Telephone: Or toll-free:

Transcription

1

2 ANDERSON COUNTY Oak Ridge Main Office 221 S. Rutgers Avenue Oak Ridge Wal-Mart 373 S. Illinois Avenue Clinton 1117 N. Charles Seivers Blvd KNOX COUNTY North Knoxville 808 Victor Drive West Knoxville 8721 Kingston Pike Middlebrook Food City 9565 Middlebrook Pike East Knoxville 2321 East Magnolia South Knoxville 7325 Chapman Highway Farragut Municipal Center Drive Fountain City Northgate Plaza Shopping Center 4330 N. Broadway Karns 7228 Oak Ridge Highway Halls 4510 Emory Road Powell Kroger 6702 Clinton Highway Millertown Pike 5409 Millertown Pike ROANE COUNTY Kingston 1204 N. Kentucky Street Oak Ridge National Lab P.O. Box 365 Rockwood Wal-Mart 1102 N. Gateway Avenue LOUDON COUNTY Lenoir City 895 Highway 321 North BLOUNT COUNTY Alcoa 103 Hamilton Crossing Drive Maryville 1743 West Broadway Maryville Wal-Mart 2401 US Hwy. 411 South MONROE COUNTY Madisonville 111 Kefauver Lane HAMBLEN COUNTY Morristown 1730 West Andrew Johnson Hwy SEVIER COUNTY Sevierville 502 Dolly Parton Parkway Telephone: Or toll-free: *All locations except Madisonville and Morristown CyberBranch TM Printed on recyclable paper. Your savings insured to 100,000 NCUA National Credit Union Administration, a U.S. Government Agency. EQUAL HOUSING OPPORTUNITY

3

4 L ooking back on your credit union s performance throughout 2006, I am proud to $759.0 million. Deposits grew by $98.6 million, or 13.49%. At year-end, our deposits totaled report another prosperous year. Perhaps the best way to describe the past year is one of consistent growth. New branches were opened, many were remodeled to increase the level of service they provide, and plans were set in place for additional branches in the best way to describe the past year is one of consistent growth. $829.1 million. Total assets for the credit union grew by $102 million, or 11.60%, to a year-end total of $980.9 million. ORNL FCU was once again voted Best Credit Union in 2006 by both the Knoxville News-Sentinel and the Already, many of your friends and neighbors have taken advantage of the convenience a growing branch network affords them. This is reflected in the numbers of new members we attracted in During the year, membership increased by 10.58%, or 11,627 members. Total membership at year-end was 121,478. Loan and deposit growth was also strong during Although the nation experienced slower Oak Ridger s readers polls. This continued confidence and satisfaction with your credit union is largely due to our staff s ongoing efforts to provide superior service and convenience to you and all of our members. As part of our effort to provide the greatest level of service and convenience possible, four new branches were opened in Early in the year, we expanded to the Sevierville area and, soon after, celebrated the continued on page 2 economic growth, including a slowdown in the housing market and a decrease in consumer spending, ORNL Federal Credit Union loans outstanding grew $55.4 million, or 7.91%, to finish the year at

5 continued from page 1 opening of an in-store branch located within the Kroger store in the Powell community. Later in the year, to better serve members in the Harriman and Rockwood area, a new office was opened within the Rockwood greater access to members in the East Knoxville area by relocating to a larger, stand-alone, full-service facility. Many product and service enhancements were introduced during In July, we began offering Wal-Mart. And, in November, a new East Knoxville branch was opened at 5409 Millertown Pike. Our Oak Ridge Wal-Mart location was also given a new look in 2006 to help provide...we rolled out a new web site design that provided members easier navigation... Health Savings Accounts (HSAs), designed to help individuals and families with high deductible health plans. Many members have already taken advantage members visiting the branch even greater convenience. Also, during 2006, we expanded Saturday hours at our Farragut, Clinton, and Oak Ridge branches to better accommodate those members taking advantage of our convenient weekend hours. As we look forward to the new year, many plans are in place for new branch locations. Ground was broken in October for a new branch in Alcoa, with plans for a tentative opening date of March Another Blount County branch is set to open within the Maryville Wal-Mart in March. A month later, our Fountain City Branch is set to relocate to Fountain City s new Shoppes at Fountain View. And in May, our East Knoxville office will be able to provide 2 of the convenient, tax-free distributions these accounts provide. Months later, we introduced our BALANCE Financial Fitness Program in an effort to assist members in realizing their financial goals by reducing debt, saving for higher education, or planning for retirement. Over 250 members have already looked to the BALANCE Program s unbiased money management information and assistance for guidance. Late in the year, we rolled out a new web site design that provided members easier navigation and more online tools than ever before. For example, our new HomeValueBot service provides

6 site visitors instant, free estimates of their home values. Users can even enter an address to have updated home valuations sent to them quarterly. Through our partnership with Credit Union Direct Lending (CUDL), our...we are pleased to be moving into our fourth year as presenting sponsor of the Dogwood Arts Festival. the summer of CU Community Insurance, LLC, was established to offer members a convenient, low-cost choice for homeowners, renters, and auto insurance. The success of our Affinity Title Company and the startup of new CUDL AutoSMART program provides members with tools to research a vehicle, locate a dealer, have dealers compete for their business, and find information about credit union financing. As part of our ongoing financial education effort, podcasts were also added to our new web site design. With the ability to listen online or download, our podcasts provide financial education to help members make informed financial decisions. Web site visitors can even subscribe to and receive ORNL FCU podcasts automatically as they are posted each month. After two years of success with our Credit Union Service Organization (CUSO), Affinity Title Company, your CU Community Insurance, LLC, has prompted us to continue to look into other related areas of business for further expansion of our CUSO. As part of the credit union s overall community involvement efforts, we are pleased to be moving into our fourth year as presenting sponsor of the Dogwood Arts Festival. We continue to be proud of this event s accomplishments in relation to youth arts education and support of other local organizations. The year 2006 was also our 15th year offering the B.A. Candler/ORNL Federal Credit Union Scholarship to the University of Tennessee. Each year, one deserving student receives $1,000 toward school related expenses. And, of course, we continue our involvement in the Partners-In-Education and Junior Achievement programs credit union created CU Community Insurance, LLC, in 3 throughout our 16-county community. continued on page 4

7 continued from page 3 On February 1, 2006, Knoxville city officials, credit union staff and Knox County school leaders were delighted to open the area s first in-school, studentrun credit union. Located within the Austin-East Magnet High School, the branch is staffed by students, under the coordination of school and ORNL FCU staff. It serves the students and faculty of Austin-East. The goals of this program are to provide real-world, handson experience to the student staffers and to provide savings programs and incentives for students to learn how to save your credit union continues to work, in collaboration with the City of Knoxville, Federal Home Loan Bank, Fannie Mae and the Knox Housing Partnership, to assist low to moderate income families with first-time home purchases. As we look back on our growth and success in 2006, we look forward to 2007 and the opportunity the year brings for us to expand in reaching even more of your friends and neighbors. Be assured, that although we have grown tremendously since obtaining our community charter in regularly. The student-run credit union plays a major role in the new Academy of Business and Finance curriculum adopted by the school....we will never lose sight of what has brought us to where we are today you, our member-owners. 2002, we will never lose sight of what has brought us to where we are today you, our member-owners. On behalf of the credit union staff and officials, Since establishing a partnership with the Tennessee Conference for Community Development, in May 2005, thank you for trusting ORNL Federal Credit Union as your financial service provider and financial partner. 4

8 Statement of Financial Condition Assets Cash and cash equivalents $63,006,196 $49,767,191 Investments $114,443,186 $91,195,359 Loans to members, net of the $740,452,887 $686,301,797 allowance for loan losses Loans held for sale $15,922,578 $14,639,894 Accrued interest receivable $3,588,498 $3,026,641 Property and equipment $25,830,249 $19,607,410 National Credit Union Share $7,239,491 $6,295,053 Insurance Fund deposit Other assets $10,485,174 $8,179,062 TOTAL ASSETS $980,968,259 $879,012,407 Liabilities & Members' Equity Liabilities Members shares $829,148,393 $730,578,920 Accrued expenses and $16,372,105 $13,735,573 other liabilities Federal Home Loan Bank $33,997,470 $41,381,526 advances Total Liabilities $879,517,968 $785,696,019 Members' Equity Retained Earnings $101,450,291 $93,316,388 TOTAL LIABILITIES & EQUITY $980,968,259 $879,012,407 Statement of Income and Expense Income Interest Income Interest on loans to members $44,006,431 $36,910,973 Interest on investments $5,227,059 $3,499,168 and cash equivalents Total Interest Income $49,233,490 $40,410,141 Interest Expense Dividends on members shares $20,027,428 $13,604,194 Interest paid on borrowed funds $1,546,913 $1,646,706 Total Interest Expense $21,574,341 $15,250,900 Net Interest Income $27,659,149 $25,159,241 Provision for Loan Losses $1,450,885 $2,692,580 Net Interest Income After Provision for Loan Losses $26,208,264 $22,466,661 Non-Interest Income $14,864,853 $14,056,442 Income Before General and Administrative Expenses $41,073,117 $36,523,103 General and Administrative Expenses Salaries and benefits $18,030,534 $15,651,224 Operations $11,154,137 $9,066,375 Occupancy $2,465,236 $1,994,584 Other $2,065,362 $1,983,416 TOTAL EXPENSES $33,715,269 $28,695,599 NET INCOME $7,357,848 $7,827,504 NOTES TO FINANCIAL STATEMENTS 1. Cash and Cash Equivalents - Cash and cash equivalents consist of cash on hand, demand deposits, money market funds and non-term share deposits in Volunteer Corporate Credit Union. 2. Investments - Investments consist primarily of government agency securities, mortgage-backed securities and term deposits at other insured financial institutions. 3. Loans to Members 12/31/06 12/31/05 First Mortgage Real Estate $269,084,654 $259,829,475 Other Real Estate $116,300,405 $84,118,744 Member Business $62,096,064 $46,981,291 Automobile $264,196,257 $263,210,123 Unsecured $18,532,416 $20,038,691 Other Loans $28,796,430 $29,736,861 $759,006,226 $703,915,185 Allowance for Loan Losses $(2,630,761) $(2,973,494) $756,375,465 $700,941, Loan Servicing - Mortgage loans sold to FNMA are not included in the accompanying statements of financial condition. The unpaid principal balances as of December 31, 2006, and 2005, were $157,960,488 and $133,758,433 respectively. 5. National Credit Union Share Insurance Fund (NCUSIF) Deposit - The deposit in the NCUSIF is in accordance with the National Credit Union Administration regulations, which requires a deposit by each federally insured credit union in an amount equal to 1% of its insured members shares. 6. Federal Home Loan Bank Advances - FHLB advances are payable in monthly installments of principal and interest. The average cost in 2006 was 4.12%. Interest paid is included in interest expense on the Statement of Income. Advances are used to fund members fixed rate first mortgage loans. 7. Consolidated Statements - The credit union wholly owns CU Community, LLC, a credit union service organization. The credit union s financial statements are consolidated as required by generally accepted accounting principles. 8. Members Shares 12/31/06 12/31/05 Regular Share Accounts $152,628,858 $152,856,499 Share Draft Accounts $113,768,141 $105,709,178 Money Market Accounts $114,441,550 $130,927,912 IRAs $75,611,291 $63,937,729 Certificates $372,698,553 $277,147,602 YEAR ENDING DECEMBER 31, 2006 $829,148,393 $730,578,920 5

9 (in millions) $1,000 $900 $800 $700 $600 $500 $400 $300 $ (in millions) $1,000 $900 $800 $700 $600 $500 $400 $300 $

10 (in millions) $1,000 $900 $800 $700 $600 $500 $400 $300 $ (in thousands) ,

11 T he Supervisory Committee, which is appointed by the Board of Directors of ORNL FCU, is responsible for ensuring that an independent audit and to provide an opinion on the financial condition of your credit union for the period ending 12/31/2006. The goals the credit union s financial records are in order and that internal controls are in place to protect the assets of the credit union for its members. The Supervisory Committee does this by conducting financial audits and by regular testing of internal controls. To assist us in carrying out these responsibilities this past year, the committee engaged the firm of McGladrey and Pullen, CPAs, to perform of this audit are to determine the reliability and integrity of the financial and operating information and to determine compliance with generally accepted accounting principles (GAAP). Independent audit findings are helpful in our oversight of credit union activities. The committee also engaged CastleGarde to perform an internal vulnerability T he Nominating Committee reviewed the qualifications of members who submitted their names for consideration as candidates for the Board of Directors. The three positions are to be filled by online voting from February 13 through February 22, prior to our credit union s 59th Annual Meeting. We hereby nominate the following four individuals who we believe will serve the credit union in the best interests of the members. The order in which their names appear was determined by a random drawing. Samuel P. McKenzie James E. Payne Marcella C. Catron Karla J. Gaither Respecfully submitted, ORNL FCU Nominating Committee Herb Debban, Chairman Joseph A. Setaro and Crystal Schrof 8

12 assessment. CastleGarde was also responsible for performing quarterly intrusion testing. An Internal Audit Program, under the direction of the Supervisory Committee, provides an ongoing review of compliance with policies and procedures. This program includes an annual inspection of internal controls, cash, member loans, and other assets of your credit union. The audit program The Supervisory Committee followed and offered guidance to our internal auditing function during the year. It approved the annual internal audit plan, participated in training programs, and met with credit union officers to discuss detailed operational information. The committee is pleased to report your credit union continues a tradition of excellent financial management and compliance. for the year 2006 was completed as planned with no unresolved issues. 1/ CALL TO ORDER a. Welcome b. Quorum determination 2/ MINUTES OF 58TH ANNUAL MEETING 3/ REPORTS a. Chairman b. Treasurer c. Supervisory Committee 4/ ANNOUNCEMENT OF ELECTION RESULTS Introduction of newly elected Board Members 5/ OLD BUSINESS 6/ NEW BUSINESS 7/ ADJOURNMENT 9

13 March 9, Call to Order a. WELCOME. The 58th Annual Meeting of the ORNL Federal Credit Union (operating under NCUA Charter No. 5797) was called to order at 7:30PM by Mason Oakes, Chair of the Board of Directors. Members of the Veterans United Honor Guard under the direction of Ralph Hendrix presented colors and led the pledge of allegiance. Director Katie Wolfe Zahn led members of the Sound Company Children s Performing Choir of Oak Ridge in singing the national anthem and other selections. Mason Oakes introduced President and Chief Executive Officer, John D. McKittrick; current board members, and members of the Supervisory Committee. He thanked members of other committees and volunteers as listed in the printed report. He stated that the purposes of the meeting were to elect board members, report to the membership, and award prizes. b. QUORUM DETERMINATION. There were 387 members present, more than enough to constitute a quorum. Minutes of the 57th Annual Meeting A motion was made, seconded, and passed to approve the minutes as written. 3 4 Election a. REPORT OF THE NOMINATING COMMITTEE. Members of the committee were Ben Smith, Chairman; Mary Beth Blair; and J. Grant Stradley. Smith referred to the Committee s report as published in the 2005 Annual Report. He stated that the committee received seven candidate applications, with all applicants being highly qualified, and selected five. Nominees were Randy Gorman, Bill Grimmell, Jama B. Hill, Samuel P. McKenzie, and Leigha Stewart. b. ANNOUNCEMENT OF ELECTION RESULTS. Cindy Spence, member of the Supervisory Committee, stated that 2,747 members voted, and she announced the following results of electronic/ paper voting prior to the meeting: Jama B. Hill 804 Leigha Stewart 659 Randy Gorman 564 Samuel P. McKenzie 531 Bill Grimmell 189 Oakes congratulated Jama Hill, Leigha Stewart, and Randy Gorman on their election. Reports A 12-minute audio-visual presentation on the credit union s activities during 2005 was shown. Oakes thanked Larry Jones and members of the Marketing Department for producing the audio-visual report. a. CHAIR. Mason Oakes referred to the printed report and to the audiovisual presentation. He said that staff members have worked really hard, and that we had a very good year. He called for questions, but there were none. 10

14 5 6 b. TREASURER. Marcella Catron agreed with Oakes that this has been a good year for the credit union. She referred to the printed Treasurer s report, and called for questions, but there were none. c. SUPERVISORY COMMITTEE. Chair Randy Gorman referred to the Committee s printed report and stated that he had one thing to add. He stated that the external auditors, McGladrey and Pullen, were here this week. The committee met with them this afternoon and received a full report. ORNL-FCU received an excellent report, with no findings. Old Business PRESENTATIONS. Oakes presented framed Dogwood Arts prints to Bettie Kurtz and Joe Setaro who chose to retire from the board this year. He expressed appreciation to them for their many years of service to ORNL Federal Credit Union. New Business Member Lewis Emerson asked why the credit union has stopped its past service of providing assistance to members who were purchasing new vehicles. John McKittrick stated that a library of car facts is no longer kept since so much information is now available on-line, but staff members are trained to assist when requested. Member John Clarke requested that ORNL FCU keep recognizing Mrs. Davis, its first employee and manager Drawing of Door Prizes. Marcy Catron conducted the drawing, assisted by Herb Debban and Mason Oakes. Twenty-nine cash prizes totaling $1,500 were awarded by drawing names of attending members from a barrel. Also awarded was a $1,500 Travel Gift Certificate from American Express World Travel in Knoxville. Catron read the rules, which state that members must be present to win. Names were drawn from the barrel by Jamie Antrican, daughter of employee Melanie Antrican. The winners were: $100 Peggy Mitchell $50 Alvin L. Sharp $100 Paul S. Rohwer $50 Wendy Packan $100 Teresa Fancher $25 Helen Brown $100 Kyle R. Spence $25 Ashley Bryant $100 Jon A. Loftis $25 Kathy Wilson $100 Delores Doff $25 Daniel Claus $100 Doyle H. Cole $25 Diane Maddox $50 Joan Leffew $25 Donald Wright $50 Joel Pearman $25 Faye Wallace $50 Rosa Trivette $25 J. C. White $50 Martha Drewry $25 Ernest Shepherd $50 Mason Oakes $25 John Steward $50 Donna Beeco $25 B. G. Graham $50 Anne Belland $25 Denise Metcalf $50 Linda Morris All names were then returned to the barrel before the drawing for the grand prize, which was a $1,500 travel gift certificate from American Express World Travel of Knoxville. Mary Brooks was the winner of the grand prize. Adjournment. The meeting was adjourned at 8:20PM, after which a reception, catered by Judy Dodd, was held for members in the High School Cafeteria.

15 BOARD OF DIRECTORS Mason Oakes, Chairman Herb Debban, Vice-Chairman Marcella Catron, Treasurer Wanda McCrosky, Secretary Randy Gorman J. Robert Hightower, Jr. Jama Hill Ben B. Smith Leigha Stewart Mary Helen Rose, Recording Secretary SUPERVISORY COMMITTEE Cindy Spence, Chairman David A. Watkins, Secretary Jeff Ault James McKinley Joel E. Pearman NOMINATING & ELECTION COMMITTEE Herb Debban, Chairman Crystal Schrof Joseph A. Setaro POLICY & GOVERNANCE COMMITTEE Wanda McCrosky, Chairman Randy Gorman J. Robert Hightower, Jr. Jama Hill Ben B. Smith Leigha Stewart PENSION PLANNING COMMITTEE Mason Oakes, Chairman and Trustee Sally Jaunsen Freels, Trustee J. Robert Hightower, Jr. Ben B. Smith Mary Yoder LEGISLATIVE AND GOVERNMENTAL AFFAIRS COMMITTEE Ben B. Smith, Chairman J. Robert Hightower, Jr. Leigha Stewart 12

16 John D. McKittrick, President Dennis Bowker, Senior Vice-President, Finance Chris Johnson, Senior Vice-President Larry A. Jones, Senior Vice-President R. Taylor Scott, Senior Vice-President Maxine W. Allen, Vice-President, Mortgage Lending Dawn Brummett, Vice-President, Member Services David Farmer, Vice-President, New Branch Development Clay Kearley, Vice-President, Consumer Lending Michael McKnight, Vice-President, Chief Technology Officer Brenda Owensby, Vice-President, Human Resources C. Ed Samsel, Vice-President, Member Business Services Janita Clausell, Assistant Vice-President, Member Services Stacey Foster, Assistant Vice-President, Fraud & Forgery, Security Andrea Griffitts, Assistant Vice-President, Audit Services Lori Ihle, Assistant Vice-President, Member Services Vickie Kitts, Assistant Vice-President, Loan Servicing, Collections Melissa McMahan, Assistant Vice-President, Remote Service Delivery Lisa Taylor, Assistant Vice-President, Controller Tom Wright, Assistant Vice-President, Marketing and Community Relations Jean Eiler, Security Officer Vicki Cox, Manager, Consumer Loan Quality Tod Elam, Manager, Collections Chris Fox, Manager, Information Technology Emily Gibson, Manager, Indirect Lending Karen Lawrence, Manager, Sales Janet Martin, Manager, Contact Center Brian Mullins, Manager, MEMBERS Financial Services Renee Pemberton, Manager, eservices Rochelle Pettus, Manager, Operating/ Deposit Servicing Trish Seiber, Manager, Mortgage Servicing Tim Sirman, Manager, Facilities Melanie Walsh, Manager, Staffing Joy Wilson, Manager, Technical Training, Oak Ridge Anne Belland, Branch Manager, Powell Kroger Ryan Bennett, Branch Manager, Oak Ridge National Lab Debra Brown, Branch Manager, Clinton Amy Chesney, Branch Manager, Fountain City Michael Dennis, Branch Manager, Sevierville Barbie Evans, Branch Manager, Morristown Linda Evans, Branch Manager, Maryville Tommy G Fellers, Branch Manager, South Knoxville Debbie Hankins, Branch Manager, Oak Ridge Wal-Mart John Hassell, Branch Manager, Madisonville Vickie Hill, Branch Manager, Millertown Pike Susie Jones, Branch Manager, Floater Michelle Leach, Branch Manager, North Knoxville Amanda Mahan, Branch Manager, Middlebrook Food City Gale Pace, Branch Manager, Farragut Cissi Reagan, Branch Manager, Halls Angel Scott, Branch Manager, West Knoxville LaTanya Terrell, Branch Manager, East Knoxville Don Thaler, Branch Manager, Lenoir City Harriet Walker, Branch Manager, Kingston, Rockwood 13