Navy Federal Credit Union 2015 Annual Report Download - page 66

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Financial Section 47
2015—SHARED SUCCESS
(dollars in thousands)
Year Ended December 31, 2014
Unrecognized
Net Pension and
Postretirement
Costs
Unrealized Net
Gains (Losses) on
Available-for-Sale
Securities
Unrealized Net
Gains (Losses)
on Cash Flow
Derivatives
Total
Balance, beginning of period $ (101,559) $ (97,024) $ 23,353 $ (175,230)
OCI before reclassifications (182,707) 254,308 (77,340) (5,739)
Amounts reclassified from AOCI to:
Salaries and employee benefits 3,906 — — 3,906
Net gain on sales of investments — (3,751) — (3,751)
Interest on securities sold under
repurchase agreements and notes payable — — 22,431 22,431
Interest income on
available-for-sale securities — — (2,012) (2,012)
Net change in AOCI (178,801) 250,557 (56,921) 14,835
Balance, end of period $ (280,360) $ 153,533 $ (33,568) $ (160,395)
NOTE 20: REGULATORY MATTERS
Navy Federal is subject to regulatory capital requirements administered by the NCUA. Failure
to meet minimum capital requirements can initiate certain mandatory and possible additional
discretionary actions by regulators that, if undertaken, could have a direct material eect on
Navy Federal’s consolidated financial statements. Under capital adequacy regulations and the
regulatory framework for prompt corrective action, Navy Federal must meet specific capital
requirements that involve quantitative measures of Navy Federal’s assets, liabilities and certain
commitments as calculated under GAAP. Navy Federal’s capital amounts and net worth
classification are also subject to qualitative judgments by its regulators about components,
risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require Navy Federal
to maintain minimum amounts and ratios of net worth to total assets. Credit unions are also
required to calculate a risk-based net worth (RBNW) requirement that establishes whether the
credit union will be considered “complex” under the regulatory framework. A credit union is
defined as “complex” if the credit union’s quarter-end total assets exceed fifty million dollars
($50,000,000) and its RBNW requirement exceeds 6%. Navy Federal’s RBNW requirement
as of December 31, 2015 and 2014 was 5.73% and 5.93%, respectively. Based on the RBNW
requirement, Navy Federal was not placed in the “complex” category as of December 31, 2015
or 2014.
The NCUA categorized Navy Federal as “well capitalized” under the regulatory framework
for prompt corrective action with a net worth-to-assets ratio of 10.94% and 11.24% as of
December 31, 2015 and 2014, respectively. Net worth for this calculation is defined as undivided
earnings plus regular and capital reserves. To be categorized as “well capitalized,” Navy Federal
must maintain a minimum net worth ratio of 7%. The components of Navy Federal’s capital are
stable, and the occurrence of factors that could significantly aect capital adequacy is considered
to be remote and limited to extraordinary regulatory or economic events. There are no conditions
or events that have occurred since December 31, 2015 that management believes would have
changed Navy Federal’s categorization.