OAR 441-720-0360
Classification of Member Business Loans to Reserve for Potential Losses


Non-delinquent member business loans may be classified based upon factors such as the adequacy of analysis, supporting documentation, or grades given based upon the financial strength of the borrower. The credit union must classify potential loss loans as either substandard, doubtful, or loss. The criteria for determining the classification of loans are:

(1)

SUBSTANDARD. A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. The loan classified has a well-defined weakness or weaknesses that jeopardize the liquidation of debt. The loan is characterized by the distinct possibility that the credit union will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.

(2)

DOUBTFUL. A loan classified doubtful has all the weaknesses inherent in one classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include: proposed merger, acquisition, or liquidation actions; capital injection; perfecting liens on collateral; and refinancing plans.

(3)

LOSS. A loan classified loss is considered uncollectible and of such little value that its continuance as a loan is not warranted. This classification does not necessarily mean that the loan has absolutely no recovery or salvage value, but rather, it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may occur in the future.

Source: Rule 441-720-0360 — Classification of Member Business Loans to Reserve for Potential Losses, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=441-720-0360.

441‑720‑0100
Scope and Application
441‑720‑0110
Definitions
441‑720‑0120
Risk Weights and Risk Categories
441‑720‑0130
Minimum Capital Ratio
441‑720‑0140
Procedures, Risk-Weight Ratios and Computations
441‑720‑0150
Required Reserve Transfers
441‑720‑0160
Fidelity Bond Coverage for Corporate Credit Union
441‑720‑0200
Purpose, Authority for Federal Tie-In Rules
441‑720‑0210
Adoption of Federal Regulations Concerning Purchase, Sale and Pledge of Eligible Obligations
441‑720‑0215
Procedures Required Prior to Exercise of Certain Investment Powers
441‑720‑0220
Investments in Investment and Borrowing Repurchase Agreements, Bankers Acceptances, Participation in Federal Funds Authorized
441‑720‑0225
Adoption of Federal Statutes, Rulings, Policy Regarding Mortgage Assumptions
441‑720‑0230
Adoption of Federal Statutes and Regulations Concerning Loan Participations
441‑720‑0300
Definitions
441‑720‑0305
Member Business Loan
441‑720‑0310
Implementation of Member Business Loan Program
441‑720‑0315
Member Business Loan Policies and Procedures
441‑720‑0320
Collateral and Security Requirements
441‑720‑0325
Recordkeeping Requirements
441‑720‑0330
Aggregate Loans to a Member or Associated Members
441‑720‑0335
Calculation of the Aggregate 15% Limit
441‑720‑0340
Aggregate Member Business Loan Limit for a Credit Union
441‑720‑0345
Exceptions to the Aggregate Member Business Loan Limit for a Credit Union
441‑720‑0350
Exception Procedure
441‑720‑0355
Construction and Development Lending
441‑720‑0360
Classification of Member Business Loans to Reserve for Potential Losses
441‑720‑0365
Minimum Reserves for Potential Loan Losses
441‑720‑0370
Prohibited Member Business Loans
441‑720‑0375
Available Waivers for Specific Loan Types
441‑720‑0380
Waiver Procedure
Last Updated

Jun. 8, 2021

Rule 441-720-0360’s source at or​.us