The NAFCU Journal July - August 2017 - 47

E. SUPPORTING SERVICES
The major components of the Organization's consolidated supporting
service expenses consist of the following for the years ended
December 31,:
Employee compensation and benefits
Building operations
Depreciation
Professional services
Other

2016

2015

$9,401,132
762,663
162,297
430,925
1,599,795
$12,356,812

$8,650,352
865,433
159,247
375,781
1,587,671
$11,638,484

F. RETIREMENT PLANS
Deferred compensation plans: The Organization has established

nonqualified deferred compensation plans under the Internal Revenue
Code for certain eligible executives. The total liability accrued for
the deferred compensation plans was $549,600 and $430,864 as of
December 31, 2016 and 2015, respectively.
Defined contribution plan: The Organization maintains a defined

contribution retirement plan covering substantially all full-time
employees who meet certain age and length of service requirements.
Employees are fully vested on attaining five years of service.
Retirement plan expenses charged to operating expenses in 2016 and
2015 were $539,984 and $463,352 respectively.
G. COMMITMENTS AND CONTINGENCIES
The Organization leases a portion of its headquarters building under
operating leases which expire through 2021. The approximate future
minimum payments to be received under the operating leases are as
follows for the year ending December 31,:
2017
2018
2019
2020
2021

165,000
91,000
96,000
102,000
107,000
$561,000

H. INCOME TAXES
NSC accrues a liability for certain compensation expenses that are
not deductible for income tax purposes until the obligations are paid
in cash. As a result, these compensation accruals create a deferred
tax asset. The total deferred tax asset related to anticipated future
compensation expense deductions equaled $8,583 and $4,000 as of
December 31, 2016 and 2015, respectively.
As of December 31, 2016, NSC has accumulated operating losses of
approximately $70,000 which may be carried forward to offset taxable
income through the year 2036. An estimated deferred tax asset of $13,910
and $7,400 has been recorded at December 31, 2016 and 2015, respectively,
to account for the potential future benefit of these operating losses.
NSC has unused charitable contribution deductions that may be
used to offset future income tax liabilities through the year 2019.
As of December 31, 2016, total unused charitable contributions
approximated $2,000. Due to uncertainty regarding NSC's future
ability to utilize these deductions, a valuation allowance has been
recorded to completely offset any related deferred tax asset.
I. FAIR VALUE MEASUREMENTS
The Organization has implemented the accounting standards topic
regarding fair value measurements. This standard establishes a
framework for measuring fair value in accordance with generally
accepted accounting principles and expands disclosures about fair
value measurements. This standard uses the following prioritized
input levels to measure fair value. The input levels used for valuing
investments are not necessarily an indication of risk.
Level 1 - Observable inputs that reflect quoted prices for identical
assets or liabilities in active markets such as stock quotes;
Level 2 - Includes inputs other than level 1 inputs that are directly or
indirectly observable in the marketplace such as yield curves or other
market data; and
Level 3 - Unobservable inputs which reflect the reporting entity's
assessment of the assumptions that market participants would use in
pricing the asset or liability including assumptions about risk such as
bid/ask spreads and liquidity discounts.

I. FAIR VALUE MEASUREMENTS (CONTINUED)
The Organization's investments and deferred compensation investments were measured at fair value on a recurring basis using the following
input levels at December 31,:
2016
Equity mutual funds & EFT's
Fixed income mutual funds & EFT's
Certificates of deposit
Deferred compensation investments (mutual funds)
Investments Carried at Fair Value
Money Market funds*

Fair Value
$1,368,827
5,192,592
1,500,000
416,989
8,478,408
7,110,232
$15,588,640

(Level 1)
$1,368,827
5,192,592
416,989
$6,978,408

(Level 2)
$1,500,000
$1,500,000

(Level 3)
$$-

2015
Equity mutual funds & EFT's
Fixed income mutual funds & EFT's
Certificates of deposit
Deferred compensation investments (mutual funds)
Investments Carried at Fair Value
Money Market funds*

Fair Value
$2,021,481
3,740,566
1,459,000
316,434
7,537,481
5,924,114
$13,461,595

(Level 1)
$2,021,481
3,740,566
316,434
$6,078,481

(Level 2)
$1,459,000
$1,459,000

(Level 3)
$$-

*Cash included in the investment portfolio is not subject to the provisions of fair value measurements as it is recorded at cost.
The Organization's investments in certificates of deposit are carried at each instrument's face value. Management has concluded that face value
approximates the fair value of these instruments.

THE NAFCU JOURNAL  JULY-AUGUST 2017

11

47



Table of Contents for the Digital Edition of The NAFCU Journal July - August 2017

Our First 50 Years
Events Calendar
From the Chair
Inside NAFCU
The Digital Download
How Secure Is Your Credit Union?
The Bank Secrecy Act
2017 Annual NAFCU Award Winners
2016 NAFCU Annual Report
Getting to Know …
Management Insight
Compliance Central
Inside NAFCU Services
From the President’s Desk
The NAFCU Journal July - August 2017 - Cover1
The NAFCU Journal July - August 2017 - Cover2
The NAFCU Journal July - August 2017 - 1
The NAFCU Journal July - August 2017 - Our First 50 Years
The NAFCU Journal July - August 2017 - Events Calendar
The NAFCU Journal July - August 2017 - From the Chair
The NAFCU Journal July - August 2017 - 5
The NAFCU Journal July - August 2017 - Inside NAFCU
The NAFCU Journal July - August 2017 - 7
The NAFCU Journal July - August 2017 - 8
The NAFCU Journal July - August 2017 - 9
The NAFCU Journal July - August 2017 - 10
The NAFCU Journal July - August 2017 - 11
The NAFCU Journal July - August 2017 - 12
The NAFCU Journal July - August 2017 - 13
The NAFCU Journal July - August 2017 - The Digital Download
The NAFCU Journal July - August 2017 - 15
The NAFCU Journal July - August 2017 - How Secure Is Your Credit Union?
The NAFCU Journal July - August 2017 - 17
The NAFCU Journal July - August 2017 - 18
The NAFCU Journal July - August 2017 - 19
The NAFCU Journal July - August 2017 - 20
The NAFCU Journal July - August 2017 - 21
The NAFCU Journal July - August 2017 - The Bank Secrecy Act
The NAFCU Journal July - August 2017 - 23
The NAFCU Journal July - August 2017 - 24
The NAFCU Journal July - August 2017 - 25
The NAFCU Journal July - August 2017 - 26
The NAFCU Journal July - August 2017 - 27
The NAFCU Journal July - August 2017 - 28
The NAFCU Journal July - August 2017 - 29
The NAFCU Journal July - August 2017 - 2017 Annual NAFCU Award Winners
The NAFCU Journal July - August 2017 - 31
The NAFCU Journal July - August 2017 - 32
The NAFCU Journal July - August 2017 - 33
The NAFCU Journal July - August 2017 - 34
The NAFCU Journal July - August 2017 - 35
The NAFCU Journal July - August 2017 - 36
The NAFCU Journal July - August 2017 - 2016 NAFCU Annual Report
The NAFCU Journal July - August 2017 - 38
The NAFCU Journal July - August 2017 - 39
The NAFCU Journal July - August 2017 - 40
The NAFCU Journal July - August 2017 - 41
The NAFCU Journal July - August 2017 - 42
The NAFCU Journal July - August 2017 - 43
The NAFCU Journal July - August 2017 - 44
The NAFCU Journal July - August 2017 - 45
The NAFCU Journal July - August 2017 - 46
The NAFCU Journal July - August 2017 - 47
The NAFCU Journal July - August 2017 - Getting to Know …
The NAFCU Journal July - August 2017 - 49
The NAFCU Journal July - August 2017 - Management Insight
The NAFCU Journal July - August 2017 - 51
The NAFCU Journal July - August 2017 - Compliance Central
The NAFCU Journal July - August 2017 - 53
The NAFCU Journal July - August 2017 - Inside NAFCU Services
The NAFCU Journal July - August 2017 - 55
The NAFCU Journal July - August 2017 - From the President’s Desk
The NAFCU Journal July - August 2017 - Cover3
The NAFCU Journal July - August 2017 - Cover4
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