THE NATIONAL INSTITUTES OF HEALTH FEDERAL CREDIT UNION

Transcription

1 THE NATIONAL INSTITUTES OF HEALTH FEDERAL CREDIT UNION 2017 ANNUAL REPORT

2 Steven J. Berkowitz, Chairman of the Board Rick Wieczorek, President & CEO Chairman s and President s Report The NIH Federal Credit Union (NIHFCU) is thriving. During 2017, we continued to make important strides in several essential areas of your credit union. For example, we: Enhanced our remote banking convenience To succeed in today s increasingly digital and competitive financial service environment, we continued to improve your NIHFCU banking experience using your computer and mobile devices. With the introduction of our new online account opening service, opening an account or applying for a new loan is now faster and more expedient than ever. Welcomed more new members Nearly 3,600 new memberships were opened, 28% more than in We attribute much of this success to the launch of our fast and easy online member application, and the development of several new healthcare employer partnerships. With over half of our new members coming from within the millennial or younger generations, we are ensuring the intergenerational success of your credit union into the future. Improved our products The addition of our popular 15/15 Adjustable Rate Mortgage (ARM) is helping NIHFCU members enjoy the initial low rate of an ARM along with the stability of a traditional 30-year fixed loan. Further, we introduced our new student lending solutions, with exceptional funding options for current students, and loan refinancing options for practicing medical specialists and other professionals. In 2017, the NIHFCU continued the implementation of its quality service program by integrating enhanced training activities, and updating many procedures to support the top notch and efficient experience you deserve. In addition, we launched our new Facebook page, providing a way for current and potential members to stay in touch with the NIHFCU using social media. Finally, as part of our community engagement activities, we helped the NIHFCU become more active with and give back more to the stakeholders we serve. Our financial position is excellent and the future is very bright. In 2018, we are excited to announce even more advancements including a new website and a more robust mobile banking experience, modernization of our ATM fleet, and the roll out of new products to serve our members. We remain dedicated to you, our loyal members, and look forward to earning your trust and business every day. Thank you and have a wonderful year. New in 2017 With our new online account opening service, it is more convenient than ever to open a membership or a new account right from your personal computer or mobile device. 1

3 Supervisory Committee Report The Supervisory Committee, in accordance with the Federal Credit Union Act, ensures the NIH Federal Credit Union management has in place: Practices and procedures to safeguard members assets. Controls so that financial reporting objectives have been met. The Committee oversees the Internal Audit function where regular audits are completed. The Committee meets monthly with Internal Audit to ensure internal controls are established and effectively maintained, applicable laws and regulations are followed, and member concerns are resolved. In addition, the Committee employs the certified public accounting firm of Doeren Mayhew (DM) to assist them in performing an annual independent audit of the Credit Union s financial statements. DM has issued an unqualified opinion on the Credit Union s financial statements as of and for the fiscal year ending September 30, Along with the audits performed by DM, the NIHFCU is examined by the National Credit Union Administration (NCUA). The NCUA has exclusive authority governing the operation of federally chartered credit unions. We are pleased to report that the NIHFCU is financially sound. It is the goal of the Committee to ensure the integrity and financial strength of the NIHFCU while continuing the highest level of service to our membership. The Committee is here for your benefit. Members of the Supervisory Committee: Left to right: La Tonya Malone, Jamikah St. Lewis, Eugene Belt, Donna Adderly (Chairperson). Not shown: Anissa Brown. New in 2017 NIHFCU s new student loan program provides funding options for undergrad, graduate and PhD students, as well as loan refinancing opportunities for practicing medical specialists and other professionals. 2

4 Treasurer s Report The NIH Federal Credit Union had another successful year in 2017 and continued to maintain a strong financial presence. The balance sheet remains positioned to take on the added risks associated with a rising rate environment even as assets grew to a near record high $612.0 million by December 31, The Credit Union s net income improved in 2017 to $1.82 million compared to $1.73 million in the prior year. We are well capitalized based on the threshold set by the National Credit Union Administration with a net worth ratio of 8.73% and our members remain loyal and appreciative of the innovative products and services that we offer. The improvement in our net income can be attributed mainly to the growth in loans. Loan receivables rose to $380.1 million versus $339.8 million in 2016, an increase of 11.9%. This rate of growth exceeded the industry average over the same time period and was driven primarily by the successful introduction of our new 15/15 ARM product, strong member demand for vehicle loans and commercial loan participation purchases. The yield on the loan portfolio increased as well, rising from 3.48% in 2016 to 3.53% in The important composition shift towards higher loan balances helped generate greater, sustainable revenue for the Credit Union which we plan on using to further expand into the healthcare community and strengthen our existing relationship with the NIH. Non-interest income in 2017 was $6.7 million or $304,000 higher than the prior year. Total non-interest expense increased $1.3 million or 6.7%, to $20.1 million in Higher expenses in 2017 were driven primarily by an investment in our current staff and by adding additional staff to better serve our members, an increase in debit card fraud related expenses and costs associated with resolving a problem business loan. The decision to defer certain IT related initiatives partially offset these higher expenses. The Provision for Loan Loss expense declined by $130,000 to reflect fewer reserves needed for specifically identified non-performing loans. Our loan delinquency ratio of 0.55% as of year-end 2017 improved significantly over the prior year s level of 1.46%. The NIHFCU regularly monitors and maintains an appropriate level of reserves for potential, future credit losses. Recently, a comprehensive three-year strategic plan was developed through a joint effort between management, the Board of Directors and committee volunteers of the Credit Union. This plan is designed to focus resources on several major initiatives that will benefit the Credit Union and, most importantly its members. We are positioned financially to make this happen in 2018 and beyond. John Jarman, Treasurer New in 2017 Rick Wieczorek, NIHFCU s President & CEO, helped kick off our new Community Engagement program as part of the Special Love motorcycle brigade escorting more than 100 children with cancer to Special Love s 35th Annual Camp Fantastic. 3

5 National Institutes of Health Federal Credit Union Statements of Income Years Ended December 31, 2017 and 2016 (UNAUDITED) INTEREST INCOME: Loans Investments Total interest income $12,877,686 3,373,705 16,251,391 $12,034,415 3,302,763 15,337,178 INTEREST EXPENSE: ($MILLIONS) NET INCOME Members deposits Net interest income 352,967 15,898, ,759 14,968,419 Provision for loan losses Net interest income after provision for loan losses 714,001 15,184, ,338 14,124, % 0.30% 0.45% 0.30% RETURN ON ASSETS 0.30% NONINTEREST INCOME: Fees and service charges Net mortgage asset gains Gain on sale of investment securities Other Total noninterest income NONINTEREST EXPENSE: Compensation and employee benefits Office operating costs Computer expenses Marketing expenses Professional and outside services Miscellaneous expenses Total noninterest expense 6,310, , ,941 20,266 6,705,183 9,374,025 2,075,991 3,136, ,165 2,188,102 2,659,245 20,065,771 5,639, , ,607 4,073 6,401,278 8,725,442 1,968,999 2,906, ,020 2,155,838 2,409,884 18,799,120 Net income $1,823,834 $1,726,239 The above financial statements are unaudited. A complete set of audited financial reports for the twelve months ending September 30, 2017 are available upon request. 4

6 National Institutes of Health Federal Credit Union Statements of Financial Condition December 31, 2017 and 2016 (UNAUDITED) ASSETS: ($MILLIONS) TOTAL ASSETS Cash and cash equivalents Investment securities available-for-sale Investment securities held-to-maturity Other investments Loans held for sale Allowance for loan and lease Deferred loan costs Loans receivable Accrued interest receivable Foreclosed and repossessed assets Premises and equipment, net NCUSIF deposit Prepaid expenses and other assets Total assets LIABILITIES: Members deposits Accrued expenses and other liabilities Total liabilities $64,985, ,272,829 8,066, ,363 1,933,850 (1,853,836) 746, ,139,281 1,596, ,400 2,292,221 5,285,650 17,455,830 $612,046,717 _ $554,084,494 9,969, ,053,581 $72,960, ,119,084 9,088,445 10,553,399 12,438,102 (2,277,188) 568, ,792,373 1,600, ,599,253 4,911,134 7,496,952 $593,850,468 _ $538,433,240 10,205, ,638,380 MEMBERS EQUITY: ($MILLIONS) TOTAL DEPOSITS Regular reserve Undivided earnings Accumulated other comprehensive loss Total members equity 4,356,244 49,097,635 (5,460,743) 47,993,136 4,356,244 47,273,800 (6,417,956) 45,212,088 Total liabilities and members equity $612,046,717 _ $593,850,468 _ The above financial statements are unaudited. A complete set of audited financial reports for the twelve months ending September 30, 2017 are available upon request. 5

7 Board of Directors Your Board of Directors is a volunteer group elected by the membership and is responsible for the strategic direction of the Credit Union, including developing goals and establishing policy. The Board members are dedicated individuals who are committed to ensuring a high level of service to members and enhancing the financial position of the Credit Union. By providing a full range of financial products and exceptional service, your Board of Directors strives to promote the fundamental ideals of the credit union movement. Members of the Board of Directors: Seated, left to right: Cheryl Stevens, Steven J. Berkowitz (Chairman of the Board), Margaret Gordon. Standing, left to right: Diana Rutberg, Donald Christoferson, Ann Fitzpatrick, John Jarman, Timothy Tosten, Vicki Buckley. Asset Liability Management Committee The members of the Asset Liability Management (ALM) Committee are dedicated to managing the inherent risks in the Credit Union s balance sheet. They accomplish this through the establishment and oversight of a wide variety of financial policies. Guidance from these policies meet all relevant regulatory risk compliance mandates and provide management with a sound foundation for maintaining sustainable earnings and adequate capital levels for the Credit Union. Members of the Asset Liability Management Committee: Left to right: Laura Gent, Jeffrey Grempler, John Jarman (Chairman), Donald Christoferson, Ann Fitzpatrick. New in 2017 NIHFCU s new and popular 15/15 Mortgage, combining the low rate of an adjustable rate mortgage with the stability of a traditional 30-year fixed loan, is helping members strengthen their mortgage dollars. 6

8 Website and Online Banking nihfcu.org Mobile Banking nihfcu.org/mobilebanking National Call Center TDD/TTY Locations The NIH Federal Credit Union serves its members through a network of branches and ATMs throughout the Washington DC/ Baltimore metro area. Members can also enjoy convenient nationwide access to their accounts at over 30,000 network ATMs and 5,000 shared branch locations in addition to a wide range of 24/365 remote services. Visit nihfcu.org/locations to search for any branch or ATM location. NIH Federal Credit Union P.O. Box 6475 Rockville, Maryland Members of the Senior Leadership Team: Rick Wieczorek President & CEO Timothy Duvall EVP, Chief Financial Officer Frank Amantia SVP, Chief Lending Officer Jesse Boyer SVP, Chief Operating Officer Ken Cahoon VP, Retail Delivery Cassandra Hairston VP, Community Engagement Jonathan Hefter Controller Andre Kiss Director, Internal Audit Steven Levin VP, Marketing & Business Development Laura Little Strategic Project Manager Christopher Newell VP, Information Technology Steven Peschin VP, Finance & Investments Taneka Walton-Courtney AVP, Payments & Card Services 7