Annual Report. Fiscal Year Ending March 31, 2016

Transcription

1 Annual Report Fiscal Year Ending March 31, 2016

2 Serving our members best interest... past, present and future. California Coast Credit Union has been serving its members best interest for over 85 years and is proud to be the credit union of choice for over 144,000 members. We re a true credit union embracing the philosophy of people helping people providing the best possible rates and offering a wide array of services. Our service is friendly, our branches are welcoming and the member experience is truly enjoyable. In fact, our members give us exceptional ratings each year for member service. It is with great pride that we give back to our community by providing local high school and college students with financial education and scholarships, raising funds for Rady Children s Hospital, the San Diego Humane Society and so much more. Cal Coast employees are passionate about our members financial well-being and are dedicated to improving the lives of those in our communities. Today, California Coast offers 22 branches in San Diego and Southern Riverside counties, competitive deposit rates, lower loan rates, state-of-the-art technology, mobile banking and many additional convenient services. Members have access wherever they live, work or travel through Cal Coast Online, a shared branch network of more than 5,000 locations, as well as more than 30,000 surcharge-free ATMs nationwide. Brand Ideal Improve the lives of people in our community by helping them attain financial success and independence. Mission The reason we exist is to promote our members financial prosperity while continuously delivering exceptional, caring service. I love my credit union. While all the other banks are charging for this and that, my credit union keeps giving me perks. From my checking account, to my rollover IRA, to my easy as pie car loan - California Coast Credit Union is the way to go. I recommend them to all my friends the second they start to complain about their bank. Laura S. Yelp Review

3 President s Report California Coast Credit Union is pleased to be the credit union of choice for over 144,000 members in San Diego and Southern Riverside counties. Member satisfaction is a top priority and members have consistently given us high marks for customer service and satisfaction, year after year. On solid financial ground with over $2.0 billion in assets, our current financial standing indicates strong performance and risk management practices. Additionally, California Coast remains well-capitalized with good loan quality which is a key measure of strength, providing safety for members and allowing us to invest in secure systems and branch locations. California Coast was honored to be selected by the City of San Diego as its Preferred Financial Services Partner. We re a natural fit with the City as both organizations exist to serve and better our community. California Coast also formed a strong partnership with a new, yet familiar organization the San Diego Gulls Hockey Team. As presenting sponsor, Cal Coast and the Gulls enjoyed a successful season and the return of hockey to San Diego. As reported last year, California Coast launched a new values-based brand. This endeavor is a significant expansion of our mission to give back to our communities through involvement with charities and causes that support youth, education and the health and care of people and animals. We also deepened our relationship with local communities by engaging employees to become even more involved where they live or work and their participation has been as outstanding as it has been rewarding. As part of our values-based brand and culture, we also established a nonprofit charity organization, the Cal Coast Cares Foundation. This foundation will provide deserving students with scholarships and equally deserving teachers with grants. In an effort to continue offering members a truly exceptional experience, we launched several new technological advancements, including early credit for certain ACH payroll deposits, ACH loan payments, a mobile quick balance feature, Apple Pay for debit cards and upgraded online security features. We appreciate that our members trust us to provide value they won t find anywhere else. Our members can continue to count on us to embrace the latest proven technological advances, provide exceptional service and go the extra mile in the communities we serve. Respectfully submitted, Todd M. Lane President/CEO Chairman s Report As we look back at the past year, we are pleased with the financial milestones that we ve met and exceeded. It s been a very good year, indeed. We are opening new branches, providing our members with exciting new products and services, continuing to grow our membership, and our assets have exceeded the $2 billion mark! In the end though, the strong financial position that we ve worked hard to achieve is not about profit, it s about the people we serve our members. As a not-for-profit organization, we strive to serve our members by returning our profits back to them in the form of lower fees and loan rates, higher deposit rates and increased investments in new products and services, as well as systems to protect the financial security of the credit union and individual member accounts and transactions. From this position of financial strength and stability, we have been able to invest in our values-based brand and culture, which reflects the very foundation of the credit union movement to serve our members and support the communities in which they live. In the past year, our credit union has greatly strengthened our partnerships with key community charities, non-profits, schools and other organizations that help make San Diego and Riverside counties a great place to live and work. We have developed strong relationships with new members from our partnership with the City of San Diego; invited members, non-profits and community friends to join us in our exciting partnership with the San Diego Gulls; expanded our working relationship with colleges and schools all across San Diego County; and provided support to many nonprofit organizations that share our commitment to building strong and healthy communities. The credit union has also recently established the Cal Coast Cares Foundation to expand the number of scholarships we award to local students as well as provide grants for local educators. Here at California Coast Credit Union, this past year has clearly proven that, especially as a not-for-profit serving its members, we can indeed do well by doing good. On behalf of the Board of Directors, I am very proud of this accomplishment and extend that commitment and our thanks to our members in the year ahead. Respectfully submitted, Rick Knott Board of Directors Chair

4 Chief Financial Officer s Report The Statement of Financial Condition as of March 31, 2016 reflects 9.9% growth in assets which ended the fiscal year at $2.09 billion, a $188 million increase over one year prior. Most of the credit union s assets are in Loans to Members and most of the liabilities are in the form of Members Share Accounts. Total Members Equity (generally understood to represent reserves) amounted to $241 million, reflecting a 9.7% increase ($21 million) over the prior year. The credit union s ratio of net equity-to-assets ended at 11.51% versus 11.54% at the end of March This greatly exceeds the regulatory definition of well capitalized which is 7.0%. Members shares provide the source of liquidity for making loans to members. One metric used for measuring how much is being loaned out is the loan-toshare ratio. At March 31, 2015, that ratio was 76.5% but by March 31, 2016, it had risen further up to 80.2% as more of the credit union s members turned to their credit union to meet their borrowing needs. For the period ended March 31, 2016, Net Loans increased 15.5% ($197 million), Member Shares increased 8.3% ($139 million) and $25 million in Non-member Deposits were accepted from the State of California. Even with the increased lending activity, the credit union s liquidity position remains very strong. For the fiscal year ended March 31, 2016, Net Interest Income was at $53.4 million before the Provision for Loan Losses. The Provision for Loan Losses (PLL) expense totaled $1.0 million, bringing Net Interest Income to $52.4 million. Non-Interest Income increased by $2.3 million as there were increases in income mostly related to Interchange Income and Other Non-Interest Income due to gains on sale of mortgage loans and real estate owned properties. Non-Interest Expense was $3.5 million higher than the previous year but overall was held in check as the credit union continued to focus on expense control in the midst of rapid growth in member loans and deposits. Net Income for the period ended March 31, 2016 was $21.4 million compared to Net Income of $16.0 million for the prior fiscal year. The increase in Net Income was largely the result of increased Interest Income primarily attributable to the tremendous loan growth experienced over the last couple of years. The credit union continues to diligently manage operating expenses and growth. Contributing positive factors included the slowly strengthening economy with low unemployment, low inflation and high demand for auto loans and home loans. The combination of strong reserves, wise lending and investment practices, and emphasis on member financial education, has well positioned our credit union to continue as a safe harbor of financial services for all of its members. Respectfully submitted, Christina Lethlean Chief Financial Officer

5 Cal Coast in the Community California Coast Credit Union s well established commitment to supporting the communities we serve was on full display this past year! Our dedicated staff was seen on the phone banks in the KFMB TV studios supporting the San Diego Humane Society s annual Day of Giving. And many of our Cal Coast members and friends in the community joined us for various runs, walks and other events supporting the important missions of non-profits, schools, libraries and other organizations that share our mission to create vibrant and healthy communities in which we live, work and raise families. Cal Coast strengthened many of our current valued partnerships and developed wonderful new partnerships with several other organizations. Existing partnerships that we built upon included San Diego State University where we provided financial support for the Cal Coast Open Air Theater, free financial workshops for students, sponsorship of the annual Diversity Awards, and much more, including an on-campus branch. We were also very active with our new preferred partnership with the City of San Diego, providing free financial education workshops to thousands of employees and residents, and sponsoring several citywide events. We continued our support for Rady Children s Hospital, the San Diego Zoo, San Diego Pride, Leukemia & Lymphoma Society, American Lung Association, MANA San Diego, STAR/PAL and many other worthy organizations. We were particularly excited to develop new partnerships with the San Diego Gulls, additional local universities and community colleges, the 9th District PTA, Meals-on-Wheels of San Diego, Temecula Valley Family Fair, Asian Business Association, San Diego Blood Bank and many others. California Coast Credit Union is proud to be a values-based, not-for-profit organization that continues to put its values into action. We invite you to join us in making our communities better places to live, work and play! You can learn how to get involved by connecting with us on social media, including Facebook, Twitter and YouTube.

6 AS OF Statement of Financial Condition - Audited ASSETS 3/31/2016 3/31/2015 Cash and Cash Equivalents $ 161,988,000 $ 72,353,000 Deposits in Other Financial Institutions 11,223,000 19,215,000 Securities - Available for Sale 354,888, ,554,000 Securities - Held to Maturity 21,369, ,692,000 Other Investments 14,642,000 14,536,000 Loans Held for Sale 293,000 2,017,000 Loans, Net 1,466,048,000 1,269,334,000 Accrued Interest Receivable 4,675,000 4,304,000 Foreclosed Assets 178,000 3,423,000 Premises and Equipment, Net 27,233,000 27,807,000 NCUSIF (National Credit Union Share Insurance Fund) Deposit 16,572,000 15,929,000 Goodwill 3,168,000 3,168,000 Other Assets 11,983,000 7,847,000 TOTAL ASSETS $ 2,094,260,000 $ 1,906,179,000 LIABILITIES AND MEMBERS EQUITY Liabilities Members Share and Savings Accounts $ 1,816,783,000 $ 1,678,166,000 Non-member Certificate of Deposit 25,027,000 Accrued Expenses and Other Liabilities 11,052,000 8,038,000 Total Liabilities 1,852,862,000 1,686,204,000 Members Equity Regular Reserves 78,754,000 78,754,000 Undivided Earnings 162,343, ,944,000 Accumulated Other Comprehensive Income 301, ,000 Total Members Equity 241,398, ,975,000 TOTAL LIABILITIES AND MEMBERS EQUITY $ 2,094,260,000 $ 1,906,179,000 FISCAL YEAR ENDED Statement of Income and Expense - Audited INTEREST INCOME 3/31/2016 3/31/2015 Loans $ 52,124,000 $ 45,412,000 Securities, Interest Bearing Deposits and Cash Equivalents 4,282,000 4,853,000 Total Interest Income 56,406,000 50,265,000 INTEREST EXPENSE Members Share and Savings Accounts 2,929,000 3,296,000 Non-Member Certificate of Deposit 40,000 Total Interest Expense 2,969,000 3,296,000 Net Interest Income 53,437,000 46,969,000 PROVISION FOR LOAN LOSSES 1,015,000 1,158,000 Net Interest Income After Provision for Loan Losses 52,422,000 45,811,000 NON-INTEREST INCOME Service Charges and Fees 10,506,000 9,995,000 Interchange Income 10,701,000 10,043,000 Other Non-Interest Income 6,076,000 4,911,000 Total Non-Interest Income 27,283,000 24,949,000 NON-INTEREST EXPENSE General and Administrative Employee Compensation and Benefits 32,088,000 29,977,000 Office Occupancy 6,011,000 6,045,000 Office Operations 14,683,000 13,859,000 Other Operating Expenses 5,524,000 4,882,000 Total Non-Interest Expense 58,306,000 54,763,000 NET INCOME $ 21,399,000 $ 15,997,000

7 Supervisory Committee s Report The Supervisory Committee represents the membership of California Coast Credit Union and is responsible for overseeing the audit function. The Committee is also charged with documenting the verification of member accounts periodically in accordance with the credit union s bylaws. To fulfill these responsibilities, the Supervisory Committee engaged the independent audit firm of CliftonLarsonAllen to perform the verification of member accounts as of December 31, 2015, and to perform the financial statement audit for the period ending March 31, It is the opinion of CliftonLarsonAllen that the consolidated financial statements present fairly, in all material respects, the financial condition of California Coast Credit Union and its subsidiary as of March 31, 2016, and the results of the operations and cash flows for the year conform to generally accepted accounting principles. As part of the audit of the financial statements, a confirmation of members accounts, as of December 31, 2015, was performed in accordance with the requirement of the California Department of Business Oversight and generally accepted auditing standards. The Supervisory Committee is also responsible for overseeing the internal audit function. The Committee selects and coordinates the audits of key areas and regularly meets to review audit findings, and to ensure the continued strengthening of its internal controls. As a result of these audits, the established strong processes and controls of California Coast continue to be improved in On behalf of the Committee, I would like to thank the California Coast management and Board of Directors for their leadership and cooperation. Respectfully submitted, Jay Shepard Supervisory Committee Chair

8 Member Savings and Loan Portfolios Non-Member Deposits 2% Other Consumer Loans 2% Credit Cards 4% Certificates 17% Savings 22% Vehicle Loans 40% Consumer Real Estate Fixed 27% Checking 23% IRAs 6% Money Market Shares 30% Business Real Estate Non-residential 17% Consumer Real Estate Variable 10% Member Savings Member Loans Asset, Deposit and Net Loan Growth Assets (in Billions) Deposits (in Billions) Net Loans (in Billions) $0.93 $1.65 $2.09 $0.82 $1.46 $1.84 $0.79 $1.00 $ California Coast Credit Union experienced significant growth since merging with First Future Credit Union in From March 2011 to March 2016, total assets increased 27%, from $1.65 billion at the end of fiscal year 2011 to $2.09 billion at the end of fiscal year This growth was driven by increases in deposit balances, which grew 26% during this time frame. The growth in deposits was led by increases in Checking, Savings and Money Market Accounts, which grew 50%, 61% and 51%, respectively, over this five-year period. Loan balances increased 47% from March 2011 to March 2016, with significant growth in Vehicle loans (+132%), Other Consumer loans (+113%), Consumer Real Estate loans (+13%) and Business Real Estate loans (+12%). All data as of March 31.

9 Community Partnerships California Coast Credit Union has a longstanding commitment to serving the community. But we couldn t meet that commitment without our valued community partners. From local schools, colleges and universities to non-profits that serve youth, families and our cherished pets, Cal Coast continues to establish and foster strong partnerships to accomplish our shared mission to improve the communities in which we live, work and play. Below are just a sampling of the many organizations that California Coast Credit Union has partnered with in the past year. Saving lives today. Improving life tomorrow. When the City looks for partners, we look for companies that really want to make an impact and California Coast Credit Union really cares about the community. California Coast is authentic. I think that s really the best way to describe them. They re helping to support our recreation programs, our libraries, literacy programs, our volunteer programs and our youth development programs. Cal Coast Cares I know that is a slogan but it really is the way they do business. Natasha Collura Director of Corporate Partnerships, City of San Diego

10 Looking Back and Ahead Looking back on was a very productive year at California Coast Credit Union. Cal Coast was very pleased to launch a loyalty rewards program for our members in early 2016 to celebrate our most valuable asset our members. A loyalty rewards calculator on our website makes it easy for members to track their rewards. In an effort to remain on the cutting edge of technology, we launched a mobile wallet solution Apple Pay for our credit card holders. The Cal Coast Apple and Android mobile banking apps now include the Send Money feature powered by PayPal, Apply for a Loan, Open an Account and Loyalty Rewards. ACH loan payments, early credit for certain ACH payroll deposits and upgraded online security features were also launched this year. In addition, a fresh look was implemented for Cal Coast Online, Bill Pay and estatements. We also enhanced Cal Coast Online security by adding a passcode. Glancing ahead to 2016 A typical year at California Coast Credit Union is always filled with new innovations, and the plan for 2016 holds no exception to that rule. In 2016, Cal Coast launched Apple Pay for our debit card holders. We will also be upgrading the Apple and Android mobile banking apps to include Pending Transactions, Quick Balance and Card Controls. Members can watch for additional mobile wallet enhancements in When new credit cards are sent out this year, members will notice that we have transitioned to the MasterCard brand to better serve our members. We will also have added the EMV chip to all of our cards which offers greater security and peace of mind for our debit and credit card users. In the early fall, Cal Coast expects to launch an enhanced money management tool in Cal Coast Online and the Cal Coast mobile banking apps that enables users to take control of their finances. Members will be able to budget and have access to account aggregations, automatic categorization of transactions and debt management. Cal Coast is very pleased to announce that we have two new branches planned to open in 2016 the Menifee Branch will open its doors in October, while our new Downtown San Diego Branch in East Village is planned to open later in the year. As always, we strive to serve in our members best interest. Comments, questions and feedback are always welcome and appreciated, so please don t hesitate to give us a call or stop by your local branch. Your suggestions provide us with opportunities to continue enhancing our service to you!

11 We re in a neighborhood near you! 22 branches, 60 shared branches and 600 fee-free ATMs in San Diego and Southern Riverside counties with 30,000 ATMs nationwide. Chula Vista 386 East H Street, Suite 213 Clairemont 4265 Genesee Avenue Downtown San Diego 440 Beech Street Downtown San Diego - East Village Coming in 2016 El Cajon 898 Jackman Street Encinitas 429 Santa Fe Drive Escondido 962 West Valley Parkway Hillcrest 1060 University Avenue, Suite A101 Kearny Mesa 4285 Ruffin Road La Mesa 8002 La Mesa Boulevard Menifee Coming in 2016 Mira Mesa 8220 Mira Mesa Boulevard, Suite D Murrieta Madison Avenue Murrieta Murrieta Hot Springs Road National City 1704 Sweetwater Road Oceanside 3485 Marron Road Poway Poway Road, Suite 200 San Marcos 140 Knoll Road Santee 9808 Mission Gorge Road, Suite A Scripps Ranch 9825 Mira Mesa Boulevard SDSU Campus in the Student Union Solar Turbines 2200 Pacific Highway, Building 8 (restricted access) Temecula Temecula Parkway, Building C University Heights 4470 Park Boulevard

12 Get social with us! If you would like a copy of the accompanying notes, which are an integral part of these financial statements, call PUB 07/16