# Forecast Adjustments

### Actuals Columns

These are numbers based on actual records (not projections) as of the previous year end (12/31/2009 in the example).

**Principal**-**∑(Principal)**the sum of the principal balances of the loans/securities

**Accrual**-**∑(Principal × Interest / 12)**excluding non-accrual loans the sum of the principal balances times the respective interest rates of all loans that are not more than 90 days past due (ie, nonaccrual loans are excluded).**WAC**-**∑(Principal × Interest) / ∑(Principal)**(Weighted Average Coupon) the sum of the principal balances times the respective interest rates divided by the sum of the principal balances

### Forecast Columns

These columns are computed by the program as explained below.

**Principal**-**∑(Principal) - ∑(Principal of maturing loans/securities) - ∑(Anticipated Mortgage Principal Payments)***Mortgages*: If a payment was received for a mortgage during the last month of the previous year ('Mtg' Inv Type) then we assume timely monthly payments of that principal amount*USGA*: Only receive principal payments at maturity, so no monthly principal payment is calculated*MBS*: Because of the extraordinarily wide variance in monthly principal payments for MBS's, no attempt to forecast these payments is made; these payments can be projected manually by including them in the Pmts/Payoffs column under the Projection Adjustments section

**Accrual**-**∑((Days active / Days in month) × Interest × Principal / 12)**- this calculation takes into account the expected Maturity Date of the loans
- once a loan is past its maturity date it no longer contributes to this number
- the calculation allows for partial month accruals if the maturity date lands in the middle of the month
*Mortgages*: the calculation takes into account a reduced principal based on anticipated mortgage principal payments as detailed above (ie, it uses the Principal from the above calculation)

**WAC**-**∑(Principal × Interest) / ∑(Principal)**(Weighted Average Coupon) the Principal is the Principal from the above calculation (ie, it takes into account maturities and principal payments for mortgages)

### Projection Adjustments Columns

These columns can be edited by the user, but only if the Sale Status and PA Taxable dropdown boxes are all filled in. If one of these boxes is empty, these columns will display a summary of the user entered totals. In other words, if Sale Status is not filled in, the columns will include the total of all user-entered Available for Sale, Held To Maturity, and Trading items.

**Pmts/Payoffs**- enter the projected amount of principal that will be paid down during the month*Mortgages*: For mortgages, this column would be used to project pre-payments only; projected payments are calculated automatically by the form (see Forecast Principal section above for details)*USGA*: For treasuries, this column would be used to project calls only; maturities are calculated automatically by the form based on each treasury's maturity date*MBS*: For mortgage pools, this column is used to project both regular payments and pre-payments; maturities are calculated automatically by the form based on the maturity date of each MBS

**Purchases**- enter the projected amount of principal that will be added (ie, purchased) during the month**Purch Int**- enter the projected coupon rate of any purchases that will be added during the month; it is important to fill in this information if there are purchases, otherwise the default of 0.00 will be used when calculating the Adjusted WAC (see details below)**WAC Change**- enter a value here if you want to**replace**the Forecast WAC when performing the Adjusted calculations (see Effective WAC below for details)- this value should not be the difference between the Forecast WAC and the Projected WAC Change, but an actual replacement value
- unlike the other columns in the Projection Adjustment section, this column does not have a cumulative effect; so if you want to project a change in the coupon rate and have it carry forward for multiple months, you would need to enter the WAC Change in the current month and all future months
- for example, if you want to project a drop of 500 basis points (0.5%) starting in September 2010 followed by an additional drop of 200 basis points (0.2%), then using the screen shot below you would enter 1.5409 in the WAC Change column for September and October and 1.3409 in the WAC Change column for November and December

### Adjusted Amounts

These amounts are running totals where each row is influenced by the Projections on the same or higher rows of the table.

**Effective WAC**- in the formulas below, the**Effective WAC**is calculated as follows for each month:- if there
**is a value in the WAC Change**column then Effective WAC = WAC Change - if there
**is no value in the WAC Change**column then Effective WAC = Forecast WAC

**Principal**-**ForecastPrincipal - ∑(Previous Pmts/Payoffs) - (Current Pmts/Payoffs) + ∑(Previous Purchases) + (Current Purchases)**ie, Principal - Pmts/Payoffs + Purchases**Accrual**-**∑((Principal - Projected purchases) × Effective WAC) + ∑(Projected purchases × Projected purchased interest)**the adjusted accrual is the sum of two components:- the Forecast principal less Projected pmts/payoffs times the Forecast weighted average coupon
- the Projected purchases times the Projected purchased interest

**WAC**-**(∑((Principal - Projected purchases) × Effective WAC) + ∑(Projected purchases × Projected purchased interest)) / ∑(Principal)**the weighted average coupon is calculated as follows:- multiply the Forecast principal less Projected pmts/payoffs by the Forecast weighted average coupon
- multiply the Projected purchases by the Projected purchased interest
- add 1. and 2. together
- divide 3. by the full Adjusted principal amount