2015 Audited Financial Statements - Digital Federal ... See accompanying Notes to Consolidated Financial

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  • DIGITAL FEDERAL CREDIT UNION AND SUBSIDIARIES

    CONSOLIDATED FINANCIAL STATEMENTS

    YEARS ENDED DECEMBER 31, 2015 AND 2014

  • DIGITAL FEDERAL CREDIT UNION AND SUBSIDIARIES TABLE OF CONTENTS

    YEARS ENDED DECEMBER 31, 2015 AND 2014

    INDEPENDENT AUDITORS’ REPORT 1

    CONSOLIDATED FINANCIAL STATEMENTS

    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 3

    CONSOLIDATED STATEMENTS OF INCOME (OPERATIONS) 4

    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) 5

    CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY 6

    CONSOLIDATED STATEMENTS OF CASH FLOWS 7

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9

  • CliftonLarsonAllen LLP CLAconnect.com

    An independent member of Nexia International

    (1)

    INDEPENDENT AUDITORS’ REPORT

    Supervisory Committee and Board of Directors Digital Federal Credit Union and Subsidiaries Marlborough, Massachusetts Report on Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Digital Federal Credit Union and Subsidiaries, which comprise the consolidated statements of financial condition as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, changes in members' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

    Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

  • Supervisory Committee and Board of Directors Digital Federal Credit Union and Subsidiaries

    (2)

    Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Digital Federal Credit Union and Subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

    CliftonLarsonAllen LLP

    Boston, Massachusetts March 7, 2016

  • DIGITAL FEDERAL CREDIT UNION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

    DECEMBER 31, 2015 AND 2014 (IN THOUSANDS)

    See accompanying Notes to Consolidated Financial Statements. (3)

    2015 2014

    Cash and Cash Equivalents 591,630$ 252,578$ Deposits in Corporate Federal Credit Union 45,000 44,000 Securities - Available-for-Sale 360,422 381,094 Other Investments 44,698 42,508 Loans Held-for-Sale 99,890 32,655 Loans, Net 5,542,108 5,088,193 Accrued Interest Receivable 17,424 16,061 Premises and Equipment, Net 52,170 51,014 NCUSIF Deposit 47,839 43,157 Other Assets 21,736 16,029

    Total Assets 6,822,917$ 5,967,289$

    LIABILITIES Members' Share and Savings Accounts 5,384,311$ 4,773,483$ Borrowed Funds 765,000 615,000 Accrued Expenses and Other Liabilities 61,864 41,547

    Total Liabilities 6,211,175 5,430,030

    MEMBERS' EQUITY Regular Reserves 100,227 100,227 Undivided Earnings 515,684 440,207 Accumulated Other Comprehensive Loss (4,169) (3,175)

    Total Members' Equity 611,742 537,259

    Total Liabilities and Members' Equity 6,822,917$ 5,967,289$

    LIABILITIES AND MEMBERS' EQUITY

    ASSETS

  • DIGITAL FEDERAL CREDIT UNION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME

    YEARS ENDED DECEMBER 31, 2015 AND 2014 (IN THOUSANDS)

    See accompanying Notes to Consolidated Financial Statements. (4)

    2015 2014

    INTEREST INCOME Loans 202,277$ 185,246$ Securities, Interest Bearing Deposits and Cash Equivalents 4,829 3,838

    Total Interest Income 207,106 189,084

    INTEREST EXPENSE Members' Share and Savings Accounts 28,306 26,528 Borrowed Funds 13,930 9,674

    Total Interest Expense 42,236 36,202

    Net Interest Income 164,870 152,882

    PROVISION FOR LOAN LOSSES 14,500 11,650

    Net Interest Income After Provision for Loan Losses 150,370 141,232

    NON-INTEREST INCOME Service Charges and Fees 15,139 11,118 Interchange Income 30,383 27,182 Other Non-Interest Income 7,943 9,771

    5,288 2,678 Total Non-Interest Income 58,753 50,749

    NON-INTEREST EXPENSE Employee Compensation and Benefits 65,750 59,001 Office Occupancy and Operations 36,517 35,252 Other Operating Expenses 30,197 25,751 Net Loss on Sale of Investments 857 - Net Loss on Sale and Impairment Losses of Foreclosed Assets 325 1,156

    Total Non-Interest Expense 133,646 121,160

    NET INCOME 75,477$ 70,821$

    Net Gain on Sale of Loans

  • DIGITAL FEDERAL CREDIT UNION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    YEARS ENDED DECEMBER 31, 2015 AND 2014 (IN THOUSANDS)

    See accompanying Notes to Consolidated Financial Statements. (5)

    2015 2014

    NET INCOME 75,477$ 70,821$

    OTHER COMPREHENSIVE LOSS: Securities - Available-for-Sale

    Unrealized Holding Loss Arising During the Period (1,851) (479) Reclassification for Losses Included in Net Income 857 -

    Subtotal (994) (479)

    Defined Benefit Plan Net Gain Arising During the Period - 211

    TOTAL OTHER COMPREHENSIVE LOSS (994) (268)

    TOTAL COMPREHENSIVE INCOME 74,483$ 70,553$

  • DIGITAL FEDERAL CREDIT UNION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

    YEARS ENDED DECEMBER 31, 2015 AND 2014 (IN THOUSANDS)

    See accompanying Notes to Consolidated Financial Statements. (6)

    Accumulated

    Other Regular Undivided Comprehensive

    Reserves Earnings Loss Total

    BALANCES AT DECEMBER 31, 2013 100,227$ 369,386$ (2,907)$ 466,706$

    Net Income - 70,821 - 70,821

    Other Comprehensive Loss - - (268) (268)

    BALANCES AT DECEMBER 31, 2014 100,227 440,207 (3,175) 537,259

    Net Income - 75,477 - 75,477

    Other Comprehensive Loss - - (994)