Credit Union Annual Report 2022 - Flipbook - Page 80
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2022
22. Financial risk management (continued)
On a monthly basis, the DCD prepares a report on all delinquent loans in excess of 15 days delinquent, which in turn is
presented to the Chief Executive Officer, Board of Directors, and the Chairpersons for the Credit and Supervisory
Committees. This report summarizes the totals of the various delinquency classes, the delinquency rate and the current
exposure. The Board, Chairpersons of the two committees and the various other functions established review the
reports and ascertain whether satisfactory effor t is being made on all delinquent accounts.
A review of the schedule of delinquent loans is essential to the Board in making certain that its policies and
procedures are being carried out. It is an invaluable aid to the Treasurer and the Chief Executive Officer as they cannot
carry out their responsibilities and take appropriate action unless they know what loans are delinquent for how long
and what efforts have been made to collect them.
The debt collection team regularly monitor a variety of sources of information in assessing the credit worthiness of the
borrower, including reference to court judgements and information available in the public domain.
The collection efforts include making initial contact with the member to regularize their accounts, followed by up to three
reminder letters, up to and including legal action in the event of significant default.
During and after the reminders are sent to delinquent borrowers and their co-makers or guarantor(s), every effort is made
to collect the debt. In the event of significant default, where the loan is secured by securities such as a Bill of Sale or
mortgage (charge on property) the Credit Union can take the necessary action so that the security maybe realised. If
efforts to regularise the members’ loans fail, the ultimate action is referral of the matter to the Credit Union’s attorney,
in respect of loans secured on property, who in turn take legal proceedings against the member. These proceedings can
include action for foreclosure, and possession of property served as security for the loan. With respect to consumer
loans, the loan may be referred for further collection efforts to the Cayman Islands National Credit Bureau.
Any dividends earned on delinquent members’ shares must be credited against his outstanding obligations, first to the
outstanding interest, then towards reducing the outstanding principal.
Upon initial recognition for loans and advances, the fair value of collateral is based on valuation techniques
commonly used for corresponding assets and include valuations provided by reputable lo cal property valuation
specialists. In subsequent periods, the fair value is updated periodically from time to time depending on market
conditions and/or when collateral values approximate the carrying value of the loan.
The carrying value of impaired loans is generally determined by reference to the fair value of collateral held in respect
of such loans. Accordingly, any change in the fair value of collateral held in respect of impaired loans will have a direct
impact on the carrying value of impaired loans. In addition, the assessment if whether a loan is classified as past due
but not impaired is also generally made by reference to the fair value of collateral held.
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