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  • SAFE FEDERAL CREDIT UNION

    FINANCIAL STATEMENTS

    DECEMBER 31, 2018 AND 2017 (With Independent Auditor’s Report Thereon)

  • SAFE FEDERAL CREDIT UNION

    TABLE OF CONTENTS

    Page

    INDEPENDENT AUDITOR’S REPORT .............................................................................................. 1

    FINANCIAL STATEMENTS

    Statements of Financial Condition ....................................................................................................... 3

    Statements of Income ........................................................................................................................... 4

    Statements of Comprehensive Income ................................................................................................. 5

    Statements of Members’ Equity ........................................................................................................... 6

    Statements of Cash Flows .................................................................................................................... 7

    Notes to the Financial Statements ........................................................................................................ 9

  • 12060 S.W. 129th Court, Ste. 201 Miami, Florida 33186-4582

    305.232.8272 doeren.com

    Insight. Oversight. Foresight.®

    Known Internationally as Moore Stephens Doeren Mayhew, P.C. An Independent Firm Associated With Moore Stephens International Limited.

    Independent Auditor’s Report

    February 4, 2019

    To the Supervisory Committee and Board of Directors of SAFE Federal Credit Union

    Report on the Financial Statements

    We have audited the accompanying financial statements of SAFE Federal Credit Union, which comprise the statements of financial condition as of December 31, 2018 and 2017, and the related statements of income, comprehensive income, members’ equity and cash flows for the years then ended, and the related notes to the financial statements.

    Management’s Responsibility for the Financial Statements

    Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

    Auditor’s Responsibility

    Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

    An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

    We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

  • DoerenMayhew To the Supervisory Committee and Board of Directors of SAFE Federal Credit Union Page 2

    Opinion

    In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SAFE Federal Credit Union as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.

    Doeren Mayhew

    Doeren Mayhew Miami, FL

  • SAFE FEDERAL CREDIT UNION

    STATEMENTS OF FINANCIAL CONDITION AS OF DECEMBER 31, 2018 AND 2017

    Assets 2018 2017

    Cash and cash equivalents $102,152,724 $83,881,403 Interest bearing deposits 10,102,050 27,511,105 Available-for-sale investments 86,662,984 175,144,723 Loans to members, net of allowance for loan losses 821,999,273 710,700,272 FHLB stock 1,007,100 982,500 Accrued interest receivable 2,307,307 2,380,835 Prepaid and other assets 3,005,298 2,649,300 Property and equipment 16,587,291 16,962,380 NCUSIF deposit 9,038,306 8,912,457

    Total assets $1,052,862,333 $1,029,124,975

    Liabilities and Members' Equity

    Liabilities: Members' shares and savings accounts $915,570,011 $906,413,430 Accrued expenses and other liabilities 16,271,209 13,481,335

    Total liabilities 931,841,220 919,894,765

    Commitments and contingent liabilities

    Members' equity: Regular reserve 9,361,293 9,361,293 Undivided earnings 112,596,553 101,166,122 Accumulated other comprehensive loss (936,733) (1,297,205)

    Total members' equity 121,021,113 109,230,210

    Total liabilities and members' equity $1,052,862,333 $1,029,124,975

    See accompanying notes to the financial statements.

    - 3 -

  • SAFE FEDERAL CREDIT UNION

    STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2018 AND 2017

    2018 2017 Interest income: Loans to members $29,822,858 $26,305,796 Investments and interest bearing deposits 3,163,573 3,541,633

    Total interest income 32,986,431 29,847,429

    Interest expense: Total interest expense 4,271,680 3,997,690

    Net interest income 28,714,751 25,849,739

    Provision for loan losses 3,833,504 3,178,981

    Net interest income after provision for loan losses 24,881,247 22,670,758

    Non-interest income: Overdraft privilege fees 9,075,659 7,956,507 Interchange income 6,401,054 5,931,939 Other fees and service charges 3,695,593 3,193,748 Other income 2,721,530 2,353,496 Gain on sale of Mastercard stock 1,580,231 —

    Total non-interest income 23,474,067 19,435,690

    Non-interest expenses: Compensation and benefits 18,120,704 17,874,018 Professional and outside 4,813,983 4,518,701 Office operations 4,633,699 4,913,418 Loan servicing 3,356,942 2,580,220 Other expense 2,641,755 2,056,770 Office occupancy 2,135,374 2,087,650 Advertising costs 1,222,426 1,412,581

    Total non-interest expenses 36,924,883 35,443,358

    Net income $11,430,431 $6,663,090

    See accompanying notes to the financial statements.

    - 4 -

  • SAFE FEDERAL CREDIT UNION

    STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2018 AND 2017

    2018 2017

    Net income $11,430,431 $6,663,090

    Other comprehensive income/(loss):

    Net unrealized holding gains/(losses) on available-for-sale investments 360,472 (50,120)

    Other comprehensive income/(loss) 360,472 (50,120)

    Comprehensive income $11,790,903 $6,612,970

    See accompanying notes to the financial statements.

    - 5 -

  • SAFE FEDERAL CREDIT UNION

    STATEMENTS OF MEMBERS' EQUITY YEARS ENDED DECEMBER 31, 2018 AND 2017

    Accumulated Other

    Regular Undivided Comprehensive Reserve Earnings Income/(Loss) Total

    Balance, December 31, 2016 $9,361,293 $94,503,032 ($1,247,085) $102,617,240

    Net income — 6,663,090 — 6,663,090 Other comprehensive loss — — (50,120) (50,120)

    Balance, December 31, 2017 9,361,293 101,166,122 (1,297,205) 109,230,210

    Net income — 11,430,431 — 11,430,431 Other comprehensive income — — 360,472 360,472

    Balance, December 31, 2018 $9,361,293 $112,596,553 ($936,733) $121,021,113

    See accompanying notes to the financial statements.

    - 6 -

  • SAFE FEDERAL CREDIT UNION

    STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2018 AND 2017

    2018 2017 Cash flows from operating activities:

    Net income $11,430,431 $6,663,090

    Adjustments to reconcile net income to cash flows provided from operating activities: Provision for loan losses 3,833,504 3,178,981 Depreciation and amortization 1,790,132 2,134,019

    (Increase) decrease in: Prepaid and other assets (355,998) 738,004 Accrued interest receivable 73,528 (671,819)

    Increase in: Accrued expenses and other liabilities 2,789,874 1,217,511

    Total adjustments 8,131,040 6,596,696

    Net cash provided from operating activities 19,561,471 13,259,786

    See accompanying notes to the financial statements.

    - 7 -

  • SAFE FEDERAL CREDIT UNION

    STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2018 AND 2017

    Cash Flows (Continued)

    2018 2017 Cash flows from investing activities: Net change in loans to members (115,132,505) (101,364,791) Purchase of interest bearing deposits — (6,224,000) Proceeds from the maturity of int

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