letter from the CFO NCUA’s Corporate <strong>Credit</strong> <strong>Union</strong> Stabilization Plan We know that the collapse of major fi nancial institutions has you worried. No one has been immune from this. Not even credit unions. Before I explain how this affects <strong>Elevations</strong> <strong>Credit</strong> <strong>Union</strong>, I want to assure you that we are safe and sound, and our capital remains strong. You can borrow money from us to fi nance a car, a home, an education, or a variety of other purposes. You can also invest your money with us in a safe, federally insured account. Your credit union did not get involved in the sub-prime mortgage market. Your credit union did not get involved in leveraged derivatives. In fact, your credit union is proud to report that in all categories we had the best year we have had in our history. However, even though we did many things right we are still being affected. Let me give you some background. <strong>Elevations</strong> is a “natural person” credit union. This means we provide banking products and services direct to consumers and businesses. We also have a relationship with what is known as a “corporate credit union.” The corporate is where we (and other credit unions) process payments (such as members’ checks) for deposit into the Federal Reserve. The corporate credit union is also where we invest in Certifi cates, just like you would invest in a Certifi cate. Through the corporate, we have access to a line of credit if we ever needed more liquidity. Our corporate credit unions are SunCorp, located in Westminster, CO and WesCorp located in San Dimas, CA. The corporate credit unions (including SunCorp and WesCorp) also have a corporate credit union: U. S. Central <strong>Credit</strong> <strong>Union</strong>. U. S. Central provides the corporate credit unions with investment options and is a source of liquidity for corporates, much the same as the corporates provide this service to natural person credit unions. U. S. Central and WesCorp had some investments that plummeted along with the economy. As a result, the potential credit losses on the collateral underlying the investments outweighed their capital. Because of this decrease in their capital, the National <strong>Credit</strong> <strong>Union</strong> Administration (NCUA), which regulates all credit unions, used $1 billion from the National <strong>Credit</strong> <strong>Union</strong> Share Insurance Fund (NCUSIF – similar to the FDIC except it protects credit union members). As a result, all federally-insured credit unions (this includes <strong>Elevations</strong>) are being required to recapitalize the NCUSIF. Also, since the NCUA decided to fully insure all deposits in corporate credit unions until December 2010, federally insured credit unions are required to pay an additional premium to the NCUSIF to cover the loss reserve for the corporate credit union deposit insurance. Additionally, NCUA has since taken into conservatorship both U.S. Central and WesCorp which means that our capital investment totaling $7,241,193 in our two corporates, SunCorp and WesCorp, has become impaired. The costs related to the NCUA’s Corporate <strong>Credit</strong> <strong>Union</strong> Stabilization Plan are designed to bring the NCUSIF up to its required regulatory capital level and will be recognized by <strong>Elevations</strong> <strong>Credit</strong> <strong>Union</strong> over the next several years, beginning in 2009. What is recorded in the accompanying fi nancial statements is our loss of capital in both SunCorp and WesCorp due to the conservatorship of U.S. Central and Wescorp. What is important for you, our members, to understand is we are fi nancially strong, safe and sound because we stayed true to our mission of serving our members. We had a strong 2008 and are beginning 2009 with great results. We can absorb this shock without risking our strength or soundness. Our capital ratio will remain above NCUA guidelines for a well capitalized credit union. Remember, your deposits with us are insured up to $250,000 and backed by the full strength of the United States Government. If you have questions, please call us at 303.443.4672 or email us at CU.Strength@<strong>Elevations</strong>CU.com. ELEVATIONS <strong>Credit</strong> <strong>Union</strong> 2008 annual report 20 Vince Wayland Board Secretary/Treasurer Peggy Anderson Chief Financial Offi cer
fi nancials <strong>Elevations</strong> <strong>Credit</strong> <strong>Union</strong> Financial Statements December 31, 2008 and 2007 McGladrey & Pullen, LLP is a member of RSM International—an affi liation of separate and independent legal entities. ELEVATIONS <strong>Credit</strong> <strong>Union</strong> 2008 annual report 21
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