MSIC 2023 Annual Report

MASSACHUSETTS CREDIT UNION SHARE INSURANCE CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

N OTE 2 - S UMMARY OF S IGNIFICANT A CCOUNTING P OLICIES B ASIS OF A CCOUNTING , P RESENTATION A ND C ONSOLIDATION

The consolidated financial statements are prepared on the accrual basis of accounting for all significant items of income and expense in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The consolidated financial statements include the accounts of MSIC’s wholly owned subsidiaries, MSIC Properties, LLC, which owns and manages a commercial real estate property and MSIC CRE Manager, LLC, which provides management services. In each of the years ended September 30, 2023 and 2022, the Corporation invested an additional $375,000 in MSIC Partners, LLC which resulted in the Corporation’s ownership interest in the LLC of approximately 64% and 54%, respectively, and a majority voting interest in the LLC. Accordingly, the LLC is included in the consolidated financial statements with the amounts attributable to the non-controlling interest in the LLC reported in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation. U SE OF E STIMATES AND R ESERVE FOR I NSURANCE L OSSES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the reserve for insurance losses. The Corporation’s policy is to reserve for anticipated insurance losses when, in the opinion of management, such losses become probable of occurrence and the amount can be reasonably estimated. The amount of the reserve, if any, is management’s best estimate within a range of potential losses. It is an amount that management believes will be adequate to absorb potential losses. Management bases its determination on the review of its members’ financial data (including regulatory call reports), consultation with regulatory authorities and recent historical experience. Substantial weight is accorded to indications from regulatory authorities that a member credit union has an extremely high or near-term possibility of failure. The reserve would reflect the level of reported excess deposits insured, net of management’s estimate of expected share and deposit adjustments and recoveries.

82 INTERNATIONAL COLLABORATION