Young Men s Christian Association of Greater Richmond. Financial Report December 31, 2014

Young Men s Christian Association of Greater Richmond Financial Report December 31, 2014

Contents Independent Auditor s Report 1-2 Financial Statements Statements of financial position 3 Statements of activities 4-5 Statements of cash flows 6 Statements of functional expenses 7-8 Notes to financial statements 9-21

Independent Auditor s Report To the Board of Directors Young Men s Christian Association of Greater Richmond Richmond, Virginia Report on the Financial Statements We have audited the accompanying financial statements of Young Men s Christian Association of Greater Richmond (the Association) which comprise the statements of financial position as of December 31, 2014 and 2013, and the related statements of activities, cash flows, and functional expenses 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 audit 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. 1

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Association as of December 31, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Richmond, Virginia June 19, 2015 2

Statements of Financial Position December 31, 2014 and 2013 2014 2013 Assets Cash and Cash Equivalents $ 6,373,844 $ 7,492,754 Prepaid Expenses and Other Receivables 538,896 477,193 Contributions Receivable, Net (Note 2) 1,143,329 1,697,376 Investments (Notes 3 and 4) 8,105,552 7,999,812 Land, Buildings and Equipment, Net (Note 5) 63,149,149 61,963,623 Other Assets 77,999 82,872 $ 79,388,769 $ 79,713,630 Liabilities and Net Assets Liabilities Accounts payable and accrued expenses $ 3,727,540 $ 2,165,368 Deferred membership and program fees 933,447 988,545 Long-term debt (Note 6) 22,356,035 23,576,328 Total liabilities 27,017,022 26,730,241 Commitments (Note 7) Net Assets (Note 9) Unrestricted 47,134,917 46,525,977 Temporarily restricted 2,439,406 3,670,008 Permanently restricted 2,797,424 2,787,404 Total net assets 52,371,747 52,983,389 Total liabilities and net assets $ 79,388,769 $ 79,713,630 See. 3

Statements of Activities Years Ended December 31, 2014 and 2013 2014 2013 Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total Revenues and Public Support United Way Services $ 430,338 $ - $ - $ 430,338 $ 446,264 $ 11,678 $ - $ 457,942 Contributions 2,185,343 730,764-2,916,107 2,098,723 934,617-3,033,340 Endowment contributions 35,443-10,020 45,463 147,873-6,238 154,111 Capital campaign contributions - 65,488-65,488-624,678-624,678 Total public support 2,651,124 796,252 10,020 3,457,396 2,692,860 1,570,973 6,238 4,270,071 Membership fees 23,634,349 - - 23,634,349 23,573,321 - - 23,573,321 Program fees 11,726,701 - - 11,726,701 12,048,595 - - 12,048,595 Rental of facilities 160,875 - - 160,875 153,726 - - 153,726 Merchandise sales and YMCA training fees 110,528 - - 110,528 124,123 - - 124,123 Other income (loss) (10,688) - - (10,688) 74,373 - - 74,373 Investment gain (Note 3) 179,252 202,924-382,176 383,164 531,220-914,384 Net assets released from restrictions (Note 9) 2,229,778 (2,229,778) - - 1,230,756 (1,230,756) - - Total revenues and public support 40,681,919 (1,230,602) 10,020 39,461,337 40,280,918 871,437 6,238 41,158,593 (Continued) 4

Statements of Activities (Continued) Years Ended December 31, 2014 and 2013 2014 2013 Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total Expenses Program services: Healthy living $ 18,359,451 $ - $ - $ 18,359,451 $ 18,526,859 $ - $ - $ 18,526,859 Youth development 14,078,576 - - 14,078,576 13,668,557 - - 13,668,557 Social responsibility 1,905,145 - - 1,905,145 1,849,135 - - 1,849,135 Total program services 34,343,172 - - 34,343,172 34,044,551 - - 34,044,551 Supporting services: General administration 4,121,786 - - 4,121,786 4,025,284 - - 4,025,284 Fundraising 1,311,813 - - 1,311,813 1,334,286 - - 1,334,286 Total supporting services 5,433,599 - - 5,433,599 5,359,570 - - 5,359,570 Unallocated Payments to National Organization 314,526 - - 314,526 291,924 - - 291,924 Total expenses 40,091,297 - - 40,091,297 39,696,045 - - 39,696,045 Gain/(Loss) on Sale of Fixed Assets (1,490) - - (1,490) 10,416 - - 10,416 Change in net assets 589,132 (1,230,602) 10,020 (631,450) 595,289 871,437 6,238 1,472,964 Net Assets Beginning 46,525,977 3,670,008 2,787,404 52,983,389 46,058,055 2,798,571 2,781,166 51,637,792 Initial recognition of accumulated post retirement benefit obligation (Note 7) - - - - (147,175) - - (147,175) Amortization of prior service cost 19,808 - - 19,808 19,808 - - 19,808 Ending $ 47,134,917 $ 2,439,406 $ 2,797,424 $ 52,371,747 $ 46,525,977 $ 3,670,008 $ 2,787,404 $ 52,983,389 See. 5

Statements of Cash Flows Years Ended December 31, 2014 and 2013 2014 2013 Cash Flows From Operating Activities Change in net assets $ (631,450) $ 1,472,964 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 3,414,874 3,455,685 Discount for net present value of pledges and provision for uncollectible contributions receivable, net (69,280) (77,603) Net realized gain from disposition of investments and equipment (267,431) (361,823) Unrealized gain on investments 177,122 (349,124) Contributions restricted for construction (65,488) (624,678) Contributions restricted for long-term investments (10,020) (6,238) Non-cash donations (4,462) - Changes in assets and liabilities: Prepaid expenses and other receivables (61,702) 131,657 Contributions receivable (8,661) (68,436) Accounts payable and accrued expenses 208,595 (894,493) Deferred membership and program fees (55,098) 25,357 Net cash provided by operating activities 2,626,999 2,703,268 Cash Flows From Investing Activities Proceeds from sales of investments 5,782,063 4,349,304 Proceeds from sales of equipment and other assets 39,521 7,998 Purchases of investments (5,782,238) (4,408,168) Acquisition and construction of land, buildings and equipment (3,255,952) (1,320,099) Changes in contributions receivable 1,725 8,727 Net cash used in investing activities (3,214,881) (1,362,238) Cash Flows From Financing Activities Principal payments on notes payable (1,175,097) (1,345,061) Principal payments on capital lease obligations (55,289) (54,504) Changes in contributions receivable 623,850 644,288 Contributions restricted for construction 65,488 624,678 Contributions restricted for long-term investments 10,020 6,238 Net cash used in financing activities (531,028) (124,361) Net increase (decrease) in cash and cash equivalents (1,118,910) 1,216,669 Cash and Cash Equivalents Beginning 7,492,754 6,276,085 Ending $ 6,373,844 $ 7,492,754 Supplemental Disclosure of Cash Flow Information Cash payments for interest $ 355,514 $ 416,097 See. 6

Statement of Functional Expenses Year Ended December 31, 2014 Program Services Supporting Services Healthy Youth Social General Fund Living Development Responsibility Total Administration Raising Total Total Salaries and Wages $ 8,963,030 $ 6,439,730 $ 727,132 $ 16,129,892 $ 2,040,518 $ 826,579 $ 2,867,097 $ 18,996,989 Employee Benefits 867,511 755,101 88,374 1,710,986 329,898 120,907 450,805 2,161,791 Payroll Taxes and Workers Compensation 804,738 578,871 65,359 1,448,968 183,420 74,300 257,720 1,706,688 10,635,279 7,773,702 880,865 19,289,846 2,553,836 1,021,786 3,575,622 22,865,468 Professional Fees and Contract Services 534,569 381,676 50,350 966,595 664,782 65,993 730,775 1,697,370 Supplies 557,369 1,204,731 123,966 1,886,066 22,730 125,759 148,489 2,034,555 Telephone 95,268 76,642 9,561 181,471 121,682 384 122,066 303,537 Postage and Shipping 19,345 11,815 1,588 32,748 40,495 189 40,684 73,432 Occupancy 3,799,080 2,333,513 271,463 6,404,056 123,521 15,984 139,505 6,543,561 Transportation and Travel 68,129 297,492 16,250 381,871 19,082 3,142 22,224 404,095 Conferences and Training 204,717 180,153 37,352 422,222 238,718 26,057 264,775 686,997 Printing, Promotion and Publicity 267,610 180,809 25,291 473,710 267,639 8,968 276,607 750,317 Specific Assistance - - 266,846 266,846 - - - 266,846 Bad debt 87,359 66,247 9,042 162,648 - - - 162,648 Miscellaneous 331,823 237,971 30,521 600,315 (34,239) 6,995 (27,244) 573,071 16,600,548 12,744,751 1,723,095 31,068,394 4,018,246 1,275,257 5,293,503 36,361,897 Depreciation and Amortization 1,758,903 1,333,825 182,050 3,274,778 103,540 36,556 140,096 3,414,874 $ 18,359,451 $ 14,078,576 $ 1,905,145 $ 34,343,172 $ 4,121,786 $ 1,311,813 $ 5,433,599 $ 39,776,771 See. 7

Statement of Functional Expenses Year Ended December 31, 2013 Program Services Supporting Services Healthy Youth Social General Fund Living Development Responsibility Total Administration Raising Total Total Salaries and Wages $ 9,148,190 $ 6,474,224 $ 667,518 $ 16,289,932 $ 1,901,888 $ 815,459 $ 2,717,347 $ 19,007,279 Employee Benefits 921,792 733,194 102,698 1,757,684 334,743 145,725 480,468 2,238,152 Payroll Taxes and Workers Compensation 813,359 575,235 59,309 1,447,903 168,984 72,454 241,438 1,689,341 10,883,341 7,782,653 829,525 19,495,519 2,405,615 1,033,638 3,439,253 22,934,772 Professional Fees and Contract Services 337,101 241,347 18,067 596,515 606,477 51,142 657,619 1,254,134 Supplies 725,357 1,148,106 107,512 1,980,975 21,196 146,762 167,958 2,148,933 Telephone 117,872 73,891 11,702 203,465 103,992 1,078 105,070 308,535 Postage and Shipping 23,381 13,872 1,940 39,193 46,518 339 46,857 86,050 Occupancy 3,767,751 2,204,011 266,068 6,237,830 171,256 18,993 190,249 6,428,079 Transportation and Travel 72,208 276,557 11,616 360,381 18,424 3,537 21,961 382,342 Conferences and Training 235,000 234,331 25,118 494,449 188,696 33,879 222,575 717,024 Printing, Promotion and Publicity 251,391 181,655 25,859 458,905 274,301 8,413 282,714 741,619 Specific Assistance - - 330,016 330,016 - - - 330,016 Miscellaneous 314,612 204,937 41,396 560,945 51,192 4,795 55,987 616,932 16,728,014 12,361,360 1,668,819 30,758,193 3,887,667 1,302,576 5,190,243 35,948,436 Depreciation and Amortization 1,798,845 1,307,197 180,316 3,286,358 137,617 31,710 169,327 3,455,685 $ 18,526,859 $ 13,668,557 $ 1,849,135 $ 34,044,551 $ 4,025,284 $ 1,334,286 $ 5,359,570 $ 39,404,121 See. 8

Note 1. Nature of Activities and Significant Accounting Policies Mission and nature of activities: The mission of the Young Men s Christian Association of Greater Richmond (the Association) is to put Christian principles into practice through programs that build healthy spirit, mind and body for all. The Association is a not-for-profit charitable organization which promotes healthy living, youth development and social responsibility throughout the Richmond, Virginia metropolitan area and Petersburg, Virginia. The significant accounting policies followed by the Association are described below: Basis of accounting: The accompanying financial statements are presented in accordance with the accrual basis of accounting, whereby, revenue and public support is recognized when earned and expenses are recognized when incurred. Basis of presentation: The financial statement presentation follows the recommendations of The Financial Accounting Standards Board s (FASB) Accounting Standards Codification (ASC) 958, Not-for- Profit Entities. Under ASC 958, the Association is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. Unrestricted net assets: Unrestricted net assets are the net assets that are neither permanently restricted nor temporarily restricted by donor-imposed stipulations. Temporarily restricted net assets: Temporarily restricted net assets result from contributions whose use is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Association pursuant to those stipulations. Net assets may be temporarily restricted for various purposes, such as use in future periods or use for specified purposes. Permanently restricted net assets: Permanently restricted net assets result from contributions whose use is limited by donor-imposed stipulations that neither expire by passage of time nor are otherwise removed by the Association s actions. Contributions: Contributions receivable are carried at net present value less an estimate made for potentially uncollectible accounts based on a review of all outstanding amounts on a regular basis. Management determines the allowance by regularly evaluating individual donor receivables and considering a donor s payment history and current economic conditions. Contributions receivable are written off when deemed uncollectible. Recoveries of receivables are recorded when received. The Association reports gifts of cash and other assets as temporarily or permanently restricted support if they are received with donor stipulations that limit the use or timing of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or a purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets in the statements of activities. All contributions to be received within one year are considered to be available for unrestricted use unless specifically restricted by the donor. Gifts of property and equipment are reported as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. 9

Note 1. Nature of Activities and Significant Accounting Policies (Continued) Contributed services: Contributed services are recorded at their fair value if such services create or enhance non-financial assets, would have been purchased if not provided by contribution, require specialty skills and are provided by individuals possessing such specialized skills. A substantial number of volunteers contribute significant amounts of time and services to the Association s program operations, fund raising campaigns and boards and committees of the Association. Such contributed services do not meet the criteria for recognition of contributed services and are not reflected in the accompanying financial statements. Accounting estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents: For purposes of reporting cash flows, the Association considers all highly liquid debt instruments with maturity, when acquired, of three months or less, to be a cash equivalent. Membership and program fees: Membership and program fees are recognized as revenue over the membership or program period. Such fees received in advance are recorded as deferred revenue. Joining fees are non-refundable and are recognized as revenue when received. Investments: Equity securities with readily determinable fair values and all investments in debt securities are reported at fair value. Alternative investments are valued at fair value based on the applicable percentage of ownership of the underlying net assets or partners capital as determined by the fund at the measurement date. Unrealized gains and losses are reported in the statements of activities. In calculating realized gains and losses, the cost of securities sold is determined by the specific-identification method. Investments received by gift are recorded at the fair value on the date received. Financial risk: The Association maintains its cash and temporary cash investments in bank deposit accounts with major financial institutions which, at times, may exceed federally-insured limits. The Association has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and temporary cash investments. The Association invests in a professionally managed portfolio that contains common shares and bonds of publicly traded companies, U.S. obligations, mutual funds and money market funds. Such investments are exposed to various risks such as interest rate, market and credit. Due to the level of risk associated with such investments and the uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment balances and the amounts reported in the financial statements. Fair value of financial instruments: The carrying value of financial instruments, including cash equivalents, accounts payable, accrued expenses, deferred revenue and short-term borrowings, approximate fair value due to their short maturities. The fair values of the Association s investments are determined using quoted market prices for those securities. The fair value of the Association s long-term debt is estimated based on current market interest rates and credit spreads for debt with similar maturities. The fair value of long-term debt incorporates a credit valuation adjustment to appropriately reflect the Association s own nonperformance risk. The Association believes the carrying value of the debt approximates fair value. 10

Note 1. Nature of Activities and Significant Accounting Policies (Continued) Land, buildings and equipment: Land, buildings and equipment are stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives: Years Parking lots 5 20 Buildings and land improvements 15 39 Other recreational facilities 10 20 Furniture, equipment and vehicles 3 15 Valuation of long-lived assets: Long-lived assets, such as buildings and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the accompanying statements of financial position and reported at the lower of the carrying amount or fair value less costs to sell. Functional expenses: Functional expenses are determined through allocating total expenses incurred to the programs and supporting services benefited. Income taxes: The Association has been recognized by the Internal Revenue Service as tax exempt under Section 501(c)(3) of the Internal Revenue Code. In addition, the Association qualifies for charitable contribution deductions under Section 170(b)(1)(A)(vi) and has been classified as an organization that is not a private foundation under Section 509(a)(1). As a nonprofit organization, the Association is subject to unrelated business income tax (UBIT), if applicable. The Association did not have any unrelated business income for the years ended December 31, 2014 and 2013. Management evaluated the Association s positions and concluded that the Association had taken no uncertain tax positions that require adjustment to the financial statements to comply with the accounting standard on accounting for uncertainty in income taxes. The Association files an informational Form 990 in the U.S. federal jurisdiction. The Association is no longer subject to income tax examinations by the U.S federal, state, or local tax authorities for years before 2011. Advertising: Advertising costs are expensed as incurred and totaled $474,966 and $436,593, respectively, for the years ended December 31, 2014 and 2013. Recent accounting pronouncements: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. The updated standard will be effective for annual reporting periods beginning after December 15, 2017. The Association has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the financial statements. Reclassification: Certain prior year balances have been reclassified to conform with the current year presentation with no impact on change in net assets. 11

Note 2. Contributions Receivable Anticipated collections of contributions receivable at December 31, 2014 and 2013, are as follows: 2014 2013 Within one year $ 610,911 $ 827,318 One to five years 683,916 947,335 More than five years - 152,500 1,294,827 1,927,153 Less Discounts for the time-value of money at 2.5% in 2014 and 2013 (60,497) (104,777) Allowance for uncollectible contributions receivable (100,000) (125,000) $ 1,134,330 $ 1,697,376 Included in the balances above are amounts of $220,000 and $385,983 at December 31, 2014 and 2013, respectively, which are due from members of the Board of Directors and members of management. For the years ended December 31, 2014 and 2013, there were approximately $126,730 and $187,000 in gift revenues from those members, respectively. Note 3. Investments Investments are composed of the following at December 31, 2014 and 2013: Cost 2014 Fair Value Common stocks $ 4,332,922 $ 5,338,645 Corporate bonds 2,119,114 2,169,927 Cash and cash equivalents 596,980 596,980 $ 7,049,016 $ 8,105,552 Cost 2013 Fair Value Common stocks $ 3,998,471 $ 5,174,688 Corporate bonds 1,960,023 2,014,988 Alternative investments 188,766 191,475 Cash and cash equivalents 618,661 618,661 $ 6,765,921 $ 7,999,812 12

Note 3. Investments (Continued) Components of investment gain for the years ended December 31, 2014 and 2013, consist of the following: 2014 2013 Realized gain $ 276,137 $ 352,744 Unrealized gain/(loss) (177,122) 349,124 Interest and dividends 283,161 212,516 $ 382,176 $ 914,384 Note 4. Fair Value Measurements The Association uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures Topic of the ASC, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and sets out a fair value hierarchy. 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). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are described below: Level 1 Level 2 Level 3 Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The types of investments included in Level 1 include listed equities and listed derivatives. As required, the Association does not adjust the quoted price for these investments, even in situations where the Association holds a large position and a sale could reasonably impact the quoted price. Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in this category include certain corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement. Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation. Investments that are included in this category generally include equity and debt positions in private companies and general and limited partnership interests in corporate private equity and real estate funds, debt funds, and distressed debt. 13

Note 4. Fair Value Measurements (Continued) In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Association s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. In determining the appropriate levels, the Association performs a detailed analysis of the assets and liabilities that are subject to fair value measurements. Publicly traded securities, both equity and debt securities, are classified as Level 1 instruments because they comprise assets traded on public exchanges with readily determinable fair values and observable market based inputs. The alternative investment is classified as a Level 2 instrument because it comprises equity interests in a limited partnership; however, there is an observable market-based input upon which fair market value can be reasonably determined. Alternative investments classified as Level 2 instruments have net asset values per share, or the equivalent, and are able to be redeemed by the Association at the statement of financial position date, or in the near term. The following tables summarize, by level within the fair value hierarchy, the assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and 2013: Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Description Total (Level 1) (Level 2) (Level 3) 2014 Assets Common stocks $ 5,120,612 $ 5,120,612 $ - $ - Corporate bonds 2,096,327 2,096,327 - - Variable adjustable life insurance policy 291,633 291,633 - - $ 7,508,572 $ 7,508,572 $ - $ - 2013 Assets Common stocks $ 4,972,104 $ 4,972,104 $ - $ - Corporate bonds 1,944,973 1,944,973 - - Alternative investment 191,475-191,475 - Variable adjustable life insurance policy 272,599 272,599 - - $ 7,381,151 $ 7,189,676 $ 191,475 $ - Fair value for Level 1 is based on quoted market prices. The variable adjustable life insurance policy includes investments in publicly traded common stocks and corporate bonds. Alternative investments may span multiple markets, securities and risk factors with an intended strategy of providing the portfolio with greater potential for diversification, historically low correlation to traditional investments, minimization of market cycle peaks and troughs, and the potential to produce improved riskadjusted returns. 14

Note 5. Land, Buildings and Equipment Land, buildings and equipment as of December 31, 2014 and 2013, consist of the following: 2014 2013 Land $ 6,745,384 $ 6,745,384 Parking lots 2,264,080 2,252,280 Buildings and land improvements 76,495,907 75,172,947 Other recreational facilities 1,719,732 1,653,026 Furniture, equipment and vehicles, including assets under capital leases 2014 $192,411; and 2013 $213,519 13,122,280 12,504,995 Construction in progress 2,688,617 848,629 103,036,000 99,177,261 Less accumulated depreciation, including amortization applicable to assets under capital leases 2014 $113,906; and 2013 $95,331 39,886,851 37,213,638 $ 63,149,149 $ 61,963,623 Included in construction in progress above are amounts of $1,373,384 and $40,030 at December 31, 2015 and 2014, respectively, which are accrued in accounts payable and accrued expenses. The Powhatan and Goochland facilities are constructed on leased land with initial terms of 50 and 99 years, respectively. Both leases contain provisions for extension of the initial terms. Note 6. Debt At December 31, 2014 and 2013, long-term debt consisted of the following: 2014 2013 Note payable pursuant to loan agreement with the Economic Development Authority of the Town of Ashland, Virginia, dated November 23, 2010 $ 21,584,000 $ 22,605,000 Note payable to Wells Fargo Bank 709,994 864,091 Capital lease obligations 62,041 107,237 $ 22,356,035 $ 23,576,328 Note payable pursuant to loan agreement with the Economic Development Authority of the Town of Ashland, Virginia, dated November 23, 2010: The Association entered into a transaction with the Economic Development Authority (EDA) of the Town of Ashland, Virginia in which the EDA issued its Health and Community Services Facilities Revenue and Refunding Bonds (2010 Bonds) in the amount of $26,000,000, pursuant to an Indenture of Trust dated November 1, 2010 (Indenture) between the EDA and Wells Fargo Bank, National Association, as bond trustee. The EDA loaned the proceeds of the 2010 Bonds, all of which were purchased by Wells Fargo Bank, National Association (Bank), to the Association pursuant to a loan agreement between the EDA and the Association, in exchange for an unsecured note. 15

Note 6. Debt (Continued) The unsecured note, and all principal and interest payments to be made pursuant thereto, were irrevocably assigned to the bond trustee for the benefit of the Bank. Interest on the 2010 Bonds is excludable from gross income for federal income tax purposes pursuant to the Internal Revenue Code of 1986, as amended. Proceeds of the 2010 Bonds were applied as follows: Refund Series A 2000 bonds $ 7,865,000 Principal and interest on the line of credit 8,479,356 Deposit to project fund to be used for facility development projects and issuance costs 9,655,644 $ 26,000,000 The 2010 Bonds have a scheduled maturity of December 1, 2030, and bear interest at 66% of one-month London InterBank Offered Rate (LIBOR) (reset monthly) plus 1.21%. Pursuant to the terms of a Continuing Covenant Agreement dated as of November 1, 2010 (Covenant Agreement) between the Bank and the Association, the Bank and the Association agreed to an amortization schedule that provides for annual principal payments. Pursuant to the Covenant Agreement, the Bank agreed to purchase the 2010 Bonds for an initial three-year term. On June 2, 2013, the Bank and the Association agreed to extend the term for an additional three years ending on June 2, 2016. All other significant provisions of the original agreement remained the same with the exception of a reduction in the Credit Spread to 1.21%. The interest rate was 1.31% and 1.32% as of December 31, 2014 and 2013, respectively. The 2010 Bonds may be prepaid at any time with no penalty. Note payable to Wells Fargo Bank: During 2003, the Association borrowed $2,000,000 to finance the expansion of a branch facility. The note payable is unsecured, bears a fixed interest rate of 5.98% and is payable in monthly installments through 2018. In the event of prepayment or acceleration of amounts due, the note provides for potential additional compensation to the lending institution. Other credit facilities: The Association established a $500,000 unsecured line of credit available for general Association purposes through August 31, 2015. Borrowings bear variable interest at one-month LIBOR plus 1.5% (1.67% at December 31, 2014 and 2013). This facility had not been utilized as of December 31, 2014. The Association loan agreements contain various restrictive covenants, including limitations on additional indebtedness, the ability to encumber assets and revenues, and the maintenance of a minimum debt service coverage ratio. 16

Note 6. Debt (Continued) At December 31, 2014, long-term debt matures as follows: Year Ending December 31, 2015 $ 999,253 2016 1,102,448 2017 1,107,693 2018 1,107,641 2019 925,000 Thereafter 17,114,000 $ 22,356,035 Total interest expense incurred was $354,416 in 2014 and $410,080 in 2013. In 2014 and 2013, interest expense of $56,636 and $62,067, respectively, was capitalized. Note 7. Commitments and Contingencies Leases: The Association leases various facilities and equipment under operating leases with terms of one to ten years. Total rent expense was $981,795 in 2014 and $984,159 in 2013. The total minimum rental commitment at December 31, 2014, is due as follows: Year Ending December 31, 2015 $ 679,974 2016 654,441 2017 510,043 2018 212,511 2019 196,937 Thereafter $ 49,234 2,303,140 Pension plan: The Association is a participant in the National Y.M.C.A. Retirement Fund (Fund) defined contribution (individual accounts) plans for eligible employees. The Association s contributions to the Fund are 12% of covered employees annual salaries. The total expense to the Association was $1,188,727 in 2014 and $1,232,260 in 2013. Postretirement benefit plan: Effective January 1, 2013, the Association adopted a postretirement medical benefit plan. The plan allows for the payment of $100 per month to a limited number of retirees who meet certain eligibility requirements. Upon plan initiation, the previously unrecognized prior service costs of $147,175, net of amortization of $19,808 in 2014 and 2013, were recognized as a separate line item within changes in unrestricted net assets. The accumulated postretirement benefit obligation under the plan was $225,554 and $156,196 at December 31, 2014 and 2013, respectively. 17

Note 8. Related Parties The Association conducts business with financial institutions and other service providers throughout the Richmond and Petersburg areas. Certain members of the Association s Board of Directors, volunteers and donors are employed by such entities. Note 9. Restricted Net Assets Temporarily restricted net assets are comprised primarily of funds raised for capital projects, as well as other funds not yet utilized for their intended purpose. Net assets totaling $2,229,778 and $1,230,756 were released from donor restrictions during 2014 and 2013, respectively, comprised primarily of expenditures for the purchase of property and equipment in connection with the current capital campaign as well as certain operating contributions. Temporarily restricted net assets set forth below are comprised as follows: 2014 2013 Capital projects $ 506,927 $ 1,692,209 Operating contributions for future periods 269,268 281,925 Cumulative increase in temporarily restricted endowment net assets 1,663,211 1,695,874 $ 2,439,406 $ 3,670,008 Permanently restricted net assets set forth below are comprised primarily of investments in perpetuity, the income from which is expendable to support the indicated purposes: 2014 2013 Volunteer and employee training $ 52,258 $ 51,258 Human Opportunity Program Endowment (H.O.P.E.) 300,000 300,000 Art education program 3,000 3,000 Northside youth programs 1,604,801 1,604,801 Learn To Swim program 55,125 54,625 Financial assistance 114,032 114,032 General purposes 632,283 631,138 Youth and Teen programs 35,925 28,550 $ 2,797,424 $ 2,787,404 The Association s endowment consists of approximately 20 individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by management as endowments. As required by U.S. GAAP, net assets associated with endowment funds, including funds designated by management to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. 18

Note 9. Restricted Net Assets (Continued) Interpretation of relevant law: The Association has interpreted the Commonwealth of Virginia enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds, absent explicit donor stipulations to the contrary. As a result of this interpretation, the Association classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets, until those amounts are appropriated for expenditure by the Association in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Association considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: a. The duration and preservation of the fund b. The purposes of the Association and the donor-restricted endowment fund c. General economic conditions d. The possible effects of inflation and deflation e. The expected total return from income and the appreciation of investments f. Other resources of the Association g. The investment policies of the Association Return objective and risk parameters: The Association s objective is to earn a reasonable, long-term, risk-adjusted total rate of return to support the designated programs. The Association recognizes and accepts that pursuing a reasonable rate of return involves risk and potential volatility. The generation of current income is a secondary consideration. The Association targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. The Association has established a policy portfolio, or normal asset allocation. While the policy portfolio can be adjusted from time to time, it is designed to serve for long-time horizons based upon long-term expected returns. Spending policy: Spending is first governed by donor stipulations associated with specific gifts with respect to both purpose and amount. Otherwise, the Association will appropriate for expenditure in its annual budget a maximum of 5% of the rolling average of the market value of the endowment assets over the preceding 12 quarters. There may be times when the Association may opt not to take the maximum spending rate but rather to reinvest some of the annual return. No distribution is permitted if the distribution would decrease the contributed principal of the respective component of the Endowment Fund. 19

Note 9. Restricted Net Assets (Continued) The Association had the following endowment-related activities for the years ended December 31, 2014 and 2013: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment assets, January 1, 2013 $ 1,504,536 $ 1,393,381 $ 2,781,166 $ 5,679,083 Investment return: Investment income (net of fees) 34,554 86,724-121,278 Net appreciation (realized and unrealized) 158,446 414,760-573,206 Total investment return 193,000 501,484-694,484 Additions 145,522-6,238 151,760 Appropriation of endowment assets for expenditure (64,462) (198,991) - (263,453) Endowment assets, December 31, 2013 1,778,596 1,695,874 2,787,404 6,261,874 Investment return: Investment income (net of fees) 51,115 122,982-174,097 Net appreciation (realized and unrealized) 19,444 50,901-70,345 Total investment return 70,559 173,883 244,442 Additions 35,156-10,020 45,176 Appropriation of endowment assets for expenditure (73,839) (206,546) - (280,385) Endowment assets, December 31, 2014 $ 1,810,472 $ 1,663,211 $ 2,797,424 $ 6,271,107 20

Note 9. Restricted Net Assets (Continued) Endowment assets at December 31, 2014 and 2013, are comprised as follows: Temporarily Permanently Unrestricted Restricted Restricted Total 2014 Donor-restricted endowment funds $ - $ 1,663,211 $ 2,797,424 $ 4,460,635 Management-restricted endowment funds 1,810,472 - - 1,810,472 Total funds $ 1,810,472 $ 1,663,211 $ 2,797,424 $ 6,271,107 2013 Donor-restricted endowment funds $ - $ 1,695,874 $ 2,787,404 $ 4,483,278 Management-restricted endowment funds 1,778,596 - - 1,778,596 Total funds $ 1,778,596 $ 1,695,874 $ 2,787,404 $ 6,261,874 Note 10. Subsequent Events The Association evaluated subsequent events for potential required disclosures through June 19, 2015, which is the date the financial statements were available to be issued. The Association determined that the following subsequent event needs to be disclosed: On March 3, 2015, the Association entered into an agreement for a seven year term loan of $1,785,000 bearing interest at a fixed rate of 3.16% per annum to partially finance capital improvements. 21