee and the NCUSIF deposit is based.) 54

55 Income and Expenses This is your basic Income Statement. Interest Income and Interest Expense Non-interest income and expense. Must ALWAYS be YEAR-TO-DATE figures. (From January 1 st to the current quarter-end date.) 55

56 56

57 Interest Income 1. Interest on Loans. Income earned from interest on loans and recognition of deferred loan fees and costs. Interest should not be accrued on loans 90-days or more delinquent. (Interest should be reversed when the loan is determined to be a loss or- when 12 months delinquent whichever first.) Discuss Final rule change (741) and associated IRPS (APP. C ). 2. Interest Refunded. Loan interest income refunded to borrowers. 3. Income from Investments (Including Interest and Dividends). Interest and dividends earned from all investments. Include income earned on Cash on Deposit and Cash Equivalents. Do not include any realized or unrealized gains/losses from trading securities. Do not include gains or losses resulting from the sale of investments. Do not include unconsolidated CUSO income. 4. Trading Profits and Losses. Report gains and losses on trading accounts both from the sale of trading securities and from unrealized holding gains and losses. Do not include gain (loss) from sale of any investments except those that are held for trading. (Line 14) 5. Total Interest Income. Sum of lines 1 to 4. 57

58 Interest Expense 6. Dividends on Shares. Dividend expense incurred for all classes of shares year-to-date. 7. Interest on Deposits. This question is for state chartered credit unions only. Interest on all deposits year-to-date. 8. Interest on Borrowed Money. Interest cost for borrowed money from all sources including certificates of indebtedness. Low-income designated credit unions should include interest costs associated with secondary capital accounts. 9. Total Interest Expense. Sum of lines 6 to Provision for Loan & Lease Losses. Expense recorded to maintain the Allowance for Loan & Lease Losses account. 11. Net Interest Income After Provision for Loan & Lease Losses. Amount on line 5 less amount on line 9 less amount on line

59 Non-Interest Income 12. Fee Income. Fees charged for services (i.e., overdraft fees, ATM fees, credit card fees, etc.). DO NOT NET EXPENSES, report only gross income. 13. Other Operating Income. Operating income other than the types designated in lines 1 to 4 and line 12. Include dividends from the NCUSIF, income or loss derived from selling real estate loans on the secondary market, interchange income, and unconsolidated CUSO income. 14. Gain (Loss) on Investments. Use this account to report the resulting gain (loss) from the sale or disposition of all investments except trading accounts (line 4). Report losses on MCS and PIC at the CCU. In addition, use this account to report declines in fair value that are other than temporary (OTTI) for securities classified as either available for sale or held-to-maturity. However, report only the credit loss portion of OTTI on this line. All other losses related to OTTI must be reported on the balance sheet under Accumulated Unrealized Gain (Losses) on AFS Securities or Accumulated Unrealized Losses (Due to Other Factors) on HTM Securities. 59

60 14-A: Total OTTI Losses: In periods in which a credit union determines that a debt security s decline in fair value below its amortized cost basis is OTTI, the credit unions shall present the total decline to full fair market value as an OTTI in the statement of earnings. Include both the amount relating to credit losses and the amount due to other factors for disclosure purposes only. 14-B: Less: Portion OTTI Losses in Other Comprehensive Income: Report the amount of current period OTTI included in item 14-A due to other factors. The portion of OTTI due to other factors on HTM debt securities must also be recognized in the other comprehensive income portion of Accumulated Unrealized Losses for OTTI (Due to Other Factors) on HTM Securities, Balance Sheet Item C: OTTI Losses Recognized in Earnings (Included in Item 14): Report the difference between Item 14-A and 14-B. This difference represents the amount of current period OTTI due to credit losses. This total should be reflected in Item 14.

61 New 14-D Gain (Loss) associated with the Hedged Item (Investments) in a Non-Trading FV Derivatives Hedge (include in line item 14)

62 New 15 Gain (Loss) on Non-Trading Derivatives The gains or losses associated with derivatives activities exclusive of interest and premium amortization. Gains and losses will be the change in FV for the period for non-designated transactions, Fair Value designated transactions and the ineffectiveness of Cashflow hedging transactions.

63 Non-Interest Income (Continued) 16. Gain (Loss) on Disposition of Fixed Assets. Income or expense resulting from the sale or other disposition of fixed assets. This would include gains and / or losses on the sale of foreclosed and repossessed property. 17. Gain from Bargain Purchase (Merger). List any applicable gain as the result of a bargain purchase of another credit union. 18. Other Non-Operating Income (Expense). Miscellaneous non-operating income or expense. Should include such items as gifts, donations received, and contribution income, such as grants. 19. Total Non-Interest Income. Sum of lines 12 to

64 Non-Interest Expense 20. Employee Compensation and Benefits. Salaries, reimbursement to sponsor when credit union employees are on the sponsor s payroll, benefits, pension plan costs, and employer s taxes. 21. Travel and Conference Expense. Authorized expenses incurred by officers, directors, and employees for travel, attendance at conferences and other meetings. 22. Office Occupancy Expense. Expenses related to occupying an office including office rents, utilities (gas, electric, etc.), building depreciation, real estate taxes, building maintenance, and amortization of leasehold improvements. 64

65 Non-Interest Expense 23. Office Operations Expense. Expenses related to the operation of an office including communications, stationery and supplies, liability insurance, bond insurance, furniture and equipment rental and / or maintenance and depreciation, bank charges, in-house electronic data processing cost, etc. 24. Educational and Promotional Expense. Advertising, publicity, and promotions. 25. Loan Servicing Expense. Collection expenses, recording fees, credit reports, credit card program expenses, loan servicing fees. 26. Professional and Outside Services. Legal fees, audit fees, accounting services, consulting fees, and outside electronic data processing servicing. 65

66 27. Member Insurance. Total of all Expenses (acct 310) a. NCUSIF Premium Assessments b. Temporary Corporate CU Stabilization (TCCUS) Assessments by the NCUA Board c. Life savings, borrower s protection, share insurance, and other member insurance. d. TOTAL MEMBER INSURANCE 28. Operating Fees. Annual operating / supervision fee assessed by NCUA or the state supervisory authority. (Not the NCUSIF premium reported above) 29. Miscellaneous Operating Expenses. Expenses not covered by lines 20 to 28, including cash over and short, annual meeting expenses, association dues, etc. (Valuation of OREO's per RAP) 66

67 30. Total Non-Interest Expense. Sum of all operating expenses, 19 to Net Income (Loss). Net Income (Loss) The bottom line.. Reserve Transfers 32. Transfer to Regular Reserve. Income earned year-to-date which was transferred to the Regular Reserve account. 33. NET INCOME (LOSS) EXCLUDING NCUSIF PREMIUMS AND TEMPORARY CORPORATE CREDIT UNION STABILIZATION FUND ASSESSMENT REPORTED ON LINES 27a and 27b. What is your net income if you add back the NCUSIF premiums and the TCCUSF assessments????? (So, you will add 27a and 27b back to income to derive this figure.) 67

68 Miscellaneous Information 68

69 1. Excess Deposit Insurance. If the credit union has share and/or deposit insurance coverage in addition to the coverage provided by the National Union Share Insurance Fund, answer this question yes. If yes, provide the name of the insuring company and the total dollar amount of shares and/or deposits insured by company. Do not include Life Savings and Borrowers Protection Insurance. Do Not include Surety Bond Coverage. 2. Number of Current Members. Report the number of credit union members. Report the actual number of members, not the number of accounts. 69

70 3. Number of Potential Members. Report the number of potential credit union members. Include current members in this estimate. The estimate of potential members must be reasonable and supportable. 4. Number of Credit Union Employees. A.Report the number of full-time (26 or more hours) employees B.Report the number of part-time (25 or less hours) employees 70

71 5. Aggregate Capital and Operating Lease Payments on Fixed Assets Report the remaining dollar amount of the lease obligation (Do not discount or calculate the present value of future cash flows). 6. Has the credit union completed a merger or acquisition that qualifies for Business Combination Accounting (FAS 141R) after January 1, 2009? If you answer Yes, and you must complete line #7 on Page 11 (which is the PCA Net Worth Calculation Worksheet ). This breaks out the adjusted retained earnings acquired through business combinations so that it counts towards your Net Worth. 71

72 7. Transactional Website Usage. Report the number of members (not the number of transactions) using your transactional website. Do not answer this question if the website is not a transactional type website. 8. Expansion. Does the credit union intend to add any new branches or expand existing facilities in the next 12 months? 72

73 9. Uninsured Secondary Capital. This account is for low-income designated credit unions only. Report the portion of Subordinated Debt included in Net Worth reported on page 3, line 5 that represents Uninsured Secondary Capital. In accordance with Section (c) of the NCUA Rules and Regulations, the amount reported as Uninsured Secondary Capital is dependent upon the remaining maturity. The portion that may not be included in Net Worth should be reported on page 3, line 4. 73

74 #9 (Continued): The amount reported as Uninsured Secondary Capital is dependent upon the remaining maturity as a percentage of the amount borrowed. Report these accounts based on the following sliding scale: Remaining Maturity Amount to Report on Line 9, Uninsured Secondary Capital Percentage of Amount Borrowed: Greater than 5 years 100% 4 to less than 5 years 80% 3 to less than 4 years 60% 2 to less than 3 years 40% 1 to less than 2 years 20% Less than 1 year remaining maturity 0% 74

75 10. Amount of Grants Awarded to Your Credit Union YTD: Have you been "awarded" any grants? If so, report the dollar amount here. 11. Amount of Grants Received by Your Credit Union YTD: If you have received any grants YTD, report the dollar amount here. 12. Number of International Remittances Originated YTD: Report the number...these are generally wire transfers and ACH. (12 CFR ) 75

76 Delinquent Loans 76

77 77

78 Delinquent Loans DO NOT INCLUDE: Loans already written down to fair value (difference charged-off against ALLL) through a decision to sell and/or otherwise transferred to a loans held for sale (LHFS) classification Loans that the credit union has already written down to the fair value of the collateral e.g., loans in process of liquidation and transferred to Foreclosed and Repossessed Assets. (The credit union has the collateral) 78

79 Delinquent Loans a = number of delinquent loans b = amount of delinquent loans 1-9: Delinquent Loans by Collateral Type. Report the total number and outstanding loan balance of all delinquent loans and leases by categories, even if serviced by an outside processor. 10 (a) and (b): Total Delinquent Loans (by number and by amount) 79

80 Troubled Debt Restructured A TDR is a loan whose terms have been modified by the credit union for economic or legal reasons related to the debtor s financial difficulties, grants a concession to the member that it would otherwise not consider This normally provides for a reduction in interest and/or principle, a change in accrued interest, an extension of the maturity; however, there are other ways to arrive at a TDR. For example, the FMV of interest rate versus extension of loan See FAS No (April 2011): Receivables (Topic 310). A loan extended or renewed at a stated interest rate equal to the current interest rate for new debt with similar risk is not considered a TDR. 80

81 FINAL Rule on TDR s Part 741 (IRPS Appendix C) as it applies to DQ reporting TDR DQ will be calculated according to the new restructured terms. ( past due status will be calculated consistent with loan contract terms, including amendments made to loan terms through a formal restructure. ) May use the 90% rule (Consumer - non-business loans ONLY)

82 HOWEVER.. CU s cannot just kick the can down the road.restructuring activity that pushes existing losses into future reporting periods without improving the loan s collectability MUST HAVE POLICY IN PLACE! (Sound controls, appropriately structured, etc.)

83 Workouts and Monitoring Decisions based on borrower s renewed willingness and ability to repay Eligibility Limitations on the number of times a loan may be restructured (example: once a year, twice in five years to qualify for the rule). Re-aging, Extensions, Renewals, Rewrites, Deferrals

84 As of June 2013 Call Reports and DQ USE DAYS (not months): 60 days and over is considered reportable DQ. 2 Months = 60 days 6 Months = 180 days 12 months = 360 days

85 Delinquent Loans 1. Unsecured Credit Cards Loans: Report all delinquent credit card loans. 2. Short-Term, Small Amount Loans ( STS ) FCU s only State chartered CU s will report STS s in 7 - All Other Loans (REF: NCUA Rule (c)(7)(iii)) 3. Non-Federally Insured Guaranteed Student Loans Private student loans. (Report Guart. Student loans such as Stafford, Perkins, PLUS - granted prior to on line 7 (All Other Loans) 4. New Vehicles: Report all delinquent new vehicles. (Same definition - use collateral code!) 5. Used Vehicles: Report all delinquent used vehicles. 85

86 6.(1). First Mortgage Fixed Rate (including Hybrid/Balloon >5 years: Must have First (primary) lien on real estate. First mortgage can be a fixed note, a balloon note, or a hybrid. An example of a Hybrid would be a First mortgage that began as a fixed rate loan for a predefined period of time and then converts to an adjustable rate mortgage. (However, there are many different types of Hybrids, that is only one example.) 6.(2). First Mortgage Adjustable Rate (including Hybrid/Balloon =<5 years: Report First (primary) lien on real estate with an adjustable rate note. (Commonly referred to as an ARM.) Also include all Hybrid and Balloon notes where the predefined period is less than or equal to 5 years. 7.(1). Other Real Estate / LOC s Fixed Rate/Hybrid/Balloon. Must have second or junior lien on real estate. As stated above, the second mortgage can be a fixed note, a balloon note, or a hybrid. (Yes, second mortgages can be a hybrid..) 7.(2). Other Real Estate / LOC s / Adjustable Rate Must have second or junior lien on real estate with an adjustable rate note. A HELOC is a good example of these. Interest rate MUST reset periodically. 86

87 8. Leases Receivable: Report the number and balance of delinquent leases. 9. All Other Loans: Report delinquent loans for All Other Unsecured / Lines of Credit" (line 16 from the Balance Sheet - page 2) and "All Other Loans / Lines of Credit (line 24 from the Balance Sheet - page 2) 10.Total Delinquent Loans: Automatically calculated by the Call Report Software, includes the total number (a) and the total amount (b).

88

89 Additional Delinquency Information a = number of delinquent loans b = amount of delinquent loans Report the total number ( a ) and outstanding loan balance ( b ) of all delinquent loans and leases by categories. These Delinquent loans have already been reported in lines 1 through 10 on the previous page. You are simply providing additional information. It is important to note that a single loan may be reported in multiple places in this section. (For example RE backed C & D MBL that is a bought participation would be reported in 12, 16, and 21.)

90 11. Indirect Loans: Report the total delinquency. 12. Participation Loans: Report the total delinquency. 13. Interest Only and Payment Option First Mortgage Loans: Report the total delinquency. 14. Interest Only and Payment Option Other RE/LOC Loans: Report the total delinquency. 15. Residential Construction Excluding Business Purpose Loans: Report the total delinquency where the loan was granted directly to the borrower for building a residence for their own personal use (does not have to be their primary residence).

91 16. Member Business Loan secured by RE 17. Member Business Loans NOT secured by RE 18. Non-Member Business Loan Secured by RE 19. Non-Member Business Loan NOT secured by RE 20. Agricultural Loans: Report the total delinquency. 21. Business Construction & Development Loans: Report the total delinquency. (This includes purchased and participation loans.) 91

92 22. TDR 1st Mortgage Real Estate Loans: (1st RE -and- consumer and business) 23. TDR Other Real Estate Loans / Lines of Credit: (subordinate RE - and- consumer and business) 24. TDR Real Estate Loans also reported as Business Loans (All RE - but- business only) 25. TDR Consumer Loans NOT secured by RE: (consumer loans only - NO RE) NOT secured by RE. (Examples: a consumer auto loan, credit card, unsecured signature loan, share secured loan, etc.) 26. TDR Business Loans NOT secured by RE: (business only - NO RE) 92

93 DQ - Continued 27: Loans Held for Sale: Remember, we are only talking about DQ BUT, this bucket can and will include business and non-business, RE and no-re, etc.

94 Loan Charge Offs and Recoveries (Page 9) 94

95 95

96 Loan Losses and Recovery Information Report the dollar amount of loans charged off year-to-date by collateral and- report the dollar amount of recoveries year-to date for the following: 1. Unsecured Credit Card Loans 2. Short-Term, Small Amount Loans (STS)(FCU s) 3. Non-Federally Guaranteed Student Loans 4. New Vehicle Loans 5. Used Vehicle Loans 6. Total 1 st Mortgage Loans / LOC s 7. Total Other Real Estate Loans / LOC s 8. Leases Receivable 9. All Other Loans (Non-Real Estate) - C/O's and recoveries from an OD Protection Program are also reported here. 10. Total Charge Offs and Recoveries 96

97 (These are already included in the above totals for losses and charge offs) DUPLICATE REPORTING HAPPENS HERE ALSO 11. Indirect Loans: Report Charge offs and Recoveries year-to-date 12. Participation Loans: Report Charge offs and Recoveries year-to-date. 13. Interest Only and Payment Option 1st Mortgage Loans: Report Charge offs and Recoveries year-to-date. 14. Interest Only and Payment Option Other RE/LOC Loans: Report Charge offs and Recoveries year-to-date. 15. Residential Construction Excluding Business Purpose: Report Charge offs and Recoveries year-to-date.

98 (These are already included in the above totals for losses and charge offs) 16. Member Business Loan secured by RE 17. Member Business Loans NOT secured by RE 18. Non-Member Business Loan Secured by RE 19. Non-Member Business Loan NOT secured by RE 20. Agricultural Loans: Report C/O's and Recoveries. 21. Business Construction & Development Loans: Report C/O's and Recoveries YTD. (This includes purchased and participation loans.) 98

99 22. TDR 1st Mortgage Real Estate Loans: (1st RE -and- consumer and business) 23. TDR Other Real Estate Loans / Lines of Credit: (subordinate RE - and- consumer and business) 24. TDR Real Estate Loans also reported as Business Loans (All RE - but- business only) 25. TDR Consumer Loans NOT secured by RE: (consumer loans only - NO RE) NOT secured by RE. (Examples: a consumer auto loan, credit card, unsecured signature loan, share secured loan, etc.) 26. TDR Business Loans NOT secured by RE: (business only - NO RE) 99

100

101 27. Total Amount of Loans Charged Off Due to Bankruptcy, Year-to-Date. Report the dollar amount of loans charged off due to bankruptcy year to date, regardless of when the bankruptcy was filed. Include Chapter 7, 11, 12, and 13 bankruptcy charge-offs. Do not include recoveries. 28. (A, B, C) Number of Members Filing Chapter 7, Chapter 13, and Chapter 11 OR 12 Bankruptcy Year-to-Date. Provide the number of members who have outstanding loans in your credit union and have filed for Chapter 7, 13, 11 and/or 12 Bankruptcy, year-to-date. Include reaffirmations. Exclude bankruptcies that have been dismissed by the court. 29. Amount of Outstanding Loans Subject to Bankruptcies. Provide the dollar amount of the total outstanding loan balances of those members who have filed for bankruptcy identified in lines 28 (a-c). (This means that, at the time of reporting, they still had an outstanding balance, were not charged-off, etc.)

102 #30: Real Estate Loans Foreclosed YTD: Real Estate Loans Foreclosed YEAR- TO-DATE: Report the Number and Amount For the amount, report the balances of the real estate loans at the time of foreclosure. (The Legal process of foreclosure is complete.) 102

103 Congressional Reporting Requirement for FCU s Only Report the total dollar amount of all loans with interest rates exceeding 15%. Report the aggregate weighted average interest rate for those loans that exceed 15% 103

104 Liquidity, Commitments and Sources 104

105 Off-Balance Sheet Commitments and Other Items 105

106

107 There are three columns: Unfunded Commitments First Column (Left): Amount Committed Directly by the CU. These are unfunded commitments from direct loans made by the CU. Second or Middle Column: Amount Committed through a Third Party / Indirect. These are unfunded commitments that result from a loan made as a result of a third party; such as indirect loans or participations purchased that result in an unfunded commitment. Third Column (Right): The total of the first and second column 107

108 1. Unfunded Commitments for Business Loans A. Member Business Loans Secured by Real Estate: Report the unfunded portions of commitments to extend credit for the purpose of financing commercial properties (e.g. business and industrial properties, hotels, motels, churches, hospitals, etc), multifamily and rental residential properties (e.g. apartment buildings), and- farmland. 108

109 1. Unfunded Commitments for Business Loans B. Member Business Loans NOT Secured by Real Estate: Report the unfunded portions of commitments to extend credit which are not secured by RE. 109

110 1. Unfunded Commitments for Business Loans C NON-Member Business Loans Secured by Real Estate: Report the unfunded portions of commitments to extend credit for the purpose of financing commercial properties (e.g. business and industrial properties, hotels, motels, churches, hospitals, etc), multifamily and rental residential properties (e.g. apartment buildings), and- farmland. 110

111 1. Unfunded Commitments for Business Loans D. NON-Member Business Loans NOT Secured by Real Estate: Report the unfunded portions of commitments to extend credit which are not secured by RE. 111

112 Misc. Business Loans Unfunded Commitments These have already been included in Number 1 with your Member and Nonmember business loans. So, you will have duplicate reporting. It is important to note that you are using the unfunded portion of these business loans.

113 2. Miscellaneous Unfunded Commitments for Business Loans A. Agricultural Related Business Loan: This unfunded commitment will include: Members Non-Members May or may not be secured by Farmland MUST be for Agricultural related purposes 113

114 2. Miscellaneous Unfunded Commitments for Business Loans B. Construction and Land Development: Include the unfunded portions of commitments to extend credit for the specific purpose of financing land development (e.g. the process of improving land, laying sewers, water pipes, etc.) preparatory of erecting new structures, or the onsite construction of industrial, commercial, residential, or farm buildings. For this item, construction includes not only construction of new structures, but also additions or alterations to the existing structures and the demolition of existing structures to make way for new structures. Do not include general (i.e. non-business purpose residential construction) lines of credit that a borrower, at its option, may draw down to finance construction and land development (report in 3E). 114

115 2. Unfunded Commitments for Business Loans C. Outstanding Letter of Credit. Report the amount unfunded as of the report date of all financial standby letters of credit (and all legally binding commitments to issue financial standby letters of credit) issued by the credit union. A financial standby letter of credit irrevocably obligates the credit union to pay a third-party beneficiary when a member (account party) fails to repay an outstanding loan or debt instrument. 115

116 3. Unfunded Commitments for All Remaining Loans (Non- Business Loans) A. Revolving Open-End Lines Secured by 1-4 Family Residential Properties. Report the unfunded portions of commitments to extend credit under revolving, open-end lines of credit secured by 1 to 4 family residential properties. These lines, commonly known as home equity lines, are typically by a junior lien and are usually accessible by check or credit card.

117 B. Credit Card Lines. Report the unfunded portions of all commitments to extend credit to individuals for household, family, and other personal expenditures through credit cards. Credit unions may report unfunded credit card lines as of the end of their customers last monthly billing cycle prior to the report date or as of the report date. 117

118 C. Unsecured Share Draft Lines of Credit. Report the amount of unfunded credit available that can be accessed through use of a personal check. D. Overdraft Protection Program Commitments. Report the amount of unfunded overdraft protection program commitments. (Unlike share draft lines of credit, overdraft protection programs do not trigger Reg Z disclosures.) Think Courtesy Pay E. Residential Construction Loans Excluding Business Purpose Loans: Report the amount of unfunded commitments of residential 1 st mortgage construction loans where the borrower will be the occupant of the completed construction 118

119 F. Federally Insured Home Equity Conversion Mortgages (HECM) (Reverse Mortgage): Report the unfunded portion of commitments to extend credit under revolving, open-end lines of credit secured by 1-4 family residential properties authorized by Federally Insured Home Equity Conversion Mortgages. The FHA offers the only federally insured reverse mortgage program. G. Proprietary Reverse Mortgage Products: These are in-house, nonfederally insured Reverse Mortgages. H. Other Unused Commitments: Report the unfunded portions of all other commitments not reported in lines 3A. to 3G. (These would include unsecured LOC s not attached to a share draft account.) TOTAL (Automated no input is required) 119

120 4. Pending Bond Claims. Report the dollar amount of pending bond claims that the credit union intends to file but has not yet recorded on its balance sheet. Do not report other outstanding insurance claims. 5. Loans Transferred with Recourse. Report the total principal balance outstanding of loans transferred, including participations, for which the transfer qualified for true sales accounting treatment under GAAP, and for which the credit union retained some limited recourse (i.e. insufficient recourse to preclude sales accounting treatment). DO NOT INCLUDE LOAN TRANSFERS THAT QUALIFY FOR SALES TREATMENT BUT ONLY CONTAIN THE REPRESENTATIONS AND WARRANTY PARAGRAPHS THAT ARE STANDARD FOR SALES ON THE SECONDARY MARKET (such as Fannie Mae and Freddie Mac). Do not include loan participations transferred with substantial recourse or those transferred without recourse. If a transfer does not satisfy the criteria for sales treatment (i.e. isolation, control, and pledge), the transfer should be accounted for as a secured borrowing with pledge of collateral, and not reported here. 120

121 6. Other Contingent Liabilities. Report the aggregate amount of any other outstanding contingent liabilities. This may include post retirement packages and management contracts. Credit and Borrowing Arrangements 7. Amount of Borrowings Subject to Early Repayment at Lender s Option. Report the amount of borrowings where the lender has the option to require your credit union to repay the borrowings before the scheduled maturity. 121

122 #8 Assets Pledged to Secure Borrowings: Report the total amount of assets pledged to secure borrowings, such as pledged loans, investments, etc. (Report the amount pledged, not borrowed.)

123 #9 Lines of Credit Committed Credit Lines this is a credit line for which the CU has paid a fee in advance to guarantee access at a future time. (Remember Y2K?) Uncommitted Credit Lines: this is a credit line subject to reduction, suspension, or cancelation by the lender at any time or prior to the current terms. 123

124 #9 (Continued) Report the maximum amount your CU is entitled to borrow for the following sources: A: Corporate Credit Union B: Natural Person Credit Union C: Other Credit Lines D: Total

125 #10 Report actual borrowings by source: (LOC, Term, Other) A: Corporate Credit Union B: Natural Person Credit Union C: Other Sources D: FHLB E: CLF F: FRB G: Total

126 Schedule A Specialized Lending 126

127 Specialized Lending Section 1 Indirect Loans 127

128 1. Indirect Loans An indirect loan is a loan made by a credit union through a vendor or third party vendor that facilitates the financing arrangement. The credit union is responsible for making the underwriting decision and the loan is immediately assigned to the credit union after being made. (Ex: furniture, business, student loans, RV s, etc.) a. Indirect Loans Point of Sale Arrangement. Report the number and dollar amount of outstanding indirect loans made by the CU by contracting directly with the merchant. In this case, the credit union partners with a merchant to originate loans at the point of sale. (EX: Car dealership) b. Indirect Loans Outsourced Lending Relationship. These are indirect loans made by the CU by contracting with a third party vendor other than the merchant providing the product. In this case, the CU does not directly contract with the merchant. The third party vendor receives compensation for facilitating loan origination. A wholly owned CUSO is considered a third party for this reporting item. 128

129 Specialized Lending Section 2 Real Estate Loans and Lines of Credit Includes MBL s secured by Real Estate 129

130 130

131

132 Schedule A Section 2: Real Estate Loan / Lines of Credit For each type loan/line of credit listed, provide the number of loans / lines outstanding, the aggregate amount of loans/lines of credit outstanding, the number of loans/lines of credit granted year-to-date and the dollar amount of loans/lines of credit granted year-to-date. Real Estate loans processed by a third party but funded by the CU should be included. The number of loans/lines outstanding should NOT include those with no balance or those loans reported as loans held for sale. The number and dollar amount of loans/lines of credit granted should include any real estate loans sold on the secondary market or those classified as loans held for sale along with loans held in the current loan portfolio. Count each line of credit as a single loan granted if one or more advances were made on that line year-to-date. Report Loans secured by a First Lien as a First Mortgage Loan. 132

133 1.A. First Mortgage Fixed Rate > 15 years. Report information for loans listed on the balance sheet, line 21, that have ORIGINAL maturities of GREATER THAN 15 years and have a fixed rate for the term of the loan. (fully amortizing) 1.B. First Mortgage Fixed Rate 15 years or less. Report information for loans listed on the balance sheet, line 21, that have ORIGINAL maturities of 15 YEARS OR LESS and have a fixed rate for the term of the loan (fully amortizing). 2.A. First Mortgage Balloon/Hybrid > 5 years. Report information for loans listed on the balance sheet, line 21, that have a balloon feature or convert to an adjustable rate loan after a predefined period of time where that period of time or balloon feature is GREATER THAN 5 YEARS. 2.B. First Mortgage Balloon/Hybrid 5 years or less. Report information for loans listed on the balance sheet, line 21, that have a balloon feature or convert to an adjustable rate loan after a predefined period of time where that period of time or balloon feature is 5 YEARS OR LESS. 133

134 3. First Mortgage Other Fixed Rate. Report information for any other type of fixed rate first mortgage loan. 4. First Mortgage Adjustable Rate 1 year or less. Report information for loans listed on the balance sheet, line 21, that call for periodic adjustment of the interest rate and the reset period of that interest rate is 1 year or less. 5. First Mortgage Adjustable Rate >1 year. Report information for loans listed on the balance sheet, line 21, that call for periodic adjustment of the interest rate and the reset period of that interest rate is greater than 1 year. NOTE: The sum of 1A through 5 MUST equal the amount reported on the balance sheet, line 21 (Total 1 st Mortgage Real Estate Loans/Lines of Credit). 134

135 OTHER REAL ESTATE LOANS 6. Other Real Estate "Closed-End Fixed Rate". Report loans listed on the balance sheet, line 22 that have a set interest rate until maturity. 7. Closed-End Adjustable Rate. Report loans listed on the balance sheet, line 22 that are not eligible for additional advances and have a contract which calls for the periodic adjustment of the interest rate charged. Loans with periodic interest rate adjustments are considered adjustable rate regardless of the frequency of the periodic adjustment period. 135

136 8. Open-End Adjustable Rate (Think Home Equity Loans). Report loans listed on the balance sheet, line 22 that are eligible for additional advances and have a contract which calls for the periodic adjustment of the interest rate charged. Loans with periodic interest rate adjustments are considered adjustable rate regardless of the frequency of the periodic adjustment period. 9. Open-End Fixed Rate. Report loans listed on the balance sheet, line 22 which are eligible for additional advances and have a fixed rate of interest. NOTE: The sum of 6 through 9 MUST equal the amount reported on the balance sheet, line 22 (Total Other Real Estate / Lines of Credit). 136

137 Line 10 -Totals Therefore, the sum of 1-9 MUST equal the sum of the balance sheet, line 21 and line 22. (In other words, your total real estate loans.) 137

138 Miscellaneous Real Estate Loans / Line of Credit Information (Schedule A) 11. Interest Only and Payment Option 1 st Mortgage Loans Report the balance outstanding and the amount granted year-to-date. 12. Interest Only and Payment Option Other RE/LOC s Loans Report the balance outstanding and the amount granted year-to-date. (Yes, interest only HELOC s will be reported here until required principle reduction payments.) 138

139 REVERSE MORTGAGES Number 13 As discussed earlier, the FHA offers the only federally insured reverse mortgage program, called HECM. There are five options for receiving payments under this program: Tenure: equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principle residence. Term: equal monthly payments for a fixed period of months selected. Line of Credit: unscheduled payments or installments, at times and in amounts of the member s choosing until the line of credit is exhausted. Modified Tenure: combination of the LOC with monthly payments for as long as the member remains in the home. Modified Term: combination of LOC plus monthly payments for a fixed period of months selected by the member. 139

140 REVERSE MORTGAGES 13 (A) Federally Insured Home Equity Conversion Mortgage (HECM): Report the number of HECM loans outstanding, the outstanding balance, the number granted year-to-date, and the dollar amount granted year-todate. 13 (B) Proprietary Reverse Mortgage Products: Report the number of HECM loans outstanding, the outstanding balance, the number granted year-to-date, and the dollar amount granted year-to-date. (These are not federally insured.) 140

141 Miscellaneous Real Estate Loans / Line of Credit Information (Schedule A) (continued) 14. Balance Outstanding of 1 st Mortgage Residential Construction Loans Excluding Business Purpose: Report the amount of residential 1 st mortgage construction loans where the borrower will be the occupant of the finished construction. Do not include business purpose loans in this amount. 15. Allowance for Losses on Real Estate Loans: Report the dollar amount of the allowance for loan losses account that is reserved for unrealized real estate loan losses. 16. Total Amount of all First Mortgage Loans Sold in the Secondary Market Year-to-Date. Total loan balance of all first mortgage real estate loans which have been sold in the secondary market, to other credit unions, to private investors, etc. 141

142 17. Amount of Real Estate Loans Outstanding that will contractually refinance, reprice, or mature within the next 5 years and that are not member business loans (reported in section 4, line #9). Report the outstanding balance of adjustable or fixed rate real estate loans that according to contractual agreements, will reprice or mature within the next 5 years and are not business loans (Sec. 4, #9). Also include real estate backed balloon loans, that according to contractual agreements, are due within the next 5 years. 18. Amount of real estate loans sold but serviced by the credit union (servicing retained). 19. Mortgage Servicing Rights. Report the dollar amount of Mortgage Servicing Rights recorded as an asset in this Call Report. 142

143 Specialized Lending Section 4 (Yes, section 4 is being taught before section 3 for a reason) Business Loans 143

144

145 Business loans do NOT include: A loan fully secured by a lien on a 1- to 4-family dwelling that is the member s primary residence A loan fully secured by shares in the credit union or deposits in other financial institutions Loan(s) to a member or an associated member which, when added together, (NMBLB) are equal to or less than $50,000 A loan where a federal or state agency (or its political subdivision) fully insures repayment, fully guarantees repayment, or provides an advance commitment to purchase in full. Loans to credit unions and credit union service organizations (CUSO s) 145

146 Remember: Net Member Business Loan Balance (NMBLB) NMBLB means the outstanding loan balances plus any unfunded commitments, reduced by any portion secured by shares or deposits (in any financial institution), or a lien on the member s primary residence, or insured or guaranteed by a government agency, or sold as a participation interest without recourse (GAAP). 146

147 For each type of member business loan listed, provide the number of loans outstanding, the aggregate NMBLB amount of loans outstanding, the number of loans granted or purchased year-to-date, and the NMBLB amount of loans granted or purchased year-to-date. For participation loans, report the NMBLB amount of the portion that remains on the credit union s balance sheet. Include any unfunded commitments with these reported figures unless otherwise noted in the instructions. For loans held for sale, report only the number of loans granted or purchased year-to-date and the aggregate NMBLB amount of loans granted or purchased year-to-date. 147

148 Business Loans 1 and 2 1 (a-k) Member Business Loans. Report the total count and NMBLB amount of any loan or participation to a member. 2 (a-k) Purchased business loans or participation interests to nonmembers. Report the total count and NMBLB amount resulting from a purchase of any nonmember business loan or participation interest qualifying for sales accounting. 148

149 Business Loans 1 and 2 A through E are business loans backed by REAL ESTATE. G through J are business loans NOT back by Real Estate 149

150 Business Lending Section 4 (cont) A. Construction and Development Loans. Report the total count and NMBLB amount of any loan or participation interest to a member (#1) or non-member (#2) for the purpose of acquisition of property or rights to property with the intent to convert it to income producing property. This includes land or structure loans made with the intent of conversion into an income producing property such as residential housing for rental or sale, commercial or industrial use, or similar use. These also include loans for major renovation or development of property already owned by the borrower that will convert the property to income producing property or covert the use of the income producing property to a different use from its use before the major renovation or development or is a major expansion of its current use. (Does not include loans to finance maintenance, repairs, or improvements to an existing income producing property that does not change its use.) 150

151 Business Lending Section 4 (cont) B. Secured by Farmland: Report the total count and NMBLB amount of any loan or participation interest to a member (#1) or nonmember (#2) business loan secured by farmland and improvement thereon. Farmland includes all land used for agricultural purposes. C. Secured by non-farm Residential Property: Non-farm business purposes such as: rental properties, apartment buildings, duplexes, condos, etc. The primary source of repayment is derived from thirdparty income associated with the property. DO NOT INCLUDE LOANS FULLY SECURED BY A MEMBER S PRIMARY RESIDENCE. 151

152 Business Lending Section 4 (cont) D. Secured by Owner Occupied, non-farm, non-residential Property: Such as: business and industrial property, hotels, churches, recreational facilities, nursing homes, mini-storage warehouse facilities, etc. The primary source of repayment is the cash flow from the ongoing operations and activities conducted by the borrower occupying the property and- rental income is less than 50% of the source of repayment. Loans secured by investorowned properties, where the investor leases the property to a thirdparty, are NOT included here. E. Secured by Non-Owner Occupied, Non-farm, Non-Residential Property: This is where you include investor-owned properties where the investor leases property to an unaffiliated 3 rd party, who in turn, operates the business occupying the property. The primary source of repayment is derived from the non-affiliated 3 rd party rental income associated with the property (greater than 50%). 152

153 Business Loans-Section 4 ***Remember*** A through E are business loans backed by REAL ESTATE. (So, F is the sum of all RE backed business loans.) G through J are business loans NOT back by Real Estate..and, now for G 153

154 Business Lending Section 4 (cont) G. Loans to Finance Agricultural Production and other loans to farmers: Report the total count and NMBLB amount of any loan or participation interest to a member (#1) or non-member (#2) business loan for agriculture or farm related equipment, seed, fertilizer, etc. (NO RE BACKED AGI LOANS.) H. Commercial and Industrial Loans: These are loans to businesses (DBA, LLC, LLP, Corps,etc.) where the collateral is not RE. (Ex: Equipment, A/R, other collateral, dealer floor plans) 154

155 Business Lending Section 4 (cont) I. Unsecured Business Loans: These are unsecured installment loans, include overdrawn share accounts that qualify as business loans. Report the Outstanding amount. J. Unsecured Revolving Lines of Credit granted for Business Purposes. Report the total count and NMBLB amount of any unsecured revolving line of credit loan or participation interest to a member (#1) or non-member (#2) for business purposes. YOU MUST REPORT BUSINESS CREDIT CARDS. Additionally, you must report unfunded commitments. (Change eff: ) 155

156 Business Loans K = Totals 1 Member Business Loans: 1 a-e plus 1 g-j TOTAL OF ALL MEMBER BUSINESS LOANS. 2 Nonmembers Business Loans: 2 a-e plus 2 g-j TOTAL OF ALL NON-MEMBER BUSINESS LOANS 156

157 Business Lending Section 4 (cont) Miscellaneous Business Loan Information 3. Construction and Development Loans meeting the requirements of Section 723.3(a): Report the NMBLB of all C&D loans EXCLUDING any loan to finance the construction of a single family residence IF a prospective homeowner has contracted to purchase the property (one residence per borrower/member or group of associated borrowers - even if no contract). 4. Unsecured Business Loans Outstanding meeting 723.7(c)- (d): Outstanding balances only and exclude "non-natural member / borrower" credit cards limited to normal and routine use for the business. 157

158 723.3(a) Why? Doesn t count against the 15% of net worth rule.. a) The aggregate of the net member business loan balances for all construction and development loans must not exceed 15% of net worth. In determining the aggregate balances for purposes of this limitation, a credit union may exclude any loan made to finance the construction of a single-family residence if a prospective homeowner has contracted to purchase the property and may also exclude a loan to finance the construction of one single-family residence per member-borrower or group of associated member-borrowers, irrespective of the existence of a contractual commitment from a prospective homeowner to purchase the property

159 723.7(d) Why? The code allows it: (d) You are exempt from the provisions of paragraphs (a), (b), and (c) of this section with respect to credit card line of credit programs offered to nonnatural person members that are limited to routine purposes normally made available under those programs.

160 Business Loans - Section 4 (cont) 5. Purchased business loans or participation interests to members: Report the total count and NMBLB amount of any purchased member business loan or participation interest reported in line 1 "K" above (member business loans). 6. Agricultural Related Loans 160

161 Business Lending Section 4 (cont) Miscellaneous Business Loan Information 7. Business Loans and Participations sold Year-to-Date. Report the total count and dollar amount of any business loan or participation interest sold year-to-date qualifying for sales accounting under GAAP. 8. Small Business Administration Loans Outstanding (SBA). Report the total count and outstanding amount (including the guaranteed portion) of any loan granted under a SBA loan program. (SBA bonds are not reported here; they are reported as an investment. This line is for loans only.) 161

162 9. Portion of Real Estate Loans (included in Total Real Estate Loans, Section 2, line 10) which are also reported as business loans (1 and 2 above). Report the outstanding portion of any loan contained in the Total Real Estate Loans (line 10) and the NMBLB is also reported as a business loan on lines 1 or 2 above. (So-NMBLB less unfunded portion) Do not include balances excluded from the NMBLB such as the portion secured by a lien on a member s primary residence, or partially secured by shares. (This captures Real Estate secured business loans under the regulatory definition. Used for Net Long Term Assets.) 162

163 #9 what is reported here? NMBLB less the unfunded commitments NMBLB minus unfunded commitments NMBLB does not contained certain excluded balances already; such as: Portion secured by deposits Portion secured by a lien of the member s primary residence 163

164 Risk Based Net Worth (RBNW) THE INFAMOUS BOX 10. Loans and participation interests qualifying for RBNW. Report the outstanding loan balances of any loan and participation that meets the definition of a member business loans at the time of origination or purchase. For the purposes of RBNW, you MUST include the portion of loan balances that are secured by shares or deposits, a lien on the member s primary residence, insured by a government agency, etc. However, you would not include those that don t reach the regulatory limit of $50,000 at origination. For the purposes of RBNW, once a business loan always a business loan ; and member and nonmember business loans are treated the same. DO NOT INCLUDE UNFUNDED COMMITMENTS. (Those are on the next line.) 11. Unfunded Commitments for loans and participation interests qualifying for RBNW. Here are the unfunded portions for loans included in #10 above. 164

165 Risk Based Net Worth (RBNW) (cont.) Why? 12. Amount of Real Estate Loans included in total real estate loans (line 10) and also reported as loans and participation interests qualifying for RBNW on line #10 above. In other words, the outstanding balance of your business loans secured by real estate that have ever qualified as a business loan.regardless of whether the loan is presently classified as a business loan. During the calculation of Risk Based Net Worth (RBNW), the Call Report software will automatically take that amount out of your Long Term Real Estate Loans since it is already included in the Member Business Loans Outstanding thereby preventing it from counting against you twice. 165

166 (OK here is section 3) Specialized Lending Section 3 Loans Purchased and Sold in Full And Participation Loans Purchased and Sold 166

167 167

168 Section 3 1-A: Loans Purchased in Full from Other Financial Institutions: Report the total number and dollar amount of loans purchased by your credit union for which it has full title, year-to-date. (Seller has assigned the note and supporting documents to your credit union.) DO NOT INCLUDE PARTICIPATION LOANS PURCHASED HERE. 1-B: Loans Purchased in Full from Other Sources: (other than from a financial institution.) 1-C: Loans, Excluding Real Estate Loans, Sold in Full Year to Date: Report the amount of loans that are not real estate loans that were sold in full year to date. DO NOT INCLUDE PARTICIPATION LOANS SOLD HERE. 168

169 2. Participation Loans Purchased a. Participation Loans Purchased (with Recourse): In the left hand column, report the number and dollar amount of ALL Participation loans purchased (cumulative). In the right hand column, report the number and dollar amount of Participation Loans purchased year-to-date whether or not the credit union is holding a current outstanding balance (NMBLB on both). (Participations with RECOURSE only.) b. Participation Loans Purchased (no Recourse): In the left hand column, report the number and dollar amount of ALL Participation loans purchased (cumulative). Report the number and dollar amount of Participation Loans purchased year-to-date in the right hand column whether or not the credit union is holding a current outstanding balance. (NMBLB on both)(participations with NO RECOURSE only.) 169

170 3. Outstanding Participation Loans Sold A. Participation Loans Retained / Sold (with Recourse): In the left hand column, report the number and outstanding balance retained by the credit union of ALL Participation loans sold (cumulative and NMBLB). In the right hand column report the number and outstanding dollar amount (cumulative and NMBLB) of Participation Loans sold whether or not the CU is servicing the loan. (Participations with RECOURSE only.) If they were sold with recourse, you must report that balance on the Liquidity Commitments and Sources schedule as a Contingent Liability. B. Participation Loans Retained / Sold (no Recourse): Same as above, except using loans that were retained or sold with NO RECOURSE. *** Includes MBL s, non-mbl s, C & D, and all Business LOC. *** Ensure that unfunded commitments are included.

171 4. Participation Loans Sold Year-to-Date a. Participation Loans Retained / Sold - YTD (with Recourse): In the left hand column, report the number and outstanding balance retained by the credit union of ALL Participation loans sold YTD (cumulative and NMBLB). In the right hand column report the number and outstanding dollar amount (cumulative and NMBLB) of Participation Loans sold whether or not the CU is servicing the loan YTD. (Participations with RECOURSE only.) If they were sold with recourse, you must report that balance on the Liquidity Commitments and Sources schedule as a Contingent Liability. b. Participation Loans Retained / Sold - YTD (no Recourse): Same as above, except using loans that were retained or sold with NO RECOURSE. *** Includes MBL s, non-mbl s, C & D, and all Business LOC. *** Ensure that unfunded commitments are included. 171

172 5. Participation Loans Outstanding by Type Left Hand Column: Report the total number and dollar amount OUTSTANDING (NMBLB if a business loan) for which the credit union has purchased a participation interest. (Cumulative basis not year-to date) Right Hand Column: Report the total number and dollar amount OUTSTANDING (NMBLB if a business loan) for which the credit union has sold a participation interest. You will be reporting the amount that you retained here. (Cumulative basis not year-to date) a. Consumer b. Non-Federally Guaranteed Student Loans c. Real Estate (do not list business loans back by RE here) d. MBL s excluding Construction and Development Loans e. Non-Member BL s excluding Construction and Development Loans f. Commercial Construction and Development Loans g. Loan Pools **** Business loans will NOT be listed under RE, they will be in d, e, or f. 172

173 Section 5 of Schedule A TDR S (Troubled Debt Restructured)

174

175 Troubled Debt Restructured A TDR is a loan whose terms have been modified by the credit union for economic or legal reasons related to the debtor s financial difficulties, grants a concession to the member that it would otherwise not consider This normally provides for a reduction in interest and/or principle, a change in accrued interest, an extension of the maturity; however, there are other ways to arrive at a TDR. For example, the FMV of interest rate versus extension of loan This concession either stems from an agreement by and between the member and the credit union or is imposed by law or a court. A loan extended or renewed at a stated interest rate equal to the current interest rate for new debt with similar risk is not considered a TDR. 175

176 TDR: Part 741 (Reference: IRPS Appendix C) For TDR reporting, you must indicate whether or not the loan is in accrual status or nonaccrual status. #1: Must use outstanding balances, segregated by accrual and non-accrual. #2: ( TDRs approved YTD ): YTD only and resets every January 1 st May include multiple TDR restructuring

177 #1: TDR (RE Secured Loans) a. TDR 1st Mortgage Real Estate Loans: Report the number and outstanding dollar amount for TDR loans in accrual and nonaccrual status which are presently secured by a first mortgage. b. TDR Other Real Estate Loans / Lines of Credit: Report the number and outstanding dollar amount for TDR loans in accrual and nonaccrual status which are presently secured by a junior lien. c. TDR Real Estate Loans also reported as Business Loans: Report the number and outstanding dollar amount for TDR loans in accrual and nonaccrual status which meet the definition of Business Loans that are secured by Real Estate. (Include fully purchased and participation business loans.) 177

178 #1: TDR Loans (cont.) d. TDR Consumer Loans NOT secured by RE: Report the number and outstanding dollar amount for TDR loans in accrual and nonaccrual status These are consumer loans (not for business purposes) that are NOT secured by RE. (Examples: a consumer auto loan, credit card, unsecured signature loan, share secured loan, mobile homes that do not include land, etc.) e. TDR Business Loans NOT Secured by Real Estate: Report the number and outstanding dollar amount for TDR loans in accrual and nonaccrual status which meet the definition of a business loan under Part 723 and- are not secured by real estate. (These loans have already been reported in Section 4 as Business Loans.)

179 TDR Section 5 (Cont.) 2. TDR Loans Approved Year-to-Date: Report number and dollar amount of TDRs approved YTD. (This may include multiple restructures and/or loans that have been charged off or paid off.) 3. TDR Portion of the ALLL: Report the amount in the ALLL account that is reserved for unrealized TDR loan losses

180 Section 6 of Schedule A PCILs (Purchased Credit Impaired Loans)

181

182 Purchased Credit Impaired Loans These are loans where (1) there is evidence of deterioration of credit quality since the origination of the loans and (2) it is probable that the CU will be unable to collect on part or all of the loan. CU s must account for these PCILs pursuant to GAAP. Normally, these are loans that have been acquired in merger (business combination under the acquisition method).

183 Purchased Credit Impaired Loans (continued) The surviving credit union generally establishes an allowance of losses related to these PCILs. CU s will establish pools of these loans that have similar risk characteristics, especially in large mergers. The risk of loss may increase over time.

184 #1: Balances as of call report date For the difference PCILs, you must report the number and dollar amount of the contractual balance outstanding, the nonaccretable balance outstanding, the accretable yield, and the carrying value of the PCIL (what is it on your balance sheet for?)

185 #1 - PCILs 1A: PCILs secured by RE in 1 st position 1B: PCILs secured by Other RE 1C: PCILs RE secured business loans 1D: PCIL s NON-RE (consumer loans) 1E: PCILs NON-RE (business loans)

186 Schedule B Investments, Supplemental Information 186

187 187

188 US Government Obligations 1 a-b: NCUA Guaranteed Notes (NGNs) - both fixed and variable by maturity classification. 1c: Total FDIC-Issued Guaranteed Notes 1d: All Other U.S. Government Obligations U.S. Government Obligations, including U.S. Treasury Bills, Notes, Bonds, Zero Coupon Bonds and Strips, etc. 1e: TOTALS 188

189 2. A and B: Federal Agency Securities. Report the amount of investments in securities issued or guaranteed by Government Corporations and Government Sponsored Enterprises (GSE s). These are divided into A Debt Instruments (not backed by mortgages) and B Mortgage-Backed Securities. 189

190 Federal Agency Security: Issued by one of two entities: Government Owned (wholly or partially), usually back by the Full Faith and Credit of the US Government or an explicit guarantee by the issuer. (SBA s will be included in these.) Government Sponsored Enterprise (GSE): Privately-owned, Congressionally-chartered corporations. These are government instrumentalities; however, they do not carry the same guarantee as a Government Owned entity. (Non-explicit US guarantee) Some examples of GSE s: FNMA FHLB FHLMC FFCB FAMC (Farmer Mac)

191 3. Securities Issued by States and Political Subdivisions in the US: Report the amount of investments in securities issued by states and political subdivisions, such as cities and counties in the United States 191

192 What is the difference between Mortgage Related and Mortgage Backed when dealing with Privately Issued Mortgage Securities??????? Privately Issued Mortgage-Related Securities: These are first mortgage backed securities that are rated in one of the two highest categories by a least one nationally-recognized statistical rating organization. (AAA or AA, or equivalent rating). Privately Issued Mortgage-Backed Securities: These are mortgage backed securities that do not meet the definition of a Mortgage Related Security. For example, they are rated lower than AA (or its equivalent rating).or they are a security backed by second lien mortgages, etc. These securities are NOT PERMISSIBLE investments for FCU s.

193 #4: Other Mortgage-Backed Securities 4-A: Privately Issued Mortgage-Related Securities. ( i and ii ): i = Privately issued mortgage related securities. ii = Securities that fail to meet the definition of a mortgage related security (down-graded below the two highest rating categories after purchase) (FCU only) 4-B: Privately Issued Mortgage-Backed Securities. (SCU only) (Not Permissible for FCU s) 193

194 5. Mutual Funds. Report the amount of investments in mutual funds. Mutual funds have a Net Asset Value ( NAV ). 6. Common Trust Investments. Report the amount of investments in common trust investments. Common trust investments include the Government Securities Program (GSP) and NIFCU$. 7. Bank Issued FDIC-Guaranteed Bonds. Report the amount of investments in bank issued bonds that the FDIC backs with the full faith and credit of the US. 194

195 Investments Meeting Specific Criteria of Part 703 (FCU ONLY) 8. Non-Mortgage Related Securities with Embedded Options or Complex Coupon Formulas. This question is for federal credit union only. Report total holdings in securities, other than mortgage-related securities, with embedded options (calls, puts, caps, and floors); or where the coupon formula is related to more than one index, or is inversely related to an index, or is a multiple of an index. Do not include NGN's, mutual fund investments, CUSO stock or the stock of the Federal Reserve, FHLB, or SLMA. 9. Non-Mortgage Related Securities with Maturities Greater than Three Years that Do Not have Embedded Options or Complex Coupon Formulas. This question is for federal credit unions only. Report total holdings in securities, other than mortgage-related securities, with maturities greater than 3 years, e.g. agency bullets. Exclude securities with embedded options (calls, puts, caps, and floors), where the coupon formula is not related to more than one index, and is not inversely related in an index, or is a multiple of an index. Do not include NGN's, mutual fund investments, CUSO stock or the stock of the Federal Reserve, FHLB, or SLMA. 195

196 10. Total of Securities Meeting the Requirements of Section (b). Sum of lines 2b, 4c, 8, and 9. (Electronic Filers This field populates automatically.) 196

197 Mortgage-Backed Securities (MBS) Mortgage-related securities are securities collateralized by mortgages and may be publicly or privately issued. This items should already be included in lines 1 through 4 listed above. 11. Collateralized Mortgage Obligations / Real Estate Mortgage Investment Conduits (CMOs/REMICs). Report multiclass (MRS) bond issued collateralized by whole loan mortgages or mortgage-backed securities. Principal payments are distributed on a prioritized basis. 12. Commercial Mortgage Related Securities. Report securities that are backed by commercial mortgage loans (e.g. multi-family (>4 units) housing, hotels, retail space, office buildings) and represent an undivided interest in a pool of mortgages. 197

198

199 Miscellaneous Investment Information 13. Total of Deposits and Shares Meeting the Requirements of Section (a). Federal Credit Unions only. Report total holdings in shares and deposits of banks, credit unions, or other depository institutions with remaining maturities greater than 3 years; or with embedded options (calls, puts, caps, and floors); or where the coupon formula is related to more than one index, or is inversely related to an index, or is a multiple of an index. Do not include membership capital (Nonperpetual Capital Accounts) and paid-incapital (Perpetual Contributed Capital) at corporate credit unions. 199

200 14. Market Value of Investments Purchased Under an Investment Pilot Program This question is for federal credit unions only. Report only those investments that are purchased under the authority of an approved pilot program. Report the market value of investments, NOT the notional amounts (e.g. derivatives such as swaps). 15. Fair Value of Held to Maturity Investments. Report the fair value of all held to maturity investments (those reported on page 1, line 6). Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties. If quoted market price is available for an instrument, derive the fair value by multiplying the number of units of the instrument by its market price. 200

201 16. Investment Repurchase Agreements. Report the dollar amount of all repurchase agreements where the credit union lends funds (not reverse repurchase agreements). 17. Borrowing Repurchase Transactions Placed in Investments for Purposes of Positive Arbitrage (income enhancement). Report the dollar amount of all outstanding repurchase agreements where the credit union borrows the funds. 201

202 18. Investments Not Authorized by the Federal Credit Union Act or the NCUA Rules and Regulations. This question is for state chartered CU s only. Report the amount of investments permitted by state law, but that are not authorized by the Federal Credit Union Act (See Section 107) or NCUA Rules and Regulations (see Part 703) 19. Outstanding balance of brokered certificates of deposit and share certificates. Report the book value of all certificates of deposit and share certificates purchased through or from a broker. Exclude any certificate of deposit or share certificate purchased directly from the issuing depository institutions. (This DOES INCLUDE SimpliCD s since they are not direct purchases from the issuing institution.) 202

203 #20: Amounts reported in the Asset section (Statement of Financial Conditions) to fund employee benefit plans or- deferred compensation plans: Under Section (c) (if FCU) Or similar state provisions (if SCU) That are impermissible under NCUA RR Part 703, but allowed under Section (c)

204 20: Investment used to fund employee benefit plans (cont.) Do not include assets held in 457(b) plans Do not include assets held in qualified defined contribution and qualified benefit plans (since these assets to not reside on the balance sheet).

205 20: Investment used to fund employee benefit plans (cont.) A : Securities: Report the recorded value of all securities held for the purpose of funding same. B : Other Investments

206 20: Investment used to fund employee benefit plans (cont.) C: Other Assets: i. Split Dollar Arrangements a. Collateral Assignment Split Dollar Arrangements (recorded value of all loans to fund collateral assignment for split dollar arrangements) b. Endorsement Split Dollar Arrangements ii. Other Insurance iii. Other Non-Insurance

207 21: Investment in Charitable Donations Report the recorded value of investments in Charitable Donation Accounts allowed under Section 721(b)(2) of the NCUA RR (if a FCU) or similar state provisions (if a SCU)

208 Schedule C Credit Union Service Organizations Information (CUSO) 208

209 209

210 1. CUSO Definition: A credit union service organization (CUSO) is a corporation or limited partnership that provides services primarily to credit unions or members of affiliated credit unions. Line item entries for credit union loans and investments have been moved to the NCUA Form 4501A (Profile Form). Answer the following questions for each CUSO in which you have a loan or an investment. If your credit union has investments in or loans to more than one CUSO, complete a separate line of information for each CUSO. 210

211 2. Accounting Issues: A. If the credit union wholly-owns the CUSO or owns a controlling financial interest (assumed at ownership of 50% or more of the voting stock), the CUSO s books and records should be consolidated with the credit union s books and records (as if the two were one entity) for balance sheet and income statement reporting. B. If the credit union has ability to exert significant influence over operations of the CUSO (assumed at ownership of 20% or more but less than 50% of the voting stock of the CUSO), the credit union s investment in the CUSO should be reflected in its books and records using the equity method of accounting. C. If the credit union owns less than 20% of the voting stock of the CUSO, the credit union should account for its CUSO investment using the cost method of accounting. 211

212 2. Aggregate of Financial Interests The CU has in CUSO s o Total Value of Investments in CUSO s o Total Amount Loaned to CUSO s o Total Aggregate Cash Outlay in CUSO s The bottom portion will only be filled out if you wholly own a CUSO. 212

213 Wholly Owned CUSO EIN Name Total Assets of CUSO Total Capital of CUSO Net Income / Loss of CUSO Total Loans of CUSO Total Delinquency of CUSO Does the CUSO have any subsidiary CUSO s? Y/N

214 Schedule D Derivative Transactions Pages 20 through 24

215 Schedule D: Section 1: Outstanding Section 2: Outstanding with Accounting Designations Section 3: Activity Section 4: Maturity Horizon Section 5: Counterparty Exposure for Derivative Transactions

216 Schedule E Bank Secrecy Anti-Money Laundering

217