Before finalizing the pro forma financial statement projections and assumptions, the PFCU should confirm with NCUA that the review of the membership survey was found to be adequately completed (represents a statistically valid random sample or targeted random sample, the results are tallied, and a written analysis developed).
Once the results from the membership survey are tallied, analyzed, and conclusions reached, you will use the results to develop assumptions for membership, loans, shares, usage of products and services, etc. and projections for the PFCU’s pro forma financial statements.
Detailed pro forma financial statements consist of a balance sheet and income statement for at least the first two years of operations and until the credit union is profitable, as well as membership, delinquency, and net charge off projections. We provide an example of detailed pro forma financial statement projections illustrating the breakout of categories on a PFCU’s balance sheet and income statement on our website.
Include in this section written, detailed assumptions explaining how each line item category on the balance sheet and income statement was calculated and include the basis for the assumption (such as survey results, industry averages, other indicators). An example of written assumptions is on our website.
As discussed earlier in this chapter under “Plans for Operating Independently,” submit financial projections beyond Year 2 through the year the PFCU plans to operate profitably absent grant money. For example, if the PFCU projects it will not be profitable until Year 5, prepare and include pro forma financial projections through Year 5. Only the first two years of projections need to be semi-annual. Subsequent years can be annual.
Documentation Required for the Pro Forma Financial Statements and Assumptions
- Submit to CURE by email with the business plan the semi-annual pro forma balance sheet and income statement projections and corresponding assumptions for at least the first two full years of operation; and
- Submit annual pro forma financial projections through the year the PFCU will be profitable through positive earnings to demonstrate its ability to operate independently.