FINANCIAL SOLUTIONS MADE EASY 2017 ANNUAL REPORT

Transcription

1 FINANCIAL SOLUTIONS MADE EASY 217 ANNUAL REPORT

2 BOARD CHAIR/CEO REPORT Page 2 TREASURER S REPORT Page 6 FINANCIAL CONDITION Page 8 INCOME & EXPENSE Page 9 SUPERVISORY COMMITTEE REPORT Page 11 BOARD OF DIRECTORS AND Page 12 SUPERVISORY COMMITTEE EXTRAORDINARY PEOPLE GUARANTEE We believe that each member of Enrichment Federal Credit Union is extraordinary, special, and deserving of personal attention each time you call, click, or visit our offices. You can expect us to listen, focus on your needs, offer assistance, and bring a quick resolution to your request. It is our goal to get to know you, understand your needs and objectives, and work with you to develop a personal financial strategy while offering you the greatest benefits.

3 BOARD CHAIR AND CEO REPORT T wenty seventeen was a very successful year for Enrichment Federal Credit Union on all fronts. We added 2,668 new members, the most in recent years. We grew our deposits by $12 million, or 2.95%; we grew our loans by $45 million, or 17.37%. We generated new loans of $14 million, a record for the Credit Union, and we increased our return-on-assets (or profitability a key measure of operating efficiency) to.51% which is equal to our national peer credit unions. Another key ratio, loans-to-deposits, increased from 65.87% to 75.1%, also about equal to our national peer credit unions. The loans-to-deposits ratio means that for every $1 dollar deposited, we are loaning out 75 cents to our members, a measure of how effectively we are serving your lending needs. Over the past year, our net worth ratio, a measure of solvency, also increased from 1.8% to 1.24%, a well-capitalized level. Importantly, these financial results have shown improvement during a period of a significant increase in investment in the Credit Union s operating infrastructure approved by your Board of Directors. In 216, your Board of Directors approved a long-term strategic plan that included a management reorganization, the implementation of a new credit-union-wide core computer system, and comprehensive training to enhance our lending opportunities with our membership. All of these have contributed to these positive results in 217. Marketing. During 217, the Credit Union implemented a very successful Casino type marketing campaign designed to increase the utilization of Credit Union services by our membership. The campaign centered around members and potential members receiving chips when they utilized Credit Union services. This program resulted in increases to our loans and deposits as well as our electronic services bill pay, e-statements, and debit/credit cards. The campaign culminated in one member winning a new Acura TLX automobile! During 218, the Credit Union will continue several similar, exciting promotions designed to increase member usage of our products and services. Technology. In addition to our new core computer system, the Credit Union has made other investments in new technologies all designed to make your Credit Union banking available 24 hours a day, 7 days a week, anywhere in the world. These new technologies include Remote Deposit Capture (RDC), whereby Credit Union members can take a picture of a check and then remotely deposit that check from any location. Early in 217, we implemented MyMobileMoney which allows members to turn their debit card on or off. This great security feature allows you the member to control when your debit card can be accessed, helping reduce fraud. Additionally, with MyMobileMoney, you are notified via a text message anytime a charge is made to your card. In November 217, Enrichment Federal Credit Union was the first credit union in the U.S. to introduce the Amazon Echo banking platform! The Amazon Echo platform is a new banking application which uses utilizes artificial intelligence. With the Amazon Echo, members can conduct inquires of their Credit Union balances, transfer funds between their accounts, and make loan payments by commands such as Alexa, what is the balance in my checking account? Alexa will then either text or the member a receipt for the transaction. The Credit Union s Amazon Echo banking application is a secure encrypted process, much like the internet banking application that we are all familiar with. This new technology provides a real benefit to disabled and elderly members who may not be able to visit branches conveniently in person. Training. In 216 and 217, the Credit Union has significantly increased its employee training. We have invested more in lending training, personal development of staff, and consultation for specific areas where we have seen a need. In 217, we implemented our initial class of Enrichment Experts a group of 13 employees who completed 1 individual classes covering a broad range of subjects including technology and leadership training. The concept, drawn from Apple Computer s Geniuses program, is designed to eventually lift the level of technology and personal development skills of all employees emanating from this original group of mentors. There will be additional Experts classes each year. Page 2 enrichmentfcu.org enrichmentfcu.org Page 3

4 Halls Branch. Faced with a very narrow timeline for making a decision, the Board of Directors and Management decided to relocate our branch located in the Food City in Halls. The Credit Union was able to purchase a closed bank branch on Maynardville Pike that provides the Credit Union with much improved exposure and digital signage. In addition, this new location provides additional services that the prior branch location could not, such as drive-thru access and safe deposit boxes. Amazingly, the Credit Union was able to close on the purchase of the building and open the new branch in approximately 45 days! Your Credit Union employees worked extremely hard to make this happen! 218 and Beyond. Continuing with the Board of Directors long-term strategic plan, 218 will bring many exciting changes to your Credit Union, including: Call Center. As the Credit Union has reviewed transaction trends of our branches and services, it has become apparent that we must deliver a more unified, cohesive E-Services Support Group to properly serve your needs. To address this, your Board of Directors approved a project to complete interior modifications and construction of the third floor of the Oak Ridge Branch. We expect this renovation to be completed in April 218. The third floor will house our existing Call Center, Home Banking, and Card Services groups together to better address your needs when you reach out to us. We see this combined group as an area that will continue to grow to meet your increasing remote service needs. Credit and Debit Cards. After years of analysis, in late 218, the Credit Union will change from separate debit and credit card processors to a single processor for both debit and credit cards. There are many benefits to both the Credit Union and the member from this change. The Credit Union will save money from the efficiency of using a single vendor, and the members will obtain better service since the member records will all reside internally on the Credit Union s core computer system (credit card records currently reside on the credit card processor s computer system). Members will be able to control the security ( on and off ) of both debit and credit cards with the new processor within the same app. We will also be making changes to our current rewards program to include a cash rewards option. (Members will not lose any of their current rewards points.) Other Changes. To be able to offer members a more robust menu of low-cost mutual funds and fee-based accounts, Enrichment Retirement and Investment Services (ERIS) will be changing its broker-dealer platform from Cuna Brokerage Services, Inc. to Security Services Network, in the first half of 218. For those of you who have made investments through our ERIS program, we can assure you that this change will be seamless. In 218, you will see a new Credit Union virtual branch. This virtual branch will include a new website layout and design with functionality that will allow online account opening, loan applications/approvals, and many other new features. To enable our members to transact business with us anytime and anywhere in the world we will also be rolling out remote document delivery. We will also begin evaluating vendors for improved internet banking and mobile banking products, which will complement the new virtual branch. The internet banking and mobile banking products are planned for early 219 installation. Watch for announcements on all of these exciting new offerings, so that you re able to truly do business with us anytime, anywhere. You can always rest assured that the security of your account is paramount to us and will remain protected. Your Credit Union is committed to providing member-owners a lifetime of exceptional products and extraordinary service. Our purpose is Member Financial Solutions Made Easy. We are determined to balance new technologies without losing touch with the relationships we have built through the years. We value the trust you have placed in us as your financial partner, and you can be assured that everything we do, we do for you the member. Thank you for choosing Enrichment Federal Credit Union for you and your family s financial needs now, and in the future. Rick Benson Chairman Craig Peters Chief Executive Officer Page 4 enrichmentfcu.org enrichmentfcu.org Page 5

5 Member Loans In Millions $ $ $ $ $ $398 $ $ Member Deposits In Millions Loan Growth In Millions $ , $ , $ ,788 $ , Members In Thousands 214 2, , ,332 2, New Members TREASURER S REPORT wenty seventeen was a year of steadily increasing growth in loans, deposits, and membership. Loans outstanding increased $45.5 million over 216, from $262 million to $37 million. This represents 17.37% annual growth. The Credit Union loaned a record $14 million to our members to help them achieve their personal goals. Deposits increased $11.7 million during 217, from $397 million to $49 million. This represents 2.95% annual growth. We strive to balance this growth relative to our market needs and the desire to pay a competitive rate to our membership on their deposits. Generally, our interest pricing strategy is to pay close-to-market averages on all deposit products. We survey the market weekly to confirm that our rates remain competitive. The Federal Reserve s monetary policy and worldwide economic conditions have kept interest rates at historic lows. However, recent political and economic changes may cause rates to begin to increase in 217. Enrichment welcomed 2,658 new members to the Credit Union in 217. These new relationships represent approximately $15 million dollars in new deposits and approximately $27.4 million dollars in new loans. Your Credit Union continues to experience below average loan losses and loan delinquencies due to prudent underwriting standards and efficient loss control practices. Loan delinquency at year end was.11% and net charge-offs were.1%, compared to peer averages of.86% and.51%, respectively. In 217, the Credit Union also made considerable investment in new technology, which is reflected in the positive operating results for 217. This new technology has allowed us to deliver more efficient and effective services to the membership. We are pleased with our yearend results for 217. We appreciate your commitment and support. On the following pages, you will find the operating details in our financial statements for the year ending on December 31, 217. James M. Young, Jr. Treasurer In Thousands Page 6 enrichmentfcu.org enrichmentfcu.org Page 7 T

6 FINANCIAL CONDITION As of December 31, 217 INCOME & EXPENSE Year Ended December 31, 217 Loans to Members Loans, Visa/MC $ 37,352, Loans in Process of Liquidation 92,454.5 Total Loans $ 37,445, Less Allowance for Loan Losses 285,19.98 Net Loans $ 37,16, Accounts Receivable $ 23, Cash on Hand $ 6,285,563.6 Investments Federal Agency Securities-Net $ 89,345, Volunteer Corporate Credit Union $ 7,968,41.58 Interest Bearing Deposits/Other 15,774,353.4 Financial Institutions Other Investments 4,943, Credit Union Owned Life Insurance 8,961, Bond & Stock Index Funds Unrealized Loss on Investments (1,92,848.45) Total Investments $ 125,899, Accrued Income 997, Prepaid Expenses 656, Fixed Assets Land $ 4,32,51.96 Buildings 8,,952.7 Furniture & Equipment 2,48, Leasehold Improvements 1, Total Fixed Assets $ 14,182,62.52 Other Assets $ 3,6,95.94 Total Assets $ 458,86, Liabilities Accounts Payable $ 227, Accrued Expense 1,12,22.31 Taxes Payable 2, Deferred Credits 316,72.65 Other Liabilities 1,843,91.8 Total Liabilities $ 3,492, Members Shares Shares $ 126,99, Share Drafts 82,657, Money Market Account 139,243, Individual Retirement 16,729, Accounts Share Certificates 43,786,831.2 Total Members Shares $ 49,47,84.69 Regular Reserve $ 6,92, Undivided Earnings $ 4,79, Reserve For Unrealized Loss (1,92,848.45) Total Members Equity $ 455,314,47.3 Total Liabilities & $ 458,86, Members Equity Interest on Loans, Visa/MC & Participation Notes Income from Investments Income from Fees/Charges All Other Income Total Income Employee Compensation & Benefits Travel, Conference & Training Association Dues Office Occupancy Office Operations Education & Promotion Loan Servicing Expenses Professional & Outside Services Provision For Loan Losses Federal Supervision & Examination Expenses Cash Over & Short Annual Meeting Expenses All Other Operating Expenses Total Expenses Member Dividends Non-Operating Loss Interest on Borrowed Money Contributions to Capital 11, ,891, ,35, ,839, ,815, ,188, , , ,79, ,389, , ,843. 2,967, , ,328.4 (645.93) 2, , ,655, , (26,221.17).8 2,34,75.36 Page 8 enrichmentfcu.org enrichmentfcu.org Page 9

7 SUPERVISORY COMMITTEE REPORT I n accordance with current regulations, your Enrichment Federal Credit Union management, policies, procedures, and financial operations are subject to periodic federal examination by the National Credit Union Administration (NCUA), an annual certified opinion audit by a CPA firm, and ongoing reviews conducted by another CPA firm, and the Credit Union s Internal Audit Department. The NCUA performed their examination on Credit Union operations, policies, and management for the period ending March 31, 217. The results of this examination revealed the Credit Union to be operating in a safe and sound manner. The Credit Union received an unqualified audit opinion on the Credit Union s financial statements and internal controls from the CPA firm McGuire, Yuhas, Huffman & Buckley, P.C., as of September 3, 217, and for the year then ended. During 217, Security Compliance Associates conducted internal and external vulnerability assessments. These assessments confirmed your Credit Union s internal and external security systems to be safe and secure. Additionally, Enrichment continues to support and maintain a secure home page and website to ensure our members confidence and peace of mind. I am pleased to report that each department of the Credit Union fully carried out the policies and procedures for which it was responsible during 217. All audits showed your Credit Union to be in sound and stable financial condition and that our internal/external security is at the highest level. Thanks to safe practices, strict oversight, extensive audits, and deposit insurance backed by the federal government, you can have the utmost confidence in the safety, soundness, and security of your Enrichment Federal Credit Union. The Supervisory Committee met with the Internal Audit Manager monthly during 217 to discuss the results of various audits and reviews. In addition, members of this Committee reviewed accounts payable, surveyed closed accounts, and addressed member complaints. Results of these audits and reviews are reported to the President/CEO and Board of Directors on a monthly basis. Steve Braden Chairman Page 1 enrichmentfcu.org enrichmentfcu.org Page 11

8 BOARD OF DIRECTORS Rick Benson Board Chairman Dwight K. Potter Vice Chairman James M. Young, Jr. Secretary/Treasurer Patricia Brackett Patsy Hamby John Clayton Beth Fee SUPERVISORY COMMITTEE OUR MISSION, OUR PROMISE We pledge to enrich our members lives by providing a lifetime of exceptional financial products with service that exceeds expectations. Our mission is to make members financial solutions easy. Our goal is for our members to be able to transact business with us anytime, anywhere in the world... seamlessly. Steve Braden Chairman David Robinson Tim Stallings Page 12 enrichmentfcu.org

9 CORPORATE LOCATION: Oak Ridge 21 South Illinois Ave. P.O. Box 883 Oak Ridge, TN BRANCH LOCATIONS: Clinton 1116 N. Charles G. Seivers Blvd. Clinton, TN Pellissippi 9419 S. Northshore Dr. Knoxville, TN Halls 75 Maynardville Pike Knoxville, TN Roane County 19 Bradford Way Kingston, TN Pinnacle Point 1834 Roane State Hwy. Harriman, TN West Knoxville 921 Kingston Pike Knoxville, TN New Tazewell 44 S. Broad St. New Tazewell, TN North Knoxville 521 Schubert Rd. Knoxville, TN enrichmentfcu.org National Credit Union Administration, a U.S. Government Agency Member accounts are federally insured to at least $25, and backed by the full faith and credit of the United States Government.