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Be ready for major changes to the NCUA 5300 Call Report Form in March

Jan 19, 2022

As part of the Call Report Modernization Initiative, the National Credit Union Administration (NCUA) has published significant revisions to the NCUA 5300 Call Report Form that are expected to go into effect March 31, 2022. The changes will impact the current structure of the Call Report, eliminate obsolete reporting items and build out current reporting to accommodate the enhanced risk-based capital (RBC) ratio calculation.

This is the first significant overhaul of the NCUA 5300 Call Report since 2013 when additional reporting was added for delinquent loans, employee benefit funds and specialized lending. The changes will eliminate reporting of items no longer needed or relevant and expand reporting of existing items.

Anticipated NCUA 5200 Call Report preparation disruptions

The NCUA has published a Catalog of Account Codes that indicates more than 500 new/new-replaced account codes were added, close to 600 account codes were retired or replaced and close to 400 account codes were relocated within the reporting form. The account coding changes will impact any automated routine or mapped reports.

Mapping used to complete the December 2021 Call Report will no longer be usable to complete the March 2022 Call Report. The changes approved in December 2021, and effective March 31, 2022, mean that core providers, vendors and other preparation tool providers are working diligently to update reporting in time to meet the reporting deadline.

This reporting cycle will require more time and resources than usual to address the changes. We recommend identifying and having resources available to assist with implementing changes to obtain and process required information.

Data gathering challenges

A number of new data points will require additional research to determine how information is to be obtained and processed for reporting. Many of the new data points were added to enhance the detail of broader reporting items. The most significant items requiring enhanced reporting are investments.

Many credit unions obtain bond summary reports that include call reporting data. Check your current reports to determine whether providing or contacting your securities safekeeping agent to determine how the new data point information will be provided are among your requirements.

For credit unions with assets greater than $500 million, additional off-balance sheet exposures will need to be reported. Those include:

  • Details related to unconditionally cancellable unfunded commitments
  • Loans with limited recourse or seller enhancements
  • Loans transferred under the FHLB MPF program
  • Letters of credit
  • Forward agreements that are not derivative contracts
  • Sold credit protection, including guarantees and credit derivatives
  • Off-balance sheet securitized exposures
  • Securities borrowing or lending transactions
  • Off-balance sheet exposure of repurchase transactions

Obscure items trimmed down or removed

A large number of more obscure and difficult to obtain reporting items were removed. Examples include:

  • Detailed trouble debt restructured accounts (TDR) reporting was eliminated.
  • The number of delinquent loans by collateral type was reduced to the total number of loans 60 days or more past due for each category.
  • Delinquency reporting was reduced to only the main consumer and commercial loan categories, eliminating all additional delinquency reporting on page 9.
  • Charge off and recoveries reporting was reduced to only the main consumer and commercial loan categories. While participation and indirect loans are still included, all other “additional loan loss information” on page 10 were eliminated.

Note that some items that appear to have been removed were relocated. Looking up the account code in the Catalog of Account Codes is the most effective way to determine the status of an individual item.

Adequate preparation time

The updated 5300 form has significant change in its structure as well as the items reported. Working through the process of understanding the changes, determining the sources of data and updating current mapping will require time and resources that will exceed the normal Call Report preparation period. Some changes appear simple, such as separate reporting of consumer and commercial nonaccrual loans. But depending how loans are coded and reports are set up, this may take time to reconfigure.

If you are currently using reporting with custom queries, expect that some of these will need to be updated. Update your current process and preparation procedure as soon as possible using resources available at the NCUA Call Report Modernization website.

Change to net worth and capital calculations

In response to the 2007-2009 recession, NCUA began working to restructure capital adequacy standards in 2015. The final rule, including a definition of complex credit unions, was the most significant change and will impact credit unions with over $500 million in assets. There will be no changes for credit unions under $500 million.

Credit unions with assets of $500 million or more must elect one of the following capital calculation methods:      

Complex Credit Union Leverage Ratio (CCULR)

If all of the following eligibility criteria are met, the credit union can opt into using the net worth ratio that is automatically calculated based on the following criteria:

  • Total asset under $500 million
  • Net worth ratio of 9% or greater
  • Off balance sheet exposures 25% or less of total assets
  • Trading assets and trading liabilities 5% or less of total assets
  • Goodwill and other intangible assets 2% or less of total assets

Risk-based capital ratio

If the credit union does not meet the eligibility requirements or elects to opt out of the CCULR, they must complete pages 24 through 28 to calculate the risk-based capital ratio.

  • The current risk weighing on page 13 has been expanded to include assigning risk weights to a comprehensive list of on balance sheet and off-balance sheet items to determine a risk- based asset total.
  • The adjusted capital is divided by the risk-based assets to calculate the risk-based capital ratio.

No changes to commercial and member business loan definitions

It is important to note there were no changes to the definitions of commercial loans or member business loans. While some of the accounting coding changed and reporting items were relocated, the content will not require modification to queries or reporting. The exception for identifying aggregate net member business loans, including line of credits less than $50,000, will continue to be a data collection challenge.

As with any regulatory updates, additional changes can be expected when the final 5300 form and instructions are released, but until then, the NCUA Call Report Modernization page includes the proposed 5300 Call Report form, instructions, redline mapping to proposed 5300 form, catalog of account codes, and a vendor schema file. Reviewing this information in preparation for the March 31, 2022 changes to NCUA 5300 Form will be critical to ensure resources are focused on collected and reported in the new format.

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Author(s)

Danielle M. Heidemann, CIA
Manager
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