Board Chairman Report

Transcription

1 2015 Annual Report

2 Board Chairman Report 2015 was another eventful economic year as the market experienced significant fluctuations leading to the first decline in 3 years for the S&P and 6 years for the Dow. In August the Dow lost more than 1,000 points in a matter of seconds, reminiscent of But this time it wasn t because of an implosion in the U.S. financial sector but investors fears of China the world s second largest economy as well as massive consumer of American products devaluing its currency amidst other significant signs of Sino economic weakness. Recognizing the difference in this situation soothed everyone s jittery nerves but still served to remind us of the volatile economic world that we live in today. Perhaps the most significant U.S. financial news happened in mid- December when the Federal Reserve approved the first rate hike since June 29, 2006, raising its target funds rate by 0.25 percent increase. Granted this was a very small change but was hugely symbolic of a reversal in monetary policy. The expectation is that rates may continue to rise, albeit slowly and gradually. This is welcome news to depositors. What is the takeaway from this market data? While the economy sends market investors on a roller coaster ride, there are a lot of encouraging signs for us locally. Rates for borrowers will continue to be very affordable while depositors should see rates trending up for the first time in a very long time. The housing market continues to improve with housing prices continuing to recover while still remaining very affordable for buyers. Increasing job stability should bring about a greater sense of security in consumers that they can borrow money again. Small businesses are launching or expanding, which creates new jobs and opportunities for owners and employees alike. All of these things represent a more promising Looking back for a moment, I want to share with you what an outstanding year your credit union had in Perhaps you saw the Knoxville News- Sentinel business section on December 27th ranking area credit unions according to asset growth. If you did, then you saw Y-12 FCU listed as #1 of 17! Your credit union grew assets by more than 23% in 2015 alone. The next best growth in the region was a distant 8.7%. As a result, your credit union grew to more than 100,000 members while experiencing the most successful year ever thanks to efforts of staff and you, the member/owner of this fantastic financial cooperative. One other milestone that should be noted is the retirement of Don Norris as Chairman of our Board of Directors. Don served this credit union in many important roles throughout his 37 year career, including 29 years as Chairman of our solely-owned subsidiary Credit Union Services of East Tennessee. His powerful leadership played an enormous role in the success of your credit union from the thin financial years of the 1980 s all the way

3 to the powerhouse organization that it is today. We celebrate Don s service as a gifted visionary, a tenacious leader, and a friend to every member that he represented in his elected service to the credit union. He will be missed more than words can say. With Don s retirement, I am privileged to be selected as Chairman. It has been my honor to be the Vice Chairman for the past four years, as well as having served various other roles on the Board and various committees throughout my 23 years of service to the credit union. I also want to recognize the service of your other elected officials: David Rupert as Vice Chairman; Sam Pelchar as Treasurer; Lloyd Jollay as Secretary; Cecil Chitwood and Hilary Shreter as Directors. Additionally, Hurtis Hodges, Gary Smith, Tom Fisher and David Liles all serve in several capacities supporting the Board of Directors. Every one of these volunteers dedicates a tremendous amount of hours in the leadership and administration of your credit union. I wish to express a sincere thank you to each of them. In closing, I want to thank you, our member/owners. As I mentioned above, the successes that this credit union has enjoyed have been thanks to a wonderful staff and outstanding leadership, to say the least. But ultimately none of it would be possible without the investment that each of you our owners makes in this organization by choosing to be a member of Y-12 Federal Credit Union. Thank you! Ronald A. Honeycutt CHAIRMAN, Y-12 FEDER AL CREDIT UNION BOARD OF DIRECTORS Supervisory Committee Report The Supervisory Committee is a three-member body whose members are appointed annually by the Board of Directors. The Federal Credit Union Act holds this Committee responsible for ensuring that each segment of the Credit Union is properly administering the plans, policies, and procedures for which it is accountable. The Committee functions independently, but interfaces with the Board of Directors, CEO, staff, National Credit Union Administration examiners, and an independent certified public accountant to meet this responsibility. The Committee employs the Credit Union s Internal Auditor and meets routinely to discuss internal controls, audits, and reviews. A comprehensive annual audit of the Credit Union is also a Supervisory Committee responsibility. The certified public accounting firm of Nearman, Maynard, and Vallez, CPAs is performing the annual audit for 2015 and audit field work has been completed. We fully expect that Y-12 FCU will receive an unmodified opinion when the auditor s report is issued. The Committee is aware of the importance of their responsibility to the members. It is the opinion of the Supervisory Committee that your Credit Union s internal controls are effective and adequately protect the Credit Union,

4 its members, management, and employees. The Supervisory Committee is confident that the volunteer officials and the paid Credit Union staff form a dedicated group working to continually improve the position and strength of the Credit Union for its members now and into the future. Hilary Shreter C H A I R M A N Treasurer s Report 2015 presented the Credit Union with a number of continuing and unique challenges. Although, low interest rates persisted, the Credit Union was able to maintain a reasonable yield on its investments thanks to the investing process initiated two years ago. Even though the Federal Reserve recently increased interest rates slightly, the financial impact was minimal. And finally, a declining stock market value and an annuity increase to life expectancy had the potential to significantly increase our pension cost. However, after an evaluation of available options, we were able to mitigate that major cost increase. In addition to the above actions, cost structure improvements, favorable yields on investments and outstanding loan growth resulted in a strong financial performance in 2015 that exceeded 2014 Net Income by 68.2%. The Balance Sheet continues to strengthen as Assets grew from $749.7 million in 2014 to $929.6 million in 2015 a 24.0% growth. Contributing to that growth was a 24.1% increase in Total Loans from $616.7 million in 2014 to $765.5 million in Member Shares in Y-12 Federal Credit Union continued to grow in 2015 by 16.6% ($110.2 million) over Y-12 Federal Credit Union remains financially sound and secure thanks to a healthy loan-to-deposit balance resulting from increased liquidity and continued expansion in our Net Worth. These key financial elements position the Credit Union to invest in growth, to weather significant economic challenges and continue to enhance members services and security. Regulations and lots of them tend to increase the potential of costly noncompliance. The Credit Union Management and the Asset and Liability Management Committee (ALM) embraced these regulations as an opportunity to further enhance member protection and financial monitoring capabilities. The Asset and Liability Management Committee comprised of Board members, Management, and Volunteers. I would personally like to thank all of the employees and volunteers that are dedicated to protecting and growing the Credit Union s Net Worth which enables the Credit Union to continuously provide new and enhanced products, services and security to our Members. Sam Pelchar TRE ASURER

5 Statement of Condition As of December 2015 (Summary in Thousands) ASSETS Loans Net of Allowance for Loan Losses 614, ,820 Cash & Cash Equivalents 17,704 20,229 Investments 78, ,795 Fixed Assets 20,900 22,056 Other Assets 17,853 23,692 Total Assets 749, ,592 LIABILITIES and EQUITY Accounts Payable & Other Liabilities 8,427 9,659 Notes Payable 11,224 73,960 Total Liabilities 19,651 83,619 Member Shares 664, ,106 Non Member Shares 0 27,750 Regular Reserves 9,050 9,050 Undivided Earnings & OCI 56,386 62,067 Total Equity and Member Shares 730, ,973 Total Liabilities and Equity 749, ,592 Statement of Income and Expenses for the Year Ended December 2015 Income Loan Interest 20,727 26,296 Investment Interest 1,252 1,418 Fee & Other Income 12,683 14,639 Total Income 34,662 42,353 EXPENSES and COST OF FUNDS Operating Expenses (Included PLL) 27,234 30,968 Cost of Funds 1,946 2,303 Total Expenses and Cost of Funds 29,180 33,271 Other Non Operating Income Exp (Inc) Net Income before Stabilization 5,520 9,282 Stabilization Expense 0 0 Net Income after Stabilization 5,520 9,282

6 Board/Committees B OA R D O F D I R E C TO R S Ronald A. Honeycutt CHAIRMAN David Rupert VICE CHAIRMAN Lloyd Jollay S ECRETARY Sam Pelchar TRE A S U RER Cecil Chitwood DIRECTOR Hilary Shreter DIRECTOR S U P E RV I S O RY CO M M I T T E E Hilary Shreter CHAIRMAN Hurtis Hodges S ECRETARY David Liles MEMBER Locations A N D E R S O N CO U N T Y 501 Lafayette Drive Oak Ridge, TN Crosspark Drive Clinton, TN N. Charles Seivers Blvd Clinton, TN B LO U N T CO U N T Y 624 W. Lamar Alexander Pkwy. Maryville, TN Old Knoxville Hwy. Maryville, TN A S S E T L I A B I L I T Y M A N AG E M E N T CO M M I T T E E Sam Pelchar CHAIRMAN Lloyd Jollay MEMBER David Liles MEMBER Mark Ziegler MEMBER Dustin Millaway MEMBER P E R S O N N E L CO M M I T T E E David Rupert CHAIRMAN Michelle Byrd MEMBER Cecil Chitwood MEMBER Mark Ziegler MEMBER C R E D I T U N I O N S E RV I C E S O F E A S T T E N N E S S E E, L LC ( W H O L LY OW N E D S U B S I D I A RY ) Cecil Chitwood CHAIRMAN Tom Fisher TRE A S U RER Gary Smith S ECRETARY Lloyd Jollay MEMBER C A M P B E L L CO U N T Y 2550 Jacksboro Pike LaFollette, TN E. Central Ave. LaFollette, TN K N OX CO U N T Y 6640 Clinton Highway Knoxville, TN Kingston Pike Knoxville, TN Kingston Pike Knoxville, TN Cherahala Blvd. Knoxville, TN E. Emory Road Powell, TN ROA N E CO U N T Y 1715 Roane State Hwy Harriman, TN P O L I C Y CO M M I T T E E Lloyd Jollay CHAIRMAN David Rupert MEMBER Hilary Shreter MEMBER Mark Ziegler MEMBER S E V I E R CO U N T Y 972 Dolly Parton Pkwy Sevierville, TN Mission Statement The Mission of Y-12 Federal Credit Union is to be a financially sound institution making a positive difference in our membership s financial lives and the communities in which they live. AR2015