Investing in your future
Message from the president In calendar year, together we have built the foundation for better things to come. We were able to put forth a number of member service initiatives that enhanced the benefit of being an AFCU member. Our Visa balance transfer program, 3.9% auto loan promotion, and our revamped home equity loan program were well received and provided you, our members, the opportunity to take advantage of historical low interest rates while improving your lifestyle. For your savings dollar, we were able to reward you with a better than average dividend rate making AFCU the recipient of more of your savings dollars throughout the year. We welcome and appreciate your business. On the horizon, there is much excitement aside from investing in education and member service awareness programs to assist AFCU staff team members in providing you with the utmost in service quality, we have been working diligently to develop and deliver to you new product offerings for the New Year. Joining the ranks of our uniquely positioned regular share savings account is an electronic transaction account, commonly referred to as a checking account, to give you greater access to your funds on deposit and a means to simply manage your daily financial affairs. As we move forward, we want to be a part of your future. The Board of Directors and volunteers, management, and staff are committed to providing you with outstanding service while maintaining competitive savings rates, low loan rates, and the safety and soundness of your Credit Union. Marvin L. Thomas President/CEO Report of the chairman Your Credit Union Board of Directors is pleased to report that was another very successful year for AFCU. Operating costs were held to our traditionally low level. The general environment was one in which interest rates fell substantially. Due, we think, to our favorable dividend rate for most of the year, we saw a $26.1 million, or 12.4%, increase in Total Assets. In contrast to last year, we saw loan demand remain roughly constant at $27 million during the year. Our forecasts for 2004 are for a stable interest rate environment with less of an increase in assets and continuing relatively constant loan demand. As has been our policy for some time, we maintained a very competitive dividend rate, as compared with credit union norms. The Credit Union Board and management have continued to evaluate new approaches to services this year, including the continuation of home loan programs started last year, further development of our Web site (www.aerofcu.org), the completion of another successful year of the AFCU Visa card program, and continuation of the use of ATMs that were installed during 1995. We are also testing a new electronic transaction account that should be available to our members in 2004.
We continue our commitment to our members, to provide high dividends and low loan interest rates, consistent with maintaining the safety and liquidity of the Credit Union. The annual audit conducted by the National Credit Union Administration again resulted in the highest possible overall rating. This comprehensive audit examines key financial and management factors and compares the operation of AFCU with NCUA goals and with the performance of other federal credit unions. We appreciate the efforts of both management and staff of AFCU to improve operational efficiency and to continue to seek better ways to meet member needs for both loans and deposits. We value the advice and service provided by management and staff for our fellow volunteers on the Board, the Supervisory Committee and the Advisory Committee. Most importantly, we would like to extend our thanks to our members for viewing Aerospace Federal Credit Union as a key financial institution in their lives for both loans and deposits. Joe M. Straus Chair, Board of Directors Report Your Credit Union experienced favorable financial performance in. Some of the highlights are: An average dividend rate of 2.06% was paid on shares for the 1 2 3 4 5 1 2 3 4 year. Total dividends paid of $4.3 million represents 51.4% of the Credit Union s total income of $8.3 million for. The operating expense ratio continues to be one of the lowest in the credit union industry at 27.0%. The percentage of delinquent loans at 0.64% reflects an increase from the 0.37% at year-end. Despite the increase, losses on member loans at $83,368 were $4,257 less than in. Reserves and retained earnings increased $1.8 million from $16.9 million to $18.7 million. The net worth ratio continues to be very strong at 8.19% and is reflective of our goals to provide members with the highest possible dividends and lowest possible loan rates. Other trends of significance were: Total assets increased by $26.1 million from $211.2 million to $237.3 million, a 12.4% increase. Total share account deposits increased by $24.3 million from $194.1 million to $218.4 million, a 12.5% increase. Loans decreased $0.7 million to $26.7 million. The average return on loans for the year was 6.6% and was down from the 7.2% yield earned in. Investments increased $25.0 million from $178.8 million to $203.8 million, an increase of 14.0%. The average return on investments for the year was 3.3% compared to 4.1% for. The Credit Union looks forward to a relatively stable year in 2004. We anticipate member share and loan account volumes to remain constant. Given the general interest rate environment that we are currently experiencing, we anticipate that our return on investments will decrease slightly. James W. Ford Treasurer of the treasurer
Total Assets $153.7 $148.4 $171.2 $211.2 $237.3 Loans $33.9 $37.4 $34.1 $27.4 $26.7 Shares $139.3 $133.8 $155.9 $194.1 $218.4 Total Reserves $14.2 $14.5 $15.1 $16.9 $18.7 $=millions Year End Report of the supervisory committee The Federal Credit Union Act requires the Supervisory Committee to make or cause to be made a comprehensive annual audit of the books and affairs of the Credit Union The Supervisory Committee has retained a professional accounting firm, which specializes in auditing credit unions, to conduct an independent audit of the Credit Union s financial statements. The audited financial statements are available for review at the main office of the Credit Union. Ray F. Johnson Chair, Supervisory Committee
Summary statement of Years ended December 31 financial condition ASSETS Loans to s 26,683,173 27,365,939 Less: Allowance for Loan Loss (90,000) (180,000) Cash 3,179,775 2,193,562 Investments 203,797,806 178,828,131 Accrued Interest Receivable 1,518,100 1,176,896 Property and Equipment 80,226 93,737 NCUSIF Deposit 1,715,383 1,557,080 Other Assets 419,103 154,931 TOTAL ASSETS 237,303,566 211,190,276 LIABILITIES & EQUITY Shares 218,388,770 194,095,177 Accounts Payable & Accrued Liabilities 194,480 179,584 Regular Reserve 1,580,557 1,580,557 Retained Earnings 16,639,759 14,834,958 Appropriated Retained Earnings 500,000 500,000 TOTAL LIABILITIES & EQUITY 237,303,566 211,190,276 Summary statement of Years ended December 31 income & expense INTEREST INCOME Loans to s 1,786,693 2,212,259 Investments 6,370,435 6,631,908 Total Interest Income 8,157,128 8,844,167 Less: Dividend on Shares 4,266,842 5,419,115 Net Interest Income 3,890,286 3,425,052 Other Operating Income 142,314 109,371 Total Operating Income 4,032600 3,534,423 OPERATING EXPENSE Salaries & Benefits 1,321,230 1,287,731 Data Processing 172,340 144,647 Communications 60,703 69,690 Auditing Fees 41,957 30,437 Stationery & Supplies 34,298 34,184 Education & Promotion 36,219 31,338 Depreciation & Amortization 14,702 11,926 General Expenses 546,349 118,613 Total Operating Expense 2,227,799 1,728,566 NET INCOME 1,804,801 1,805,857
annual report of Board of Directors Joe M. Straus Lynn M. Friesen James W. Ford Robert D. Matthews James R. Coge Patrick J. Devine William H. Hiatt Charlotte M. Lazar-Morrison John F. Wagner officials Chair Vice Chair Treasurer Secretary Supervisory Committee Ray F. Johnson Susan J. Adams Gary Hawkins Advisory Committee Andrea L. Amram Carl D. Billingsley Mark H. Goodman Allyson D. Yarbrough Chair Recording Secretary Elaine S. Lydon Credit Union Office 2350 E. El Segundo Boulevard El Segundo, CA 90245 Telephone: (310) 336-5030 Toll Free: (800) 795-2325 Fax: (310) 336-8212 Web Site: http://www.aerofcu.org ATM Locations The Aerospace Corporation Building A-3 Cafeteria Building D-8 Cafeteria 15049 Conference Center Drive Chantilly, VA Los Angeles Air Force Base Area A, Building 120, Cafeteria Lobby