7 6 5 4 3 2 1 8 - Elevations Credit Union

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Elevations Credit Union Notes to Financial Statements December 31, 2008 and 2007 ELEVATIONS Credit Union 2008 annual report 40 $ 282,789,000 $ 244,272,000 Commitments to extend credit are agreements to lend to a member as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Credit Union evaluates each member's credit worthiness on a case-by-case basis. The amount of collateral obtained to secure borrowing on the lines of credit is based on management’s credit evaluation of the member. Unfunded commitments under revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines-of-credit are uncollateralized and usually do not contain a specified maturity date and ultimately may not be drawn upon to the total extent to which the Credit Union is committed. Note 10. Commitments and Contingent Liabilities The Credit Union is a party to various legal actions normally associated with collections of loans and other business activities of financial institutions, the aggregate effect of which, in management’s opinion, would not have a material adverse effect on the financial condition or results of operations of the Credit Union. The Credit Union is a state-chartered credit union described in Internal Revenue Code (“IRC”) Section 501(c) (14). As such, the Credit Union is exempt from federal taxation of income derived from the performance of activities that are in furtherance of its exempt purposes. However, IRC Section 511 imposes a tax on the unrelated business income (as defined in Section 512) derived by state-chartered credit unions. Many states have similar laws. The specific application of Section 512 to the various activities conducted by state-chartered credit unions has been at issue for many years. During 2007, the Internal Revenue Service (“IRS”) issued a series of Technical Advice Memoranda (“TAM”) to a number of state-chartered credit unions located throughout the country. In these TAMs the IRS ruled certain products and services to be subject to taxation as unrelated business income. In light of the TAMs, the Credit Union has assessed its activities and any potential federal or state income tax liability. In the opinion of management, any liability arising from federal or state taxation of activities deemed to be unrelated to its exempt purposes is not expected to have a material effect on the Credit Union’s financial position or results of operation. Note 11. Employee Benefits The Credit Union has a 401(k) plan that allows employees to contribute by deferring a portion of their compensation into the plan. The Credit Union matches a portion of the employees’ deferred contributions. Additionally, the Credit Union makes a discretionary contribution to all employees, regardless of their own participation. 401(k) plan costs are accrued and funded on a current basis. The Credit Union contributed $644,579 and $636,716, respectively, to the plan for the years ended December 31, 2008 and 2007. Note 12. Members’ Equity The Credit Union is subject to various regulatory capital requirements administered by the NCUA. Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the Credit Union’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Credit Union must meet specific capital guidelines that involve quantitative measures of the Credit Union’s assets, liabilities, and certain offbalance-sheet items as calculated under generally accepted accounting principles. The Credit Union’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Elevations Credit Union Notes to Financial Statements December 31, 2008 and 2007 Quantitative measures established by regulation to ensure capital adequacy require the Credit Union to maintain minimum amounts and ratios (set forth in the table below) of net worth to total assets. Further, credit unions over $10,000,000 in assets are also required to calculate a Risk-Based Net Worth (RBNW) requirement which establishes whether or not the Credit Union will be considered “complex” under the regulatory framework. The Credit Union’s RBNW requirements as of December 31, 2008 and 2007 were 5.40 percent and 6.04 percent, respectively. The minimum requirement to be considered “complex” under the regulatory framework is 6 percent. Management believes, as of December 31, 2008 and 2007, that the Credit Union meets all capital adequacy requirements to which it is subject. As of December 31, 2008, the NCUA categorized the Credit Union as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Credit Union must maintain a minimum net worth ratio of 7 percent of assets. There are no conditions or events since that notification that management believes have changed the institution’s category. The Credit Union’s actual capital amounts and ratios are presented in the following table: December 31, 2008 December 31, 2007 Amount Ratio/Requirement Amount Ratio/Requirement Amount needed to be classified as “adequately capitalized” Amount needed to be classified as “well $53,437,478 6.00% $45,781,494 6.04% capitalized” $62,343,725 7.00% $53,058,023 7.00% Actual net worth $63,175,744 7.09% $68,562,110 9.05% Because the RBNW requirement is less than the net worth ratio, the Credit Union retains its original category. Further, in performing its calculation of total assets, the Credit Union used the quarter-end balance option, as permitted by regulation. Note 13. Related Party Transactions In the normal course of business, the Credit Union extends credit to directors, supervisory committee members and executive officers. The aggregate loans to related parties at December 31, 2008 and 2007 are $3,572,615 and $2,337,608, respectively. Shares from related parties at December 31, 2008 and 2007 amounted to $560,858 and $326,814, respectively. Note 14. Fair Value of Financial Instruments Effective January 1, 2008, the Credit Union adopted the provisions of SFAS No. 157, (SFAS 157) "Fair Value Measurements" for assets and liabilities measured and reported at fair value. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. SFAS 157 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability ELEVATIONS Credit Union 2008 annual report 41
Page 1 and 2: safe. sound. local. 2008 Annual Rep
Page 3 and 4: table of contents Joseph Wilson Mor
Page 5 and 6: letter from the president Dear Memb
Page 7 and 8: Pictured page 4 Eric Jones Chair Er
Page 9 and 10: The Supervisory Committee ensures t
Page 11 and 12: community relations committee Pictu
Page 13 and 14: kids fair Hundreds of fun-loving ki
Page 15 and 16: mortgages Elevations side-stepped t
Page 17 and 18: community relations Broomfi eld Com
Page 19 and 20: “I am equally passionate about wo
Page 21 and 22: anch managers 5 4 2 3 1 Mary Ann Ka
Page 23 and 24: fi nancials Elevations Credit Union
Page 25 and 26: Independent Auditor’s Report Supe
Page 27 and 28: Elevations Credit Union Statements
Page 29 and 30: Elevations Credit Union Statements
Page 31 and 32: Elevations Credit Union Notes to Fi
Page 41: Elevations Credit Union Notes to Fi
Page 47 and 48: senior leadership team Gerry Agnes

7 6 5 4 3 2 1 8 - Elevations Credit Union

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