Denver Catholic

2014 FINANCIAL REPORT I B7 DENVER CATHOLIC REGISTER I DECEMBER 3, 2014 2013 2013 4,377,182 139,881 204,695 4,721,758 500,000 3,413,974 940,005 4,853,979 (132,221) 957,551 825,330 The Archdiocese of Denver Irrevocable Revolving Fund Trust (the trust) is a religious and charitable trust organized to build up the kingdom of God within the territory of the archdiocese. While the trust holds legal title to its assets, the equitable and beneficial owners of its assets belong to, and are owned by each parish and other related ecclesiastical entity partic- ipating in the trust. Deposits to the trust are encouraged but not mandated. The assets, deposits and other accounts of the trust are administered by an independent financial in- stitution acting as the trustee. The trust allows parishes and other related entities within the territory of the archdiocese to obtain competitive terms for depositing, withdrawing and borrowing money. The trust currently loans money at the Wall Street Journal prime rate which was 3.25 percent at June 30, 2014 and 2013 and does not charge any fees for loan origination costs. The spread between the lending rate and the rate paid to depos- itors was 2.75 percent for the years ended June 30, 2014 and 2013. Accordingly, the trust currently has and continues to pay a very competitive rate of .50 percent to depositors on their savings accounts held in the trust during the fiscal years 2014 and 2013. Such deposits have no restrictions as to terms, require no minimum balances or contain early-with- drawal penalties. For the year ended June 30, 2014, the trust realized net in- come of $686,920 as compared to the previous year which reflected net income of $369,910. The increase in net in- come in fiscal 2014 is primarily attributed to a decrease in the unrealized losses from the investment portfolio and the improving credit quality of the loan portfolio, resulting in a reduction in the allowance for loan losses. Unrealized gains and losses are a reflection of the market value of the investments at a particular point in time, but not necessarily an indication of the actual gains or losses that will ultimately be realized when the investment either matures or is sold. The trust continues to invest in low risk, conservative short-term fixed-income funds. The trust has no exposure to equity stock holdings. The trust's conservative investment strategy does not mean it is immune to market volatility, which can cause losses in a rising interest rate environment. The Offices of the Controller and Parish Finance of the Management Corporation provided significant assistance to the Revolving Fund Trust management committee of the trust. In doing so, the trust approved seven new loans to parishes totaling $4.6 million in fiscal 2014 as compared to five new loans totaling $1.4 million in fiscal 2013. Assets: Cash & cash equivalents Prepaid expenses & other Loans receivable Investments Total assets Liabilities & net assets: Due to related entities & other Saving deposits Total liabilities Net assets: Unrestricted Total liabilities & net assets 2013 $ 15,906,388 266 17,858,650 22,656,842 $ 56,422,146 $ 40,208 50,873,288 50,913,496 5,508,650 $ 56,422,146 Statements of Financial Position As of June 30, 2014 $ 8,473,446 266 15,608,983 33,094,611 $ 57,177,306 $ 19,219 50,962,517 50,981,736 6,195,570 $ 57,177,306 Statements of Activities YEARS ENDED JUNE 30, 2014 AND 2013 Interest income: Loans Investments Total interest income Interest expense Net interest income Realized and unrealized gains (losses) from investments, net Other expenses, net: Trustee fees Parish assistance fund grants Provision (credit) for loan losses General & administrative expenses Total other expenses Increase in net assets 2013 $ 621,947 510,638 1,132,585 207,595 924,990 (344,187) 65,364 60,000 (45,000) 130,529 210,893 $ 369,910 2014 $ 551,593 481,122 1,032,715 253,435 779,280 (42,408) 83,902 25,000 (149,000) 90,050 49,952 $ 686,920 ARCHDIOCESE OF DENVER IRREVOCABLE REVOLVING FUND TRUST The Archdiocese of Denver Risk Management and Property/Casualty Insurance Trust (the Risk Management Trust) strives to protect parishes and other participating ecclesiastical entities within the territory of the archdi- ocese from catastrophic financial loss. Prevention and other cost-containment measures are stressed to mini- mize risk and control plan costs. Archdiocesan entities and parishes within the territory of the archdiocese pay premiums to the Risk Management Trust. The staff of the Risk Management Trust coordinates safety, compliance with environmental law and risk-awareness programs for parishes, schools and other participating organizations within the territory of the archdiocese. The Risk Management Trust is partially self-funded and bears the financial loss on claims up to certain limita- tions of acceptable risk. Traditional indemnity insurance policies cover losses exceeding the trust's risk limitations. Effective July 1, 2014, the Risk Management Trust modi- fied its workman's compensation program in an effort to further reduce costs, but more importantly, to enhance safety standards for the participating entities throughout northern Colorado. During fiscal 2014, the Risk Management Trust pro- cessed 130 workman's compensation claims, valued at $488,306 and 175 property and casualty insurance claims totaling $3,434,651 (excluding the Camp St. Ma- lo claims). During fiscal 2013, 151 workman's compen- sation claims totaling $769,528 and 92 property and casualty claims totaling $560,154 were processed. The Risk Management Trust increased its net as- sets by $389,796 during fiscal 2014. However, the Risk Management Trust experienced a decline of $300,687 in operating income as compared to fiscal 2013. Specifically, the Risk Management Trust realized an increase in premi- um costs and experienced unfavorable claims experience under its property and casualty insurance program due, in part, to the rainstorms and related flooding that occurred in the fall of 2013. Partially offsetting these increases were a decline in administrative expenses arising from a reduc- tion in uncollectable debt expenses. ARCHDIOCESE OF DENVER RISK MANAGEMENT AND PROPERTY/CASUALTY INSURANCE TRUST Statements of Financial Position As of June 30, Assets: Cash & cash equivalents Prepaid expenses & other assets Accounts receivable Due from parishes & other related entities, net Investments Property & equipment, net Total assets Liabilities & net assets: Accounts payable & accrued expenses Claims payable Total liabilities Net assets: Unrestricted Total liabilities & net assets 2013 $ 3,461,844 27,709 35,555 376,851 2,984,081 1,177 $ 6,887,217 $ 125,730 505,983 631,713 6,255,504 $ 6,887,217 2014 $ 3,693,159 25,000 1,855 383,786 3,037,895 660 $ 7,142,355 $ 69,312 427,743 497,055 6,645,300 $ 7,142,355 Statements of Activities YEARS ENDED JUNE 30, 2014 AND 2013 Support & revenue: Self insurance premiums & insurance billings Investment income (loss) Miscellaneous, net Total support & revenue Expenses: Self insurance claims, premiums, settlements & other costs Support & administrative expenses Total expenses Decrease in net assets 2013 $ 4,974,294 (12,970) 2,505 4,963,829 3,884,450 388,896 4,273,346 $ 690,483 2014 $ 4,903,187 54,328 2,070 4,959,585 4,274,386 295,403 4,569,789 $ 389,796 The Archdiocese of Denver Management Corporation (the management corporation) is a Colorado nonprofit cor- poration, formed in March of 1999, that provides payroll, accounting, real estate, construction, human resources and other management services to the archdiocese, the parish- es in northern Colorado and various ecclesiastical entities, pursuant to service agreements. During fiscal 2014, the management corporation in- curred a decrease in net assets of approximately $121,000, or a $90,000 improvement, from the comparable amount in fiscal 2013. This decrease in losses was attributable to an in- crease in service fees charged to the archdiocese and its re- lated entities. The increase in administrative expenses was due to modest salary and benefit increases combined with an increase in consulting expenses for information technol- ogy initiatives. Significant services provided by the manage- ment corporation during fiscal 2014 included the following: The Office of Parish Finance is overseeing the imple- mentation of a new accounting program for all parishes in northern Colorado. After selecting the new software with the assistance of a committee of parish business managers, the office conducted numerous orientation, design and us- er training sessions, including six two-day software training sessions throughout the territory of the archdiocese. Construction management services for parishes and re- lated ecclesiastical entities involved the oversight of 47 new projects with an estimated value of $21.5 million in fiscal 2014 as compared to 39 projects valued at $24.3 million in fiscal 2013. In fiscal 2014, 53 construction projects were completed throughout northern Colorado with a value of approximately $10.2 million as compared to 44 projects val- ued at $23.2 million in fiscal 2013. The Office of Legal Services, in conjunction with various other offices, enhanced our corporate governance docu- ments by amending the underlying trust agreements for the Cemeteries' Perpetual Care Trust Fund and the Archdiocese of Denver Risk Management Property/Casualty Insurance Trust. Real estate services for the archdiocese, parishes and re- lated ecclesiastical entities in fiscal 2014 included the pur- chase of five new properties, valued at $2.8 million, the sale of three real estate parcels valued at $3.7 million, and 70 leasing transactions valued at $1.6 million. The Internal Audit department visited 76 parishes and is- sued 67 reports in fiscal 2014. Statements of Financial Position As of June 30, Assets: Cash & cash equivalents Prepaid expenses & other assets Accounts & other receivables, net Due from other related entities & parishes Property & equipment, net Total assets Liabilities & net assets: Accounts payable & accrued expenses Due to other related entities Total liabilities Net assets Total liabilities & net assets 2013 $ - 179,520 27,650 188,676 702,399 $ 1,098,245 $ 700,803 25,367 726,170 372,075 $ 1,098,245 2014 $ - 127,709 13,977 277,565 588,234 $ 1,007,485 $ 729,709 26,171 755,880 251,605 $ 1,007,485 Statements of Activities YEARS ENDED JUNE 30, 2014 AND 2013 Support & revenue: Management & service fees Other income Total support & revenue Expenses: Support & administrative expenses Total expenses Decrease in net assets 2013 $ 5,545,113 275,080 5,820,193 6,030,522 6,030,522 $ (210,329) 2014 $ 6,376,213 36,295 6,412,508 6,532,978 6,532,978 $ (120,470) ARCHDIOCESE OF DENVER MANAGEMENT CORPORATION OTHER TRUSTS AND ARCHDIOCESAN ENTITIES

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