AGENDA 2016 Annual Business Meeting March 1, 2017 Call to Order Invocation Minutes of the Last Meeting Chairman s Report CEO Report Including Financials & Operations Supervisory Committee Report Nominating Committe Report Old Business None New Business Requested in Writing, None Received Adjournment Michelle Small Michelle Small Chris Antal Bill Shanholtz, Jr. BOARD OF DIRECTORS, Chairman James Stovall, Vice Chairman Harold Sweat, Secretary Tom McKay, Treasurer A.D. Robertson, Director Howard Harris, Director Lynza Roberson, Director SUPERVISORY COMMITTEE Chris Antal, Chairman Amy Hyde Howard Harris NOMINATING COMMITTEE Bill Shanholtz, Jr., Chairman David Moody Jim Voit, Jr.
OUR CULTURAL VALUES Adaptive Prudent Risk-Takers Energized Leadership Commitment to Excellence Education Teamwork OUR CORE VALUES Personal Member Experience Quality Work, Products and Services Ethical and Legal Behavior Community Involvement BOARD OF DIRECTORS
2015 ANNUAL BUSINESS MEETING MINUTES MINUTES 2015 Annual Business Meeting March 17, 2016* *The 53rd Annual Business Meeting was announced and scheduled for Wednesday, March 2, 2016 6:00 p.m. in the Grande lobby. However a quorum was not present; therefore, the meeting was adjourned and rescheduled for Thursday, March 17th prior to the monthly Board Meeting. I. Board Chairman,, called this year s Annual Business Meeting to order at 12:06 p.m. Board Secretary Harold Sweat confirmed that a quorum of members was present. II. III. IV. INVOCATION Michelle Small, CEO, gave the invocation. MINUTES Mr. Barr presented the minutes. Howard Harris made a motion that Tom McKay seconded to approve last meetings minutes. The motion carried. REPORTS Mr. Barr noted the Chairman and CEO Report which was printed in the Annual Report distributed at the meeting. Howard Harris made a motion that Tom McKay seconded to dispense with the reading of the other written reports. The motion carried. Howard Harris made a motion that Tom McKay seconded to accept the Financial and Operations Reports as written. The motion carried. Mr. Barr noted the Supervisory Committee Report, which was printed in the Annual Report distributed at the meeting. Harold Sweat requested to dispense with the reading of all the reports listed on the agenda and approve them as written. Tom McKay seconded. The motion carried. V. NOMINATING COMMITTEE REPORT Mr. Barr recognized the Nominating Committee members (David Moody, Bill Shanholtz, Jr. and Jim Voit, Jr.), thanked each of them for their service to the credit union and relieved them of their duties until next year. Harold Sweat motioned to reinstall all the officers to the same positions as in 2015. Tom McKay seconded the motion. Motion carried unanimously. VI. VII. VIII. OLD BUSINESS None. NEW BUSINESS New business was asked for in writing. None submitted. ADJOURN There being no further business, Tom McKay made a motion that Chris Antal seconded to adjourn the meeting at 12:10 p.m. Kelly Community Federal Credit Union
SUPERVISORY COMMITTEE REPORT The National Credit Union Administration (NCUA) charges the Supervisory Committee in Part 715 of the NCUA Rules and Regulations with the responsibility of examining the affairs of the Credit Union. This includes an annual audit of its financial records and a report to the membership. Along with the financial supervision, the Supervisory Committee sees to the maintenance of proper conduct by all officers, directors, members of committees and employees in carrying out the business of the Credit Union. According to the Federal Credit Union Act, the Supervisory Committee is responsible for scheduling the annual audit. The audit firm Harold Antao & Company, LLC performed the 2016 Supervisory Committee Guide Audit for the period ending June 30, 2016. They reviewed both the financial condition and the internal audit controls for compliance with federal and state laws and internal credit union policies as established by the Board of Directors. All exceptions were noted and responded to by the Compliance Officer. The Credit Union is responsible to adhere to NCUA s Rules and Regulations and operate within the scope of the Federal Credit Union Act. It is the opinion of this Supervisory Committee that Kelly Community Federal Credit Union operates within the sphere of its responsibility and that the financial statements present a true and accurate report of its financial condition. Respectfully Submitted 2016 Supervisory Committee Members Chris Antal, Chairman Howard Harris Amy Hyde Chris Antal Supervisory Committee Chairman
CHAIRMAN S REPORT Welcome to the 54th annual meeting of Kelly Community Federal Credit Union. It is a blessing to have you here. I can see you care not only about your financial future, but the future of your credit union as well. I applaud you. I m delighted to speak to you today and humbled by the trust you have placed in me and my fellow board members whose leadership, dedication, and passion for credit unions are integral to our success. As a credit union member, you can take comfort in knowing that, unlike for-profit financial institutions such as banks, your board of directors serves on a volunteer basis and does not profit from that service. Though the credit union needs to make a profit to keep the doors open, we do not work for shareholders demanding to collect high profits. Our sole interests are in your interests. We are the stakeholders in this credit union, and we all share in its future. Whenever we can, we will distribute profits back to you. Your Board of Directors also has a responsibility to ensure that we have a capable, competent, qualified, and trustworthy management team, and I can say unequivocally that we do. I am proud to say that your credit union is not just one financial institution, but one of thousands in the credit union movement that spans the globe. We each serve as a supporting pillar in this movement, and that means the success of one credit union is a success for the entire movement. As a not-for-profit financial cooperative, we understand that we can most effectively serve you and strengthen that movement by engaging in the vast network of organizations and service groups available. For instance, our participation in our local chapter of credit unions allows us to benefit from the training, tools, and resources available through our trade associations, the Cornerstone Credit Union League and the Credit Union National Association, whose sole purposes are to support our endeavors and, by extension, you. As you can see in the Annual Report, Kelly Community performed well in Fiscal Year 2016. Some of the highlights of that report include: Membership at Kelly Community Federal Credit Union, as our CEO will note, now stands at 8,440 (non-duplicated social security numbers), representing an increase of two percent over the prior fiscal year. In total, our 8,440 members have more than $70 million in their saving/money market/ certificate/ira accounts. When we see people putting money away for the future, we hope our efforts to enhance the financial literacy of our members has contributed to this increase. You, the members and owners of this institution, have borrowed more than $71 million this fiscal year, which reflects the continued optimism in our economy and trust in your credit union. I am delighted that so many of you are turning to your credit union for your mortgage needs. In Fiscal Year 2016, Kelly Community Federal Credit Union wrote more than 100 home loans worth more than $13 million. Favorable interest rates and a strengthening economy motivated many of you to buy vehicles. In Fiscal Year 2016, Kelly Community Federal Credit Union wrote 815 auto loans worth more than $14 million. The delinquency ratio was 0.53 percent. This is a strong indicator that our members are diligently staying on top of their debt obligations. This is also more evidence of a strengthening economy, something for which we can all be grateful.
CHAIRMAN S REPORT In addition to establishing policies and ensuring that the credit union adheres to pertinent laws, regulations, and sound business practices, we are also charged with making sure new products and services are developed as needed. With the continued success of Kelly Community Federal Credit Union, we can offer beneficial savings and wealth-building tools and other financial products and services that enhance your life, improve our delivery channels, and expand our community outreach. Our highest and best purpose in serving you includes some of the following objectives: As our CEO will reference in her remarks, we want to target particular segments of our community where we can make the greatest impact. Helping with financial literacy and the account management for our members who are most vulnerable, such as high school students, young adults, retirees, and our elderly is one way we can do that. We want to be a knowledge hub that places the credit union at the center of our members financial lives, allowing them to trade peer advice and insights about budgeting, buying, retiring, and saving. We want to offer more and better resources that ensure our members are using the safest, most secure, and most convenient technology available. We want to grow our community impact through basic interest payouts, financial capability programs, payment deferral during community emergencies, and working with members that face challenges in whatever life phase they might be in; and We want to help you finance life activities, such as education, transportation, and real estate in a responsible way. In closing, I d like to express my confidence in the leadership of Kelly Community Federal Credit Union, the wisdom and guidance of our esteemed Board of Directors, the commitment of our dedicated staff, and the support and loyalty of our members. We are extremely optimistic about the future because Kelly Community Federal Credit Union is well positioned to face any challenge and seize any opportunity that presents itself in 2017. Thank you, ladies and gentlemen. I wish you and your families the very best in 2017. Chairman
CEO S REPORT Welcome to our 2017 Annual Meeting. On behalf of the staff of Kelly Community Federal Credit Union, let me say how happy I am to be here on this, the 54th annual meeting since our credit union began in 1963. One member, one vote. That is the foundation of our unique cooperative business model, and it empowers every single member to have a voice in your financial institution. When you participate in your credit union s voting process, you are contributing to its growth year after year. In return, because of our cooperative structure, we are able to return our profits to you in the form of competitive rates, new products, enhanced services, and additional points of service. It is my special privilege to provide a State of Our Credit Union address at this time. Let me begin by saying that 2016 was one of the most significant years in recent memory for the nation, and for the credit union movement, as well. In addition to the headline-grabbing election cycle, the credit union movement weathered another round of banker attacks, not only regarding our tax exemption, but field of membership rules. Bankers went so far as asking a federal court to nullify the regulations, which are based on the Federal Credit Union Act and give the National Credit Union Administration the authority to implement and modify such membership rules to mitigate regulatory burden. Through our advocacy efforts, we will continue to push back when the bankers lobby tries to undermine our cooperative system. In fact, we will encourage Congress to do more to expand consumer access to credit unions. With continued data breaches in the headlines, cybersecurity ranked high on our list of 2016 priority items, under the heading of advocacy. Some of the other items we watched with interest included financial regulatory improvement, overtime rules, the Truth in Lending Act and Real Estate Settlement Procedures, and payday alternative loans. All of those issues demanded we allocate time and resources to advocating with our lawmakers on behalf of credit unions. The good news is that, in 2017 we have excellent opportunities to see credit union advocacy victories on the regulatory relief front. With CUNA, the Cornerstone League, and credit unions joining forces like never before, we intend to be engaged and help drive the Campaign for Common-Sense Regulation. You know, whether you are a member or not, credit unions benefit all consumers. The reason is competition. Our very presence in the financial services industry helps to drive down the cost of financial services for everyone. To compete effectively, other financial institutions are forced to offer quality products and services at a reasonable cost.
CEO S REPORT As our credit union membership grows, so do our assets, which is one of the primary indicators of how well our members are receiving the products and services we offer. As of December 31, 2016, our assets were $97.5 million. Membership at Kelly Community Federal Credit Union increased two percent in 2016 and now stands at 8,854. I am happy to report that as loan demand has increased two percent, delinquencies remain low at 0.53 percent. This is a reflection of two things: the competitive rates we are able to offer and your strong commitment to honoring your financial obligations with us. I am very pleased to announce that again this year Kelly Community Federal Credit Union is a well-capitalized financial institution, with a strong net worth ratio of 11.47 percent. To put that in perspective, a net worth position above 7 percent is considered well capitalized by our regulators. Just as you are committed to your financial institution, we are committed to you. The following few high points from 2016 demonstrate our dedication to providing products and services that benefit you and your families: We implemented the new Debit MasterCard with chip technology We implemented a new phone system; which allowed more of the staff to be able to answer phones and phone calls to be directed to the appropriate departments. We implemented check scanners at the teller line, which enables you to see more check activity on-line in your different accounts and suffixes. Our 2016 results illustrate that we are a strong, sustainable, and efficient financial institution. That financial well-being enables us to maintain an integral presence in our community. Community involvement is just one of the things that make credit unions different from other financial institutions. The following activities were just some of the things that embodied our commitment to the community during 2016: We raised more than $6,454.56 for the Children s Miracle Network We hosted two Reality Fairs and taught more than 200 students financial education at Tyler Junior College and The Brook Hill School We co-sponsored the American Heart Association Soccer Tournament at Cumberland Academy, and donated funds in support of the local American Heart Association We have an excellent team of professionals who report to work every day with the intention of helping our members meet their financial goals. This credit union s many accomplishments would not have been possible without their energy, optimism, commitment, and wholehearted belief in our cause. Their passion is inspiring, and I thank them for their loyal service. We also have a highly capable volunteer Board of Directors that share an enormous amount of time, knowledge, and expertise in guiding this organization. They have a strong desire to be a well-skilled and educated governing body As we move into 2017, my commitment to you today is that Kelly Community Federal Credit Union will continue to: Grow responsibly while listening and responding to your needs; Explore innovative product and service solutions to enhance your financial life, such as online account openings, online loan closings, pay-by phone, debit card management via mobile device; and Develop our staff and board so they can confidently and wisely serve you. We are sincerely grateful that you are an integral part of our credit union family. I m highly optimistic about our future, and on behalf of the entire staff, we look forward to a happy and successful 2017. Michell Small CEO
FINANCIAL HIGHLIGHTS Kelly Community Federal Credit Union Run: 02/23/2017 As of: 12/31/2016 Monthly Balance Sheet Page: 1 of 1 LOANS & CASH 1st Mortgage Loans 36,720,140.16 Unsecured Loans 2,888,513.88 New Vehicle Loans 8,385,777.83 Used Vehicle Loans 16,875,006.58 Other Real Estate 1,419,027.32 All Other Loans 4,949,037.60 Total Loans 71,237,503.37 Allowance for Loan and Lease Loss (644,333.94) Net Loans Outstanding 70,593,169.43 Accounts Receivable 40,648.23 Non-Interest Earning Cash 919,177.34 CCFCU Accounts 235,322.00 Overnight Funds 3,999,139.01 Total Cash & Cash Equivalents 5,153,638.35 INVESTMENTS All Other Investments 10,960,607.26 Government Obligations 6,000,000.00 Total Investments 16,960,607.26 Net Investments 16,960,607.26 OTHER ASSETS Prepaid & Deferred Expenses 177,146.71 Land and Building 4,958,849.77 Accumulated Building Depreciation (1,754,072.92) Land & Building (Net) 3,204,776.85 Furniture, Fixtures & Equipment 2,179,492.68 Accumulated F.F. & E. Depreciation (1,858,436.16) Furniture, Fixtures & Equip (Net) 321,056.52 Accrued Income 223,359.82 NCUSIF 869,465.29 All Other Assets 41,667.00 TOTAL ASSETS 97,585,535.46 LIABILITIES AND EQUITY Accounts Payable 494,322.26 Dividends Payable 9,303.29 All Other Liabilities 387,371.02 Regular Shares 34,089,725.29 Christmas Savings 8,376.22 Checking Accounts 14,651,137.84 Regular Certificates 13,083,947.71 IRA Shares 5,081,056.85 IRA Certificates 5,203,229.94 Money Market 13,143,034.08 Escrow 240,703.08 TOTAL SHARES 85,501,211.01 TOTAL LIABILITIES 86,392,207.58 Regular Reserve 1,753,405.57 Undivided Earnings 9,439,922.31 TOTAL EQUITY 11,193,327.88 TOTAL LIABILITIES AND EQUITY 97,585,535.46
FINANCIAL HIGHLIGHTS Kelly Community Federal Credit Union Run: 02/23/2017 Income Statement As of: 12/31/2016 Month-to-Date Quarter-to-Date Year-to-Date Page 1 of 1 INTEREST INCOME Income from 1st Mortgage Loans 150,018.54 450,562.83 1,761,432.00 Income from Unsecured Loans 23,179.67 69,483.77 268,857.62 Income from New Vehicle Loans 29,332.77 87,152.16 355,641.75 Income from Used Vehicle Loans 82,156.08 242,959.93 934,920.38 Income from Contra-Auto Referral Co (5,605.00) (18,810.00) Income from Other Real Estate 6,816.30 22,442.51 94,292.16 Income from All Other Loans 30,861.91 93,757.43 372,707.90 Income from Mortgage Loan for Resal 3,454.00 5,789.13 31,096.66 Total Loan Income 325,819.27 966,542.76 3,800,138.47 Net Loan Income 325,819.27 966,542.76 3,800,138.47 Income from All Other Investments 9,706.53 33,343.40 106,257.98 Income from Government Obligations 4,274.99 12,825.00 68,525.41 Income from Overnight Funds 1,603.54 5,109.97 28,348.70 Total Investment Income 15,585.06 51,278.37 203,132.09 Total Interest Income 341,404.33 1,017,821.13 4,003,270.56 INTEREST EXPENSE Dividends - Regular Shares 5,715.19 16,808.41 64,156.47 Dividends - Christmas Savings 1.13 13.53 70.85 Dividends - Checking Accounts 1,087.48 3,259.32 13,087.97 Dividends - Regular Certificates 11,308.30 34,843.03 168,579.95 Dividends - IRA Shares 2,356.91 6,780.23 25,778.21 Dividends - IRA Certificates 5,336.49 16,462.81 72,206.21 Dividends - Money Market 4,162.80 12,425.19 48,458.53 Dividends - Non Member Certificates 1,441.58 Interest On Borrowed Money 0.67 56.01 Total Interest Expense 29,968.30 90,593.19 393,835.78 Net Interest Income 311,436.03 927,227.94 3,609,434.78 Provision For Loan Loss Expense 51,409.90 201,172.83 577,172.48 Net Interest Income after Provision 260,026.13 726,055.11 3,032,262.30 OPERATING EXPENSES Salaries 154,628.45 419,946.09 1,638,959.99 401K 4,763.34 13,021.05 49,789.86 Employee Benefits 33,980.36 80,574.25 267,895.09 Travel & Conference 2,735.27 5,483.20 62,475.73 Miscellaneous Dues 2,339.87 9,036.17 39,657.02 Office Occupancy 17,028.71 50,003.79 218,682.00 Office Operations 74,071.86 267,039.25 925,465.51 Education & Promotion 11,584.42 41,771.21 203,412.76 Loan Servicing 6,811.37 23,732.95 99,296.18 Professional & Outside Services 12,623.01 40,804.92 174,733.80 Supervisory Audit Fees (5,811.88) (5,811.88) 790.38 Cash Over/Short 0.16 20.67 6,252.70 Misc. Operating Exp. 496.41 787.97 3,567.69 Depreciation Expense-Building & Lea 12,958.74 39,080.52 156,796.69 Depreciation Expense-Furniture, Fix 11,480.00 33,129.27 152,778.18 Total Operating Expenses 339,690.09 1,018,619.43 4,000,553.58 OTHER OPERATING INCOME Fees & Charges 72,403.21 193,538.40 723,591.93 Miscellaneous Income 55,181.03 262,759.15 1,062,615.07 Total Other Operating Income 127,584.24 456,297.55 1,786,207.00 (Gain) / Loss on Sale Of Assets (11,995.15) Other Non-Operating (Gain) / Loss 1,900.00 1,900.00 1,900.00 Total Non-Operating Income 1,900.00 1,900.00 (10,095.15) Net Income 46,020.28 161,833.23 828,010.87