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TABLE OF CONTENTS

Introduction ........................................................................... 1

Peer Groups .......................................................................... 1

Percentile Rankings.............................................................. 1

Arrangement......................................................................... 2

Description ........................................................................... 2

Ratio Components ..................................................................6

Capital Adequacy ................................................................. 6

Asset Quality ........................................................................ 7

Earnings ............................................................................... 7

Asset Liability Management ................................................. 8

Productivity ........................................................................... 9

Other Ratios........................................................................... 9

Additional Information ....................................................... 10

National Credit Union Administration Regional Offices ... 11
INTRODUCTION

The Financial Performance Report

(FPR) serves as an analytical tool for

credit union management. The FPR

also aids NCUA and State Supervisory

Authorities in measuring the financial

performance of credit unions. The

yearend FPR is designed to provide a 5-

year picture of the financial trends and

operating results of the credit union.

The midyear and quarterly FPRs

portray these trends for shorter time

intervals. The data contained in the

report may be used by the credit union

to identify key trends, analyze past

performance, and set future goals.

FPRs are computer generated reports

prepared from data the credit union has

submitted to NCUA. For all credit

unions, data is updated quarterly. The

data is collected from the Call Report,

NCUA 5300. Optionally, credit unions

with assets less than $10 million may

use the abbreviated version of the Call

Report, NCUA 5300SF for March and

September. Data is presented in the

form of ratios, percentages, and dollar

amounts. FPRs also portray the credit

union in relation to a credit union peer

group of similar asset size.

PEER GROUPS

Peer group data is provided to show

how the credit union performed in

relation to a group of credit unions of

similar asset size and charter type.

Depending on the credit union's asset

size, it is placed into one of the

following peer groups:

ASSETS

$2,000,000 or less

$2,000,000 - $10,000,000

$10,000,000 - $50,000,000

$50,000,000 - $100,000,000

$100,000,000 - $500,000,000

$500,000,000 or more

The credit union’s peer group is shown

on page 4 of the FPR.

NCUA computes the peer group

averages by calculating the average of

the individual ratios values within each

defined range.

PERCENTILE RANKINGS

Percentile rankings are used to show

where the credit union stands in

relation to its peers in key areas of

financial performance.

In arriving at the percentile ranking for

a particular key ratio, the corresponding ratios for all credit unions in the

peer group are arranged in order from

the best to the worst value. A percentile ranking from 100 (best) to 1 (worst)

is assigned to each ratio depending on

its position. All credit unions having

1
the same ratio value are assigned the

same percentile ranking. The percentile

ranking assigned to the credit union’s

ratio is a measure of the relative

standing of that ratio in the entire range

of ratio values.

A high or low percentile ranking does

not automatically imply good or bad,

satisfactory or unsatisfactory. However, when reviewed in relation to

other available data, a conclusion can

usually be reached as to the importance of a high or low percentile to the

credit union’s financial performance.

ARRANGEMENT

The December FPR is divided

into four sections:

• Explanatory Letter and Financial

• Comparison, page 1;

• Graphic Display, pages 2 and 3;

• 5-Year Financial History, page 4;

and

• 5-Year Ratio Analysis, page 5.

The semi-annual and quarterly FPRs

mirror the December FPR. In the semiannual and quarterly FPRs, financial

data is provided in shorter intervals

rather than the annual intervals of the

yearend report. Ratios and percentages

are annualized where appropriate.

DESCRIPTION

A page-by-page description of the

December FPR is given below. The

discussion concerning the financial

comparison, graphic display, financial

history, and ratio analysis pages can

also be used as a general guide to the

midyear and quarterly FPRs.

Explanatory Letter, Page 1. The

Explanatory Letter provides information about the credit union, including

its name and charter or certificate

number. The narrative portion of page

1 contains a general description of the

report. Additionally, page 1 identifies

the four key performance areas, the

credit union’s ratio in each area, the

percentile ranking, and ratio peer

average.

2
Following is an explanation of the four key ratios. The four key ratios are listed in

the same order as they appear in the Financial Comparison.

Ratio Designation Method of Computation and Comment

Net Worth Net Worth divided by Total Assets.

Comment: This is a capital adequacy ratio

that measures net worth in relation to total

assets. Net worth cushions fluctuations in

earnings, supports growth, and provides protection against insolvency. The rate of growth

should be commensurate with the levels of

risk and asset growth. The rate of growth in

total assets and net worth are shown on

page 5 of the FPR.

Return on Average Assets Net Income divided by Average Assets.

Comment: This is an earnings ratio that

measures net income in relation to average

assets. This ratio represents the bottom line.

A positive ratio value shows that earnings

were sufficient to cover the credit union’s

operating expenses and cost of funds.

Delinquency Delinquent Loans divided by Total Loans.

Comment: This is an asset quality ratio that

measures delinquent loans in relation to total

loans. This ratio is an indicator of delinquency control and potential loan & lease

losses. A high ratio value in relation to the

peer group average indicates that the credit

union could incur significant loan & lease

losses.

3
Charge-Offs Net Charge-Offs divided by Average Loans.

Comment: This is an asset quality ratio that

measures net charge-offs in relation to average loans. Charge-offs are an important indicator of the effectiveness of lending and

collection practices. A high ratio value in relation to the peer group average indicates

that large loan & lease losses have been realized. Loan & lease losses reduce the credit

union’s capital.

More information about the key ratios and their components appears in the discussion of the 5-Year Ratio Analysis.

Graphic Display, Pages 2 and 3.

Pages 2 and 3 contain graphic displays

of the four key financial ratios for the

current year and previous 4 years. (In

the June FPR, the four key ratios are

shown for the current cycle and 4 previous semi-annual periods. In the quarterly FPRs, the four key ratios are

shown for the current quarter and 4 previous quarters.) The boxes below the

graphs note the range, middle 50 percent, peer average, as well as the credit

union’s own ratio for each of the four

key ratios. The middle 50 percent of

the peer group distribution is calculated by ranking the ratio values for all

credit unions within the peer group, determining the midpoint (median) of the

ranked ratio values, and identifying the

ratio values for the credit unions whose

relative position within the ranking fall

25 percent above and below the midpoint.

The Graphic Display provides a quick,

visual review of key financial trends,

and can be used to monitor the credit

union’s progress in various areas of financial performance. The Graphic Display also provides a comparison of the

credit union’s performance in relation

to its peers for all key ratios.

The significance of the financial ratios

which appear in the Graphic Display is

explained in the narrative which follows each graph. For further information about these ratios, see the discussion regarding the 5-Year Ratio Analysis.

5-Year Financial History, Page 4.

The 5-Year Financial History contains

balance sheet and income and expense

data for the current year and previous 4

years. (In the June FPR, the data items

are shown for the current and 4 previous semi-annual periods. In the quarterly FPRs, the data items are shown for

the current quarter and 4 previous quarters.) For certain key data items, the annual percentage changes are displayed

to the right of the item.

4
The 5-Year Financial History is particularly useful for reviewing trends and

can also be used in monitoring the

credit union’s progress in various areas

of financial performance. For example,

if the credit union’s performance has

been weak in the area of loan growth,

this may indicate that promotional efforts need to be increased in order to

achieve a specified percentage of loan

growth in future periods. The progress

made toward achieving the growth

could then be monitored by reviewing

monthly loan growth, as well as the percent change data displayed for loans in

subsequent FPRs.

5-Year Ratio Analysis, Page 5. The

5-Year Ratio Analysis displays six

groups of financial ratios for the current

and previous 4 years. (In the June FPR,

the ratios are displayed for the current

cycle and preceding 4 semi-annual periods. In the quarterly FPRs, the ratios

are shown for the current quarter and 4

previous quarters.) The ratios are

grouped in relation to major areas of

the CAMEL Rating System (capital adequacy, asset quality, earnings, asset/liability management), productivity and

other ratios. The 5-Year Ratio Analysis

also displays the corresponding peer

group ratios (peer averages for the current year) and the difference between

the credit union’s ratio values and the

corresponding peer group ratio values

for the current year.

The 5-Year Ratio Analysis allows

in-depth analysis of the first four pages

of the report. Also, by carefully reviewing the peer data shown on page 5 and

other available data, the credit union

should be able to judge the importance

(positive or negative impact on the

credit union) of any particular ratio

value which varies significantly from

the peer group’s ratio.

As an example, assume that the credit

union’s Delinquent Loan Ratio (in the

asset quality grouping) is significantly

higher than the peer group’s Delinquent Loan Ratio. This condition,

coupled with a high Charge-Off Ratio

in relation to the peer group and/or in

relation to the credit union’s past performance, could cause the board of directors to conclude that lending policies and/or collection practices need to

be revised. In this example, the credit

union’s unfavorable comparison with

the peer group indicates a negative impact on the credit union when reviewed

in relation to other available information (charge-off data). The important

point to remember is that peer comparisons must be considered in relation to other available data, including

any factors unique to the credit union,

before any definite conclusions can be

reached.

The following are descriptions of the

ratios used in the 5-Year Ratio Analysis. Commonly used components of

some of the ratios are defined first in order to simplify the descriptions. An asterisk (*) placed before a ratio indicates

that it is one of the four key ratios used

in the Financial Comparison, page 1.

5
RATIO COMPONENTS

AVERAGE ASSETS. Total assets for

the current period plus total assets for

the prior yearend divided by 2.

AVERAGE INVESTMENTS. Total

investments, cash on deposit and cash

equivalents for the current period plus

total investments, cash on deposit and

cash equivalents for the prior yearend

divided by 2.

AVERAGE LOANS. Total loans for

the current period plus total loans for

the prior yearend divided by 2.

BORROWINGS. The total of promissory notes, reverse repurchase agreements, other notes payable, interest on

notes payable less reverse repurchase

transactions placed in investments for

positive spread income, and Subordinated Debt. For low-income designated

credit unions only, borrowings also include Uninsured Secondary Capital.

COST OF FUNDS. Interest on borrowed money from all sources plus

dividends on shares and interest on deposits.

ESTIMATED LOSSES. Estimated

losses include the Allowance for Loan

& Lease Losses. The Allowance for

Loan & Lease Losses reflects the estimated loss in pools of loans that have

already been incurred, even if not yet

identifiable. Estimated losses also include The Appropriation For Non-Conforming Investments account. This account is used by state-chartered federally insured credit unions for investments not authorized by NCUA. Note:

In conformity with SFAS 115, it is assumed that investments classified as

Available for Sale or Trading are properly reported at fair value. The differences between book value and fair

value for Available for Sale and Trading securities should already have been

adjusted through the appropriate equity

or income accounts.

EQUIVALENT FULL-TIME EMPLOYEES. Number of part-time employees divided by 2 plus the number

of full-time employees.

NET WORTH. The total of the Undivided Earnings, Regular Reserves, Appropriation for Non-Conforming Investments (state-chartered credit unions

only), and Other Reserves (Appropriations of Undivided Earnings). For low

income designated credit unions only,

net worth also includes Uninsured Secondary Capital. Note: In all FPRs

other than the December cycle, the undistributed Net Income is included in

the calculation of net worth for credit

unions not closing their books. Credit

unions must close out net income into

undivided earnings for the December

reporting period.

SHARES. The total of all shares and

deposits.

CAPITAL ADEQUACY

*NET WORTH/TOTAL ASSETS.

Net worth divided by total assets.

6
TOTAL DELINQUENT LOANS/NET

WORTH. All loans 2 months or more

delinquent divided by net worth.

SOLVENCY EVALUATION (ESTIMATED). Total assets plus the Allowance for Loan & Lease Losses less liabilities and estimated losses divided

by total shares.

CLASSIFIED ASSETS (ESTIMATED)/NET WORTH. Estimated

losses divided by net worth.

ASSET QUALITY

*DELINQUENT LOANS/TOTAL

LOANS. All loans 2 months or more

delinquent divided by total loans.

*NET CHARGE-OFFS/AVERAGE

LOANS. Total amount of loans

charged-off during the year less all recoveries on charged-off loans during

the year divided by average loans. For

March figures, multiplying the result

by 4 annualizes this ratio. For June figures, multiplying the result by 2 annualizes this ratio. For September figures,

multiplying the result by 1.33 annualizes this ratio.

FAIR (MARKET) VALUE/BOOK

VALUE (for investments Held to Maturity). Fair market value of investments Held-to-Maturity divided by the

book value of investments Held-to-Maturity.

ACCUMULATED UNREALIZED

GAINS OR (LOSSES) ON AVAILABLE FOR SALE SECURITIES {+

debits - credits}/COST OF INVESTMENTS AVAILABLE FOR SALE.

Accumulated Unrealized Gains or

(Losses) on Available for Sale Securities, divided by the total of the book

value of investments Available for Sale

minus the Accumulated Unrealized

Gains or (Losses) on Available for Sale

Securities.

DELINQUENT LOANS/ASSETS. All

loans 2 or more months delinquent divided by total assets.

EARNINGS

Earnings ratios which use average assets as the denominator must be annualized. Multiplying the result of the formula given by the appropriate

annualization factor for each quarter

annualizes these ratios:

March 4

June 2

September 1.33

No annualization is necessary for December ratios because they already reflect an annual period.

*RETURN ON AVERAGE ASSETS.

Net income (loss) divided by average

assets, annualized as appropriate.

7
GROSS INCOME/AVERAGE ASSETS. Gross income divided by average assets, annualized as appropriate.

YIELD ON AVERAGE LOANS. Interest on loans net of any refunds divided

by average loans, annualized as appropriate.

YIELD ON AVERAGE INVESTMENTS. Income from investments and

trading profits or losses divided by average investments, annualized as appropriate.

COST OF FUNDS/AVERAGE ASSETS. Interest on borrowed money

from all sources plus dividends on

shares and interest on deposits divided

by average assets, annualized as appropriate.

NET MARGIN/AVERAGE ASSETS.

Gross income minus cost of funds divided by average assets, annualized as

appropriate.

OPERATINGEXPENSES/AVERAGE

ASSETS. Operating expenses (excluding the provision for loan & lease

losses and cost of funds) divided by average assets, annualized as appropriate.

PROVISION FOR LOAN & LEASE

LOSSES/AVERAGE ASSETS. Provision for loan & lease losses divided by

average assets, annualized as appropriate.

NET INTEREST MARGIN/AVERAGE ASSETS. Loan income plus investment income minus the cost of

funds divided by average assets, annualized as appropriate.

OPERATING EXPENSES/GROSS

INCOME. Total operating expenses

(excluding the provision for loan &

lease losses and cost of funds) divided

by gross income. This ratio is not annualized.

FIXED ASSETS AND OREOs/TOTAL ASSETS. The sum of land and

building, other fixed assets and other

real estate owned divided by total assets. This ratio is not annualized.

NET OPERATING EXPENSES/AVERAGE ASSETS. Total operating expenses (excluding the provision for

loan & lease losses and cost of funds)

minus fee income divided by average

assets, annualized as appropriate.

ASSET/LIABILITY

MANAGEMENT

NET LONG-TERM ASSETS/TOTAL

ASSETS. The sum of real estate loans

which will not refinance, reprice or mature within 5 years (3 years prior to December 2000), member business loans,

investments with remaining maturities

of more than 3 years, NCUSIF deposit,

land and building and other fixed assets divided by total assets.

REGULAR SHARES/TOTAL

SHARES AND BORROWINGS.

Regular shares divided by total shares

and borrowings.

8
TOTAL LOANS/TOTAL SHARES.

Total loans divided by total shares.

TOTAL LOANS/TOTAL ASSETS.

Total loans divided by total assets.

CASH AND SHORT-TERM INVESTMENTS/ASSETS. Cash plus investments with less than one-year remaining maturity, divided by total assets.

TOTAL SHARES, DEPOSITS AND

BORROWINGS/EARNING ASSETS.

Total shares, deposits, and borrowings

divided by the sum of total loans and

total investments (excluding reverse repurchase transactions placed in investments for positive arbitrage).

REGULAR SHARES + SHARE

DRAFTS/ TOTAL SHARES AND

BORROWINGS. Regular shares plus

share drafts divided by total shares and

borrowings.

BORROWINGS/TOTAL SHARES

AND NET WORTH. Total borrowings

divided by total shares and net worth.

PRODUCTIVITY

MEMBERS/POTENTIAL MEMBERS. Number of current members divided by the total of potential members.

BORROWERS/MEMBERS. Number

of loans divided by number of current

members.

MEMBERS/FULL-TIME EMPLOYEES. Number of current members divided by equivalent full-time employees.

AVERAGE SHARES PER MEMBER.

Total shares and deposits divided by

number of current members.

AVERAGE LOAN BALANCE. Total

loans divided by number of loans.

SALARY & BENEFITS/FULL-TIME

EMPLOYEES. Employee compensation and benefits divided by equivalent

full-time employees.

OTHER RATIOS

This section of the FPR shows growth

ratios for net worth, shares, loans, assets, and investments.

All growth ratios are computed using

the same basic formula:

Current Period (***) minus Prior Year End (***)

divided by Prior Year End (***)

where (***) is the growth item to be

calculated (such as shares or loans).

The growth ratios must be annualized.

Multiplying the result of the basic formula by the appropriate annualization

factor for each quarter annualizes these

ratios:

March 4

June 2

September 1.33

9
No annualization is necessary for December ratios because they already reflect an annual period.

NET WORTH GROWTH. This ratio

measures the growth in total net worth.

To compute the ratio, use total net

worth in the basic formula discussed

above and annualize as appropriate.

(Note: The calculation of this ratio requires using the absolute value of the

denominator.)

MARKET GROWTH. This ratio measures the growth in shares. To compute

the ratio, use total shares in the basic

formula discussed above and annualize

as appropriate.

LOAN GROWTH. This ratio measures

the growth in loans. To compute the ratio, use total loans in the basic formula

discussed above and annualize as appropriate.

ASSET GROWTH. This ratio measures the growth in assets. To compute

the ratio, use total assets in the basic

formula discussed above and annualize

as appropriate.

INVESTMENT GROWTH. This ratio

measures the growth in investments.

To compute the ratio, use total investments (excluding for all periods reverse

repurchase transactions placed in investments for positive arbitrage) in the

basic formula discussed above and annualize as appropriate. Beginning in

December 2000 this ratio indicates

growth in the sum of investments, cash

on deposit and cash equivalents.

ADDITIONAL

INFORMATION

Additional information about the FPR

and this User’s Guide may be obtained

from the appropriate NCUA regional office, as noted on the following page.

10
REGION I (ALBANY)

Regional Director

National Credit Union Administration

9 Washington Square

Washington Avenue Extension

Albany, NY 12205

(518) 862-7400

Connecticut New York

Maine Rhode Island

Massachusetts Vermont

New Hampshire

REGION II (CAPITAL)

Regional Director

National Credit Union Administration

1775 Duke Street

Suite 4206

Alexandria, VA 22314-3437

(703) 519-4600

Delaware New Jersey

District of Pennsylvania

Columbia Virginia

Maryland

REGION III (ATLANTA)

Regional Director

National Credit Union Administration

7000 Central Parkway

Suite 1600

Atlanta, GA 30328

(678) 443-3000

Alabama Mississippi

Arkansas North Carolina

Florida Puerto Rico

Georgia South Carolina

Kentucky Tennessee

Louisiana Virgin Islands

NATIONAL CREDIT UNION ADMINISTRATION

REGIONAL OFFICES

11

REGION IV (CHICAGO)

Regional Director

National Credit Union Administration

4225 Naperville Road

Suite 125

Lisle, Illinois 60532

(630) 955-4100

Illinois Ohio

Indiana West Virginia

Michigan Wisconsin

Missouri

REGION V (AUSTlN)

Regional Director

National Credit Union Administration

4807 Spicewood Springs Rd.

Suite 5200

Austin, Texas 78759-8490

(512) 342-5600

Arizona New Mexico

Colorado North Dakota

Iowa Oklahoma

Kansas South Dakota

Minnesota Texas

Nebraska

REGION VI (PACIFIC)

Regional Director

National Credit Union Administration

1230 West Washington Street

Suite 301

Tempe, AZ 85072

(602) 302-6000

Alaska Montana

American Samoa Nevada

California Oregon

Guam Utah

Hawaii Washington

Idaho Wyoming