The NCUA approved major revisions to the 5300 Call Report that take effect in the first quarter of 2022. These changes involve substantial reorganization and restructuring of most sections of the call report, including the removal, addition, and modification of more than 1,000 combined account codes.
The changes are part of the Call Report Modernization Project that began in 2016. The project aims to reduce the reporting burden for credit unions by:
Streamlining the call report process.
Reorganizing and improving data collection.
Accommodating the complex credit union leverage ratio (CCULR) and the risk-based capital (RBC) schedule.
CCULR Versus RBC? Which One Is Right?
Credit unions with less than $500 million in assets are considered non-complex credit unions. The regulatory capitalization rules for these credit unions remain unchanged.
Credit unions with more than $500 million in assets are considered complex credit unions. They must choose between regulatory capitalization formulas — CCULR and RBC.
Complex Credit Union Leverage Ratio (CCULR)
The CCULR was designed to provide a simpler measure of capital adequacy for complex credit unions. If an institution meets the qualifications listed below, it may elect to use the CCULR.
CCULR qualification criteria include:
A net worth ratio of 9% or greater.
Off-balance sheet exposures of less than 25% of total assets.
Trading assets and liabilities less than 5% of total assets.
Goodwill and other intangible assets less than 2% of total assets.
If an institution qualifies for and elects the CCULR method, it does not have to complete the RBC schedule.
Risk-Based Capital (RBC)
If an institution has more than $500 million in assets and does not qualify for CCULR or elects not to use the CCULR option, it must complete the more complex RBC schedule on pages 24-28 of the new call report.
A credit union is considered “well-capitalized” if it uses the CCULR method or has an RBC ratio higher than 10%.
Of note: Complex credit unions with more than $500 million in assets are now allowed to issue secondary capital as subordinated debt and count this value toward their RBC calculation. Secondary capital issuance was previously limited only to credit unions with a low-income designation.
BI User Group Webinar: 2022 Call Report Changes
The NCUA Call Report Modernization Project has big implications for how credit unions report to the NCUA, and the skill and expertise of analytics teams have a part to play. Join Callahan & Associates for this free webinar on April 7.
Notable Changes To The First Quarter Call Report
The call report changes that took effect between the fourth quarter of 2021 and the first quarter of 2022 are substantial and represent the bulk of the Call Report Modernization Project.
The major areas of change include:
Expanding information on foreclosed and repossessed assets.
Removing commercial loans from the real estate lending detail.
Reducing delinquency and charge-off categories and aligning them with loan types.
Adjusting indirect loan and participation reporting requirements.
Restructuring categories for investment portfolio reporting.
Providing new information on off-balance sheet exposures.
Adding CCULR and RBC calculation schedules.
Many of these changes involve separating, offering additional detail, and aligning information related to commercial lending.
In addition to these changes, the NCUA reorganized much of the call report. Many schedules moved to new pages and areas, although the account codes themselves remain unchanged.
Will This Impact Performance Analysis?
Most of the commonly used account codes in Callahan & Associates’ software programs remain unchanged. Additionally, Callahan is working to ensure all pre-built displays and formulas are minimally affected by the call report changes.
However, not all displays will be cleanly updated. For account codes that have been removed entirely, displays containing them might be retired or relocated. Some displays will no longer be able to accurately trend across time periods pre-and-post these changes.
Reporting areas that are unchanged or insignificantly changed from a reporting standpoint include:
Top level balance sheet items like assets, loans, shares, and all major loan and share categories.
Income statement and earnings metrics.
Commercial lending categories.
Displays related to the following categories might be relocated, retired, or trend inconsistently between the fourth quarter of 2021 and the first quarter of 2022.
Detailed mortgage information — originations, fixed/adjustable/balloon, etc.
Delinquency and charge-offs — commercial loans are now broken out separately by loan type.
Investment portfolios — investment categories have adjusted and been regrouped.
Additions to the 5300 Call Report provide new insights for displays. These include:
Indirect lending and participation breakdowns.
Foreclosed asset breakdowns.
Pullable CCULR and RBC ratios for all complex credit unions.
Callahan understands these changes can be overwhelming. If you have questions or need assistance, reach out to firstname.lastname@example.org or contact Callahan through the chat feature within Peer Classic or Peer+.
Are you interested in learning more about the changes with the 5300 Call Report? Register today for our webinar on April 7th where we will discuss the 5300 and its implications for credit unions moving forward.