SUPERVISORY COMMITTEE REPORT

Transcription

1 ANNUAL REPORT 2014

2 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 reports, as well as 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 2014 audit was conducted according to generally accepted accounting standards and resulted in an unmodified clean opinion for the 2014 financial statements. A portion of the audited financial statements are included in this report, a full copy is available upon request. Based upon the results of all audits and examinations conducted during 2014, 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.

3 CHAIRMAN S REPORT I am pleased to report that 2014 was another very strong and successful year at Teachers Credit Union. We remain a safe and sound financial institution and our members can be proud of their Credit Union s achievements and continued growth. Some of the highlights of the year s performance are as follows: Strong financial performance that exceeded expectations. Continuing high member support as measured by member survey responses. Members continue to find that TCU is simply a good place to do business. Expanded services to members, which include TCU Mobile edeposit and Online Loan Payment capabilities. More and more members are using eservices, including mobile devices, to conduct their financial business. TCU is committed to investing in the technology necessary to meet these growing needs. Strong loan growth led by automobile and business lending. This is a reflection of attractive rates and the ease of doing business at TCU. TCU Investment Services saw its growth continue in A growing number of members are finding the talented and dedicated Investment Services staff to be an effective resource to assist with their retirement planning and wealth building. More and more members are finding TCU Insurance Agency a valuable resource for their insurance needs. Members have found many cost saving options from the Agency for their homes, automobiles, boats, motorcycles and RV s. Additionally, many senior TCU members are using the Agency s knowledgeable agents to assist with finding the right Medicare supplemental plan to meet their needs or in navigating the Affordable Care Act Exchange and selecting the right options for them. TCU Travel continues as a resource to members in assisting with their travel planning. Members are using TCU Travel for cruises, weekend getaways, international travel or vacationing in the US. Over 800 members used over $300,000 of their TCU debit card rebates last year to assist in paying for their travels through TCU Travel. Supporting and giving back to our communities remains a strong commitment at TCU. We continue to give through the TCU Foundation and Community Financial Support to various worthy organizations and projects. These include community economic development programs focusing on job creation; college scholarships; community United Way campaigns and enhancing financial literacy. I remain a proud member of TCU and I am pleased to bring you such a positive report regarding your Credit Union s 2014 performance. Sincerely, David R. Sage Chairman of the Board

4 PRESIDENT S REPORT At TCU we remain committed to our strategic commitments, which centers focus on our members, communities, team members, a continuum of growth and financial stability. This continued commitment provided many successes for your Credit Union in Our members gave us our highest survey response scores ever in Awareness campaigns using technology-based mediums were introduced and were determined great successes. These scores and results indicate members are engaged and overall satisfied using TCU as their financial institution. Offering improved convenience to our members was a primary focus in This focus was accomplished with the opening of a Service Center in Plainfield, the relocation of a Service Center in Elkhart and the addition of an ATM in Edwardsburg. Additionally, we expanded our technology-based solutions by adding Mobile edeposits, Online Loan Pay and e-receipts. By the end of the year, our Mobile apps received 71,322 downloads. These Mobile apps provided our members account access over their smartphone devices. TCU s lending programs in 2014 represented overall growth in the loan portfolio of 15.97% with total Loan balances ending the year at $2.2 billion. Loan growth was led by a record year in auto lending through our Indirect Lending program, with production exceeding $700 million, increasing outstanding volumes by 25.7% for the year. Commercial loan balances also had impressive growth of 14.2%. In addition, TCU s Visa credit card portfolio increased 79%. The Window of Opportunity HELOC campaign also contributed to loan growth and meeting the financial needs of our members. This campaign generated lines of credit totaling more than $46 million to 1,300 of our members. With the growth of our loan portfolio, total assets increased $268 million, ending the year at $2.6 billion continued TCU s commitment to support our communities by focusing on distributing monies in all the areas where we have a presence. Our contributions in 2014 totaled $1.17 million and centered on Educational Programs, Financial Literacy, Human Services, Economic Development and Community Enrichment Programs. In August 2014, the TCU Foundation established a new giving program for TCU team members called HEART (Hope, Engage, Act, Reach and Teach) which raised $2,069 from TCU team members. The TCU Foundation matched team member donations, and $4,138 was donated to nine different youth mentoring programs offered throughout the State. The HEART program is designed to engage our team members in the philanthropic outreach of the TCU Foundation. Consistency has its rewards and at TCU we remain true to our original philosophy of people helping people. This philosophy has been our guidepost for more than 84 years. When TCU was incorporated in 1931, the commitment was made to provide a needed service to people in the South Bend community who became members of TCU. That commitment continues as we strive to demonstrate to all of our members the many rewards of belonging to TCU. Best regards, Paul A. Marsh President and CEO, TCU

5 RETAIL GROWTH First and Foremost it is About Our Members and Membership: In 2014, TCU continued to provide our members and potential members with competitive and convenient products and beneficial offers. TCU Visa Platinum Credit Cards $30,000, % Increase in card balances 64.83% Increase in number of accounts $22,500, $15,000, $7,500, $0 14, , , , TCU Mobile edeposit launched in April 2014 Number of transactions: 55,589 Total dollar amount deposited: $13,255, % Increase in net cardholder income 0 $130, $97, $65, $32, ,300 Members took advantage of our 1.49% Home Equity Line of Credit Promotion that ran from July September 2014 $

6 Team Members are Partners in Our Success: The TCU Member Call Center contributes significantly to TCU sales and member satisfaction goals. In 2014 the TCU Member Call Center: u Handled 650,000 calls - Averaging 54,000 inbound calls per month. u Brought in $11.4 million in loans. u Processed 3,400 new membership applications. u Provided 10,470 additional products/services. u Achieved an average NPS* rating of * 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. Continuum of Growth: u A TCU Electronic Service Center opened at 400 Dan Jones Road in Plainfield, Indiana inside Meijer. u The TCU Service Center located in Chesterton, Indiana was renovated and now includes these convenient features: Drive thru Debit card instant issue Night deposit u Late in the year, the ecommerce Marketing Specialist position was created and filled to increase brand exposure and further TCU s mission over social media platforms.

7 COMMERCIAL LENDING GROWTH Continued to expand its presence in Central Indiana. Commercial Loans outstanding grew 14%. Booked over $43,000,000 in new loans. Generated over $400,000 in Fee Income. Originated and booked our first $10,000,000 loan. Commercial Loan Members averaged over $15,000,000 in combined deposit balances. LOANS DEPOSITS MEMBERSHIPS INDIRECT LENDING GROWTH LOAN VOLUME $705,765,700 loan volume for 2014 and opened 28,137 new memberships. LEADS THE STATE Has consistently been the number one indirect lender for the state of Indiana. CREDIT UNION PROGRAM $42 million - Currently facilitates the sale of loans with 5 credit union partners.

8 COMMUNITY GROWTH Committed to Our Communities: Highlights u Through our involvement as the primary sponsor of the Falloween Fest in Walkerton, IN since 2009, the event has raised over $125,000 for scholarships benefiting more than 120 students. u Headline sponsor of The Notre Dame TRiO Program Annual Student Leadership Conference. u Sponsored Christmas at the Zoo at the Indianapolis Zoo with record attendance of 129,073. u Sponsored Lemonade Day in Indianapolis. This unique program teaches children how to start, own and operate their own business. 20,000 children registered in u Helped collect 1,400 pairs of shoes for Dress For Success of Indianapolis. u Helped fund the purchase of 10 ipad Airs and protective cases for The Logan Center therapists and individuals with Autism for use in their treatment centers. u Donated $2,500 to ValPLAYso:The Next Generation in Valparaiso, Indiana. The park was built in October 2014 over 6 days with all local volunteers from the community to accommodate children with special needs. TCU Foundation Highlights u The TCU Foundation funded $82,000 in scholarships benefiting 40 students. u The TCU Foundation continues to help fund the production and implementation of the video curriculum for Five Star Life, a not-for-profit Youth Mentoring and Character Building Organization. The program is delivered as an after school program at 14 middle schools in Elkhart, St. Joseph, Berrien and Marshall Counties reaching 2,500 students. The TCU Foundation committed $13,875 in 2014 to update and expand the video curriculum so that the materials could be utilized in more schools and for in-school programming. u The TCU Foundation underwrote, for the third year in a row, the TCU Foundation Job Center at the Indianapolis Public Library. The TCU Foundation Job Center provides assistance to residents for job searches, resume writing, filing unemployment claims, assistance with job applications and enrolling in Work One. The TCU Foundation Job Center served nearly 1,800 people in 2014.

9 INVESTMENT SERVICES GROWTH INSURANCE AGENCY GROWTH u 2nd largest CUNA Brokerage Investment Program in u Invested more than $70 million new dollars by our team of financial professional experts. u Our advisors now help manage more than $600 million in assets for credit union members. We continue to help members take control of their retirement by making the rollover process easy when members change jobs or retire. u TCU Investment Services now has eight CFPs, which is more than any other Indiana Credit Union. Achieved high honors in 2014 from several of its carrier partners including Presidents Club, Senior Partner and Leadership Circle Awards. TRUST SERVICES GROWTH u TCU Trust Services now has more than $75 million dollars under management. u We served members and team members with 8 educational seminars, numerous face-to-face meetings and countless phone calls regarding trust management and estate planning issues. u Grew our network with estate planning attorneys resulting in TCU Trust Services being named Personal Representative and/or Successor Trustee in more than 15 estate plans. Expanded the Senior Product lines, carriers and territory into the surrounding areas of Northern Indiana and Southern Michigan. 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. Continued to be a significant resource within the market place for education and utilization of the Affordable Care Act. TCU Agency, LLC is a subsidiary of TCU. Insurance products are offered through various approved carriers.

10 MORTGAGE GROWTH * * In a collaborative effort between retail, mortgage and centralized underwriting we booked more than $46 million in new home equity lines. We provided our members with $43,729 in rebates from CU Realty When our Members use a Realtor from the TCU CU Realty network they earn a cash rebate of 20% of the agent s commission, based upon the home sale or purchase price. Members can save hundreds if not thousands of dollars when buying or selling a home. Our average closing time for purchases was 10 days faster than the national average. CU Realty is under contract with Teachers Credit Union to make realty services available to members. CU Realty is a licensed real estate agency, in Indiana and Michigan. NMLS#

11 FINANCIAL STATEMENT ASSETS Cash and due from banks $64,371,102 $80,205,891 Interest-bearing demand deposit 7,812,703 14,318,007 Investment securities Available for sale 236,194, ,138,812 Held to maturity (fair value of $0 and $11,262,982) - 10,062,95 Total investment securities 236,194, ,201,764 Loans, net of allowance for loan losses of $16,416,052 and $15,547,550 2,217,867,163 1,911,072,404 Premises and equipment 51,391,178 53,992,132 Federal Home Loan Bank stock 19,412,400 13,199,600 National Credit Union Share Insurance Fund and other deposits 18,594,308 18,448,458 Alloya membership shares 2,750,000 2,750,000 Goodwill 1,831,111 1,831,111 Intangible assets, net of accumulated amortization of $3,635,326 and $3,140,651 3,861,449 4,306,002 Other assets 26,024,028 27,071,436 Total assets $2,650,109,452 $2,383,396,805 LIABILITIES Share accounts $2,036,781,205 $2,038,219,067 Borrowings 377,208, ,886,063 Other liabilities 19,842,313 18,844,383 Total liabilities 2,433,831,774 2,185,949,513 MEMBERS EQUITY Regular reserve 147,667, ,024,849 Undivided earnings 68,310,245 66,573,949 Accumulated other comprehensive income (loss) 299,587 (5,151,506) Total members equity - substantially restricted 216,277, ,447,292 Total liabilities and members equity $2,650,109,452 $2,383,396,805

12 FINANCIAL STATEMENT INTEREST INCOME Loans and leases $74,498,693 $74,437,993 Investment securities 4,923,348 3,571,781 Interest-bearing deposits 507, ,690 Other interest and dividend income 667, ,886 80,596,887 78,972,350 INTEREST EXPENSE Share accounts 12,969,583 13,709,817 Borrowings 3,758,640 3,552,066 16,728,223 17,261,883 NET INTEREST INCOME 63,868,664 61,710,467 Provision for losses on loans 5,390,256 3,511,877 NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS 58,478,408 58,198,590 OTHER EXPENSES Salaries and employee benefits 40,877,280 41,008,971 Net occupancy expenses 6,436,765 6,397,216 Equipment and data processing expenses 13,135,232 12,363,950 Printing and office supplies 2,110,844 1,877,656 Marketing and public relations 2,818,128 3,342,656 NCUSIF expense - 1,441,477 Loan expenses and fees 2,859,275 2,481,455 Telephone expense 876, ,324 Other expenses 13,380,945 12,741,305 Total Other Expenses 82,495,017 82,594,010 NET INCOME 13,184,113 $11,471,244 OTHER INCOME Service charges and fees on share accounts 26,246,517 26,246,070 Annuity and other commissions 7,662,169 7,430,748 Gain on investments 863,782 9,708 Other-than-temporary impairment Total loss related to other-thantemporarily impaired securities - (42,863) Portion of loss recognized in other - comprehensive loss - 7,172 Other-than-temporary impairment loss recognized in net income (35,691) Loss on other real estate owned and repossessions (412,364) (616,091) Other income 2,840,618 2,831,920 37,200,722 35,866,664

13 FINANCIAL STATEMENT OPERATING ACTIVITIES Net income $13,184,113 $11,471,244 Items not requiring (providing) cash Provision for loan losses 5,390,256 3,511,877 Investment securities amortization, net 2,861,366 3,821,197 Net loan origination cost accretion, net (1,327,458) (944,109) Gain on sale of investments (863,782) (9,708) Other-than-temporary impairment of investments - 35,691 Loss on other real estate owned and repossessions 412, ,091 Depreciation and amortization 5,571,693 5,526,556 Amortization of intangible assets 494, ,620 Change in Interest receivable (25,478) (46,714) Interest payable and other liabilities 997,930 (2,287,203) Prepaid expense and other assets (397,912) 784,543 Net cash provided by operating activities 26,297,767 22,987,085 INVESTING ACTIVITIES Net change in interest-bearing time deposits 6,505,304 8,868,202 Purchase of FHLB stock (6,212,800) - Purchase of available-for-sale securities (83,255,610) (104,844,351) Proceeds from maturities and paydowns of securities available for sale 38,268,238 50,087,128 Proceeds from maturities and paydowns of securities held to maturity 1,313,562 2,911,037 Proceeds from sales of securities available for sale 56,885,484 - Proceeds from sales of held-to-maturity securities 10,249,589 - Proceeds from sales of real estate owned 8,012,307 8,403,071 and repossessions Net change in loans (310,952,938) (133,208,785) Purchases of premises and equipment (2,978,678) (3,497,790) Increase in NCUSIF and other deposits (145,850) (429,933) Loans Purchased (6,900,675) - Net cash used in investing activities (289,212,067) (171,711,421) FINANCING ACTIVITIES Net change in Certificates of deposit and individual retirement accounts (16,609,044) (28,558,444) Other share accounts 15,171,182 55,292,973 Proceeds from borrowings 29,000,000 41,000,000 Repayment of borrowings (14,077,807) (38,931,516) Net change in short-term borrowings 233,400,000 - Membership fees received 195, ,570 Net cash provided by financing activities 247,079,511 28,953,583 NET CHANGE IN CASH AND CASH EQUIVALENTS (15,834,789) (119,770,753) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 80,205, ,976,644 CASH AND CASH EQUIVALENTS, END OF YEAR $64,371,102 $80,205,891 ADDITIONAL CASH FLOWS AND SUPPLEMENTARY INFORMATION Interest paid $16,701,423 $17,268,178 Transfer of loans to other real estate owned 6,996,056 7,507,472 and repossessions

14 FINANCIAL STATEMENT Consolidated Statements of Members Equity Years Ended December 31, 2014 and 2013 Regular Reserve Undivided Earnings Accumulated Other Comprehensive Income (Loss) Balances, January 1, 2013 $128,902,014 $62,074,970 $732,736 $191,709,720 Total Net income 11,471,244 11,471,244 Other comprehensive income (5,884,242) (5,884,242) Regulatory transfers, net 6,972,265 (6,972,265) Membership fees received 150, ,570 Balances, December 31, ,024,849 66,573,949 (5,151,506) 197,447,292 Net income 13,184,113 13,184,113 Other comprehensive income (5,451,093) (5,451,093) Regulatory transfers, net 11,447,817 (11,447,817) Membership fees received 195, ,180 Balances, December 31, 2014 $147,667,846 $68,310,245 $299,587 $216,277,678

15 BOARD OF DIRECTORS DAVID SAGE Chairman WILLIAM HOJNACKI Vice Chairman ROGER THORNTON Secretary PAUL A. MARSH Treasurer SHIRLEY GOLICHOWSKI Assistant Secretary JIM DUBOIS Board Member VINCENT HENDERSON Board Member THEA KELLY Board Member DIANE MAAS Board Member JOHN MYERS Board Member

16 EXECUTIVE MANAGEMENT PAUL A. MARSH President & Chief Executive Officer TODD BROWN Senior Vice President & Chief Financial Officer DAN ROUSSEVE Senior Vice President & Chief Information Officer RICK A. SILVERS Senior Vice President & Chief Retail Officer SUPERVISORY COMMITTEE DAVID ARANOWSKI Chairman BERNARD DIEDRICH Committee Member KEVIN SCOTT Committee Member DERRICK TORAN Committee Member

17 Your savings federally insured to at least $250,000 and backed by the full faith and credit of the United States Government NCUA National Credit Union Administration, a U.S. Government Agency Visit tcunet.com for TCU Service Center locations or download our smartphone app Teachers Credit Union