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JM Associates Federal Credit Union Notes to the Financial Statements For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. The effective date for Credit Unions is for fiscal years beginning after December 15, 2019. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. The FASB issued ASU No. 2016-01 "Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities." The main objective in developing this Update is enhancing the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The Update has two areas of interest to Credit Unions. One is the removal of the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities. The other has a more significant potential impact. The ASU requires entities to record equity securities at fair value with adjustments to fair value recorded through the income statement. Currently many securities meeting the definition of an equity security are recorded as available-for- sale with fair value adjustments recorded as part of other accumulated comprehensive income. Securities meeting the definition of an equity security include any ownership interest in an entity. Credit Unions with investments in mutual funds, stocks, limited partnerships, and trusts could see unacceptable levels of earnings volatility on their income statements. Removing the disclosure of fair value of financial instruments is available for implementation immediately upon issuance of the ASU. The effective date for the accounting for equity securities for Credit Unions is for fiscal years beginning after December 15, 2018. Credit Unions may adopt this ASU early with fiscal years beginning after December 15, 2017. By the Numbers TruStage ® 505 – total number of JMAFCU members protected by TruStage auto and home insurance 2,125 – total number of JMAFCU members protected by TruStage accidental death and dismemberment insurance $114,912 – total claims paid by TruStage to JMAFCU members for auto and home insurance in 2017 $75,000 – total claims paid by TruStage to JMAFCU members for accidental death and dismemberment insurance in 2017 TruStage, a CUNA Mutual company, now provides insurance coverage to more than 18 million Credit Union members – including many right here at JMAFCU. TruStage strongly believes in the power of Credit Unions and the role we play in helping our members build better financial futures. Â Leveraging technology to maximize efficiency, while always protecting and maintaining member confidentiality. 15 The Way We Do Things Has Changed. Who We Are Has Not! • 2017 Annual Report