Navy Federal Credit Union 2014 Annual Report Download - page 52

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Navy Federal Credit Union34
NOTE 12: COMMITMENTS
In the normal course of business, Navy Federal enters into conditional commitments to extend credit
and makes financial guarantees to help meet the financing needs of its members. Unfunded loan
commitments are amounts that Navy Federal has agreed to lend a member generally as long as the
member remains in good standing on existing loans. Commitments generally have fixed expiration dates
or other termination clauses. Commitments are typically expected to expire without being drawn upon,
and therefore, do not necessarily represent future cash requirements. Navy Federal uses the same credit
policies in making commitments as it does for all loans to members and, accordingly, at December 31,
2014 and 2013, the credit risk related to these commitments was similar to that on its existing loans.
Unused commitment balances as of December 31, 2014 and 2013 were as follows:
(dollars in thousands) 2014 2013
Credit cards $ 11,647,058 $ 11,095,663
Home equity lines of credit 944,194 919,142
Checking lines of credit 892,784 831,196
Pre-approved auto loans 401,135 331,716
Utility deposit guarantee programs 1,583 1,706
Other (1) 10,378 8,915
Total $ 13,897,132 $ 13,188,338
(1)Includes Stand By Letters of Credit and Business Lines of Credit.
Navy Federal had an allowance of $16.9 million and $12.4 million at December 31, 2014 and 2013,
respectively, against unfunded credit card loan commitments and checking lines of credit loan
commitments. The total allowance for credit cards and checking lines of credit is derived at a product
level against the total credit line amounts, and the unfunded commitment liability portion is determined
by applying a ratio to that total allowance. The unfunded commitment liability ratio used is computed
based on historical data that identifies the volume of charge-os that exceeded the related outstanding
purchases over a 12-month period and its relation to the total respective portfolio charge-os. The
allowance for unfunded credit card commitments and checking lines of credit are included in Other
liabilities in the Consolidated Statements of Financial Condition. The osetting adjustments to the
allowance are included in the Provision for loan losses in the Consolidated Statements of Income.
The net change in the allowance for unfunded loan commitments was as follows:
(dollars in thousands) 2014 2013
Balance, beginning of period $ 12,421 $ 9,109
Net change in allowance for unfunded loan commitments 4,482 3,312
Balance, end of period $ 16,903 $ 12,421