APS330 Prudential Disclosure

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Heritage Isle Credit Union - APS330 Prudential Disclosure - Capital and Credit Risk 1.1 Detailed Capital Disclosures Template The capital disclosures detailed in the template below represents the post 1 January 2018 Basel III common disclosure requirements. Heritage Isle Credit Union is applying the Basel III regulatory adjustments in full as implemented by APRA. These tables should be read in conjunction with the Regulatory Balance Sheet and the Reconciliation between detailed capital disclosures template and the Regulatory Balance Sheet.

30-Jun-17 Common Equity Tier 1 capital: instruments and reserves 1 2 3 4 5 6

Directly issued qualifying ordinary shares (and equivalent for mutually-owned entities) capital Retained Earnings including current year earnings Accumulated other comprehensive income (and other reserves) Directly issued capital subject to phase out from CET1 (only applicable to mutually-owned companies) Ordinary share capital issued by subsidiaries and held by third parties (amount allowed in group CET1) Common Equity Tier 1 capital before regulatory adjustments

Reconciliation Table Reference

$

243,230 7,839,082

Table A

8,082,312

Common Equity Tier 1 capital : regulatory adjustments 7 Prudential valuation adjustments 8 Goodwill (net of related tax liability) 9 Other intangibles other than mortgage servicing rights (net of related tax liability) 10 Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability) 11 Cash-flow hedge reserve 12 Shortfall of provisions to expected losses 13 Securitisation gain on sale (as set out in paragraph 562 of Basel II framework) 14 Gains and losses due to changes in own credit risk on fair valued liabilities 15 Defined benefit superannuation fund net assets 16 Investments in own shares (if not already netted off paid-in capital on reported balance sheet) 17 Reciprocal cross-holdings in common equity 18 Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions, where the ADI does not own more than 10% of the issued share capital (amount above 10% threshold)

26c 26d 26e 26f 26g 26h 26i 26j 27

Significant investments in the ordinary shares of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions (amount above 10% threshold) Mortgage service rights (amount above 10% threshold) Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax liability) Amount exceeding the 15% threshold of which: significant investments in the ordinary shares of financial entities of which: mortgage servicing rights of which: deferred tax assets arising from temporary differences National specific regulatory adjustments (sum of rows 26a, 26b, 26c, 26d, 26e, 26f, 26g, 26h, 26i and 26j) of which: treasury shares of which: offset to dividends declared under a dividend reinvestment plan (DRP), to the extent that the dividends are used to purchase new ordinary shares issued by the ADI of which: deferred fee income of which: equity investments in financial institutions not reported in rows 18, 19 and 23 of which: deferred tax assets not reported in rows 10, 21 and 25 of which: capitalised expenses of which: investments in commercial (non-financial) entities that are deducted under APRA prudential requirements of which: covered bonds in excess of asset cover in pools of which: undercapitalisation of a non-consolidated subsidiary of which: other national specific regulatory adjustments not reported in rows 26a to 26i Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover deductions

28

Total regulatory adjustments to Common Equity Tier 1

29

Common Equity Tier 1 Capital (CET1)

19 20 21 22 23 24 25 26 26a 26b

Additional Tier 1 Capital: instruments 30 Directly issued qualifying Additional Tier 1 instruments 31 of which: classified as equity under applicable accounting standards 32 of which: classified as liabilities under applicable accounting standards 33 Directly issued capital instruments subject to phase out from Additional Tier 1 34 Additional Tier 1 instruments (and CET1 instruments not included in row 5) issued by subsidiaries and held by third parties (amount allowed in group AT1) 35 of which: instruments issued by subsidiaries subject to phase out 36 Additional Tier 1 Capital before regulatory adjustments Additional Tier 1 Capital: regulatory adjustments 37 Investments in own Additional Tier 1 instruments 38 Reciprocal cross-holdings in Additional Tier 1 instruments 39 Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions, where the ADI does not own more than 10% of the issued share capital (amount above 10% threshold)

163,380 46,730 43,433 5,589

259,132 7,823,180

Table B Table C Table D Table B

40

Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions, where the ADI does not own more than 10% of the issued share capital (amount above 10% threshold)

41 National specific regulatory adjustments (sum of rows 41a, 41b and 41c) 41a of which: holdings of capital instruments in group members by other group members on behalf of third parties 41b of which: investments in the capital of financial institutions that are outside the scope of regulatory consolidations not reported in rows 39 and 40 41c of which: other national specific regulatory adjustments not reported in rows 41a and 41b 42 Regulatory adjustments applied to Additional Tier 1 due to insufficient Tier 2 to cover deductions 43 Total regulatory adjustments to Additional Tier 1 capital 44 Additional Tier 1 capital (AT1) 45

Tier 1 Capital (T1=CET1+AT1)

7,823,180

Tier 2 Capital: instruments and provisions 46 47 48

Directly issued qualifying Tier 2 instruments Directly issued capital instruments subject to phase out from Tier 2 Tier 2 instruments (and CET1 and AT1 instruments not included in rows 5 or 34) issued by subsidiaries and held by third parties (amount allowed in group T2) 49 of which: instruments issued by subsidiaries subject to phase out 50 Provisions 51 Tier 2 Capital before regulatory adjustments Tier 2 Capital: regulatory adjustments 52 Investments in own Tier 2 instruments 53 Reciprocal cross-holdings in Tier 2 instruments 54 Investments in the Tier 2 capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions, where the ADI does not own more than 10% of the issued share capital (amount above 10% threshold) 55 Significant investments in the Tier 2 capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions 56 National specific regulatory adjustments (sum of rows 56a, 56b and 56c) 56a of which: holdings of capital instruments in group members by other group members on behalf of third parties 56b of which: investments in the capital of financial institutions that are outside the scope of regulatory consolidation not reported in rows 54 and 55 56c of which: other national specific regulatory adjustments not reported in rows 56a and 56b 57 Total regulatory adjustments to Tier 2 capital 58 Tier 2 capital (T2) 59 Total capital (TC=T1+T2) 60 Total risk-weighted assets based on APRA standards Capital ratios and buffers 61 Common Equity Tier 1 (as a percentage of risk-weighted assets) 62 Tier 1 (as a percentage of risk-weighted assets) 63 Total capital (as a percentage of risk-weighted assets) 64 Buffer requirement (minimum CET1 requirement of 4.5% plus capital conservation buffer of 2.5% plus any countercyclical buffer requirements expressed as a percentage of risk-weighted assets) 65 of which: capital conservation buffer requirement 66 of which: ADI-specific countercyclical buffer requirements 67 of which: G-SIB buffer requirement (not applicable) 68 Common Equity Tier 1 available to meet buffers (as a percentage of risk-weighted assets) National minima (if different from Basel III) 69 National Common Equity Tier 1 minimum ratio (if different from Basel III minimum) 70 National Tier 1 minimum ratio (if different from Basel III minimum) 71 National total capital minimum ratio (if different from Basel III minimum) Amount below thresholds for deductions (not risk-weighted) 72 Non-significant investments in the capital of other financial entities 73 Significant investments in the ordinary shares of financial entities 74 Mortgage servicing rights (net of related tax liability) 75 Deferred tax assets arising from temporary differences (net of related tax liability) Applicable caps on the inclusion of provisions in Tier 2 76 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardised approach (prior to application of cap) 77 78

Cap on inclusion of provisions in Tier 2 under standardised approach Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap) 79 Cap for inclusion of provisions in Tier 2 under internal ratings-based approach Capital instruments subject to phase-out arrangements (only applicable between 1 Jan 2018 and 1 Jan 2022) 80 Current cap on CET1 instruments subject to phase out arrangements 81 Amount excluded from CET1 due to cap (excess over cap after redemptions and maturities) 82 Current cap on AT1 instruments subject to phase out arrangements 83 Amount excluded from AT1 instruments due to cap (excess over cap after redemptions and maturities) 84 Current cap on T2 instruments subject to phase out arrangements 85 Amount excluded from T2 due to cap (excess over cap after redemptions and maturities)

332,785 332,785

Table A

332,785 8,155,965 50,026,108 15.64% 15.64% 16.30% 7.00% 2.50% 0.00% 8.30%

332,785 332,785

1.2 Regulatory Balance Sheet Assets Cash Trade and other receivables Placements with other Financial institutions Current tax receivable Loans & advances to members Other investments Prepayments Property, plant & equipment Deferred tax assets Intangible assets Total assets

$ 2,396,915 274,843 19,228,000 2,049 76,890,107 168,969 57,595 1,873,347 226,231 43,433

Table B

Table C Table D

101,161,489

Liabilities Deposits from members Trade and other payables Deferred tax liabilities Provisions

91,466,529 792,771 179,501 307,591

Total liabilities

92,746,392

Net assets

8,415,097

Members' Equity General reserve Asset revaluation reserve Reserve for credit losses Retained earnings

6,670,169 1,168,913 332,785 243,230

Total members' equity

8,415,097

Table C

Table A Table A Table A

1.3 Reconciliation between detailed capital disclosures template and the Regulatory Balance Sheet Table A Accumulated other disclosed reserves General reserve per balance sheet Asset Revaluation Reserve per balance sheet General reserve for credit losses Total per capital disclosures template

6,670,169 1,168,913 332,785 8,171,867

Row 3 Row 3 Row 50

Table B Other financial investments Equity investments in financial institutions Investments in commercial entities Total per balance sheet

163,380 5,589 168,969

Row 26d Row 26g

Table C Deferred tax assets Deferred tax assets per balance sheet Less Deferred tax liabilities Total per capital disclosures template

226,231 -179,501 46,730

Row 26e

Table D Capitalised expenses Intangible assets per balance sheet Total per capital disclosures template

43,433 43,433

Row 26f

2. Disclosure of Capital Adequacy as at 30 June 2017

Heritage Isle Credit Union Capital Adequacy For the period ending 30 June 2017

7804446 8132920

Capital Adequacy Deposits with banks or ADIs Claims secured against eligible residential mortgages Unsecured portion of any claim that is past due for more than 90 days

Risk Weighted Exposure 31-Mar-17 3,847,152 27,226,186 96,314

Risk Weighted Exposure 30-Jun-17 4,225,486 28,109,027 6,170

6,516,113

6,171,007

1,888,369 662,319 1,800 2,529,194 1,029,079 43,796,526

1,873,347 584,939 1,800 2,360,421 1,021,212 44,353,409

All claims (other than equity) on private sector counterparties (other than ADIs, overseas banks & corporate counterparties) Investments in premises, plant & equipment and all other fixed assets All other assets Performance Guarantees Loans approved not yet advanced Commitments with original maturity > 1 year Total Risk Weighted Assets for Credit Risk

$

Total Risk Weighted Assets for Market Risk

$

-

-

Total Risk Weighted Assets for Operational Risk

$

5,583,750

$

5,672,699

Total Risk Weighted Assets

$

49,380,276

$

50,026,108

Common Equity Tier 1 Ratio Tier 1 Ratio Total Capital Adequacy Ratio

15.80% 15.80% 16.47%

15.64% 15.64% 16.30%

3. Disclosure of Credit Risk

Credit Risk Exposure for the quarter ended 30 June 2017 Deposits with banks or ADIs Loans and Advances On balance sheet Secured by residential mortgage Other retail Commercial Off balance sheet commitments Loans approved not yet advanced Loan redraw limits Revocable overdraft limits Performance Guarantees Irrevocable standby committments Total Loans and Advances General Reserve for Credit Losses

Credit Risk Exposure for the quarter ended 31 March 2017

Gross exposure at reporting date

Average gross exposure for the period

Impaired facilities

90 days past due

Specific provisions balance

$’s

$’s

Charge for specific provisions and write-offs for the period $’s

$’s 18,127,428

$’s 17,181,594

$’s

69,693,843 5,541,105 1,911,438

69,011,032 5,745,151 1,750,632

224,198 261,950 -

10,000 61,979 -

(21,090) (3,061) -

3,478,042 4,804,071 990,534 1,800 3,024,978 89,445,811

3,245,240 4,789,467 994,994 1,800 2,985,864 88,524,180

486,148

71,979

(24,151)

332,785 Gross exposure at reporting date

Average gross exposure for the period

Impaired facilities

90 days past due

Specific provisions balance

$’s

$’s

$’s 16,235,760

$’s 14,797,881

$’s

Deposits with banks or ADIs Loans and Advances On balance sheet Secured by residential mortgage Other retail

68,328,221 5,949,197

68,058,837 5,913,435

222,581 291,804

31,090 65,040

Charge for specific provisions and write-offs for the period $’s

(207) 16,359

General Reserve for Credit Losses

Credit Risk Exposure for the quarter ended 31 March 2017 Deposits with banks or ADIs Loans and Advances On balance sheet Secured by residential mortgage Other retail Commercial Off balance sheet commitments Loans approved not yet advanced Loan redraw limits Revocable overdraft limits Performance Guarantees Irrevocable standby committments Total Loans and Advances General Reserve for Credit Losses

332,785 Gross exposure at reporting date

Average gross exposure for the period

Impaired facilities

90 days past due

Specific provisions balance

$’s

$’s

Charge for specific provisions and write-offs for the period $’s

$’s 16,235,760

$’s 14,797,881

$’s

68,328,221 5,949,197 1,589,826

68,058,837 5,913,435 1,536,406

222,581 291,804 -

31,090 65,040 -

(207) 16,359 -

3,012,438 4,774,862 999,453 1,800 2,946,750 87,602,547

2,607,929 4,675,121 987,258 1,800 2,890,449 86,671,235

514,385

96,130

16,152

328,474

4. Disclosure of Securitisation Exposures as at 30 June 2017 The total amount of exposures securitised during the quarter

Nil

Off-balance sheet securitisation exposures

Nil