2017 ANNUAL REPORT
Table of Contents Mission and Vision, Board of Directors, Executive Leadership Team...2 Message from Chairman of the Board: Johnny Williams...3 Message from CEO: Randy Theilig...4 Treasurer and Supervisory Committee Messages...5 Financial Statements: Balance Sheets...6 Financial Statements: Statements of Income and Statements of Member Equity...7 2017 in Review...8-11 MCCU History... 10-11 MCCU Branches...12 1
Members Choice Credit Union Mission and Vision Mission: We believe in people-helping-people by providing sound financial solutions and resources, as well as sharing our passion for supporting the community. Vision: To provide each person in the West Houston, Katy and Cy-Fair areas the opportunity to be financially knowledgeable and successful. Board of Directors Term Expires Johnny Williams Chairman 2018 Dr. Paul Withey Vice Chairman 2018 Wilfred Krenek Treasurer 2019 Gene Atteberry Secretary 2019 Tonya Jordan Director 2019 Ron Julun Director 2020 Arthur Beatty Director 2020 Preston Meeks Director 2020 Anthony Francis Advisory Director Jeff Smith Advisory Director Ed Conner Advisory Director Executive Leadership Team Randy Theilig Holla Walker Diane Parham Bridgette Mayon Stephen Farias Chief Executive Officer Chief Financial Officer Chief Lending Officer Chief Retail Officer Chief Information Officer 2
Message from Chairman of the Board: Johnny Williams Members Choice Credit Union Members, On behalf of the Members Choice Credit Union Board of Directors, I m honored to serve as your Chairman. Our team values the opportunity to not only take care of you and your money, but to be a financial resource and solution for you and for the communities in which we serve. MCCU employees work hard to inform and educate you about our programs and services, while providing the best service possible. We hope you are always greeted with a smile! As we continue to look forward in 2018 and beyond, we are focusing more on our Mission and Vision, to support our communities and help each of you to be more financially knowledgeable and successful. Our promise to you, our member owners, is that we ll go the extra mile to ensure that you have the products, services, tools and resources to financially succeed. We ll treat you with respect by being honest, transparent and accountable. And as a cooperative, we will work in the best interest of the membership. We re focusing more on being your financial partner, through improving our services, resources and tools to address your financial needs. We re working to offer the best products and services through expanding channels and technologies. We also want you to know that we value our employees and want to be an Employer of Choice to better serve you. You ll also see in this report and our team out in our communities, how hard we re working to better our communities and the lives of those who live and work here. Weathering adverse conditions challenges the most steadfast. And Members Choice Credit Union stood strong, Houston Strong Katy Strong Texas Strong, during Hurricane Harvey. We offered our staff, our members and our communities impacted by this challenging time, help, relief and hope. Lastly, I d like to express my confidence in the Executive Leadership Team, the guidance of our Board of Directors, and the commitment of MCCU s dedicated staff. We look forward to serving you, our members, in 2018. Sincerely, Johnny Williams Chairman of the Board of Directors 3
Message from CEO: Randy Theilig Members Choice Credit Union Members, It is my honor and privilege to present to you the Members Choice Credit Union s 2017 Calendar Year Annual Report. I m proud of the direction Members Choice Credit Union is moving and continues to move forward for each of you, our members, as outlined in this Annual Report. 2017 was a good year for Members Choice Credit Union, a year of growth and change. The new building along Katy Freeway is a perfect representation of both. Members Choice is committed to maintaining a strong financial condition. Asset, loan and deposit growth exceeded our expectations, which is covered in detail in the Treasurer s message and Financial Statement. Members Choice continues to develop and update our products and services to meet your needs. We provide special offers on our products regularly to you, and evaluate and develop products and services that offer you the latest in banking technologies. Members Choice is committed to making our communities a better place to live and work through personal leadership, fundraising and volunteerism. MCCU staff completed a total of 781 volunteer hours in our communities through the organization s volunteer efforts. Hurricane Harvey brought not only Members Choice together, but the entire Houston area. Our volunteerism and community efforts expanded due to Harvey, including the beginning of our new community program, Members Choice C.A.R.E.S. (Community. Action. Relationship. Empowerment. Service). I m proud of our MCCU staff s community development and volunteer efforts, outlined in more detail within this report. Thank you for your continued support of Members Choice Credit Union. Together we stand Strong! Sincerely, Randy Theilig CEO 4
Treasurer s Message: Wilfred Krenek 2017 was an exceptional year financially for Members Choice Credit Union. Net income for 2017 was $5 million, an increase of over $1 million from the previous year. Additionally, we ended the year with nearly $600 million in total assets and over $400 million in total loans. All of these measures were records for the credit union. The enclosed financial statements provide further details on our financial performance. These financial results allowed us to remain well-capitalized as defined by our regulators and will allow us to invest in products and services to better serve our members in the future. Members Choice Credit Union remains a financially strong institution and we remain committed to our membership. Please be assured that we are striving to be the best financial partner we can be. Supervisory Committee Message: Tonya Jordan, Supervisory Committee Chair The annual audit of the books and records of Members Choice Credit Union, for the period ending December 31, 2017, was conducted by BKD, LLP. The audit was made in accordance with generally accepted auditing standards. They examined, on a test basis, evidence supporting the amounts and disclosures in the financial statements. In their opinion, the financial statements of the credit union present fairly in all material respects, the financial position of Members Choice Credit Union as of December 31, 2017. 5
Financial Statements MEMBERS CHOICE CREDIT UNION BALANCE SHEETS DECEMBER 31, 2017 (in thousands) 2017 2016 Assets Cash and due from banks $ 3,840 $ 5,180 Interest-bearing demand deposits 29,189 23,255 Reverse repurchase agreement - 5,000 Federal funds sold 26,200 17,075 Cash and cash equivalents 59,230 50,509 Interest-bearing time deposits in banks 6,493 23,805 Investment securities 58,091 69,974 Loans, net of Allowance for Loan Losses 414,910 348,562 Premises & equipment, net 30,585 18,290 Federal Home Loan Bank Stock 6,022 262 Accrued interest receivable 1,530 1,316 NCUSIF deposit 4,636 4,523 Other assets 2,129 2,950 Total Assets $ 583,626 $ 520,190 Liabilities and Members Equity Liabilities: Members shares $ 494,848 $ 467,724 Notes payable 30,000 - Interest payable - 13 Other liabilities 7,295 6,956 Total Liabilities 532,143 474,693 Members Equity: Regular reserve 4,964 4,964 Undivided earnings 47,807 42,632 Accumulated other comprehensive income (1,288) (2,098) Total Members Equity 51,483 45,497 Total Liabilities and Members Equity $ 583,626 $ 520,190 6
STATEMENTS OF INCOME YEAR ENDED DECEMBER 31, 2017 (in thousands) 2017 2016 Interest Income Loans $ 17,968 $ 17,279 Investment securities 3,113 2,485 Total Interest Income 21,081 19,764 Interest Expense Interest expense on members shares 1,205 840 Interest on borrowed funds 1,245 361 Total Interest Expense 2,450 1,201 Net Interest Income 18,632 18,563 Provision for loan losses 1,629 1,152 Net interest income after provision for loan losses 17,003 17,412 Non-interest Income Fees and service charges 2,992 3,260 Insurance commissions 563 681 Interchange income 2,046 1,895 Net gains on sales of fixed assets 1,431 - Net gains on sale of mortgage loans, net - 11 Net gains on sales of small business administration loans 564 810 Net realized gains on sales of investment securities (619) (17) Other 43 92 Total non-interest income 7,020 6,732 Non-interest Expense Compensation and benefits 8,547 9,537 Occupancy 2,059 2,285 Operations 2,346 2,107 Advertising and promotion 517 388 Loan servicing 1,012 940 Professional and outside services 3,675 4,092 Other 691 776 Total non-interest expense 18,847 20,125 Net Interest Income $ 5,175 $ 4,019 STATEMENTS OF MEMBERS EQUITY YEAR ENDED DECEMBER 31, 2017 (in thousands) Statutory Undivided Valuation Allowance Total Reserve Earnings Investment Securities Equity Balance, December 31, 2016 $ 4,964 $ 42,632 $ (2,098) $ 45,497 Net Income 5,175 5,175 Provision for change in valuation allowance for available for sale securities, net 810 810 Balance, December 31, 2017 $ 4,964 $ 47,807 $ (1,288) $ 51,483 7
Members Choice Credit Union: 2017 in Review Members Choice Credit Union is a full-service financial institution based in Houston, Texas. We have been in business for over 76 years. Our rich history is directly related to our financial stability and our dedication to serving the needs of our members, first and foremost. Since our founding in 1941, we have operated with the people-helping-people philosophy on which all credit unions are founded. That philosophy has served us and our members extremely well. At Members Choice, we strive to exceed the expectations of our staff, our members and our communities. 2017 was an interesting year for the Houston area from winning the World Series to the devastation of Hurricane Harvey. Both events brought the Greater Houston area together, but Harvey brought out the best in us, including Members Choice. It even expanded our philosophy into a program, Members Choice C.A.R.E.S. (Community*Action*Relationship*Empowerment*Service) During 2017, Members Choice Credit Union increased its volunteer hours by over 100 hours more than in 2016, completing 781 Total Volunteer Hours. These hours were completed by Members Choice staff through volunteer opportunities offered by the Credit Union, and does not reflect the many other hours completed personally by our caring staff. We truly believe in the People Helping People philosophy. Here s an outline of some of our 2017 events and volunteer opportunities. January 2017 Katy Home & Garden Show Schmalz Elementary (Katy ISD) Backpack Buddies Food Program (weekly during school) Staff dress-up day February 2017 Katy Home & Garden Show Cy-Fair ISD Superintendent Fun Run Metamorphosis Event 8
March 2017 Gulf Coast Regional Blood Drive April 2017 ACS Relay for Life Katy ISD School Carnivals King, Pattison & Wolfe Elem. Grand Opening - Green Trails Girl Scout Troop Tour Grand Opening Green Trails May 2017 Texas Association of School Boards Award CY-Fair ISD VIPS Celebration June/July 2017 Partner Company Ice Cream Socials AutoNation Sales Event Bring the Future to Work @ ConocoPhillips Katy ISD Business Partner Recognition August 2017 Houston Food Bank Annual Bring the Future to Work Day @ ConocoPhillips Katy ISD Legacy Stadium Sponsor Books & A Buddy Curriculum Night @ Schmalz Elementary 9
September 2017 Walk to End Alzheimer s Bank Day Fundraiser and Walk Books & A Buddy @ Schmalz Elementary MCCU CARES Supplies to Christ Clinic and Katy Christian Ministries Back to School Bags 1st & 2nd graders at displaced (flooded) Bear Creek Elementary Eventure Health Fair HOPE Impacts donations Assisted renovations @ Katy Cares Home Back to School Bags at displaced Bear Creek Elementary Books & a Buddy @Schmalz Elementary OUR 10
October 2017 Katy Rice Harvest Festival Miracle Balloon Campaign Houston Chapter Partner Company Health Fairs & School Open Houses Home Impacts Golf Tournament Halloween at Cy-Fair November 2017 Distributed Teddy Bears to children at Texas Children s Hospital W. Campus Run the Clinic for a day at Christ Clinic Donated $50 HEB gift cards for 55 families for Thanksgiving at Schmalz Elem. Special Pals duties Holiday Staff Dress-up December 2017 Run the Clinic for a day at Christ Clinic Move to new Katy Freeway Branch and Administration Building Holiday Open House for members at new location Wrapping holiday gifts and delivery to Schmalz Elementary students impacted by Harvey HISTORY 11
Members Choice Credit Union Branches Katy Freeway Main Office 18211 Katy Freeway Houston, TX 77094 Grand Parkway Office 521 W. Grand Parkway South Katy, TX 77494 North Fry Road Office 3770 N. Fry Road Katy, TX 77449 Seven Meadows Office 8951 S. Fry Road Katy, TX 77494 Green Trails Office 1657 S. Fry Road Katy, TX 77450 Eldridge Office 1503 Eldridge Parkway Houston, TX 77077 Cy-Fair Office 15701 Kingfield Drive Houston, TX 77084 ConocoPhillips Office WC.02.204 For ConocoPhillips employees only. Phillips 66 Office S142 For Phillips 66 employees only. 12
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18211 Katy Freeway Houston, TX 77094 mccu.com 281.398.9900 16 NMLS#502619