2017 Annual Report. Member banking is better banking

Transcription

1 2017 Annual Report Member banking is better banking

2 Core Purpose To help members reach their financial well-being Core Values Integrity To earn members trust, we will hold ourselves accountable to the highest level of integrity Service To achieve member satisfaction, we will perform extraordinary member service Member banking is better banking Soundness To continue the benefits of membership for future generations, we will ensure the credit union is financially sound Vision Goal To be the first place our members turn for all their financial needs 1 Building long-lasting relationships is extremely important to the credit union. Raymond L. became a TruMark Financial member in Raymond turns to the credit union for assistance with credit card knowledge, account management, and more.

3 Serving members for seventy-eight years Since 1939, TruMark Financial Credit Union has been providing savings, transaction, and credit services solely for its members. TruMark Financial has more than 115,800 members and $2.06 billion in assets as of Dec. 31, 2017, ranking it among the largest credit unions based in the Commonwealth of Pennsylvania. We don t profit, you do As a credit union, TruMark Financial is not-for-profit. It exists solely for the benefit of its members, who are literally owners of the institution. After allowing for reserves and operational expenses, all earnings from TruMark Financial return to its members in the form of higher interest rates on deposits and lower interest rates on loans. TruMark Financial also reinvests its earnings in developing additional products and services. All savings accounts at TruMark Financial are insured to at least $250,000 by the National Credit Union Administration, a U.S. government agency. Easy access to services TruMark Financial currently has 22 convenient branch locations throughout Southeastern Pa. Due to TruMark Financial s commitment to increasing the convenience of its services, members may never need to visit a branch. TruMark Financial members can access their accounts through the credit union s secure online and mobile banking, Account Management by Phone, toll-free Member Service Center, the mail, Visa credit and debit cards, surcharge-free ATMs, and an enhanced mobile banking app. Dedicated to members and the community In 2017, TruMark Financial: donated $60,500 to local schools conducted 154 financial literacy presentations volunteered 1,380 hours for 80 organizations TruMark Financial appreciates all members business. When Lorretta B. visited a branch to refinance a vehicle she just bought, the branch manager quickly processed the application and removed the unnecessary charges the dealership added. Loretta stated: The service far exceeds my expectations. 4

4 President s Message In 2017, TruMark Financial s top priorities were to deepen relationships with members and enhance products and services to better meet their needs. Providing an exceptional member experience is crucial to the credit union s progress, but also helps retain long-tenured members and enhance their loyalty and satisfaction. In order to further refine and improve member experience, the credit union s website and phone system were revamped, making it quicker and simpler for members to access the financial information they need. TruMark Financial also implemented a valuable new survey program to take the pulse of its membership. As a result of member feedback, the credit union eliminated the $0.25 debit card PIN fee. The credit union experienced significant growth in 2017, with assets growing 7.4% to over $2.06 billion at year-end. Deposits grew nearly 8%, and loans to members grew 11%. Credit union net income for 2017 increased over 30%, to $14.37 million. Part of the credit union s growth strategy involved the development of relationships with significant institutions in our community. TruMark Financial became the official financial institution of La Salle University, opening a state of the art on-campus branch to serve students, faculty, staff, and TruMark Financial promises to be a responsible and trustworthy financial institution. Elaina, Natellie, and Addelyn L. s mom brought them to TruMark Financial to open their first accounts in The girls are using their accounts to save for their bright futures. alumni. The credit union also grew through a successful merger with Dow Northeast Employees Federal Credit Union, and the opening of a student-operated high school branch at Bensalem High School. These important new relationships allowed TruMark Financial to deliver accessible, affordable financial services convenient to where members live, work, and study. TruMark Financial also improved facilities to better serve members, transforming the Downingtown branch from the ground up into a beautiful new banking portal for Chester County members. The credit union brand also underwent a renovation, with the unveiling of a renewed commitment to members and non-members alike: Member banking is better banking. The credit union continued its ongoing commitment to support financial literacy programs across Southeastern Pennsylvania through the TruMark Financial Cares Foundation. Fundraising efforts resulted in donations of $60,500, enabling 11 area schools to purchase tools for teaching the value of saving, borrowing, and investing wisely. Credit union employees volunteered over 1,300 hours toward 80 different causes throughout the year, demonstrating the credit union s commitment to the credit union movement credo: People Helping People. The Board of Directors reaffirms our commitment to TruMark Financial s core values: integrity, service, and financial soundness. Holding each and every credit union employee accountable to comprehensive service standards, the credit union aims for excellence in serving members needs. The credit union succeeds only through the success of all members, and we believe TruMark Financial offers extraordinary benefits that last a lifetime. Remember to share the love with family and friends and remind them why Member banking is better banking, with TruMark Financial. Thank you for your continued loyalty, and sustained support for the credit union. Respectfully submitted, Hugh T. Bray President, Board of Directors 5 6

5 Treasurer s Report The U.S. economy continued to expand in For the record, the U.S. economy has now been in expansion mode for over eight years. In 2017, the U.S. economy demonstrated continued growth with real gross domestic product (GDP) growing an average of more than two percent. During the third quarter of the year, real GDP expanded by 3.2 percent, but slowed slightly during the final quarter of the year. By comparison, real GDP grew by an average of 1.9 percent in Personal consumption stimulated the economic expansion as consumers increased spending. Consumers were confident about the economy and became more so as employment improved throughout The U.S. unemployment rate steadily declined during the year from 4.7 percent to 4.1 percent. With confidence, U.S consumers pushed retail sales higher in 2017, growing an average of 4.6 percent. Housing starts and vehicle sales benefited from the increased optimism, although vehicle sales were slightly less than the level achieved in Nonetheless, the consumer, which represents two thirds of economic output, paved the way for continued growth. Despite low and stable inflation evidenced in 2017, the Federal Reserve Bank increased interest rates three times. The increases occurred in.25 percent increments in March, June, and December, bringing the overnight Federal Funds rate to 1.50 percent from.75 percent. The Fed has been cautious about allowing inflation to increase quickly in the expanding economy. For its part, the U.S. Treasury curve flattened in the first half of 2017 in light of two Fed rate hikes, but remained upward sloping throughout the year. The ten-year Treasury bond started the year above 2.40 percent, dipped to 2.30 percent in mid-year, and increased back to above 2.40 percent by year-end. Equity markets enjoyed significantly positive returns in 2017, buoyed by positive corporate earnings and optimism about the continuing economic expansion. The Dow Jones Industrial Average increased almost five thousand points, or over 25 percent, to close the year at 24,719. As we look forward, market sentiment has suggested higher interest rates in 2018 with possible multiple rate increases initiated by the Fed. Despite the higher rate forecasts, employment remains strong and consumers remain positive that the economic expansion will continue in the near term. All of this points toward an economic environment conducive for continued good lending and savings opportunities for TruMark Financial and its members in TruMark Financial s financial performance improved in TruMark Financial earned $14.4 million of net income based on net interest income, which represents the difference between interest earned on loans and investments less the amount of interest paid on member savings, of $46.0 million and non-interest income, which represents revenue generated outside of loans and investments, of $24.3 million. Revenue from the loan portfolio was $58.2 million and was based on a loan portfolio that increased by $134.2 million, or percent, mainly in real estate loans. Of the $134.2 million increase, adjustable-rate mortgages increased by $153.9 million and home equity lines of credit increased by $20.5 million. Offsetting these increases were declines in automobile loans year-over-year. The provision for loan loss expense, which represents funds set aside for future and probable loan losses, declined significantly in 2017 as a result of a lower overall loan delinquency rate and loan charge-off rate. Asset quality improved throughout the year. Funding for the loan growth in 2017 came from member savings, which increased by $125.7 million, or 7.92 percent. Growth in member savings was accomplished in certificates of deposit, which increased by more than $75 million and in checking and regular share accounts, which increased a combined $40 million. Other financial highlights for 2017 include total operating expenses of $56.1 million and total non-operating income of $187.7 thousand. Total assets closed 2017 at $2.06 billion, which represented an increase of $142.2 million, or 7.4 percent, over year-end The growth in total assets was based on organic growth in member loans and deposits. TruMark Financial s net worth ratio closed 2017 at percent, maintaining TruMark Financial as a wellcapitalized credit union. With total assets of $2.06 billion and a strong net worth ratio of percent, TruMark Financial Credit Union remains one of the largest and fiscally sound credit unions in Pennsylvania and in the United States. From a regulatory perspective, the National Credit Union Administration and the Pennsylvania Department of Banking, both of which are responsible for monitoring TruMark Financial Credit Union s financial performance and compliance performance, awarded the credit union with high ratings in recent examinations. As we look forward to another year, the Board of Directors, management, and staff of TruMark Financial Credit Union are eager to provide extraordinary member service while maintaining our history of financial soundness. Respectfully submitted, Wayne J. Goodwin Treasurer, Board of Directors 7 8

6 TruMark Financial genuinely cares about members. Stephanie D. knows that TruMark Financial employees are here to help her with lending needs and any banking questions she may have. Statement of Financial Condition at Dec. 31, 2017, and 2016 Statement of Income for the years ended Dec. 31, 2017, and 2016 Assets Loans to members, net 1,351,256,290 1,217,193,871 Cash and cash equivalents 14,025,542 16,673,485 Interest-bearing accounts 151,605, ,656,194 Securities held to maturity 83,808, ,222,845 Securities available for sale 344,798, ,962,734 Other investment securities 5,734,657 4,596,823 Accrued interest receivable 5,658,275 4,885,930 Property, equipment, and leasehold improvements, net 41,208,700 42,980,486 NCUSIF deposit 16,219,666 15,016,070 Prepaid expenses and other assets 47,114,746 37,028,801 Total assets 2,061,430,498 1,919,217,239 Liabilities and members' equity Liabilities: Members' shares and savings accounts 1,722,196,441 1,597,514,099 Borrowed money 100,607,201 82,000,000 Mortgage escrow accounts 10,625,456 9,560,123 Accounts payable and accrued expenses 20,079,225 35,717,481 Total liabilities 1,853,508,323 1,724,791,703 Commitments and contingencies 0 0 Members' equity and undivided earnings 207,922, ,425,536 Total liabilities and members equity 2,061,430,498 1,919,217,239 Interest income: Interest and fees on loans 58,232,270 51,472,551 Interest on investment securities 8,617,629 5,295,373 Interest on interest-bearing accounts and federal funds sold 1,282,905 1,233,567 68,132,804 58,001,491 Interest expense, dividends on members shares, and savings accounts 13,117,452 10,694,468 Net interest income 55,015,352 47,307,023 Provision for possible loan losses 9,000,000 9,851,000 Net interest income after provision for possible loan losses 46,015,352 37,456,023 Non-interest income: Service fees 11,755,482 11,214,814 Other non-interest income 12,703,744 14,291,692 Non-interest expenses: 24,459,226 25,506,506 Salaries, benefits, and payroll taxes 28,508,575 26,033,995 Occupancy and office expenses 17,399,948 17,174,645 Loan servicing expense 3,659,748 2,834,868 Other 6,536,609 5,875,951 Total operating expense 56,104,880 51,919,459 Net income 14,369,698 11,043,070 10

7 Supervisory Committee Report The Supervisory Committee oversees the quality and integrity of the credit union s financial statements and evaluates the performance of the Internal Audit function. The Committee reviews the internal control framework of the credit union to ensure its adequacy, including the security and controls surrounding assets and computerized information systems. The Committee interacts regularly with senior management to address member issues, oversight of regulatory compliance, ethics, and whistleblower hotlines. The Committee also reviews the written appeals of disapproved loans; however, we do not approve or decline any loans. Through the Internal Audit department, the Supervisory Committee directs responses for various letters, s, phone calls, and other inquiries from members to the appropriate departments in the credit union. our information systems. In addition, the National Credit Union Administration (NCUA) and the Pennsylvania Department of Banking examine the credit union annually. These examinations are designed to detect errors or deviations from credit union policies, procedures, regulations, Generally Accepted Accounting Principles (GAAP) and to assess the safety and soundness of the credit union. Based on the results of these examinations, weekly involvement with the audit function, and regular attendance at monthly Board meetings, we are confident your credit union is operating in accordance with laws and regulations in a sound manner and protecting members assets while keeping the best interest of membership in mind. TruMark Financial s Supervisory Committee is elected by the membership. The Committee functions independently from the credit union s Board of Directors and management. On an annual basis, we are required to conduct an examination of the credit union through an external audit firm. We engaged the services of Doeren Mayhew, Certified Public Accountants (CPAs), to perform the examination of the credit union s financial information, Sheshunoff Consulting Solutions to review Member Business Loans, and Security Compliance Associates, to examine the integrity of The Supervisory Committee may be contacted any time at P.O. Box 1447, Fort Washington, PA or via at SupervisoryCommitte@trumark.org 11 Finally, we want to thank the membership for their confidence in, and support of, TruMark Financial Credit Union. We look forward to serving you, our members, in Respectfully submitted, Joseph J. Ciaranca, Chairperson Donna M. Carvin, Vice Chairperson James P. DeBow, Secretary Kathleen Wells, Alternate TruMark Financial strives to provide highly personalized service. Joe R., a TruMark Financial business member, was so impressed with the level of member service he received at the credit union that he moved all his business and personal accounts to TruMark Financial. Joe has been self-employed for more than 20 years, and he states: Becoming a member of TruMark Financial was the best business decision I ve made in years.

8 Easy access to services In addition to convenient services such as ATMs, debit cards, and credit cards, members of TruMark Financial can access their funds and interact with the credit union via: Online at trumarkonline.org Along with an abundance of valuable educational and financial information, members can manage their accounts through the secure online banking site and pay bills with free online Bill Payer. Online banking and online Bill Payer are available 24/7. Account Management by Phone at TRUMARK Members can manage their accounts 24/7 through any touch tone phone with Account Management by Phone. Member Service Center at TRUMARK TruMark Financial members may speak with a member service representative seven days a week. Mobile banking and mobile app Using secure technology, registered mobile banking users can perform many financial transactions from the convenience of a webenabled cell phone, PDA, BlackBerry, Android TM, iphone, ipad, or via mobile app: check balances, transfer funds, pay bills, deposit checks, find a branch location, and more. 24/7 loan applications at Members can apply for loans online at any time and may even have a decision in as fast as 30-seconds. Branch offices Offering the personal service many members prefer for account openings, loan settlements, transactions, and special requests, TruMark Financial now has 22 strategically located branches to serve its membership. Member service, a top priority at TruMark Financial, leads to great experiences like Lorraine L. s. When Lorraine s car broke down as she was on her way to work she went to the credit union s Center City branch, applied for a loan to fix the car, and still made it to work on time. Lorraine says: I truly love my credit union! 14

9 Hugh T. Bray, President Daniel L. Dillard, Vice President Wayne J. Goodwin, Treasurer Board of Directors R. Terence Brunt, Secretary Joseph J. Bily, Director Leonard V. Doughty III, Director Richard V. Lawn, Director David A. Rufibach, Director William A. Tollok, Director Supervisory Committee Joseph J. Ciaranca, Chairperson Donna M. Carvin, Vice Chairperson James P. DeBow, Secretary Kathleen Wells, Alternate Member banking is better banking Equal Opportunity Lender Federally insured by NCUA Copyright 2018 TruMark Financial Credit Union. All Rights Reserved. AZ 27 3/18 trumarkonline.org TRUMARK