Navy Federal Credit Union 2008 Annual Report Download

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NAVY FEDERAL CREDIT UNION • 2008 ANNUAL REPORT
1
Navy Federal continued to move forward on solid ground in 2008, despite
a turbulent economy. During a year of rising unemployment and mortgage
foreclosures, Navy Federal leadership ensured that members’ accounts remained
secure. As a result of a long-held practice of prudent business decisions, we were
able to continue making funds available for new loans, including mortgages,
credit cards and auto loans.
Extending the field of membership to include the Department of Defense
allowed us to broaden the focus of our 75-year tradition of serving those who
serve. Continued expansion of branch and ATM networks accommodated a
growing number of members in new locations. With the momentum that comes
from growth, strategic management and innovative thinking, membership
becomes even more valuable. Members have the stability of a sound financial
institution, the benefits of outstanding customized service and access to
a broad spectrum of financial products.
Strength
&Vision
MOVING
FORWARD WITH

Table of contents

  • Page 1
    ... strategic management and innovative thinking, membership becomes even more valuable. Members have the stability of a sound financial institution, the benefits of outstanding customized service and access to a broad spectrum of financial products. NAVY FEDERAL CREDIT UNION • 2008 ANNUAL REPORT...

  • Page 2
    ... checking and credit card accounts in Account credit union. Access greatly helped members manage their accounts. Mobile banking service also made its debut late in 2008. Members can now view rates, find ATMs and branch offices and get contact information over their mobile phones. Far wider mobile...

  • Page 3
    ... helps to ensure that management protects and safeguards Navy Federal's assets by instituting and maintaining sound internal controls, and also ensures that the financial condition of the credit union is accurately and fairly presented in its audited financial statements. The Committee is assisted...

  • Page 4
    ... 4, 6 Brigadier General, USMC (Ret.) Chairman, Supervisory Committee COMMITTEE ASSIGNMENTS Executive Financial Strategy Membership Planning Retirement Program Supervisory 1, 6 2 3 2 1 2 3 4 5 6 5 4, 5 3 3 2, 4 3 3, 4 5 3, 4 5, 6 6 12 NAVY FEDERAL CREDIT UNION • 2008 ANNUAL REPORT

  • Page 5
    Independent Auditors To the Board of Directors of The Navy Federal Credit Union: We have audited the accompanying consolidated balance sheets of the Navy Federal Credit Union ("Navy Federal") as of December 31, 2008 and December 31, 2007, and the related consolidated statements of income, of changes...

  • Page 6
    ... Statements of Financial Condition (dollars in thousands) Navy Federal Credit Union Consolidated Statements of Income (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...

  • Page 7
    ... (101,662) (2,974) - $ (104,739) - ( 198,289) (48,537) - $ (351,565) $ $ Navy Federal Credit Union Consolidated Statements of Cash Flows (dollars in thousands) Regular Reserve Balance at December 31, 2006 Adjustment to beginning balance Adjusted balance at December 31, 2006 Net income, as restated...

  • Page 8
    ...through a valuation allowance by charges to income. Mortgage loans awaiting sale are sold with the mortgage servicing rights retained by Navy Federal. Short Term Investments Consolidation The consolidated financial statements include the accounts of Navy Federal Credit Union and NFFG. Significant...

  • Page 9
    ... ability to pay. The allowance for loan and lease losses is reviewed on a monthly basis and the provision that is charged to expense is adjusted accordingly. NCUSIF Deposit The deposit in the National Credit Union Share Insurance Fund (NCUSIF) is in accordance with the Federal Credit Union Act and...

  • Page 10
    ... as non-current restricted cash as part of the agreement it entered into with Charlie Mac, LLC. Consolidated Statement of Financial Condition Assets Loans to members, net Mortgage Servicing Rights Total Assets Liabilities Notes payable Accrued expenses and accounts payable Member's Equity Capital...

  • Page 11
    ... Losses The composition of loans to members at December 31, 2008 and 2007 (as restated), was as follows: (dollars in thousands at year-end) Consumer loans Auto Other NAVchek® lines of credit Federal education loans Vehicle leases Credit card loans Mortgage loans Mortgage loan investments Fixed rate...

  • Page 12
    ...on its Consolidated Statements of Financial Condition at fair value with changes in fair value included in current earnings. These derivative instruments are economic hedges to which Navy Federal does not receive hedge accounting treatment. The notional value of the mortgage loan commitments totaled...

  • Page 13
    .... Navy Federal uses the number of new accounts opened at acquired office locations 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. Note 12: Members' Accounts Member deposit accounts...

  • Page 14
    ... amount based on the number of years of continuous service. The following table sets forth the funded status of the pension and other postretirement plans: Pension (dollars in thousands at year-end) Funded status, end of year: Fair value of plan assets Benefit obligations Funded status $ $ 2008 490...

  • Page 15
    ... of business, Navy Federal extends loans to credit union officials. The total principal amount at December 31, 2008 and 2007, was $32.8 million and $30.0 million, respectively. Credit union officials are defined as volunteer members of the Board of Directors and board committees, and employees...

  • Page 16
    ... Identical Assets Inputs (Level 1) (Level 2 68,371 68,371 Significant Unobservable Inputs (Level 3 Balance as of December 31, 2008 68,731 68,731 (dollars in thousands) Mortgage loans awaiting sale Total assets at fair value on a nonrecurring basis 22 NAVY FEDERAL CREDIT UNION 2008 FINANCIAL...

  • Page 17
    ... awaiting sale Loans, net of allowance for loan losses Financial liabilities and equity: Securities sold under repurchase agreements Members' accounts 2008 Fair Value 2007 Fair Value $ Cash and Cash Equivalents Cash and cash equivalents include cash and balances due from banks and credit unions...

  • Page 18
    ... credit losses. Note 19: Borrowed Funds The following table displays Navy Federal's short-term and long-term borrowings as of December 31, 2008: Weighted Average Rate (dollars in thousands) Short term FHLB Short-Term Borrowings FHLB Borrowings for purpose of positive arbitrage Total short-term...

  • Page 19
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