President Message. Ben F. Heyward

Transcription

1 2011 Annual Report

2 President Message Ben F. Heyward Last year I predicted that 2010 was going to be tough. I was right. It was tough on everyone. One noteworthy event in particular, was that we voluntarily wrote down some of the value of a few of our commercial loans. This situation, combined with increased losses on our mortgage and consumer loans, as well as the assessments imposed on us and all credit unions from the NCUA led us to experience negative net income. For reference nearly half of all credit unions in this country experienced negative net income for the very same reasons. To remain safe and sound during hard economic times is a matter of capital. Those credit unions who are more than just well capitalized (over 7%) are surviving just fine. Your Credit Union ended the year with a level of capital well over 9%. In collaboration with the Board of Directors and First Financial s management team, operations were conducted to ensure our level of capital remained high. We were prepared to come out ahead even in these harsh economic times. Is your money safe? Absolutely. Your money is safe with any credit union that has a net worth at the percentages I mentioned above. It doesn t matter much if there was negative net income Photograph by member Evangeline Chavez

3 or not for that credit union for a particular year. So instead of dwelling on this, it is important for you to know what we are doing right that keeps us and your money, safe and sound. In short, our success is directly attributed to our staff. You are very fortunate to have staff who is dedicated to provide to you the best member service you can find. They are creative, energized and in particular, well trained. From our business accounts to our innovative loan products to our health savings accounts, we provide to you a comprehensive range of financial services that you not only want, but need. To this end, we are pleased to offer to you our newest branch at 831 Juan Tabo Boulevard. I am sure by now most of you have noticed how involved First Financial is with the community. We are one of only a few corporate sponsors for the American Cancer Society s Making Strides against Breast Cancer. Perhaps some of you visiting a branch recently thought we may just be partial to the color pink, but actually it is part of our annual effort to kick off our fundraising effort. We also raise money for the Children s Miracle Network each year. We also participate in the Carrie Tingley Hospital Mud Volleyball Tournament, the Ramah Navajo Fair & Rodeo, the Roosevelt County Quilt Festival, Toys For Tots and the Zuni Youth Enrichment Program, just to name a few. I will close my message to you with a call for help. There is pending legislation in Washington that In short, our success is directly attributed to our staff. You are very fortunate to have staff who is dedicated to provide to you the best member service you can find. threatens the future of free checking. I personally believe that a few select elected officials intended to provide some relief to merchants by restricting the level of interchange charged in association with the usage of debit cards. However, they failed to understand the delicate balance of an institution s program with regard to this fee income to offset the expense of administration, issuance of plastics, fraud losses and cost of funds, just to name a few. If implemented as written, the restrictions to the interchange income will cause us (and everyone else) to operate debit card programs at a loss. Since we cannot administer any program at a loss, we would have no choice but to end free checking and increase fees. You will likely agree that this situation could not have been more poorly timed. On our website is a link where you can respond. We have made it easy by allowing you to select prewritten letters you deem most appropriate to you to send to Congress. You may also compose your own letter but please keep it clean! Also, there is a robust Governmental Affairs effort that allows us to visit our elected officials, and put pressure on them to protect our interests. To help fund this effort, we participate in a program called Deduct-A-Buck. You can provide a great deal of help by participating in this by allowing us to deduct a buck (or two) from one of your accounts each month. It may not sound like much but it makes a very big difference in getting these elected officials s attention. Forms are available here for your convenience. By the way, I predict that 2011 will be a better year. I expect the economy will continue to recover, and anticipate improvement with our business loan programs. However, since I have not been good at predicting where savings rates are going let s just say that they have nowhere else to go but up!

4 Chairman s Report Cassie Kelley 2010 marks the third consecutive year of slow economic growth for our country. Unemployment rates continue to remain at historically high levels, and government deficits keep increasing. Despite these challenging times, First Financial Credit Union has maintained its financial strength and dedication to serving the community and our members. As Ben mentioned in his President s Report, all credit unions, including First Financial have to rebuild the National Credit Union Share Insurance Fund back to required levels. Although earnings decreased as a result of this situation, your Credit Union remains safe and sound, with a net worth above 9%. We were again overwhelmed with pride, when for the third year, First Financial was named as one of New Mexico s Best Places to Work of 2010 by the New Mexico Business Weekly. We are thrilled that our employees feel First Financial is a great place to work, and that they are happy with the opportunities and the benefits we offer them. We know that we wouldn t be the BEST without our solid team of employees. First Financial Credit Union has a long history of giving back to our members and the communities that we serve. Recognizing the diverse needs of our members, in 2010 we moved our South Valley branch into a bigger more convenient location. In the community, your Credit Union continues its tradition of supporting a number of charitable causes. In addition to many other worthwhile activities, in 2010 we raised money for the United Way, Toys for Tots, and the Children s Miracle Network. First Financial was also a flagship sponsor of the 2010 Making Strides Against Breast Cancer. Thanks to our employees, volunteers and members, we were able to raise over $27,612 and had over 250 walkers participate in the 2010 walk. Looking ahead to 2011 we will continue to find new ways to increase the conveniences being offered to our ever-growing membership. We will open a new branch location in both the Albuquerque and Farmington communities. We will remain strong, and continue to be the trusted financial partner you rely on. For nearly 75 years, the dedicated staff at First Financial Credit Union has been committed to helping you realize your financial goals. Our sound business practices have kept us firm and dependable for more than 7 decades. We will continue to work tirelessly to ensure our members get the most out of their membership with First Financial Credit Union. It s a goal we all share, for as a member, you re also an owner. You share in our success. On behalf of all the credit union s volunteers and employees, we thank you for allowing us to serve your financial needs. Photograph by member Arbenly Orozco

5 SUPERVISORY COMMITTEE REPORT Jennifer Walters The National Credit Union Association (NCUA) examined the credit union periodically. This federal agency provides the insurance that guarantees your deposits to $250,000. NCUA, the State of New Mexico Examiners, our CPA auditors (Nearman & Associates, who did our annual audit) and your Supervisory Committee find First Financial a sound financial institution for the year ending in The Supervisory Committee is responsible for providing oversight that assures members that the Board of Directors and management are maintaining the financial well being of your credit union, and that they are safeguarding its assets. In connection with these oversight functions, the Internal Audit Department reviews the internal operations and internal controls to determine the credit union s operations are valid, accurate and efficient. The Supervisory Committee has another function not as well know as the oversight responsibilities. We are the advocate for members who have problems or need assistance with items they are not comfortable taking to the credit union management. The Committee and our internal auditor are available to assist any member who wishes to contact us. The Committee works independently of the Board of Directors and credit union management, while working with the NCUA and the State of New Mexico s examiners. Supervisory Committee meetings are held monthly as are the branch reviews, management interviews, examination of the records and reports and compliance using applicable laws and regulations. We utilize a yearly audit plan to focus on specific areas that may need special attention as well as routine and high risk areas. In accordance with procedures prescribed by NCUA, a confirmation of members accounts was performed as of September The results reflected the conscientiousness of the First Financial s management and employees. As we look forward to the future, we may need to make changes in the way First Financial does business and in the security aspect of safeguarding your assets. The Internal Audit Department and your Internal Audit Director, Raul Arroyo, and your Supervisor Committee will do their very best to make sure First Financial will continue its promise to you, the members, to remain a safe and secure Credit Union.

6 TREASURER S REPORT John Sechrist 2010 was another challenging year for the economy and credit unions are still feeling the effects of it. First Financial took difficult, but positive steps towards positioning us well in 2010, and in preparation for the slower than normal economic growth we anticipate over the next few years. In 2010, First Financial took a very conservative approach to the business loans and foreclosed commercial property valuations, and created a large reserve ($5 million) for potential losses on these properties. These losses have not yet been incurred but the valuations are such that unless the economy and commercial real estate values recover in , these losses may ultimately be realized. To reduce interest rate risk, we continued to sell mortgage loans to FNMA, however, we keep the relationship with our members by continuing to service all aspects of the loan. To lower our cost of funds we reduced our reliance on certificates of deposit sand focused on core membership growth. This increased our net interest income by $739k and grew our membership by 1,200 members or 2.6%. As of year-end, we served 47,929 members. Two additional factors that had a significant impact on First Financial in 2010 were the National Credit Union Share Insurance expense of $830k, which was significantly higher than in previous years and Federal regulations passed in 2010, that drastically reduced our ability to collect fee income. We continue to remain well capitalized with a net worth of 9.35%. The loan to share ratio for December 2010 was 81.60%, up 4.9% from December 2009 s 76.70% Your Board of Directors is committed to keeping First Financial financially sound. We may continue to face a demanding economic environment, but are confident that First Financial is up to the challenge and will continue to grow and prosper. Photograph by member Alix King

7 2010 Statement of Financial Condition First Financial Credit Union As of 12/31/10 Assets Loans $ 259,433,155 $ 263,369,070 Allowance for Loan Losses (4,653,717) (2,403,822) Net Loans $ 254,779,439 $ 260,965,248 Cash & Investments 75,133,940 95,938,621 Fixed Assets 6,377,043 6,434,819 Other Assets 17,245,908 20,656,337 Total Assets $ 353,536,330 $ 383,995,025 Liabilities & Equity Current Liabilities $2,544,835 $2,421,426 Member Shares 317,918, ,397,806 Retained Earnings 33,072,897 38,175,793 Total Liabilities & Equity $ 353,536,330 $ 383,995,025 Statement of Income & Expense Interest Income: Loans $ 16,643,748 $ 18,529,718 Investments 481, ,896 Interest Expense: Dividends to Members (3,315,927) (5,967,855) Interest on Borrowed Funds (1,538) (76) Net Interest Income $ 13,807,411 $ 13,068,683 Other Operating Income 7,218,424 8,184,084 Non-Operating Income/Loss (4,131,928) (456,600) Operating Expense (18,129,252) (16,773,963) Provision for Loan Losses (3,867,552) (3,771,000) Net Income $ (5,102,897) $ 251,204

8 Albuquerque / Rio Rancho Offices Downtown 601 Tijeras NW South Valley 1625 Rio Bravo Blvd. SW Suite 6 San Mateo 2700 San Mateo NE Rio Rancho 2201 Rio Rancho Blvd. SE Coors 2929 Coors Rd. NW Suite 104 Juan Tabo 831 Juan Tabo NE, Suite A Gallup Offices Boardman 313 S. Boardman Mesa View 1383 N. Highway 491 Pine Hill Pine Hill Market, Rt 125 Zuni 1202 East Highway 53 Portales 700 W 2nd Farmington 3024 East Main Street Board of Directors Chairperson - Cassie Kelley First Vice Chairperson - Pablo Rael Second Vice Chairperson - Vincent Esparza Secretary/Treasurer - John Sechrist Directors John Blumenthal, Ken Carson Sr., Victor Padilla, Loretta Montoya and Cathy Thomas Supervisory Committee Chairperson - Jennifer Walters Gloria Herrera, Olivia Jimenez F e d e r a l l y PO Box Albuquerque, NM Cover photograph by member Carle Eustace All photographs are winners of the 2010 photo contest