Verity Credit Union Annual Report 2017 01
welcome from the board chair A bold new vision for tomorrow 02 we started 2017 with a new vision for Verity, cooperative communities who dream boldly. With that bold vision came a new challenge: defining community. Looking beyond the physical boundaries of the neighborhoods where we live or work, community is a support network and a common bond. It is knowing that your deposit can provide fellow members loans that will expand their array of opportunities and improve their lives, just as much as it is knowing that the same deposit enables a fleet of volunteers to serve their community. We re proud to welcome the 3,769 members who joined our community in 2017. Together, we didn't just enhance the lives of our fellow members by increasing loans by 12.9% we reached people outside of their daily finances. We fueled the businesses and leaders of tomorrow through the Business Impact Micro Loan Fund, empowered fellow credit unions to offer home mortgages through CU Home Mortgage Solutions, staged many events throughout the greater Seattle area, and unleashed roughly 2,400 hours of community service through our staff and board volunteers. of local organizations, in addition to the financial services that we expect. By choosing Verity, you empower us to help all communities dream boldly and we appreciate your support. My thanks go out to my fellow volunteers, our board of directors, supervisory committee and board associates, who not only lent their time to Verity but to other community organizations throughout the year. I also thank the community leaders and representatives who were willing to spend time with us to discuss the many issues facing our communities and help us see how Verity might help. Most of all, I want to thank our staff and management team. Verity continues to earn high marks in customer satisfaction and as an excellent place to work because of their hard work and dedication. Their belief that trust is earned every day, commitment to lifelong learning, and devotion to putting people before the bottom line shines through in everything they do. It is truly a privilege to serve alongside such fabulous people. 2018 affords us the opportunity to take things up a notch, but that won t be possible without you. Our new community branch in West Seattle will be the first of its kind, offering a flexible community meeting space to foster the development Zachary S. Gose Board Chair, 2017 01 (cover) Oil on canvas courtesy of local artist, Christine Olson. 02 Digital painting courtesy of local artist, Jeremiah Hammer. annual report 2017 1
ceo s report Banking on values a big part of Verity s mission is to build strong and viable communities. To help us learn how to best fulfill this mission, Verity joined The Global Alliance for Banking on Values (GABV). This group of financial institutions around the globe shares Verity s commitment to building strong communities and using finance to deliver sustainable economic, social and environmental development. The Global Alliance is comprised of 46 financial institutions and seven strategic partners operating in numerous countries. Members of the GABV focus on building stronger communities and helping individuals fulfill their potential. The GABV itself serves as a catalyst, bringing together the world s leading values-based financial institutions who see banking as a positive force in meeting the needs of people and the planet. GABV institutions measure not just the bottom line, but the impact they have on positive social change and improving our environment. We look forward to learning from our colleagues around the world how better to serve and build our communities. Our commitment to promoting strong and viable communities has pushed us to increase our efforts to support members in new ways to help them live a more environmentally friendly lifestyle. In addition to bicycle loans and loan discounts for green auto loans, Verity launched a solar loan program in 2017 to help members fund the cost of installing solar panels on their homes. We partnered with several local contractors to provide a financing solution for residential solar projects while helping members learn more about solar energy systems, rebates and advantages. We even found ourselves in Olympia testifying in favor of a bill to support the solar industry in Washington. Productive communities are supported by small businesses and residents who buy local. Verity supports entrepreneurship through our relationship with Business Impact Northwest and in cooperation with several other local credit unions. In 2017 we invested $1 million in a micro loan funding program for small and start-up businesses through Business Impact Northwest. The program provides access to capital and exists to fund women, veterans, communities of color, immigrants, LGBT and disabled entrepreneurs. At the core of our values is our commitment to people coming first, before the bottom line. We work hard to attract and retain the best possible team to serve you every day, and we try to create a positive and constructive environment for our employees. Those efforts have paid off with Verity once again being named to the 101 Best & Brightest Companies to Work For and Seattle Business Magazine s 100 Best Companies to Work For. As we look forward to the future and to what 2018 brings, we are excited to expand our commitment to communities into West Seattle's Alaska Junction neighborhood. Our new branch on California Avenue will be open summer 2018 and will be a resource for the community. We are already busy meeting our neighbors-to-be. The excitement and the energy that lives in West Seattle is inspiring we can t wait to join the neighborhood. Of course, our community work starts with our interaction with each and every member each and every day. We hope that we have lived up to your expectations and that we earn your trust with every interaction. If you have ideas of how we can improve our services, please let us know. We value your loyalty and your trust in us. Finally, my thanks go out to our board of directors and employees for their willingness to embrace our mission of enhancing our members lives and vision of cooperative communities who dream boldly. We can each make a difference, and when we band together with like-minded individuals, the potential for positive change is limitless. John Zmolek Chief Executive Officer income & expense statement Fiscal year ended 12/31/2017 12/31/2016 Interest Income Loans receivable $ 17,344,429 $ 16,347,946 Investments and interest-bearing accounts 2,036,115 1,820,593 Total interest income $ 19,380,544 $ 18,168,539 Interest Expense Members share accounts $ 1,394,099 1,405,999 Borrowed funds 182,583 301,798 Total interest expense $ 1,576,682 $ 1,707,797 NET INTEREST INCOME $ 17,803,862 $ 16,460,742 Provision for loan losses 1,883,055 1,624,969 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES $ 15,920,807 $ 14,835,773 Non-Interest Income Fees and charges $ 6,018,801 $ 5,596,428 Gain on sales of loans 409,943 1,532,893 Interchange income 2,819,120 2,600,782 Other 1,289,314 1,233,462 Total non-interest income $ 10,537,178 $ 10,963,565 Non-Interest Expense Compensation and benefits $ 11,243,414 $ 11,155,422 Operations 11,440,042 11,992,230 Occupancy 1,246,885 1,275,136 Total non-interest expense $ 23,930,341 $ 24,422,788 NET INCOME $ 2,527,644 $ 1,376,550 Net income (loss) attributable to non-controlling interest 11,425 (14,683) NET INCOME ATTRIBUTABLE TO VERITY CREDIT UNION $ 2,539,069 $ 1,361,867 These statements represent Verity and CUHMS consolidated. 01 2 annual report 2017 annual report 2017 3
balance sheet Fiscal year ended 12/31/2017 12/31/2016 Assets Cash and cash equivalents $ 10,991,784 $ 32,802,768 Investments Securities available for sale 88,521,767 86,160,505 Other 2,030,933 2,175,559 Loans receivable, net 400,288,774 353,706,603 Loans held for sale 404,000 616,200 Accrued interest receivable 1,431,520 1,223,791 Property and equipment, net 10,742,836 11,546,038 National Credit Union Share Insurance Fund deposit 4,207,309 3,858,783 Other assets 8,815,318 10,309,042 Total assets $ 527,434,241 $ 502,399,289 Liabilities Members share accounts $ 459,602,133 $ 438,637,458 Accrued expenses and other liabilities 6,837,318 6,297,830 Borrowed funds 13,400,000 12,400,000 Total liabilities $ 479,839,451 $ 457,335,288 Members' equity Regular reserve $ 5,565,164 $ 5,565,164 Undivided earnings 42,926,837 40,387,768 Accumulated other comprehensive loss (1,481,942) (1,485,087) Total members' equity $ 47,010,059 $ 44,467,845 Non-controlling interest 584,731 596,156 TOTAL LIABILITIES & EQUITY $ 527,434,241 $ 502,399,289 supervisory report Safeguarding members' assets the supervisory committee is an independent governing entity of Verity that shares responsibility with the board of directors. It monitors the board and management for: (a) providing required financial reporting and (b) establishing practices, procedures and policies to safeguard financial assets. The committee consists of four elected members, has regular periodic meetings, directly supervises the internal audit function, and maintains liaison with federal and state regulators to ensure that Verity is in compliance with applicable regulations. The independent CPA firm of Moss-Adams LLP was retained by the committee to audit and prepare Verity's 2017 financial statements. Your 2017 board of directors Zachary S. Gose, Chair Benjamin Lundell, Vice Chair Karen Hunt, Secretary Rodolfo Hurtado Anthony Kusske David Priestly Dan Strandy Trina Venard Dan Young Your 2017 supervisory committee John Carpenter, Chair Steve Andersen Rodolfo Hurtado Alan Randell-Chen 02 TOTAL MEMBERSHIP 31,568 30,315 These statements represent Verity and CUHMS consolidated. 01 (previous page) Watercolor courtesy of local artist, Matthew Pritchett. 02 Oil on canvas courtesy of John Osgood. John Carpenter Supervisory Committee Chair, 2017 Contact the supervisory committee: supervisorycommittee@veritycu.com Supervisory Committee P.O. Box 75974 Seattle, WA 98175 Your 2017 board associates Eric Esteban Evan Gay Your executive team John Zmolek, Chief Executive Officer Justin Martin, Chief Operating Officer Jason Hirl, Chief Technology Officer Heidi Cleveland, Chief Marketing Officer Tina Narron, Chief Lending Officer Brad Tanberg, Chief Financial Officer 4 annual report 2017 annual report 2017 5