Navy Federal Credit Union 2014 Annual Report Download - page 24

Download and view the complete annual report

Please find page 24 of the 2014 Navy Federal Credit Union annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 72

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72

Navy Federal Credit Union6
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Navy Federal Credit Union is a member-owned, not-for-profit financial institution formed to provide a
variety of financial services to those individuals in its field of membership, which includes military and
civilian personnel who are or were employed by the Department of Defense and their families.
Basis of Presentation and Use of Estimates
The consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that aect the
amounts reported in the consolidated financial statements and accompanying notes. These estimates
are based on information available as of the time preparation of the consolidated financial statements.
Actual amounts or results could dier from these estimates.
Navy Federal evaluated subsequent events through March 25, 2015, the date these financial statements
were issued.
Principles of Consolidation
The consolidated financial statements include the accounts of Navy Federal Credit Union and its wholly-
owned entities. All significant intercompany accounts and transactions are eliminated in consolidation.
Navy Federal Financial Group (NFFG) is a credit union service organization wholly owned by
Navy Federal Credit Union that provides investment, insurance and other financial services to members
of Navy Federal Credit Union. Navy Federal Brokerage Services and Navy Federal Asset Management
are wholly owned subsidiaries of NFFG. In this Annual Report, Navy Federal Credit Union and its
consolidated entities are called “Navy Federal.”
Business Combinations
The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805-10,
Business Combinations, requires that all business combinations be accounted for by applying the
acquisition method. Accordingly, Navy Federal recognizes assets obtained and liabilities assumed in
a business combination at fair value on the acquisition date and includes the results of operations of
the acquired entity on its Consolidated Statements of Income from the acquisition date. Navy Federal
recognizes as goodwill the excess of acquisition price over the fair value of net assets acquired.
Cash
Cash includes cash and balances due from other financial institutions and excludes restricted cash,
which is included in Other assets. See Note 2 for details.
Short-Term Investments
Short-term investments include federal funds sold and securities purchased under agreements to resell,
all of which have original maturities of 90 days or less. As of December 31, 2014 and 2013, all short-term
investments were carried at cost, which approximated fair value.
Investments
Navy Federal’s securities are classified as held-to-maturity (HTM) or available-for-sale (AFS) in
accordance with ASC 320-10, Investments—Debt and Equity Securities. Securities classified as HTM
are carried at cost, adjusted for the amortization of premiums and accretion of discounts. Management
has the ability and intent to hold these securities to maturity. Securities classified as AFS are carried at
fair value, with any unrealized gains and losses recorded as accumulated other comprehensive income