Navy Federal Credit Union 2007 Annual Report Download

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A Promise Delivered
Navy Federal Credit Union
2007 Annual Report

Table of contents

  • Page 1
    A Promise Delivered Navy Federal Credit Union 2007 Annual Report

  • Page 2
    2007 Financial Summary As of 31 December 2007 $33,011.9 $26,487.3 $15,102.1 $8,875.5 $3,266.8 $2,373.3...% 13.73% 6.40% Dollars in millions Assets Loans Outstanding Shares, Checking, MMSAs, IRAs Share Certificates Reserves Gross Income Non-interest Expenses Dividends Mortgage Loans Serviced Members

  • Page 3
    ...3 million members now trust Navy Federal to help them with their financial needs, from providing low loan rates, good savings rates, no or minimal fees, to offering fair treatment and no surprises. They're not surprised to hear we've received top ratings nationally for our credit card program. They...

  • Page 4
    ... One key focus this year was to improve member access by expanding Navy Federal's branch and ATM networks and by improving a member's experience when he or she calls us. In terms of expansion, we delivered 34 new branches, surpassing the 31 we promised in last year's annual report, and we installed...

  • Page 5
    ... deposit account and four-tiered Traditional IRA and Education Savings Accounts. • Two limited-time offer certificate specials were held throughout the year, both with a 6.00% APY (Annual Percentage Yield). • Two-thirds of the membership-over two million-are now enrolled in Navy Federal Online...

  • Page 6
    Board of Directors (Left to right) Henry J. Sanford, William P. Mizerak, Mark E. Ferguson III, John A. Lockard, Chairman, Kenneth R. Burns, First Vice Chairman, Frank Thorp IV 4 Navy Federal

  • Page 7
    (Left to right) Sharon R. Chapman, Cutler Dawson, Treasurer, Alan S. Thompson, Secretary, Stanley D. Bozin, Bruce B. Engelhardt, Second Vice Chairman 2007 Annual Report 5

  • Page 8
    ...their families in times of need. ® Navy Federal Online • Redesigned the home page, providing better organization of content and rate information. • Added two new interactive tools that help members select the right checking account and the best credit card for them. • Upgraded the "Locations...

  • Page 9
    ... Began offering a 0.25% APR (Annual Percentage Rate) discount on new fixed equity loans when members sign up for automatic payments from a Navy Federal checking account. • Settlement services for home equity loans expanded to 48 states and the District of Columbia. • Our Athens Branch at Naval...

  • Page 10
    8 Navy Federal

  • Page 11
    ... to Norfolk, VA, or Everett, WA, we temporarily set up on the piers to help members take care of pressing money matters. Products like the Veterans Choice and Active Duty Choice mortgages come with little or no money down, making it easier for service members to get homes. 2007 Annual Report 9

  • Page 12
    ... members' money-their credit union-safe and sound. Despite the growth, member savings still are primarily invested in loans to fellow members. Like family, Navy Federal supports members through the good times and the bad. That's why older members open up a college savings fund S ...Navy Federal...

  • Page 13
    2007 Annual Report 11

  • Page 14
    12 Navy Federal

  • Page 15
    ...to make purchases at millions of merchants around the globe, M in person, online or by phone. The card also gives access to a broad network of fee-free ATMs-Navy Federal's and 25,000 CO-OP ATMs. And most of our checking accounts ...the key to portable money management. " ® " ® offer ATM fee...

  • Page 16
    ...the essence of Navy Federal products and services. The "something extra" members receive is our free guidance in helping them choose the best product solutions for them. Four different checking accounts offer benefits not available from most other financial institutions. Savings products vary from...

  • Page 17
    2007 Annual Report 15

  • Page 18
    ...TX, to Richmond, VA, and from Kapolei, HI, to Atlanta, GA- we continue to enhance our service capability. In 2007 alone, Navy Federal added 34 new branches and 52 ATMs. Combined with our expanded hours, and even staying open on Sundays in some locations, we're reaching out to members where they live...

  • Page 19
    ... by reviewing and responding, in writing, to letters and e-mails it receives from Navy Federal members. By maintaining an open line of communication with the membership, the Committee helps to ensure that you are provided the quality of service you deserve as memberowners of your credit union. To...

  • Page 20
    ... & Services Navy Federal Online® navyfederal.org • Auto pricing guide and buying services • Loan payment and savings calculators • Automated tool matches members with the right mortgage • Online "wizards" help members select the checking account and credit card that's best for them • Home...

  • Page 21
    ... Basic money management tools- checking, savings, loans, credit cards • Online Account Access • Investment property mortgages • Merchant card processing • Business insurance • Employee retirement and insurance services Registered representatives of and securities sold through Navy Federal...

  • Page 22
    ...Board of Directors John A. Lockard Vice Admiral, USN (Ret.) Chairman of the Board Kenneth R. Burns Colonel, USMC (Ret.) First Vice Chairman Bruce B. Engelhardt Rear Admiral, USN (Ret.) Second Vice... 3, 4 3, 4 1 Committee Members George J. Allen Brigadier General, USMC..., USMC 1, 4 20 Navy Federal

  • Page 23
    The Report of Independent Auditors To the Board of Directors, Supervisory Committee and Other Members of Navy Federal Credit Union: We have audited the accompanying consolidated statements of financial condition of Navy Federal Credit Union ("Navy Federal") as of December 31, 2007 and 2006, and the...

  • Page 24
    Navy Federal Credit Union Consolidated Statements of Financial Condition (dollars in thousands) December 31 ASSETS Cash Short term investments Securities available-for-sale Securities held-to-maturity Mortgage loans awaiting sale Loans to members, net of allowance for loan losses of $256,277 at ...

  • Page 25
    ...Loan protection life insurance Life savings insurance Education and marketing Fair value adjustment of mortgage servicing assets Unrealized (gain) on mortgage loans awaiting sale Unrealized (gain)/loss from derivative and economic hedging activities Other Total non-interest expense Net income $ 2007...

  • Page 26
    ... SFAS 156 Net unrealized loss on available-for-sale securities Merger Discretionary transfer Balance at December 31, 2006 Net income Adjustments to initially apply SFAS 158 Net unrealized loss on available-for-sale securities Discretionary transfer Balance at December 31, 2007 $ 349,406 - - - 402...

  • Page 27
    Navy Federal Credit Union Consolidated Statements of Cash Flows (dollars in thousands) Years Ended December 31 Cash ï¬,ows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses Depreciation of fixed assets ...

  • Page 28
    ... their families. Navy Federal Financial Group (NFFG), a wholly-owned credit union service organization, provides investment, insurance, mortgage settlement and other financial services to members of Navy Federal Credit Union. NFRES, Navy Federal Brokerage Services and Navy Federal Asset Management...

  • Page 29
    ... on a market price offered by the appropriate government sponsored enterprise at the end of each month. Net unrealized losses are recognized through a valuation allowance by charges to income. Mortgage loans held for sale are sold with the mortgage servicing rights retained by Navy Federal. Credit...

  • Page 30
    ... 31, 2007 and 2006: mortgage loan commitments to members at specified interest rates and forward sales contracts to offset the risk of making the mortgage loan commitments at specified interest rates. See Note 6 for detail. Pension Accounting and Retirement Benefit Plans Navy Federal has de...

  • Page 31
    ... the value of U.S. Government and federal agency securities owned by Navy Federal. Other Investments represent capital required to maintain partnerships with credit union organizations. Investments pledged as collateral for borrowed funds were $872 million and $1.85 billion at December 31, 2007 and...

  • Page 32
    ...Loan Investments Fixed rate Variable rate In Process Unamortized Deferred Income Mortgage Loans Awaiting Sale Fixed rate Variable rate Unrealized Losses In Process Unamortized Deferred Income Equity loans Fixed equity Home equity lines of credit Less: Allowance for loan losses Total loans to members...

  • Page 33
    ... considers market loan prepayment predictions and other economic factors. The fair value of MSRs is mostly affected by changes in mortgage interest rates since rate changes cause the loan prepayment acceleration factors to increase or decrease. Navy Federal received mortgage loan servicing fees of...

  • Page 34
    ... Instruments and Hedging Activities, Navy Federal accounts for both the mortgage loan commitments and the forward sales contracts as derivative instruments on its Consolidated Statements of Financial Condition at fair value with changes in fair value included in current earnings. These derivative...

  • Page 35
    ... Assets. Navy Federal uses the number of new accounts opened at acquired office locations and net income per member to estimate the fair value of the goodwill. The carrying value of the goodwill is included in "Other assets" in the Consolidated Statements of Financial Condition. 2007 Financial...

  • Page 36
    ... year end): 2007 Money market Share savings Checking Share and IRA certificates IRA shares Total dividends $ 172,425 67,069 14,697 521,656 7,047 782,894 $ 2006 112,267 78,671 13,784 340,377 7,129 552,228 $ $ Note 12: Retirement Benefit Plans Navy Federal Credit Union Employees' Retirement Plan...

  • Page 37
    ... basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews. Navy Federal 401(k) Savings Plan This is a defined contribution plan where employees can contribute pretax money to a 401(k) retirement account and receive employer matching...

  • Page 38
    ...of business, Navy Federal extends loans to credit union officials. The total principal amount at December 31, 2007 and 2006 was $30.0 million and $27.1 million, respectively. Credit union officials are defined as volunteer members of the Board of Directors and board committees, and employees with...

  • Page 39
    ... Fair value for short-term securities is based on quoted market prices. Members' Accounts Derivative Instruments and Hedging Activities Navy Federal does not receive loan commitment fees. The fair value of loan commitments is based upon differences between the contracted rate and the current market...

  • Page 40
    ...Atlanta Mortgage servicing assets Mortgage loans awaiting sale Loans, net of allowance for loan losses Financial liabilities and equity: Securities sold under repurchase agreements Members' accounts $ 2,306,328 680,898 821,598 1,039,190 3,371 224,318 191,806 67,836 26,163,199 $ 2007 Fair Value 2,306...

  • Page 41
    2007 Financial Section 19

  • Page 42
    Copyright © 2008 Navy Federal NFCU 8010-F (3-08) Printed on FSC certified paper.

  • Page 43
    .... With grateful hearts, we pay tribute to those who have given their lives in service to this country. We treasure... their courage and commitment, which is an inspiration to us all. It is our great privilege to serve the heroic men, women and families of the Navy...

  • Page 44
    PO Box 3000, Merrifield, VA 22119-3000 navyfederal.org Contains 30% Post-Consumer Fiber.