Navy Federal Credit Union 2013 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2013 Navy Federal Credit Union annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 73

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73

Navy Federal Credit Union • 2013 Financial Section
24
2013 ANNUAL REPORT
NOTE 6:
Navy Federal applies ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit
Quality, to account for the credit-impaired loans obtained in connection with its acquisition of USAFCU
on October 1, 2010. The carrying value of these ACI loans is included in Loans to members on the
Consolidated Statements of Financial Condition, and their outstanding balances at December 31
were as follows:
(dollars in thousands)  
Outstanding balance $ 80,850 $ 81,067
Carrying amount 31,596 38,814
For the years ended December 31, 2013 and 2012, Navy Federal recognized interest on ACI loans of $2.5
million and $3.1 million, respectively. The average balance of ACI loans as of December 31, 2013 and 2012
was $35.2 million and $43.2 million, respectively.
Decreases in cash flows expected to be received on ACI loans resulted in increases in the allowance for
loan losses of $0.7 million and $0.9 million as of December 31, 2013 and 2012, respectively.
During 2013 and 2012, previously established allowances were reduced by $2.4 million and $4.4 million,
respectively, because either cash flows received were significantly greater than previously expected or
it was probable that there would be a significant increase in expected cash flows. During 2013 and 2012,
previously established allowances were increased by $3.1 million and $3.5 million, respectively, because
either cash flows received were less than previously expected or it was probable that there would be a
significant decrease in expected cash flows.
Accretable yield activity for ACI loans for the years ended December 31, 2013 and 2012 was as follows:
(dollars in thousands)  
Balance, beginning of period $ 22,706 $ 28,770
Accretion (3,519) (4,524)
Net reclassifications (1) 3,534 2,566
Removals (3,228) (4,106)
 $ $
(1) Includes transfers between accretable yield and non-accretable yield.