Investor Presentaiton
LOUISIANA CORPORATE CREDIT UNION
NOTES TO FINANCIAL STATEMENTS
8. COMMITMENTS AND CONTINGENCIES (continued)
Financial Instruments with Off-Balance Sheet Credit Risk
The Credit Union is a party to financial instruments with off-balance sheet risk in the normal course of
business to meet the financing needs of its members and to reduce its own exposure to fluctuations in
interest rates. These financial instruments include commitments to extend credit. Those instruments
involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in
the statement of financial condition. The contract or notional amounts of those instruments reflect the extent
of involvement the Credit Union has in particular classes of financial instruments.
The Credit Union's exposure to credit loss in the event of nonperformance by the other party to the financial
instrument for commitments to extend credit is represented by the contractual notional amount of those
instruments. The Credit Union uses the same credit policies in making commitments as it does for on-
balance-sheet instruments.
Commitments to extend credit are agreements to lend to a member as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily represent future cash
requirements. The Credit Union evaluates each member's credit worthiness on a case-by-case basis. The
amount of collateral obtained if deemed necessary by the Credit Union upon extension of credit is based
on management's credit evaluation of the counterparty. Collateral generally consists of the total assets of
the member.
Advised lines of credit are commitments for possible future extensions of credit to existing customers. These
lines of credit are collateralized and usually do not contain a specified maturity date and may not be drawn
upon to the total extent to which the Credit Union is committed.
Standby letters of credit are conditional commitments issued by the Credit Union to guarantee the
performance of a member credit union to a third party. The credit risk involved in issuing standby letters
of credit is essentially the same as that involved in extending loan facilities to members. Standby letters
of credit reduce a member credit union's advised line of credit.
The following financial instruments were outstanding whose contract amounts represent credit risk:
December 31,
2021
2020
$ 125,479,000
7,392
$ 126,289,557
508,914
Advised lines of credit - unused
Standby letters of credit - unused
Total
$ 125,486,392
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$ 126,798,471View entire presentation