Technology. Service. Commitment. Annual Report Final.pdf · Staff recognition – JMAFCU staff received eight Award of Excellence nominations. Ally Rice, JMAFCU Branch Supervisor,

Service. Commitment.Technology.

Meeting Your Financial Needs

Your Way

2014 Annual Report

JM Associates Federal Credit Union is a fi nancial institution whose primary purpose is to provide the highest quality services to our members. In support of this mission, we are committed to:

• Building customer-friendly relationships…

• Managing the membership’s collective resources for the benefi t of all…

• Providing a wide range of competitively priced products, and…

• Leveraging technology to maximize effi ciency, while always protecting and maintaining member confi dentiality.

StatementMISSION

Table of Contents

Chairman’s Report .........................................................................................................................4

President’s Letter ............................................................................................................................5

Meeting Your Financial Needs, Your Way ........................................................................6

Financial Statements ...................................................................................................................8

Independent Auditor’s Report ........................................................................................... 34

Supervisory Committee’s Report ...................................................................................... 36

Board of Directors....................................................................................................................... 37

JM Associates Federal Credit Union

Annual MeetingApril 23, 2015

JM Family Enterprises111 Building Auditorium

Deerfi eld Beach, FL

4

Chairman’s ReportApril 2015

Dear Member:I am pleased to once again provide the opening comments to this year’s Annual Report. I hope you fi nd the report interesting, educational and maybe even entertaining.

Your credit union is fi nancially strong and well prepared to serve you in the future.

It can be easy and sometimes repetitive to talk about fi nancial success and what it means to you as the member. Financial strength to a credit union is like gasoline to a car. It is the foundation of what makes us “go” and what allows us to “move forward.”

I want to stress the importance of fi nancial strength, but emphasize that our greatest strength is our people. Without great people and dedication to service, our credit union would just blend in with many other fi nancial institutions down the street.

I am very proud of our people. The credit union management, staff and many volunteers bring everything together to deliver to you the products and services that you can also be proud of. Again, this is your credit union!

Thank you to our members for your continued confi dence and your business. Let us know what we can do for you!

Sincerely,

Art MirandiChairman of the BoardJM Associates Federal Credit Union

Art Mirandi

5

President’s LetterApril 2015

Dear Member,The primary purpose of a credit union is to provide service to its members, as opposed to generating a profi t. That purpose sets the tone for everything we do at JMAFCU. While it is necessary to generate some income to continue to operate, our focus is, and always will be, service. In the pages that follow, you will fi nd fi nancial reports for JMAFCU. A brief summary is that JMAFCU is fi nancially healthy and doing well. After reading the reports, you should be assured that JMAFCU is headed in the right direction.

These fi nancial reports are only part of the story. As a credit union, JMAFCU is diff erent from other fi nancial institutions. A credit union takes the deposits of one member and loans them to another member to generate interest income that can be used to pay dividends to the depositing member. JMAFCU needs borrowers as much as it needs depositors; members helping members. In addition, you are an owner of JMAFCU. The credit union exists to serve its members (owners). Ultimately, the overall progress of members like you dictates our success and the solid fi nancial results enclosed.

What you may not readily see in these fi nancial reports, but is no less important, is JMAFCU’s commitment to serving its members through personal and electronic contact. You may speak with a real credit union associate face-to-face or by phone. It may be an associate you have spoken to for years. Have you ever spoken to the same person at another fi nancial institution? JMAFCU also off ers multiple electronic access methods, including phone, Internet and mobile, so you can have 24-hour access to your money. The more our members use electronic access, the more time we have to provide personal service to you. We are there when you need fast (electronic) or personal service.

Another way JMAFCU is diff erent is that we are supported by volunteers who, without the benefi t of fi nancial gain, contribute their time and talents. Volunteers serve on the Board of Directors, Supervisory Committee and as local representatives. If you have the opportunity, please thank them for a credit union committed to serving you.

Strong fi nancials, excellent member service, and committed volunteers and associates – your credit union. Thank you for being a member of JMAFCU, and please let us know how we can better serve you.

Sincerely,

Jim Ryan, CCUEPresident

Jim Ryan

66

Get Verifi ed. In 2014, JMAFCU introduced V.Me by Visa® to simplify the online payment process and to help protect members from fraudulent credit or debit card activity. V.Me, another line of defense against fraudulent account activity, allowed members to make online purchases without entering payment information on merchant websites.

Considering the upward trend in mobile banking over the past year, JMAFCU’s SAFE Mobile has been a welcome addition to JMAFCU’s suite of electronic services, and we continued to see marked increase in usage in 2014. SAFE Mobile was upgraded to be compatible with IOS 8 and one lucky member was the winner of the new iPhone® 6 in our Abundant Benefi ts giveaway.

The JMAFCU website was upgraded to provide even greater mobile functionality and was also given a facelift for a fresh new look.

To provide greater CheckCard and Visa Credit Card support, JMAFCU upgraded our card services. This upgrade allows cardholders to speak with a live representative to report lost or stolen cards 24 hours a day, every day of the year. This service includes English and Spanish support. All calls are recorded to ensure quality and security.

The theme for 2014, “Meeting Your Financial Needs, Your Way,” allowed JMAFCU the opportunity to show our level of dedication to meeting the needs of our members. By not only providing high quality products and services, but also by investing our resources in researching and discovering the best in technological advancements and security features, JMAFCU continues to ensure that we are doing all that we can to protect our members’ fi nancial resources.

Tech

nolo

gy.

Meeting Your Financial Needs

Your WayMeeting Your Financial Needs

Your Way

7

Service.Com

mitm

ent.In a recent survey (Sept. 2014), 92.9% of members surveyed gave JMAFCU an excellent/very good rating on products and services.

Knowledge is power. Free credit score review – For a time, JMAFCU offered free credit score reviews to the entire membership. Loan offi cers scheduled appointments for members to review their credit fi les. Recommendations were made for score improvements. JMAFCU continued our Financial Wellness Fairs, bringing together our members and business partners for informative and engaging expos. We took our fi nancial information, products and services on the road to St. Louis, Mobile, Deerfi eld Beach, Commerce and Alpharetta. We had over 300 participants at these events, which lead to an increase in membership and increased understanding and usage of products and services.

Deerfi eld Beach branch offi ce celebrated 25 years of service. South Florida members and associates know and love Mona Aliseo, who has served as Branch Manager for the entire 25 years.

Accel Members Financial Counseling has proven to be a valuable service and resource for our members. Member usage: Total call volume experienced a 12% increase from the previous year; fi rst-time callers showed a 77% increase from the previous year. Debt Management Plans: Three members completed their plans and paid their debts in full during the last year!

Staff recognition – JMAFCU staff received eight Award of Excellence nominations. Ally Rice, JMAFCU Branch Supervisor, was the 2014 Winner/Honoree.

JMAFCU’s long-standing commitment to providing the best in products and services continued our partnerships with Capital Mortgage, Accel Services, Liberty/TruStage and Members Trust Company. These partners lent their support to our Financial Wellness Fairs and held several informative Lunch-n-Learns throughout the year.

Going green. 2014 saw a continued commitment to doing our part to help the environment by encouraging members to receive their JMAFCU statements electronically. We currently have 2,419 members who receive their statements electronically. JMAFCU’s print newsletter, News You Can Use, was phased out by fi rst going to a quarterly print edition. The last edition was printed in the fourth quarter of 2014.

Committed to service. Based on September 30, 2014, fi nancial data, Bauer Financial, Inc. of Coral Gables, Florida, the nation’s credit union and bank rating fi rm, commended JM Associates Federal Credit Union with a Five-Star rating for proving once again that it is a steadfast and invaluable partner to the members it serves.

8

JM Associates Federal Credit UnionStatement of Financial Condition

ASSETSSeptember 30,

2014 2013

Cash and cash equivalents $ 1,108,752 $ 950,708

Investments

Available-for-sale 54,466,670 52,389,268

Held-to-maturity 570,348 591,750

Other 7,014,056 9,483,290

Loans receivable, net of allowance for loan losses 34,650,744 30,624,494

Accrued interest receivable 402,387 350,770

Premises and equipment, net 15,496 33,532

National Credit Union Share Insurance Fund deposit 785,648 752,604

Assets acquired in liquidation 54,000 54,000

Other assets 537,347 57,075

Total Assets $ 99,605,448 $ 95,287,491

LIABILITIES AND MEMBERS’ EQUITYSeptember 30,

2014 2013

Liabilities

Members’ share and savings accounts $ 85,382,568 $ 81,613,887

Accrued expenses and other liabilities 1,447,178 2,929,674

Total liabilities 86,829,746 84,543,561

Commitments and Contingent Liabilities

Members’ Equity

Regular reserve 716,460 716,460

Undivided earnings 12,578,906 11,142,593

Accumulated other comprehensive loss (519,664) (1,115,123)

Total members’ equity 12,775,702 10,743,930

Total Liabilities and Members’ Equity $ 99,605,448 $ 95,287,491

9

JM Associates Federal Credit UnionApril 24, 2014

JM Family Enterprises111 Building Auditorium

Deerfi eld Beach, FL

JM Associates Federal Credit UnionStatement of Income

September 30,

2014 2013

Interest Income

Interest on loans receivable $ 2,063,314 $ 1,958,413

Interest on investments 1,227,105 1,179,022

Interest income 3,290,419 3,137,435

Interest Expense

Dividends on members’ share and savings accounts 401,719 423,702

Interest expense 401,719 423,702

Net Interest Income 2,888,700 2,713,733

Provision for Loan Losses - (134,327)

Net Interest Income After Provision for Loan Losses 2,888,700 2,848,060

Non-interest Income

Other non-interest income 1,388,743 1,245,844

Fees and service charges 340,419 330,762

Other gains and losses, net 60,140 37,140

Gain on sale of investments, net - 3,768

Non-interest income 1,789,302 1,617,514

4,678,002 4,465,574

Non-interest Expense

Compensation and employee benefi ts 1,442,613 1,389,844

Professional and outside services 571,771 553,827

Operations 515,752 545,514

Loan servicing 486,756 429,289

Travel and conference 110,746 102,650

Education and promotion 84,103 89,823

Loss on sale of investment, net 29,948 -

NCUA assessment - 60,208

Non-interest expense 3,241,689 3,171,155

Net Income $ 1,436,313 $ 1,294,419

10

JM Associates Federal Credit UnionStatement of Members’ Equity

and Comprehensive Income

COMPREHENSIVE INCOMESeptember 30,

2014 2013

Net Income $ 1,436,313 $ 1,294,419

Other Comprehensive Income (Loss)

New unrealized holding (losses)/gains on securities arising during the year 565,511 (1,925,797)

Less reclassifi cation adjustment for net losses/(gains) included in net income 29,948 (3,768)

595,459 (1,929,565)

Comprehensive (Loss) Income $ 2,031,772 $ (635,146)

MEMBERS’ EQUITY

Regular Reserve

Undivided Earnings

Accumulated Other

Comprehensive Income (Loss) Total

Balance, September 30, 2012 $ 716,460 $ 9,848,174 $ 814,442 $ 11,379,076

Net income - 1,294,419 - 1,294,419

Change in unrealized gain/(loss) on securities - - (1,929,565) (1,929,565)

Balance, September 30, 2013 716,460 11,142,593 (1,115,123) 10,743,930

Net income - 1,436,313 - 1,436,313

Change in unrealized gain/(loss) on securities - - 595,459 595,459

Balance, September 30, 2014 $ 716,460 $ 12,578,906 $ (519,664) $ 12,775,702

Mobile BankingJMAFCU wants you to be able to take us wherever you go! We make mobile banking easy with our SAFE Mobile banking app. That way you can check your account balance, transfer funds and more – right from your smartphone!

JMAFCU’s mobile banking will help you manage your fi nances on the go! Mobile banking is a part of our E-suite of services. You must have an eChecking account and SAFE IB to access your accounts via mobile banking. SAFE Mobile allows you to have access to your JMAFCU accounts wherever you are!

11

JM Associates Federal Credit UnionStatement of Cash Flows

September 30,

2014 2013

Cash Flows From Operating Activities

Net income $ 1,436,313 $ 1,294 ,419

Adjustments to reconcile net income to net cash

Provisions for loan losses - (134,327)

Depreciation and amortization of premises and equipment 18,036 17,314

Loss (gain) on sale of investments, net 29,948 (3,768)

Amortization of investment premiums/discounts 1,283,969 1,133,785

Changes in operating assets and liabilities

Accrued interest receivable (51,617) (19,424)

Other assets (480,272) 5,087

Accrued expenses and other liabilities (1,482,496) 923,400

Net Cash Provided by Operating Activities $ 753,881 $ 3,216,486

Cash Flows From Investment Activities

Purchases of:

Available-for-sale securities (22,191,594) (28,496,806)

Premises and equipment - (33,916)

Proceeds from:

Maturities, paydowns and sales of available-for-sale securities 18,899,734 27,881,326

Maturities and paydowns of held-to-maturity securities 21,402 64,165

New change in:

Other investments 2,965,234 (1,587,189)

Loans receivable, net of charge-off s (4,105,500) (4,008,740)

NCUSIF deposit (33,044) (37,338)

Recoveries on loans charged off 79,250 84,604

Net Cash Used in Investing Activities $ (4,364,518) $ (6,133,894)

Cash Flows From Financing Activities

Net change in members’ share and savings accounts 3,768,681 2,961,045

Net Cash Provided by Financing Activities $ 3,768,681 $ 2,961,045

Net Change in Cash and Cash Equivalents 158,044 43,637

Cash and Cash Equivalents at Beginning of Year 950,708 907,071

Cash and Cash Equivalents at End of Year $ 1,108,752 $ 950,708

Supplemental Cash Flow Disclosures

Dividends and interest paid $ 401,719 $ 423,702

Loans receivable transferred to assets acquired in liquidation $ - $ 54,000

Non-cash change in investments, net $ - $ 250,000

12

JM Associates Federal Credit UnionNotes to the Financial Statements

NOTE 1: SIGNIFICANT ACCOUNT POLICIES

OrganizationJM Associates Federal Credit Union (the “Credit Union”) is a cooperative association organized in accordance with the provisions of the Federal Credit Union Act for the purposes of promoting thrift among, and creating a source of credit for, its members. Participation in the Credit Union is limited to those individuals who qualify for membership. The fi eld of membership is defi ned in the Credit Union’s Charter and Bylaws.

Use of EstimatesThe preparation of fi nancial statements in conformity with generally accepted accounting principles in the United States (U.S. GAAP) requires Management to make estimates and assumptions that aff ect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fi nancial statements and the reported amounts of revenues and expenses during the reporting period. Specifi cally, Management has made estimates based on assumptions for fair value of assets and liabilities and the assessment of other than temporary impairment on investments. Actual results could diff er from these estimates. Material estimates that are particularly subject to change in the near term include the determination of the allowance for loan losses (ALL), valuation of securities, and the fair value of fi nancial instruments.

Basis of Presentation The Credit Union follows the accounting standards set by the Financial Accounting Standards Board (FASB). The FASB establishes U.S. GAAP that are followed to ensure consistent reporting of the fi nancial condition, results of operations and cash fl ows of the Credit Union.

Cash and Cash EquivalentsFor purposes of the statement of fi nancial condition and the statement of cash fl ows, cash and cash equivalents includes cash on hand, amounts due from fi nancial institutions, and highly liquid debt instruments classifi ed as cash which were purchased with maturities of three months or less. Amounts due from fi nancial institutions may, at times, exceed federally insured limits.

InvestmentsThe Credit Union’s investments are classifi ed and accounted for as follows:

Held-to-Maturity: Investments which the Credit Union has the positive intent and ability to hold to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts which are recognized in interest income.

Available-for-Sale: Investments are classifi ed available-for-sale when Management anticipates that the securities could be sold in response to rate changes, prepayment risk, liquidity, availability of and the yield on alternative investments and other market and economic factors. These securities are reported at fair value. Unrealized gains and losses on securities available for sale are recognized as direct increases or decreases in members’ equity and comprehensive income. Cost of investments sold are recognized using the specifi c identifi cation method. The amortization of premiums and the accretion of discounts are recognized over the term of the related investment by a method that approximates the interest method.

Other Investments: Investments in this category do not meet the defi nition of a debt or equity security under U.S. GAAP. Other investments may include certain cash equivalents that Management has elected to classify as investments. Other investments are stated at the lower of cost or market.

Management periodically performs analyses to test for impairment of various assets. A signifi cant impairment analysis relates to the other than temporary declines in the value of securities. Management conducts periodic reviews and evaluations of the securities portfolio to determine if the value of any security has declined below its carrying value and whether such a decline is other than temporary. If such decline is deemed other than temporary, Management would adjust the amount of the security by writing it down to fair market value through a charge to current period operations.

13


Visa®, Inc. StockAs part of the restructuring of Visa, Inc., the Credit Union was issued shares of Class B Common Stock in Visa, Inc. The shares represented by this issuance are fully paid and non-assessable. The Credit Union received a partial redemption of their Class B Common Stock in Visa, Inc. leaving a balance of 5,245 shares. Currently, there is no readily available fair market value of the stock and therefore, the stock is not refl ected in the Credit Union’s fi nancial statements. Once a readily available fair market value of the stock is available, the value of the stock will be refl ected in the Credit Union’s fi nancial statements.

Loans ReceivableThe Credit Union grants mortgage and consumer loans to members. The ability of the members to honor their contracts is dependent upon the real estate market and general economic conditions.

Loans that the Credit Union has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at principal balance outstanding, net, of an allowance for loan losses. Interest income on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding.

Interest income is not reported when full loan repayment is in doubt, typically when the loan is impaired or payments are past due 90 days or more. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Consumer loans are typically charged off no later than 180 days past due. Residential real estate loans are evaluated for charge-off on a case-by-case basis and are typically charged-off at the time of foreclosure. Past-due status is based on the contractual terms of the loans. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if the collection of principal and interest is considered doubtful.

Allowance for Loan LossesThe allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and decreased by charge-off s less recoveries. Management estimates the required allowance for loan losses balance using past loan loss experience, known and inherent risks in the nature and volume of the portfolio, information about specifi c borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance for loan losses may be made for specifi c loans, but the entire allowance is available for any loan that, in Management’s judgment, should be charged-off . Loan losses are charged against the allowance for loan losses when Management believes the uncollectibility of a loan balance is confi rmed.

The allowance for loan losses consists of specifi c and general components. The specifi c component relates to loans that are individually classifi ed as impaired or loans otherwise classifi ed as substandard or doubtful. The general component covers non-classifi ed loans and is based on historical loss experience adjusted for current factors.

Due to the nature of uncertainties related to any estimation process, Management’s estimate of loan losses inherent in the loan portfolio may change in the near term. However, the amount of the change that is reasonably possible cannot be estimated. In addition, the Credit Union’s regulator, as an integral part of its examination process, periodically reviews the Credit Union’s allowance for loan losses. The regulator may require the Credit Union to adjust the allowance for loan losses based on their judgments of information available to them at the time of their examination.

A loan is considered impaired when, based on current information and events, full payment under the loan terms is not expected. Impairment is generally evaluated in total for smaller-balance loans of similar nature, such as residential mortgage, consumer, and credit card loans, but may be evaluated on an individual loan basis if deemed necessary. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash fl ows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.

14


Troubled Debt Restructurings (TDRs)In situations where, for economic or legal reasons related to a member’s fi nancial diffi culties, the Credit Union grants a concession for other than an insignifi cant period of time to the member that the Credit Union would not otherwise consider, the related loan is classifi ed as a TDR. The Credit Union strives to identify members in fi nancial diffi culty early and work with them to modify to more aff ordable terms before their loan reaches nonaccrual status. These modifi ed terms may include interest rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. In cases where the Credit Union grants the member new terms deemed to be a concession, the Credit Union measures any impairment on the restructuring using the methodology for individually impaired loans. Loans classifi ed as TDRs are reported as impaired loans.

Premises and EquipmentFurniture and equipment, and leasehold improvements are carried at cost, less accumulated depreciation and leasehold amortization. Furniture and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the term of the respective leases. Maintenance and repairs are expensed, and major improvements and renovations are capitalized. Management reviews premises and equipment for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Gains and losses on disposals are included in current operations.

Assets Acquired in LiquidationAssets acquired in liquidation in lieu of loan foreclosure are initially recorded at the lower of the Credit Union’s carrying amount or fair value less estimated selling cost at the date of foreclosure. Any write-downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan losses. After foreclosure, property held for sale is carried at the lower of the new cost basis or fair value less cost to sell. Impairment losses on property to be held and used are measured as the amount by which the carrying amount of a property exceeds its fair value. Costs of signifi cant property improvements are capitalized, whereas costs relating to holding property are expensed. The portion of interest costs relating to development of real estate is capitalized. Valuations are periodically performed by Management, and any subsequent write-downs are recorded as a charge to operations, if necessary, to reduce the carrying value of a property to the lower of its cost or fair value less cost to sell.

NCUSIF Deposit and NCUSIF Insurance PremiumThe deposit in the National Credit Union Share Insurance Fund (NCUSIF) is in accordance with National Credit Union Administration (NCUA) regulations, which require the maintenance of a deposit by each insured credit union in an amount equal to one percent of its insurable shares, less any reportable impairment. The deposit would be refunded to the Credit Union if its insurance coverage is terminated, it converts to insurance coverage from another source, or the operations of the fund are transferred from the NCUA Board.

Being insured by the NCUSIF, the Credit Union is required to pay an annual insurance premium equal to one-twelfth of one percent of its total insured shares, unless the payment is waived or reduced by the NCUA Board.

Members’ Share and Savings AccountsMembers’ shares are the savings deposit accounts of the owners of the Credit Union. Share ownership entitles the members to vote in annual elections of the Board of Directors and on other corporate matters. Irrespective of the amount of shares owned, no member has more than one vote. Members’ shares are subordinated to all other liabilities of the Credit Union upon liquidation. Dividends on members’ share and savings accounts, except for interest on certifi cates of deposit, which is set in advance, are based on available earnings at the end of a dividend period and are not guaranteed by the Credit Union. Dividend rates on members’ share accounts are set by the Board of Directors, based on an evaluation of current and future market conditions.

15


Regular ReserveThe Credit Union is required by regulation to maintain a statutory reserve, “regular reserve.” The regular reserve, which represents a regulatory restriction of retained earnings, is not available for the payment of dividends to members.

Federal and State Tax ExemptionThe Credit Union is exempt from federal and most state and local taxes under the provisions of the Federal Credit Union Act, the Internal Revenue Code and state tax laws. The FASB ASC clarifi es accounting for uncertainty in income taxes reported in the fi nancial statements. The interpretation provides criteria for assessment of individual tax positions and a process for recognition and measurement of uncertain tax positions. Tax positions are evaluated on whether they meet the “more likely than not” standard for sustainability on examination by tax authorities. Federal credit unions are tax exempt under Internal Revenue Code Sections. As such, the Credit Union has no uncertain tax positions that qualify for either recognition or disclosure in the fi nancial statements. Additionally, no interest or penalties have been recorded in the accompanying audited fi nancial statements related to uncertain tax positions.

Comprehensive IncomeAccounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the members’ equity section of the statements of fi nancial condition.

Advertising CostsAdvertising costs are expensed as incurred.

Fair Value MeasurementsThe Credit Union categorizes its assets and liabilities measured at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement fall within diff erent levels of the hierarchy, the categorization is based on the lowest level input that is signifi cant to the fair value measurement. Assets and liabilities valued at fair value are categorized based on the inputs to the valuation techniques as follows:

Level 1 – Inputs that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Credit Union has the ability to access at the measurement date. Level 2 – Inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the fi nancial instrument. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash fl ows.Level 3 – Inputs that are unobservable for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. Subsequent to initial recognition, the Credit Union may remeasure the carrying value of assets and liabilities measured on a nonrecurring basis to fair value. Adjustments to fair value usually result when certain assets are impaired. Such assets are written down from their carrying amounts to their fair value.

Subsequent EventsIn preparing these fi nancial statements, the Credit Union evaluated events and transactions for potential recognition or disclosure through December 10, 2014, the date on which the fi nancial statements were available to be issued.

Reclassifi cationsCertain 2013 fi nancial statement amounts have been reclassifi ed to conform with classifi cations adopted in the current year. This reclassifi cation did not have any change on net income or members’ equity.

16


NOTE 2: INVESTMENTS

AVAILABLE-FOR-SALEInvestments classifi ed as available-for-sale securities consist of the following:

September 30, 2014

Amortized Cost

Gross Unrealized

Gains

Gross Unrealized

Losses Fair Value

Federal agency mortgage-backed securities $ 31,166,764 $ 193,456 $ (594,304) $ 30,765,916

Bank notes and certifi cates 14,633,834 201,829 (45,436) 14,790,227

Federal agency securities 9,185,736 60,414 (335,623) 8,910,527

Total $ 54,986,334 $ 455,699 $ (975,363) $ 54,466,670

September 30, 2013

Amortized Cost

Gross Unrealized

Gains

Gross Unrealized

Losses Fair Value

Federal agency mortgage-backed securities $ 28,713,080 $ 187,398 $ (1,020,416) $ 27,880,062

Bank notes and certifi cates 14,602,108 194,947 (35,626) 14,761,429

Federal agency securities 10,189,203 50,660 (492,086) 9,747,777

Total $ 53,504,391 $ 433,055 $ (1,548,128) $ 52,389,26

17


Gross unrealized losses and fair value by length of time that the individual securities have been in a continuous unrealized loss position at September 30, 2014 and 2013, are as follows:

September 30, 2014

Less Than 12 Months 12 Months or Greater

Fair ValueUnrealized

Losses Fair ValueUnrealized

Losses

Federal agency mortgage-backed securities $ 11,676,685 $ (266,266) $ 9,645,080 $ (328,038)

Federal agency securities 3,939,306 (28,405) 1,115,780 (17,031)

Bank notes and certifi cates 1,219,298 (7,295) 466,910 (328,328)

Total $ 16,835,289 $ (301,966) $ 11,227,770 $ (673,397)

September 30, 2013

Less Than 12 Months 12 Months or Greater

Fair ValueUnrealized

Losses Fair ValueUnrealized

Losses

Federal agency mortgage-backed securities $ 18,053,387 $ (1,005,997) $ 500,584 $ (14,419)

Federal agency securities 6,006,514 (204,571) 2,712,030 (287,515)

Bank notes and certifi cates 2,753,510 (35,626) - -

Total $ 26,813,411 $ (1,246,194) $ 3,212,614 $ (301,934)

There are a total of 37 and 34 securities with unrealized losses as of September 30, 2014 and 2013, respectively. The unrealized losses associated with these securities are considered temporary as the Credit Union has the ability to hold these securities for a period of time suffi cient to allow for any anticipated recovery in fair value.

Proceeds from sales of investment securities classifi ed as available-for-sale and gross realized gains and losses from those are as follows:

September 30,

2014 2013

Sales proceeds $ 12,087,019 $ 4,411,654

Gross realized gains $ 122,732 $ 112,958

Gross realized losses $ (152,680) $ (109,190)

The amortized cost and estimated fair value of securities by contractual maturity are shown below. Expected maturities may diff er from contractual maturities because issuers may have the right to call or prepay certain obligations without call or prepayment penalties.

18


September 30, 2014

Amortized Cost Fair Value

Within 1 year $ 4,068,827 $ 4,134,191

1 to 5 years 13,558,207 13,641,779

5 to 10 years 3,194,689 3,172,474

After 10 years 2,997,847 2,752,310

Subtotal 23,819,570 23,700,754

Mortgage-backed securities 31,166,764 30,765,916

Total $ 54,986,334 $ 54,466,670

Mortgage-backed securities classifi ed as available-for-sale represent participation interest in pools of residential mortgage loans which are guaranteed by the U.S. Government, its agencies or instrumentalities. However, the guarantee of these types of securities relates to the principal and interest payments, and not to the market value of such securities. In addition, the guarantee only relates to the mortgage-backed securities held by the fund and not to the purchase of shares of the fund.

Mortgage-backed securities are issued by lenders, such as mortgage bankers, commercial banks, and savings and loan associations. Such securities diff er from conventional debt securities, which provide for the periodic payment of interest in fi xed amounts (usually semiannually) with principal payments at maturity or on specifi c dates. Mortgage-backed securities provide periodic payments which are, in eff ect, a “pass-through” of the interest and principal payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans. A mortgage-backed security will mature when all the mortgages in the pool mature or are prepaid. Mortgage-backed securities do not have a fi xed maturity and their expected maturities may vary when interest rates rise or fall.

Mobile DepositA feature of SAFE Mobile, Mobile Deposit gives sending a check for deposit a whole new meaning. It is as simple as point–click–deposit! JMAFCU’s newest mobile app feature, Mobile Deposit, is available for members who have downloaded our mobile banking app. Mobile Deposit is secure, easy to use and convenient.

• Deposit checks directly into your account using your Apple® or Android™ device.

• Receive confi rmation on your device that JMAFCU received your deposit.

• Save time with fewer trips to the ATM or your JMAFCU branch offi ce.


HELD-TO-MATURITYInvestments classified as held-to-maturity securities consist of the following:

September 30, 2014

Amortized Cost

Gross Unrealized

Gains

Gross Unrealized

Losses Fair Value

Federal agency mortgage-backed securities $ 74,348 $ 3,775 $ - $ 78,123

Certificates of Deposit 496,000 - - 496,000

Total $ 570,348 $ 3,775 $ - $ 574,123

September 30, 2013

Amortized Cost

Gross Unrealized

Gains

Gross Unrealized

Losses Fair Value

Federal agency mortgage-backed securities $ 95,750 $ 6,628 $ - $ 102,378

Certificates of Deposit 496,000 - - 496,000

Total $ 591,750 $ 6,628 $ - $ 598,378

There were no debt securities with unrealized losses as of September 30, 2014 and 2013.

The amortized cost and estimated fair value of securities by contractual maturity are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay certain obligations without call or prepayment penalties.

September 30, 2014

Amortized Cost Fair Value

1 to 5 years $ 496,000 $ 496,000

Mortgage-backed securities 74,348 78,123

Total $ 570,348 $ 574,123

Mortgage-backed securities classified as held-to-maturity represent participation interest in pools of residential mortgage loans which are guaranteed by the U.S. Government, its agencies or instrumentalities. However, the guarantee of these types of securities relates to the principal and interest payments, and not to the market value of such securities. In addition, the guarantee only relates to the mortgage-backed securities held by the fund and not to the purchase of shares of the fund.

Mortgage-backed securities are issued by lenders, such as mortgage bankers, commercial banks, and savings and loan associations. Such securities differ from conventional debt securities, which provide for the periodic payment of interest in fixed amounts (usually semiannually) with principal payments at maturity or on specific dates. Mortgage-backed securities provide periodic payments which are, in effect, a “pass-through” of the interest and principal payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans. A mortgage-backed security will mature when all the mortgages in the pool mature or are prepaid. Mortgage-backed securities do not have a fixed maturity and their expected maturities may vary when interest rates rise or fall.

20


OTHER INVESTMENTSOther investments consist of the following:

September 30,

2014 2013

Federal funds sold $ 4,321,254 $ 9,272,083

Other deposits at corporate credit unions 2,553,022 71,427

Perpetual capital at corporate credit unions 83,570 83,570

CUSO 56,210 56,210

Total $ 7,014,056 $ 9,483,290

As a requirement of membership, the Credit Union is required to maintain perpetual contributed capital share account at Corporate One Federal Credit Union. Perpetual contributed capital is not subject to share insurance covered by the National Credit Union Share Insurance Fund or any other deposit insurer. The perpetual contributed capital is redeemable only at the option of Corporate One Federal Credit Union provided regulatory approval is obtained. Perpetual contributed capital cannot be pledged against borrowings, has no scheduled maturity, and off ers noncumulative dividends.

SAFE TxtIs text messaging your communication method of choice? Now you can let your fi ngers do the talking to your credit union! JMAFCU’s SAFE TXT allows SAFE IB users to view account balances, access transaction history and transfer funds via text message (SMS).

To participate in this program, you must fi rst log in to SAFE IB at www.jmafcu.org. Through SAFE IB, select Online Services-SAFE TXT and follow the instructions for registering your cell phone.

21


NOTE 3: LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

LOANS RECEIVABLELoans receivable consist of the following:

September 30,

2014 2013

Residential fi rst mortgage real estate $ 4,628,654 $ 4,372,868

Residential second mortgage real estate 2,019,399 2,049,808

Consumer secured 15,567,179 12,930,344

Consumer unsecured 12,998,169 12,068,407

$ 35,213,401 $ 31,421,427

Allowance for loan losses (562,657) (796,933)

Loans Receivable, Net $ 34,650,744 $ 30,624,494

ALLOWANCE FOR LOAN LOSSES ACCOUNTThe following summarizes the activity in the allowance for loan losses account:

For the year ending September 30, 2014

ResidentialReal Estate Consumer Total

Allowance for Loan Losses:

Beginning balance $ 503,257 $ 293,676 $ 796,933

Provision for loan losses - - -

Recoveries on previous loan losses 8,000 71,250 79,250

Loans receivable charged off (26,626) (286,900) (313,526)

Ending Balance $ 484,631 $ 78,026 $ 562,657

Individually evaluated for impairment $ 90,216 $ 58,767 $ 148,983

Collectively evaluated for impairment 394,415 19,259 413,674

Total Allowance for Loan Losses $ 484,631 $ 78,026 $ 562,657

Loans receivables:


Collectively evaluated for impairment 6,465,435 28,450,812 34,916,247

Total Loans Receivables $ 6,648,053 $ 28,565,348 $ 35,213,401

22



ResidentialReal Estate Consumer Total

Allowance for Loan Losses:

Beginning balance $ 620,115 $ 532,323 $ 1,182,438

Provision for loan losses (109,324) (25,003) (134,327)

Recoveries 7,505 77,099 84,604

Loans receivable charged off (15,039) (320,743) (335,782)

Ending Balance $ 503,257 $ 293,676 $ 796,933


Collectively evaluated for impairment 343,735 190,490 534,225

Total Allowance for Loan Losses $ 503,257 $ 293,676 $ 796,933

Loans receivables:


Collectively evaluated for impairment 6,228,457 24,683,066 30,911,523

Total Loans Receivables $ 6,422,676 $ 24,998,751 $ 31,421,427

23


IMPAIRED LOANS

The Credit Union considers a loan to be impaired when, based on current information and events, it is determined the collection of all amounts due according to the loan contract, including scheduled interest payments, is unlikely. Determination of impairment is treated the same across all classes of loans. When a loan is identifi ed as impaired, impairment is measured based on the present value of expected future cash fl ows, discounted at the loan’s eff ective interest rate, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, impairment is based on the current fair value of the collateral, less estimated selling costs when foreclosure is probable, instead of discounted cash fl ows. If the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-off s, deferred loan fees or costs and unamortized premium or discount), an impairment is recognized through an allowance estimate or a charge-off to the allowance for loan losses account.

The following table includes the unpaid principal balances for impaired fi nancing receivables with the associated allowance amount, if applicable. Allowance reserves have been determined based on the present value of expected future cash fl ows, discounted at the loan’s eff ective interest rate, except when the remaining source of repayment for the loan is the operation or liquidation of the collateral. In those cases, the current fair value of the collateral less selling costs was used to determine the specifi c allowance recorded. Also presented is the average ending principal balance of the impaired loans and the related allowance recognized during the time the loans were impaired.

As of September 30, 2014

Unpaid PrincipalBalance

Related Allowance

AverageEnding

PrincipalBalance

With a Related Allowance Recorded:

Residential fi rst mortgage real estate $ - $ - $ -

Residential second mortgage real estate 182,618 90,216 182,618

Consumer secured 63,124 30,547 5,739

Consumer unsecured 51,412 28,220 3,213

With No Related Allowance Recorded:


Residential second mortgage real estate - - -

Consumer secured 23,558 - 7,853

Consumer unsecured - - -

Total:

Residential real estate $ 182,618 $ 90,216 $ 182,618

Consumer $ 138,094 $ 58,767 $ 16,805

24



Unpaid PrincipalBalance

Related Allowance

AverageEnding

PrincipalBalance

With a Related Allowance Recorded:


Residential second mortgage real estate 194,219 159,522 244,612

Consumer secured 188,386 14,320 247,174

Consumer unsecured 127,299 88,866 119,440

With No Related Allowance Recorded:


Residential second mortgage real estate - - -

Consumer secured 147,097 - 73,543

Consumer unsecured - - -

Total:

Residential real estate $ 194,219 $ 159,522 $ 244,612

Consumer $ 462,782 $ 103,186 $ 440,163

PAST DUE LOANS BY CLASS

The following tables present the aging of the recorded investment in past due loans by class of loans. Also includedare loans that are 90 days or more past due by loan class.


Current60-89 Days

Past DueLoans Past Due

90 Days or > Total

Residential fi rst mortgage real estate $ 4,628,654 $ - $ - $ 4,628,654

Residential second mortgage real estate 2,008,719 10,680 - 2,019,399

Consumer secured 15,470,579 68,529 28,071 15,567,179

Consumer unsecured 12,963,881 25,139 9,149 12,998,169

Total $ 35,071,833 $ 104,348 $ 37,220 $ 35,213,401

25



Current60-89 Days

Past DueLoans Past Due

90 Days or > Total

Residential fi rst mortgage real estate $ 4,372,868 $ - $ - $ 4,372,868

Residential second mortgage real estate 1,827,527 195,655 26,626 2,049,808

Consumer secured 12,839,844 39,774 50,726 12,930,344

Consumer unsecured 11,948,460 81,449 38,498 12,068,407

Total $ 30,988,699 $ 316,878 $ 115,850 $ 31,421,427

The accrual of interest income on loans is discontinued at the time the loan is ninety days past due or when the collection of interest or principal becomes uncertain, unless the credit is well secured and in the process of collection. Loans on which the accrual of interest has been discontinued or reduced approximated $37,000 and $116,000 as of September 30, 2014 and 2013, respectively. There were no loans 90 days or more past due and still accruing interest as of September 30, 2014 or 2013.

Loans are assessed for credit quality based on the contractual aging status of the loan and payment activity. Such assessment is completed at the end of each reporting period.

The following is a summary of loans based on credit quality:


Performing Nonperforming Total

Residential fi rst mortgage real estate $ 4,628,654 $ - $ 4,628,654

Residential second mortgage real estate 2,019,399 - 2,019,399

Consumer secured 15,539,108 28,071 15,567,179

Consumer unsecured 12,989,020 9,149 12,998,169

Total $ 35,176,181 $ 37,220 $ 35,213,401


Performing Nonperforming Total

Residential fi rst mortgage real estate $ 4,372,868 $ - $ 4,372,868

Residential second mortgage real estate 2,023,182 26,626 2,049,808

Consumer secured 12,879,618 50,726 12,930,344

Consumer unsecured 12,029,909 38,498 12,068,407

Total $ 31,305,577 $ 115,850 $ 31,421,427

26


Internally Assigned Loan Grades Are Defi ned as Follows:Performing – A performing loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary.

Nonperforming – A loan classifi ed as nonperforming is considered potentially uncollectible with a likelihood of charge-off . This classifi cation does not mean that the loan has absolutely no recovery or salvage value, but rather it means that charge-off is likely in the near future.

TROUBLED DEBT RESTRUCTURINGS (TDR)

The following is a summary of information pertaining to troubled debt restructurings that occurred during the audit period:


# of Loans

Pre-Modifi cation Outstanding Recorded

Investment

Post-Modifi cation Outstanding Recorded

Investment

Troubled Debt Restructurings:

Residential real estate 0 $ - $ -

Consumer 0 $ - $ -


# of Loans Balance

Troubled Debt Restructurings that Subsequently Defaulted:

Residential real estate 0 $ -

Consumer 0 $ -

27



# of Loans

Pre-Modifi cation Outstanding Recorded

Investment

Post-Modifi cation Outstanding Recorded

Investment

Troubled Debt Restructurings:

Residential real estate 0 $ - $ -

Consumer 2 $ 12,626 $ 11,752


# of Loans Balance

Troubled Debt Restructurings that Subsequently Defaulted:

Residential real estate 0 $ -

Consumer 0 $ -

Commercial 1 $ 34,463

NOTE 4: PREMISES AND EQUIPMENT

Premises and equipment consist of the following:

September 30,

2014 2013

Furniture and equipment $ 378,421 $ 378,421

Leasehold improvements 10,449 10,449

388,870 388,870

Less accumulated depreciation and amortization (373,374) (355,338)

Premises and equipment, net $ 15,496 $ 33,532

28


NOTE 5: MEMBERS’ SHARE AND SAVINGS ACCOUNTS

Members’ share and savings accounts consist of the following:

September 30,

2014 2013

Share draft accounts $ 13,311,510 $ 12,323,632

Money market accounts 44,002,785 41,693,009

Share accounts 17,469,277 16,326,612

Certifi cate accounts 10,598,966 11,270,634

Total $ 85,382,568 $ 81,613,887

The aggregate amount of certifi cate accounts in denominations of $100,000 or more were approximately $3,590,000 and $3,442,000 as of September 30, 2014 and 2013, respectively.

As of September 30, 2014, scheduled maturities of certifi cate accounts are as follows:

Year ending September 30,Amount

2015 $ 5,393,086

2016 1,722,968

2017 1,011,824

2018 935,650

2019 1,535,468

Total $ 10,598,966

The National Credit Union Share Insurance Fund insures members’ shares up to $250,000. This includes all account types, such as savings, checking, money market, and certifi cates of deposit. Individual Retirement Account coverage is an additional $250,000.

29


NOTE 6: EMPLOYEE BENEFITS

Employees of the Credit Union are participants in the JM Family Enterprises, Inc. pension plans. The plans include a contributory defi ned contribution pension plan, a non-contributory defi ned benefi t pension plan, and a noncontributory profi t sharing plan. It is not possible to determine the net pension expense for the Credit Union for the years ended September 30, 2014 and 2013 or to present separately the actuarial present value of benefi t obligations or the net assets available for benefi ts of the Credit Union because no determination has been made of the allocation of such amounts between JM Family Enterprises, Inc. and the Credit Union.

The Credit Union participates in the JM Family Enterprises, Inc. defi ned benefi t post-retirement medical plan. The plan covers all full-time status employees who elect coverage and satisfy the plan’s eligibility requirements when they retire. It is not possible to determine the net periodic post-retirement benefi t cost attributable to the Credit Union for the years ended September 30, 2014 and 2013, nor is it possible to present separately the actuarial accumulated post-retirement benefi t obligation for the Credit Union because no determination has been made of the allocation of such amounts between JM Family Enterprises, Inc. and the Credit Union.

NOTE 7: COMMITMENTS AND CONTINGENT LIABILITIES

During the prior audit period, the Credit Union closed its unused line of credit with Corporate America Credit Union and Corporate One Federal Credit Union. The Credit Union does not have an unused line of credit as of September 30, 2014.

Legal ContingenciesThe Credit Union is a party to various miscellaneous legal actions normally associated with fi nancial institutions, the aggregate of which, in Management’s opinion, would not be material to the Credit Union’s fi nancial condition.

Off -Balance-Sheet RiskThe Credit Union is a party to conditional commitments to lend funds in the normal course of business to meet the fi nancing needs of its members. These commitments represent fi nancial instruments to extend credit, which include lines of credit, credit cards and home equity lines that involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the fi nancial statements.

The Credit Union’s exposure to credit loss is represented by the contractual notional amount of these instruments. The Credit Union uses the same credit policies in making commitments as it does for loans recorded in the fi nancial statements.

Unfunded loan commitments under lines of credit are summarized as follows:

September 30,

2014 2013

Credit card $ 10,013,479 $ 8,497,131

Unsecured line of credit (PLOC) 1,515,167 1,301,388

Home equity 813,485 229,290

Share draft line of credit 96,680 98,614

Total $ 12,438,811 $ 10,126,423

30


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 fi xed 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 creditworthiness 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 lines of credit and revolving credit lines are commitments for possible future extensions of credit to existing members. These lines of credit are uncollateralized, with the exception of home equity loans, and usually do not contain a specifi ed maturity date and ultimately may not be drawn upon to the total extent to which the Credit Union is committed.

Concentrations of Credit RiskA signifi cant amount of the Credit Union’s business activity is with its members who are employees or former employees of JM Family Enterprises. The Credit Union may be exposed to credit risk from a regional economic standpoint, since a signifi cant concentration of its borrowers work or reside in the state of Florida. However, the loan portfolio is well diversifi ed and the Credit Union does not have any signifi cant concentrations of credit risk except unsecured loans, which by their nature increase the risk of loss compared to those loans that are collateralized. The Credit Union’s policy for repossessing collateral is that when all other collection eff orts have been exhausted, the Credit Union enforces its fi rst lien holder status and repossesses the collateral. The Credit Union has full and complete access to repossessed collateral. Repossessed collateral normally consists of vehicles and residential real estate.

Online Loan ApplicationDid you know you can apply for any JMAFCU loan using our online loan application? That’s right, apply any time of the day or night, 24 hours a day. Visit us online at www.jmafcu.org and click Apply For a Loan!

31


NOTE 8: CAPITAL REQUIREMENTS

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 eff ect on the Credit Union’s fi nancial statements. Under capital adequacy regulations and the regulatory framework for prompt corrective action, the Credit Union must meet specifi c capital regulations that involve quantitative measures of the Credit Union’s assets, liabilities and certain off -balance-sheet items as calculated under generally accepted accounting practices. The Credit Union’s capital amounts and net worth classifi cation are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

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. Furthermore, credit unions over $10,000,000 in assets are also required to determine if they meet the defi nition of a “complex” credit union as defi ned by regulation. The minimum risk-based net worth ratio to be considered complex under the regulatory framework is 6.00%. If the Credit Union falls under the “complex” category, an additional Risk-Based Net Worth (RBNW) requirement may be imposed that could result in capital requirements in excess of minimum levels established for non-complex credit unions.

Key aspects of the Credit Union’s minimum capital amounts and ratios are summarized as follows:

Risk Based Net Worth Ratio

September 30, 2014 September 30, 2013

Risk Based Net Worth Ratio 5.95% 7.16%

Credit Union Considered Complex? No Yes

General Capital Requirements

September 30, 2014 September 30, 2013

AmountRequirement/

Ratio AmountRequirement/

Ratio

Amount needed to be classifi ed as “well capitalized” $ 6,972,381 7.00% $ 6,670,124 7.00%

Regulatory Net Worth $ 13,295,366 13.35% $ 11,859,053 12.45%

32


NOTE 9: RELATED PARTY TRANSACTIONS

In the normal course of business, the Credit Union extends credit to Directors, Supervisory Committee members and executive offi cers. The aggregate loans to related parties as of September 30, 2014 and 2013, were approximately $1,092,000 and $1,119,000, respectively. Shares from related parties as of September 30, 2014 and 2013, amounted to approximately $2,444,000 and $3,064,000, respectively.

NOTE 10: FAIR VALUE MEASUREMENTS

Recurring BasisThe Credit Union uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. For additional information on how the Credit Union measures fair value, refer to Note 1 –Signifi cant Accounting Policies.

Available-for-Sale Securities: Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments, or on discounted cash fl ow models based on the expected payment characteristics of the underlying instruments.

The following tables present the balances of the assets and liabilities measured at fair value on a recurring basis:

September 30, 2014

Total Level 1 Level 2 Level 3

Available-for-sale investments $ 54,466,670 $ 54,466,670 $ - $ -

September 30, 2013


Available-for-sale investments $ 52,389,268 $ 52,389,268 $ - $ -

Nonrecurring BasisCertain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as if there is evidence of impairment or a change in the amount of previously recognized impairment.

33


Assets Acquired in Liquidation: Fair value is measured based on the appraised value of the collateral. Collateral may be real estate, vehicles and/or business assets including equipment, inventory and/or accounts receivable and is determined based on appraisals by qualifi ed licensed appraisers hired by the Credit Union. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the member and member’s business.

September 30, 2014


Assets acquired in liquidation $ 54,000 $ - $ 54,000 $ -

September 30, 2013


Assets acquired in liquidation $ 54,000 $ - $ 54,000 $ -

Bauer Financial RatingJMAFCU received a 5-Star rating from Bauer Financial, the nation’s leading independent bank and credit union rating and research fi rm.

JMAFCU’s latest 5-Star rating is based on September 30, 2014, fi nancial data and signifi es that we are one of the strongest credit unions in the nation. JMAFCU has earned and maintained this top 5-Star rating for 21 consecutive quarters.

34

35

36

Supervisory Committee’s ReportApril 24, 2015

Dear Member,Your Supervisory Committee is pleased to provide the following report to you.

Our independent auditing fi rm, Nearman, Maynard, & Vallez (Nearman), Certifi ed Public Accountants, performed the annual audit of JM Associates Federal Credit Union (JMAFCU). The audit for the 12-month period ending September 30, 2014, is complete and resulted in an unqualifi ed opinion. The auditor’s report is included in the Annual Report booklet and consists of the auditor’s opinion letter and the fi nancial statements with corresponding auditor notes.

Mandatory internal audits conducted by the CPA fi rm during 2014 addressed the following areas of federal compliance: the Bank Secrecy Act (BSA), Offi ce of Foreign Assets Control (OFAC), Customer Identifi cation Program (CIP), Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act, FACT Act, Identity Theft Red Flag Procedures, and Automated Clearing House (ACH) transactions. There were no signifi cant fi ndings from these audits.

Internal audits addressed areas of credit union operations including loan fi le maintenance activity and procedures; reviews of Consumer Financial Protection Board (CFPB) compliance, general ledger reconciliation, and vendor management. Additional independent audits/assessments included website compliance, IT external vulnerability assessment and a risk management analysis. There were no signifi cant fi ndings resulting from these audits and/or reviews. JMAFCU management has evaluated auditor recommendations for changes to policies and procedures and implemented the recommendations where feasible.

Members of the Supervisory Committee conducted regular closed account surveys, random cash counts, and other reviews of Credit Union procedures and activities with no signifi cant fi ndings.

The National Credit Union Administration (NCUA), the regulatory body charged with overseeing federal credit unions, examines the credit union on a regular basis. Our last examination took place in May 2014 and resulted in a favorable report.

The Supervisory Committee believes that all audits and examinations, with their related reports, have shown that the fi nancial statements present a fair and reliable report of the fi nancial condition of JMAFCU.

Respectfully submitted,

Vicki McCombChairman, Supervisory Committee

Vicki McComb

37

Board of Directors

Jerry CookSecretary

Art MirandiChairman

Cindy GriecoVice Chairman

Maryann SilerDirector

Carolyn WeedenDirector

Ralph O’DayDirector

Larry Jaff eDirector

Andrew MobayedDirector

Marty OsborneTreasurer

38

Important Information

Questions? Email us: [email protected]. *Note: Do not include any sensitive information.

Main Offi ce Deerfi eld Beach Branch

8019 Bayberry RoadJacksonville, Florida 32256

800-581-2256 or 904-443-6767Open 8:30 a.m. – 4:30 p.m. EST

Monday – FridayKaren Pustay, VP of Operations

111 Jim Moran BoulevardDeerfi eld Beach, Florida 33442

954-429-2451Open 9:00 a.m. – 4:30 p.m. EST

Monday – FridayMona Aliseo, Branch Manager

Mobile Branch Southeast Toyota Port Processing

6150 Omni Park DriveMobile, Alabama 36609

251-639-7700Open 7:30 a.m. – 4:00 p.m. CST

Monday – FridayGwen Johnson, Branch Manager

1751 Talleyrand Avenue Jacksonville, FL 32206

904-358-4424Open 8:00 a.m. – 4:30 p.m. EST Monday / Wednesday / FridayAlly Rice, Branch Supervisor

Southeast Toyota Westlake Facility St. Louis Branch

9985 Pritchard Road Jacksonville, FL 32219

904-378-4623Open 8:00 a.m. – 4:30 p.m. EST

Tuesday / ThursdayAlly Rice, Branch Supervisor

3120 Rider Trail SouthEarth City, MO 63045

314-702-4305Open 8:30 a.m. – 4:30 p.m. CST

Monday – FridayDeeDee Manson, Branch Supervisor

JM Associates Federal Credit Union Routing Number

263089800

8019 Bayberry Road Jacksonville, FL 32256

www.jmafcu.org

Documents

Technology. Service. Commitment. Annual Report Final.pdf · Staff recognition – JMAFCU staff received eight Award of Excellence nominations. Ally Rice, JMAFCU Branch Supervisor,