Supporting the Upcoming Changes on the NCUA Call Report

Sweeping changes no, ready to go yes

Over the course of the last few days there have been multiple press releases regarding the upcoming changes to the 5300 Call Report.   Headlines such as “Sweeping Changes” are grabbing the attention of our clients and we have received numerous calls regarding our reaction and ability to change the software to accommodate these changes.   Here is a highlight of the changes:

  • For the December 2012 Call Report, the Account Codes for Modified Loans in the Specialized Lending section will be eliminated and replaced with Troubled Debt Restructured Loans.
  • For the March 2013 Call Report, Account Codes will be added for reporting delinquency and charge offs based on additional NCUA loan categories.  Account Codes will also be added for unfunded commitments, credit impaired loans and investments.  This impacts the Delinquent Loans, Loan Charge Off and Recoveries, Liquidity Commitments and Sources, and Investments (Schedule B) sections of the Call Report.
  • For the June 2013 Call Report, the NCUA is changing the reporting of loan delinquencies from months to days.  We are in the process of reviewing our system for the impact of this change.   The existing Loan Delinquency Report (MNCOLL #18) provides this information currently and can continue to be used.  We will also be reviewing the Loan Delinquency Analysis Report (MNCOLL #19) for enhancements.

Numerous changes yes but sweeping, no.   Since the CU*BASE 5300 software tools were introduced over three years ago CU*Answers has a dedicated resource on staff who monitors the NCUA changes and updates the software, procedures and documentation accordingly.    We built the feature to be very nimble to the point where programming is not necessary to effectuate the changes each time a new Account Code is added.  When changes are made, our dedicated staff work diligently with both Geoff Johnson’s Lender*VP team and my team in AuditLink to give helpful hints associated with capturing the data necessary to complete the report.   These hints are actually found in the body of the software itself and I encourage you to understand what your accounting personnel are disseminating to your teams as they begin to understand the suggestions and hints on the system.   As an example we encourage credit unions to use the loan classification system to track TDR’s.     Also, in 2013 we are enhancing the system to capture charge off information, such as the original loan type and forensic data associated with the reason for the members default.   This will help credit unions to complete the charge off information section of the Call Report including NCUA’s new loan categories.

The biggest question at hand is the change in to the delinquency reporting.   The NCUA letter to credit unions may give the impression that this is a very large change that will require major revamps to the data processing systems credit unions are using today.    Be assured that cuasterisk network credit unions have had the ability to pull delinquency reports in the proposed daily format for over a decade.    We are contemplating making some additional options available for this report but only to summation and sort capabilities and none of which are necessary for the gathering of the data only from a usability standpoint.    What I believe is the larger issue is the questions relating to reportable delinquency verses reporting to the Board of Directors and collection processing.     The letter to credit unions only addresses the reporting on the Call Report and states the reasoning behind the change is consistency between all regulatory agencies.    It does not state Board reports will need to be changed nor does it state the internal collection systems should change.    Members who are 59 days past due (new definition for the Call Report) will not be listed on the credit report as two months past due nor will they be getting notices that they are two months past due until the reach two payments past due.     As always these types of ambiguities are subject to interpretation by examination field staff so until this actually becomes the rule of the land we would be guessing how this is put to the test.

Be sure to check our regular 5300 quarterly update letter for more detailed information on the upcoming NCUA changes!

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