Issue link: http://www.epageflip.net/i/964842
JM Associates Federal Credit Union Notes to the Financial Statements NOTE 8: BORROWED FUNDS Corporate Line of Credit As of September 30, 2017 and 2016, the Credit Union had an unused line of credit with Corporate One Federal Credit Union. The terms of the agreement require the pledging of all present and future loans and equipment as security for obligations under this line of credit agreement. The interest rate terms under this line of credit agreement are variable. The total line of credit was $5,000,000 as of September 30, 2017 and 2016. There were no outstanding borrowings as of these dates. NOTE 9: CAPITAL REQUIREMENTS The Credit Union is subject to various regulatory capital requirements administered by the NCUA. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Credit Union's financial statements. Under capital adequacy regulations and the regulatory framework for prompt corrective action, the Credit Union must meet specific capital regulations that involve quantitative measures of the Credit Union's assets, liabilities, and certain off-balance-sheet items as calculated under accounting standards generally accepted in the United States of America. The Credit Union's capital amounts and net worth classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Credit Union to maintain minimum amounts and ratios (set forth in the table below) of net worth to total assets. Furthermore, Credit Unions over $50,000,000 in assets are also required to determine if they meet the definition of a "complex" Credit Union as defined by regulation. The minimum risk-based net worth ratio to be considered complex under the regulatory framework is 6.00%. If the Credit Union falls under the "complex" category, an additional Risk-Based Net Worth (RBNW) requirement may be imposed that could result in capital requirements in excess of minimum levels established for non-complex Credit Unions. Key aspects of the Credit Union's minimum capital amounts and ratios are summarized as follows: Risk-Based Net Worth Ratio September 30, 2017 September 30, 2016 Risk-based net worth ratio 5.48% 5.59% Credit Union Considered Complex? No Yes General Capital Requirements September 30, 2017 September 30, 2016 Amount Requirement/ Ratio Amount Requirement/ Ratio Amount needed to be classified as "well capitalized" $ 8,084,370 7.00% $ 7,676,216 7.00% Regulatory Net Worth $ 16,839,702 14.58% $ 15,345,684 13.99% NOTE 10: RELATED-PARTY TRANSACTIONS In the normal course of business, the Credit Union extends credit to Directors, Supervisory Committee members and Executive Officers. The aggregate loans to related parties as of September 30, 2017 and 2016, were approximately $1,340,000 and $1,053,000, respectively. Shares from related parties as of September 30, 2017 and 2016, amounted to approximately $2,115,000 and $2,439,000, respectively. 28 JM Associates Federal Credit Union • jmafcu.org