ANNUAL REPORT Celebrating 85 Years of Serving our Members and Communities. Teachers Credit Union

Transcription

1 85 ANNUAL REPORT 2016 Celebrating 85 Years of Serving our Members and Communities Teachers Credit Union

2 85 YEARS REMEMBERING OUR ROOTS Eighty-five years ago, a small group of teachers pooled their savings to lend to others in need of credit. From these humble beginnings, TCU has grown to become Indiana s largest Credit Union with $3 billion in assets and fifty-five branches throughout the state of Indiana and Southwest Michigan. And while financial service is an important part of contributing to a community, TCU s history shows a commitment to going beyond this service and working to build a better community. 85 Years Remembering Our Roots

3 TCU s Vision Statement is to become the dominant financial service provider in all of the markets where we operate. The Mission of TCU is to be a financial benefit to its members, team members and to the communities of which it is a part. SUPERVISORY COMMITTEE REPORT The TCU Supervisory Committee is responsible for independently assessing the soundness of the credit union s operations and financial status. Internal controls and policies are evaluated by the supervisory committee through discussions with internal and external auditors and reviews of audit and regulatory examination reports. Certified public accountants, BKD, LLP, were retained to perform a comprehensive year-end audit of the credit union s financial statements. BKD s 2016 audit was conducted according to generally accepted auditing standards and resulted in an unmodified clean opinion for the 2016 financial statements. A portion of the audited financial statements are included in this report and a full copy is available upon request. Based upon the results of all audits and examinations performed during 2016, it is the opinion of the supervisory committee that TCU is in good financial condition. We can assure the membership that management s policies and practices are sound and effective.

4 CHAIRMAN S REPORT The Credit Union difference. We have all likely heard that statement, but many ask, what exactly is that difference? It s very simple. Credit Unions are member owned financial cooperatives whose purpose is to benefit its member/owners, not shareholders. At Teachers Credit Union, making that positive difference for our members is in the forefront of our planning, goal setting and daily operations and it has been in the forefront for all of the 85 years we have been serving our members. We accomplish this level of service excellence by using our capital for the sole purpose of increasing services provided to our members. This comes in many forms, which include lower rates on loans; lower fees; better interest rates on savings products; as well as investing in member convenience through expansion of our access points (ATMs and branch network) and new technology. The year 2016 saw TCU continue its long history and commitment of partnering with and giving back to the communities we serve. In continuing this commitment, we are very pleased to report the successful launch of the TCU Financial Empowerment Program powered by FoolProof. This program was introduced to help improve financial literacy not only among our youth, but anyone wanting or needing a refresher on this important topic. TCU s program has been accepted and highly praised by many school corporations in Indiana. The high school program ended 2016 with 127 teachers enrolled at 100 schools with over a thousand students registered for the program. The Adult Solo Program, offered online, has registered hundreds of individuals along with many organizations who offer the program to their employees and clients. Last, but not least, almost 500 TCU team members successfully completed the program s certification modules by year end. We are pleased with the program s success and the help it is providing to our members and students as they prepare to enter adulthood. We are committed to widening the reach of the program with plans in place for 2017 and beyond. TCU remains a strong and vibrant financial institution, and the Board of Directors appreciates the trust of our members. We will continue to work hard every day to keep that trust. Sincerely, David R. Sage Chairman of the Board

5 PRESIDENT S REPORT On October 13, 2016, your Credit Union celebrated its 85th year of serving members. On that day in 1931, the Credit Union opened for business with $10 of paid-in shares and the month ended with $67 in shares and two loans for $100. There have been many milestones since our humble beginnings and to add to our fruitful history, we ended 2016 achieving the major milestone of reaching $3 billion in assets while serving more than 280,000 members was a year of accomplishments at TCU, including three new branches in Indianapolis, marking one of the largest branch expansion efforts in our history. We expanded our ATM network exponentially by joining the CO-OP network, which added 30,000 free ATMs across the United States for TCU members convenience. In addition, we redesigned our deposit products to make them more user friendly for members. Also in 2016, to address a top priority, which is the safety and security of our members deposits, we rolled out chip-enabled cards for both our debit and credit card holders. Loan balances for 2016 increased 7.62% showing steady growth. Our indirect portfolio remained our top lending product with more than $1.4 billion in auto loan balances, for a 8.62% increase as compared to the previous year s increase of 7.77%. Commercial loan balances increased $25.2 million from December Adding to our commercial product line, in 2016 our business services department was expanded. For 2017, we plan to substantially grow our mortgage product line. If you are planning to purchase a home or re-finance, don t forget to contact your Credit Union first. Supporting our communities is a strategic focus at Teachers Credit Union. We continuously offer our talent, time and treasure in the communities where we are located. Throughout 2016 TCU supported local organizations with nearly a half-million dollars donated across Indiana. We made giant steps forward with the TCU Financial Empowerment Program working in more than 100 high schools, as well as hundreds of individuals registered in the Adult Solo Program, which is offered online to everyone. This program is also being used by organizations in client workshops and for their employees. If you haven t already viewed or participated in the program, I encourage you to ask for details. Over our 85 years of business, our focus has remained constant; to be a financial benefit to our members, team members and our communities. We feel strongly that we live up to our commitments and will always strive for excellence. TCU has been here for you for 85 years and will continue to serve each of you and your families for many years to come. Best regards, Paul A. Marsh President and CEO

6 RETAIL TCU Member Call Center Assisted with more than 528,000 calls averaging 44,000 inbound calls per month Brought in $7.5 million in consumer loans, $332,000 in lines of credit limits and nearly $1.5 million in Visa credit card available credit Approved more than 600 new membership applications and more than 1,000 secondary accounts through the TCU Online Application Center Approved 362 online Visa applications totaling $1.38 million in available credit dollars through the online application center 1,530 referrals to TCU lines of business including TCU Investments, TCU Trust Services, TCU Insurance Agency and TCU Mortgage Provided 9,000 additional products/services Achieved an average NPS* rating of 70.1, which meets the target goal set for TCU. * NPS stands for Net Promoter Score. It is how we measure how loyal our members are to TCU. Loyal members are more than satisfied because they not only come back to open more accounts, they refer their friends and family to TCU as well. Statewide Pin Drop Campaign Promoted the grand opening of five new Indiana service centers: - Hammond - Noblesville - Westfield - Whiteland - Mishawaka To gain awareness of TCU s new locations throughout our communities, life-sized pin drops were placed at every TCU Service Center location along with the launch of a corporate wide Pinpoint Your Financial Future campaign No matter where you are headed, we can help you pinpoint your financial future. Whether you are saving for a well-deserved vacation, your first car or a happy retirement, we can help you map your course to get there.

7 RETAIL Credit Card Services TCU Visa Platinum and Platinum Reward Credit Cards Credit Card JOHN Q MEMBER JOHN Q MEMBER Overall growth of more than 17% in balances Campaigns Balance Transfer and Credit Line Campaign Presented qualifying cardholders with a 1.99% balance transfer and automatic credit line increases Generated $1,307,270 in new balances in the first 3 months Grew 3,409 new cardholders Summer Balance Transfer Campaign Included convenience checks for low rate of 1.99% for 6 months Generated $859,651 in new balances Holiday Shopping Campaign Offered a bonus $25 rebate to qualifying cardholders for using their cards over the holidays 10 or more times 3.4% members qualified for the bonus rebate Achieved sales of more than $82 million Generated $2,337,090 in new purchases Your savings federally insured to at least $250,000 and backed by the full faith and credit of the United States Government NMLS# NCUA National Credit Union Administration, a U.S. Government Agency

8 LENDING Commercial Lending Commercial loans grew 12.6% Closed more than $73,077,807 in funded loans TCU Lending Agency LLC. Currently facilitates the sale of loans with five credit union partners $43 MILLION Continued to focus its growth in South Bend, Indianapolis and Northwest Indiana Indirect Auto Lending $685,042,888 loan volume 26,746 new memberships Consistently Indiana s No. 1 indirect auto lender

9 COMMUNITY TCU Community Highlights TCU remained committed to the communities we serve by partnering with organizations that embody the credit union philosophy of people helping people. These include, but are not limited to: American Cancer Society American Heart Association Big Brothers Big Sisters Chambers of Commerce Children s Museum of Indianapolis Christmas at the Indianapolis Zoo Dress for Success Indianapolis Downtown South Bend (DTSB) Falloween Festival in Walkerton Goodwill Industries IPS Education Foundation Habitat for Humanity Hospice Foundation Junior Achievement Make a Wish Foundation Marshall County Blueberry Festival Memorial Children s Hospital Northern Indiana Economic Development Riley Hospital for Children, Indianapolis School Corporations & Events South Bend Museum of Art South Bend Symphony TCU Bi-County Basketball Tournament United Way WTHR Health and Fitness Expo YMCA TCU Foundation Continued its support of the TCU Foundation Job Center at the Indianapolis Public Central Library, which provides patrons with assistance in resume writing, job searches, employment services, and has assisted more than 20,000 patrons over the past five years Matched more than $40,000 in member donations made to the Memorial Children s Hospital by Beacon Health System employees Awarded $72,000 in college scholarships benefiting 41 students TCU Financial Empowerment Program Powered by FoolProof More than 100 schools have registered for this web-driven financial literacy school program Saw more than 58,500 active sessions, more than 1.1 million pages viewed and 17,519 hours spent on the program s site Adult program launched in May 2016 and includes news articles, a video library, consumer buying guides and a self-guided course for individuals, colleges and organizations to utilize in classrooms and workshops Powered by tcunet.com/empower

10 INVESTMENT & TRUST SERVICES Investment Services CUNA Brokerage Investment Program is the third-largest in the U.S. Invested more than $68.5 million of new investment dollars Our advisors helped manage more than $650 million in assets for TCU members Continued to help members take control of their retirement by making the rollover process easy when members change jobs or retire Eight Certified Financial Planners (CFP ), which is more than any other credit union in Indiana Trust Services More than $80 million under management Continues to educate team members and members, hosting educational seminars Provides professional competent estate planning, trust and wealth management services to our membership Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. The CFP certification marks are not affiliated with CUNA Brokerage Services, Inc. Trust services available through MEMBERS Trust Company, Riveredge Drive, Suite 280, Tampa, FL 33637, a Federal Thrift Chartered by the Office of Thrift Supervision. This is for educational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant.

11 INSURANCE AGENCY Insurance Agency Committed to our clients and TCU members as an excellent insurance resource for personal, business, senior products, group benefits, life and health Currently serving over 10,000 clients and TCU members with multiple lines of insurance coverage Strengthened our overall sales and service structure by adding several new positions within the agency Opened our first agency office in the Indianapolis area Achieved multiple awards from our insurance carriers: - Presidents Club - Senior Partner - Leadership Circle - Million Dollar Club These awards are only presented to the Top 10 agencies within the State of Indiana and the Top 240 agencies across the country. TCU Insurance Agency, LLC is a subsidiary of TCU. Insurance products are offered through various approved carriers.

12 MORTGAGE SERVICES Mortgage Services 2016 was a year of growth for the Mortgage Division - Implementation of new strategies to grow the capabilities of the department - New work flows implemented in the last quarter of 2016 to augment production - Updated mortgage call center and planned growth to handle increased volume - Additional staffing was approved on both the operations and sales side in preparation for 2017 growth 1,289 members obtained a mortgage with TCU for a total of $151,027,686 1,475 members obtained a HELOC or second mortgage with TCU for a total of $52,425,962 Actively participate in Realtor & Builder Association membership and events Serviced 9,361 mortgages totaling more than $758 million, which is $34 million more than NMLS#

13 FINANCIAL STATEMENT ASSETS Cash and due from banks $87,287,533 $118,065,904 Interest-bearing time deposits 2,040,534 4,614,149 Available for sale securities 228,525, ,064,844 Loans, net of allowance for loan losses of $17,533,175 and $17,067,005 2,578,449,103 2,395,864,973 Premises and equipment 51,837,069 51,337,248 Federal Home Loan Bank stock 19,767,300 19,068,200 National Credit Union Share Insurance Fund and other deposits 20,199,426 19,121,908 Alloya membership shares 2,759,747 2,759,747 Goodwill 1,831,111 1,831,111 Intangible assets, net of accumulated amortization of $4,626,754 and $4,125,820 3,110,021 3,370,955 Other assets 32,256,472 25,868,833 Total assets $3,028,063,345 $2,861,967,872 LIABILITIES Share accounts $2,335,410,242 $2,223,723,267 Borrowings 427,364, ,384,197 Other liabilities 24,587,128 20,651,548 Total liabilities 2,787,362,359 2,633,759,012 MEMBERS EQUITY Balance Sheet Regular reserve 172,168, ,602,609 Undivided earnings 72,862,876 69,130,771 Accumulated other comprehensive income (loss) (4,330,288) (524,520) Total members equity substantially restricted 240,700, ,208,860 Total liabilities and members equity $3,028,063,345 $2,861,967,872

14 FINANCIAL STATEMENT Income Statement INTEREST INCOME Loans and leases 83,369,980 $78,221,079 Investment securities 4,053,020 3,663,645 Interest-bearing deposits 433, ,679 Other interest and dividend income 751, ,747 88,607,469 83,150,150 INTEREST EXPENSE Share accounts 14,092,899 13,478,974 Borrowings 3,991,997 3,928,108 18,084,896 17,407,082 NET INTEREST INCOME 70,522,573 65,743,068 Provision for losses on loans 5,573,607 5,279,861 NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS 64,948,966 60,463,207 OTHER INCOME Service charges and fees on share accounts 29,703,905 27,891,357 Annuity and other commissions 7,763,908 7,781,999 Gain on investments 444, ,489 Loss on other real estate owned and repossessions (324,119) (733,134) Other income 2,454,270 2,475,893 40,042,723 37,605,604 OTHER EXPENSES Salaries and employee benefits 43,089,855 42,129,587 Net occupancy expenses 6,481,983 6,444,070 Equipment and data processing expenses 13,393,512 13,360,605 Printing and office supplies 2,381,294 2,119,340 Marketing and public relations 3,143,095 2,885,492 Loan expenses and fees 2,967,563 3,083,464 Telephone expense 4,933,700 3,789,098 Plastic card processing 1,709,328 1,965,828 Other expenses 10,770,735 9,708,548 88,871,065 85,486,032 NET INCOME $16,120,624 $12,582,779

15 FINANCIAL STATEMENT Statement of Cash Flows OPERATING ACTIVITIES Net income $16,120,624 $12,582,779 Items not requiring (providing) cash Provision for loan losses 5,573,607 5,279,861 Investment securities amortization, net 2,792,052 2,878,102 Net loan origination cost accretion, net (2,117,168) (1,785,956) Gain on sale of investments (444,759) (189,489) Loss on other real estate owned and repossessions 324, ,134 Depreciation 5,742,818 5,446,130 Amortization of intangible assets 500, ,494 Change in Interest receivable 387, ,364 Interest payable and other liabilities 3,935, ,417 Prepaid expense and other assets (1,988,829) (13,138) Net cash provided by operating activities 30,826,018 26,193,698 INVESTING ACTIVITIES Net change in interest-bearing time deposits 2,573,615 3,198,554 Proceeds from redemption of FHLB stock - 344,200 Purchase of FHLB stock (699,100) - Purchase of securities available for sale (73,513,799) (42,861,227) Proceeds from maturities and paydowns of securities available for sale 30,259,521 32,757,734 Proceeds from sales of securities available for sale 28,641,032 22,719,939 Proceeds from sales of real estate owned and repossessions 10,523,995 8,535,198 Cash received from assumption of net liabilities - 5,829,718 Net change in loans (192,343,173) (187,143,562) Purchases of premises and equipment (6,367,647) (7,032,140) Other receivable for related party (9,446,352) - Increase in NCUSIF and other deposits (1,077,518) (527,600) Net cash used in investing activities (211,449,426) (164,179,186) FINANCING ACTIVITIES Net change in Certificates of deposit and individual retirement accounts (2,239,155) 20,419,583 Other share accounts 113,926, ,912,256 Proceeds from borrowings 15,000,000 10,000,000 Repayment of borrowings (22,019,208) (14,424,059) Net change in short-term borrowings 45,000,000 16,600,000 Membership fees received 177, ,510 Net cash provided by financing activities 149,845, ,680,290 NET CHANGE IN CASH AND CASH EQUIVALENTS (30,778,371) 53,694,802 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 118,065,904 64,371,102 CASH AND CASH EQUIVALENTS, END OF YEAR $87,287,533 $118,065,904 ADDITIONAL CASH FLOWS AND SUPPLEMENTARY INFORMATION Interest paid $18,048,835 $17,411,501 Transfer of loans to other real estate owned and repossessions 6,302,604 7,635,408 Transfer of premises and equipment to other assets 125,008 1,334,505 Acquired in assumption: Loans - 1,983,561 Alloya membership shares - 9,747 Premises and equipment - 1,000 Other assets - 4,015 Shares - 7,610,223 Other liabilities - 217,818

16 FINANCIAL STATEMENT Consolidated Statements of Members Equity Years Ended December 31, 2016 and 2015 Regular Reserve Undivided Earnings Accumulated Other Comprehensive Income (Loss) Balances, January 1, 2015 $147,667,846 $63,310,245 $299,587 $216,277,678 Total Net income 12,582,779 12,582,779 Other comprehensive income (824,107) (824,107) Regulatory transfers, net 11,762,253 (11,762,253) Membership fees received 172, ,510 Balances, December 31, ,602,609 69,130,771 (524,520) 228,208,860 Net income 16,120,624 16,120,624 Other comprehensive income (3,805,768) (3,805,768) Regulatory transfers, net 12,388,519 (12,388,519) Membership fees received 177, ,270 Balances, December 31, 2016 $ 172,168,398 $72,862,876 $(4,330,288) $240,700,986

17 BOARD OF DIRECTORS & SUPERVISORY COMMITTEE Board of Directors DAVID SAGE Chairman WILLIAM HOJNACKI Vice Chairman VINCENT HENDERSON Secretary SHIRLEY GOLICHOWSKI Assistant Secretary PAUL A. MARSH Treasurer JIM DUBOIS Board Member THEA KELLY Board Member DIANE MAAS Board Member JOHN MYERS Board Member ROGER THORNTON Board Member Supervisory Committee DAVID ARANOWSKI Chairman DERRICK TORAN Committee Member KEVIN SCOTT Committee Member TRACY WEBER Committee Member

18 EXECUTIVE MANAGEMENT PAUL A. MARSH President & Chief Executive Officer GENE NOVELLO Executive Vice President & Chief Operating Officer LOUISE ARSENAULT Senior Vice President General Counsel & Chief Compliance Officer TODD BROWN Senior Vice President & Chief Financial Officer CHAD DOUGLASS Senior Vice President & Chief Lending Officer DAN ROUSSEVE Senior Vice President & Chief Information Officer

19 Thank you to our members for 85 Years of serving you and your communities! Your savings federally insured to at least $250,000 and backed by the full faith and credit of the United States Government 2017 Teachers Credit Union. Visit tcunet.com for TCU Service Center locations or download our app. NMLS# NCUA National Credit Union Administration, a U.S. Government Agency