75th Annual Meeting March 22, Welcome to our Family

Transcription

1 75th Annual Meeting March 22, 2014 Welcome to our Family

2 Program Social Time Introductions Elections 1:30 P.M. 2:00 P.M. Cyril A. Schultz, Jr. 2:00 P.M. Business Meeting Minutes of the 74th Annual Meeting Report of the Board of Directors Report of the Treasurer (Presented by President/CEO H. Vance Vargo) Report of the Credit Committee Report of the Supervisory Committee New Business Report of the Credentials Committee Jill Dollhopf - Presentation of Plaque Adjournment Numbers of Interest 7,065 members strong $24,350,284 is the amount of loans made during the year 4,272 is the number of loans made during the year 123,034 is the total number of loans since organization $383,368,803 is the amount of total loans since organization

3 Mission Statement Family First Credit Union provides a full range of financial products and services in a prompt and friendly manner. Vision Statement Family First Credit Union will be a safe and sound financial institution offering our members and potential members competitive products and services during their lifetime. Core Values PHILOSOPHY - We are a non-profit organization that believes in the credit union philosophy of Members Helping Members. ETHICAL AND LEGAL BEHAVIOR - We conduct business with integrity, trust, privacy, confidentiality, accountability, and mutual respect. MEMBER SERVICE - We provide our members with a high level of professional service and respect. TEAMWORK - We work together to achieve common goals and evaluate our progress. STAFF DEVELOPMENT - We provide guidance and motivation to our staff through communication, policy development, and education. ADAPTIVE TO CHANGE - We are an organization that adapts to change to meet future challenges. ORGANIZATIONAL GROWTH - We will provide future growth opportunities through innovation, performance and planning initiatives. COMMUNITY SERVICE - We dedicate our time and resources to causes that make a difference in our communities.

4 Message from the CEO: I am proud to note that 2014 marks the 75th anniversary of Family First Credit Union. It is clear that without a historic commitment to serving our members and to reaching out to meet the financial needs of the City of Saginaw employees, this credit union would not have succeeded as it has since it was founded in It may be too strong to say that the financial services industry remains in turmoil, but these are definitely challenging economic times in Michigan. Consumer debt remains at historic high levels and interest rates have declined to historic low levels for a prolonged period of time. Competition from traditional and non-traditional financial institutions continues to increase, and the credit union system is changing rapidly to remain competitive and sustainable. Mergers appear to be the solution for some credit unions across the country and here in Michigan. Members have finally embraced the shift from paper transactions to electronic transactions through the use of online banking, mobile banking, and electronic bill pay programs. Despite the changing landscape and trends in the financial services industry, we diligently maintained our focus on our members and our community and achieved tremendous progress on several key initiatives. We expanded our branch network in 2013, with the opening of our new Kochville Branch Office in June. This state of the art facility will serve our members residing and/or working in both Kochville and Saginaw Townships. We also continued our effort to serve our underserved members during 2013 by partnering with Saginaw Habitat for Humanity and the Federal Home Loan Bank s housing assistance programs. These programs enable underserved members to obtain grants from the FHLB for home renovations and repairs. We also applied for and received approval from both the NCUA and DIFS, our regulator, for Low Income Designation. This will enable the credit union to work with various federal agencies to better serve our underserved members in the future. Given the past five consecutive years of double digit and unprecedented loan growth, we experienced higher levels of delinquencies and loan losses in 2013 as our loan portfolio continued to season. Although this trend and the economic climate in Michigan both had an impact on our profitability, Family First still considered 2013 to be a very productive year for the credit union. I would like to extend my sincere gratitude to our Board of Directors for their strong corporate governance and guidance and to our Official Family committee members for their ongoing oversight of the credit union. In addition, I greatly appreciate my exceptional staff for their hard work and dedication throughout this challenging year, which resulted in the many successes that we are able to report to you. In closing, please know that all of us at Family First Credit Union consider it an honor and privilege to serve you. We sincerely appreciate your loyalty and continued financial support. Sincerely, H. Vance Vargo President/CEO

5 Message from the Chairman: Good, better, best; never let it rest till your good is better, and your better is best. While the author of this quote is unknown, this statement exemplifies where Family First Credit Union is today, where are members are, and where we plan to be in the future. At Family First, things are good, and getting even better. Over the past few years, the Board, senior management, and staff planned, prepared, and worked our way through very difficult economic times in Michigan. We made difficult decisions and continually evaluated and adjusted our business tactics and strategies. In doing so, we always focused on protecting the well-being of our members and this credit union. We remained focused on keeping our services easily accessible, our loan and deposit rates competitive, our corporate values intact, and you, our members, well served. Because of this dedication to providing you exceptional member service, things were good, and today, things are getting better. As you review this Annual Report, you will realize that the strategic vision for Family First Credit Union is being implemented every year through sound management and prudent decision-making. As a member-owned cooperative organization, we operate with long-term financial sustainability in mind. We measure our performance through the value we provide our members, our financial strength, and the impact we have in our communities. We are pleased to report positive progress this past year in all of these areas. At Family First Credit Union, our members remain at the center of everything we do. This is further exemplified by the opening of our third branch office in Kochville Township in June This branch office provides our members with a third location for which they can perform their financial business with the credit union. It also enables us to better serve our members who work or reside in both Kochville and Saginaw Townships, which are considered to be areas of substantial growth in the Saginaw area. Despite the sluggish economic conditions in Michigan, the credit union remains financially strong, and is considered a well-capitalized financial institution. Over the past 75 years, our members have relied on our financial sustainability as we remained healthy and were always ready to serve them. In closing, I would like to express my sincere gratitude to the Board of Directors, the volunteers on our Supervisory and Credit Committees, our CEO and his staff, and to you, our members, for the understanding, patience, and financial partnership that you bring to your credit union. As I always remind the Board of Directors and management, if we are going to focus on making good, even better, then we have to run it like a business. Sincerely, Cyril A. Schultz, Jr. Chairman Board of Directors

6 Annual Report Financial Statement ASSETS Loans $47,091,804 $50,951,865 Allowance for Loan Losses (158,822) (285,572) Cash on Hand & in Banks 1,722,392 1,147,109 Corporate Credit Union Shares 1,492, ,349 Other Investments 14,321,801 14,079,338 NCUA Share Insurance 587, ,938 Land & Building 4,225,643 4,222,052 Furniture & Fixtures 388, ,938 Other Assets 1,647,973 1,745,795 TOTAL ASSETS $71,319,236 $74,025,812 LIABILITIES Member Shares 18,932,801 20,688,537 Christmas Clubs 50, ,842 Checking Accounts 4,498,188 4,454,446 IRA Accounts 4,350,663 4,456,055 Money Market Accounts 9,056,098 9,115,795 Certificates of Deposit 25,644,569 26,684,991 Dividends Payable 45,018 39,158 Sight Drafts Payable 156, ,887 All Other Liabilities 657, ,956 Members Equity 7,927,675 7,360,145 TOTAL LIABILITIES & EQUITY $71,319,236 $74,025,812 Income & Expenses INCOME Interest on Loans 2,374,565 2,404,282 Income from Investments 345, ,632 Other Income 737, ,213 TOTAL INCOME 3,457,371 3,465,127 EXPENSES Employee Compensation 898,422 1,076,355 Employee Benefits 188, ,560 Post-Retirement Health Insurance (49,903) (33,343) Travel & Conferences 34,808 16,840 Association Dues 7,998 9,825 Office Occupancy 182, ,425 Office Operations 409, ,180 Educational & Promotional 139, ,010 Loan Servicing 128, ,225 Professional & Outside Services 311, ,332 Provision for Loan Losses 195, ,321 Interest on Borrowed Money Supervision Fee 10,565 27,738 Cash (Over)/Short Annual Meeting 3,600 2,950 Miscellaneous 29,774 14,523 TOTAL EXPENSES $2,490,278 $3,008,239 NET EARNINGS BEFORE DIVIDENDS $967,093 $456,888 Dividends Expense 503, ,919 Non-Operating Gains/(Losses) (37,289) (3,435) Gain on Sale of Investments 97,742 7,260 NET INCOME BEFORE IMPAIRMENT 524,443 65,794 NCUSIF/TCCUSF Expense 55,834 47,275 TRANSFER TO UNDIVIDED EARNINGS $468,609 $18,519

7 Supervisory Committee Report Number of Members 7,311 7,065 Loans made during the year $24,755,569 $24,350,284 Number of loans since organization 118, ,034 Amount of loans since organization $359,018,519 $383,368,803 Each member s account is insured up to at least $250,000 and backed by the full faith and credit of the United States Government. The Office of Financial and Insurance Regulation has performed its examination of Family First Credit Union in the major areas of Capital Adequacy, Asset Quality, Management, Earnings, and Liquidity and Funds Management. The $3,000, Credit Union Discovery Bond and other insurances carried through Travelers Insurance are protection against any and all losses. Dennis Browning, Chairman John Holys, Secretary Nicholas Hall, CPA Credit Committee Report On behalf of the Credit Committee, I am pleased to report that during 2013 the credit union approved 4,272 loans to our members totaling $24,350,284. The Loan Committee and Loan Officers have the responsibility of granting all types of loans subject to the policies set forth by the Board of Directors, Bylaws and the Department of Insurance and Financial Services, which governs the operation of the Credit Union. The Credit Committee, Loan Committee and Loan Officers continue to ensure that your deposits are being invested in quality loans. Ricardo Longoria, Chairman Stephanie Harden, Secretary Maurice Patterson Kennie Kempter Judy Bannan-Sarmiento

8 74th Annual Meeting Saturday, March 9, 2013 Family First Credit Union - Freeland Branch The meeting was called to order at 10:04 A.M. by Chairman, Cyril A. Schultz, Jr. DISTRIBUTION OF BALLOTS: Chairman Schultz welcomed the members that were present. The official family and staff were then introduced. BOARD OF DIRECTORS PRESENT: Chairman Cyril A. Schultz, Jr. Vice-Chairman Tim Laugh Secretary Dave Hoffman Director Tony Coppolino SUPERVISORY COMMITTEE PRESENT: Chairman Dennis Browning Secretary John Holys Member Nick Hall CREDIT COMMITTEE PRESENT: Chairman Rick Longoria Secretary Stephanie Harden Member Judy Sarmiento STAFF PRESENT: H. Vance Vargo, Fran Gibelyou, Kim Webber, Terry Luptowski, Judi Corbin, Tommi Lough, Cathy Honeman, Julie Pangborn, Julee Rick, Joe Kubiak, Tim Pedicini, Paula Hudson and Judy Rich. ELECTIONS FOR 2013: Chairman Schultz began by announcing the two nominees for the Board of Directors. The nominees were Tim Laugh and Kevin Quinlan. He then called for nominations from the floor for the Board of Directors. Hearing none, nominations were closed. Dennis Browning moved to close the nominations, seconded by Rick Longoria. Adopted Unanimously Chairman Schultz announced the one nominee for the Supervisory Committee. The nominee was Dennis Browning. He then called for nominations from the floor for the Supervisory Committee. Hearing none, nominations were closed. Tim Laugh moved to close the nominations, seconded by Fran Gibelyou. Adopted Unanimously Chairman Schultz announced the two nominees for the Credit Committee. The nominees were Rick Longoria and Stephanie Harden. He then called for nominations from the floor for the Credit Committee. Hearing none, nominations

9 were closed. Dennis Browning moved to close the nominations, seconded by Dave Hoffman. Adopted Unanimously There was a short recess while the ballots were collected and counted. MINUTES OF THE 73rd ANNUAL MEETING: Chairman Schultz requested that the members and staff spend a few moments reviewing the minutes of the March 17, 2012, Annual Meeting that were contained inside the Annual Report of the credit union that was provided to each member. He then asked if there were any changes recommended. Hearing none, Pat Jacob moved to approve the minutes as printed, seconded by Sally Kohlhoff. Adopted Unanimously BUSINESS MEETING: REPORT OF THE BOARD OF DIRECTORS: Chairman Schultz began by reflecting on what has been a remarkable history of making a difference in the lives of our members. He reminded the members that despite lingering external financial pressures in 2012, Family First Credit Union remained true to our mission and continued to focus on the provision of value and service to our members. Chairman Schultz assured the members of Family First that several key principals are at the core of this organization, and will remain intact well into our future. First and foremost is our unwavering respect for the membership and our proud tradition of serving them. He stated we also recognize that our sole purpose as a member-owned cooperative is to provide our members with the best value possible, while at the same time maintaining the safety and soundness of the Credit Union. Chairman Schultz recognized the staff, senior management and volunteers for doing their best every day to ensure the integrity of Family First and the caliber of products and services Family First provides. Chairman Schultz concluded his comments by thanking the members for their continued loyalty and faith in Family First and, as he always does, by stating that; If we want to be successful, we have to run it like a business! REPORT OF THE TREASURER: CEO Vargo began his presentation with a brief slide presentation, which highlighted the 2011 and 2012 financial performance of the credit union. He indicated that Total Loans in 2011 were reported at $42.3 million, but increased to $47.1 million in This represented a very impressive annual growth rate of 11.35%, which was significantly higher than the national loan growth rate of 1.0% to 3.0%. He stated that deposit growth was utilized to fund the loan growth, however; this year total investments also decreased from $19.5 million to $15.8 million as maturing and called investments were also available to supplement the deposits used to fund loan growth and the purchase of the new branch office in Kochville Township. CEO Vargo reiterated that all of the holdings in the investment portfolio are in very safe investments such as Federal Agency Securities, Pass-Through Federal Agency Mortgage-Backed Securities and Negotiable CDs, which are guaranteed by the FDIC. CEO Vargo reported that Total Assets increased from $68.7 million in 2011 to over $71.3 million in Similarly, Total Deposits increased from over $60.4 million

10 to over $62.5 million during the same period. He also reported that the credit union still remains Well Capitalized. With the low interest rate environment remaining in 2012, CEO Vargo commented that Total Income actually decreased from $3.6 million in 2011 to $3.5 million in When interest rates continue to drop we have to lower our loan rates, which means we don t get as much loan interest income as we do in a higher interest rate environment. The same holds true for investments; the rates continue to drop so as our investments roll off and we replace them with new investments at lower interest rates, we don t receive as much investment interest income. Operating Expenses increased during the year by 9.22% compared to 11.38% last year. Most of this was due to continued increases in employee benefit costs in 2012, and increasing costs in general. The Provision for Loan Losses increased significantly by over 100%. This was primarily due to a higher level of loan losses reported for the year. Dividend Expenses decreased from $616 thousand to $503 thousand due to the prolonged low interest rate environment. Even though dividend expenses decreased this year, it failed to offset the increase in Provision Expenses in order to have the positive impact on profitability that it had in 2011, as Net Income decreased from $668M in 2011 to $468M in CEO Vargo reported on the changes that were made in He discussed the implementation of Fiserv R7, the Windows Version of our Core Processor, a new Visa Loan Program, an upgrade to a new version of our NetBranch Program, obtaining a new statement vendor, and most importantly, the purchase of a new branch building situated on Tittabawassee Rd. in Kochville Township. This new branch location is projected to open in the spring of 2013, giving our members a choice of three different branch office locations. CEO Vargo concluded by stating that the credit union faces several challenges in He indicated these challenges include opening the new branch and hiring staff for that branch, promoting our new Visa Loan program, looking into the feasibility of mobile banking and promoting the new branch location. He mentioned that the Board, Official Family, and credit union staff are ready and able to meet these challenges in CEO Vargo thanked the members for attending the Annual Meeting and commented that he appreciated their membership and continued financial commitment to the credit union. REPORT OF THE CREDIT COMMITTEE: Chairman Longoria gave the report of the Credit Committee, which is also contained in the Annual Report. He stated that in 2012, the Loan Committee approved approximately 4,179 loans for a total of $24,755,569. REPORT OF THE SUPERVISORY COMMITTEE: Chairman Browning gave the report of the Supervisory Committee, which is also contained in the Annual Report. He stated that the Supervisory Committee performed surprise cash counts at both the Saginaw and Freeland offices during He stated after a count of all teller drawers, travelers checks, vault monies, cash dispense machines and ATMs, there were no shortages reported. NEW BUSINESS: None REPORT OF THE CREDENTIALS COMMITTEE: Fran Gibelyou thanked everyone for voting and reported that there were 169 ballots returned, and 7 voided, with the following results:

11 Board of Directors - (2 elected for a 3 year term) Tim Laugh Kevin Quinlan Supervisory Committee - (1 elected for a 3 year term) Dennis Browning Credit Committee - (2 elected for a 3 year term) Rick Longoria Stephanie Hardin Dave Hoffman motioned to accept the results of the election, seconded by Tony Coppolino. Adopted Unanimously ADJOURNMENT: Chairman Schultz inquired if there was any further business to come before this meeting. There being none, Rick Longoria moved to approve adjournment at 11:07 A.M., seconded by Joe Kubiak. Adopted Unanimously Chairman-Cyril A. Schultz, Jr. Secretary-David Hoffman Recording Secretary-Tamara L. Westerman-Dawson

12 Volunteers Who Serve You Board of Directors Cyril A. Schultz, Jr., Chairman Timothy Laugh, Vice-Chairman David Hoffman, Secretary Kevin Quinlan, Treasurer Tony Coppolino, Director Credit Committee Ricardo Longoria, Chairman Judy Bannan-Sarmiento, Secretary Stephanie Harden Maurice Patterson Kennie Kempter Supervisory Committee Dennis Browning, Chairman Nicholas Hall, CPA John Holys Family First Credit Union Staff Saginaw Office H. Vance Vargo, President/CEO Frances M. Gibelyou, Manager Saginaw Office Tammy Westerman-Dawson, Manager Accounting Judi Corbin, Manager Credit Solutions and Recoveries Lisa Stephen, Member Service Representative Supervisor Jessica Esparza-Steele, Asst. Member Service Representative Supervisor Cathy Honeman, Account Services Specialist Julie Pangborn, Card Services Specialist Gwynn Whitmore, Member Service Representative Erin Turnwald, Member Service Representative Kyle Patterson, Part-time Member Service Representative Connie Garstecki, Senior Loan Officer Julee Rick, Loan Officer Pamela Winston, Loan Clerk Freeland Office Kimberly J. Webber, Manager Freeland Office Carey Daubert, Member Service Representative Supervisor Tim Pedicini, Credit Solutions and Recoveries Specialist Judy Rich, Part-time MSR & Collections Specialist Grace Prange, Part-time Member Service Representative Julia Pfund, Part-time Member Service Representative Paula Hudson, Loan Clerk Kochville Office Andrew Geth, Manager Kochville Office Terry Luptowski, Manager - Lending Tracey White, Member Service Representative Supervisor Tommi Lough, Marketing Specialist Ashley Sholes, Part-time Member Service Representative Makenzie Malcolm, Part-time Member Service Representative Kesha Montgomery, Part-time Member Service Representative Joe Kubiak, Loan Officer