Unitus Community Credit Union - Annual Report 2011

Unitus Community Credit Union - Annual Report 2011

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  Building a legacy. One experience at a time. Unitus Community Credit Union 2011 Annual Report Federally insured by NCUA
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  Founding Fathers Member #1: D. O. Denman    Member #2: Genard D. Gleason Member #3: Mildred E. Beck Member #4: Jake A. Ellis Member #5: Isaac W. Anderson Member #6: Robert Meyers  Member #7: Frederick M. Gavin Member #8: Shelby L. Davies  Member #9: H. S. Hayes Member #10: E. T. Healy Member #11: Leslie W. Summers Former Board Chair, Terry Gavin’s grandfather, Frederick M. According to his daughter, Carolyn, Genard D. Gleason Gavin (pictured above), was one of 11 founding members started the credit union with his friends. Each made a $5.50 of the Credit Union in 1937 and served on the original Board contribution to initially fund the Credit Union. This was the of Directors. Pages from the original member ledger show same year Carolyn was born and it also marked a significant Terry’s grandfather as member number 7 and Terry’s father, milestone with her father graduating from Law School. Frederick J. Gavin, as member number 115. Both joined We look forward to continuing this tradition of service for in 1937. Terry’s father was a lifelong member, and Terry’s generations to come. children and grandchildren are all Unitus members.  The Gavin family stands out for its heritage of service to our Credit Union, and we are proud of having served the Gavin’s and other members’ families for as many as five generations.  Building a legacy. one experience at a time.
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  A Message toour Members People want to be remembered confidence and exceptional member growth helped increase They want friends and relatives to be proud of their our assets by 1.8%. Additionally, we repositioned two of our accomplishments and are eager to share them with their branches to provide better accessibility and convenience to own families. Unitus Community Credit Union wants that our members. We relocated the University District branch too. As we look back on our 75th anniversary and look ahead staff to a new facility in the Peterkort neighborhood that to what the new year will bring, we understand that we are will accommodate a larger member pool, and we doubled stewards of the legacy that is Unitus. We are responsible the size of the Mall 205 branch by relocating it less than a not only for what we’ve inherited from the 11 founding mile away. fathers, but for what we will pass on to the next generation. We are caretakers of a great history and shepherds of a Unitus has always provided our members with the newest great future. We are ensuring that Unitus is here for our online services and looked for ways to increase access members now and for their families later. We are building points to their accounts. We define convenience through the a legacy. One experience at a time. members’ eyes and see their desire to have more time in their day. In addition to our own branches, our shared network Unitus was rewarded in 2011 for years of prudent fiscal of 4,500 branches, 2,200 kiosks and 28,000 ATMs puts our management and visionary strategies. Special recognitions, credit union within reach anywhere you are in the country. In growth in membership and assets, and increased product fact, according to the Financial Services Centers Cooperative utilization created an environment where our business goals which manages the shared network, our members are the #1 were realized and milestones achieved. users in the nation of the Vcom® 7-Eleven kiosks. The national backlash against large commercial banks served Listening to member feedback, Unitus enhanced our Bill to reaffirm our members’ choice in us. While we worked Pay product. The new service, now integrated with uOnline, to provide more services, our members responded with simplified several features and will also allow for future increased utilization, 60% now have a checking account. incorporation with mobile banking and Total Finance. This Nonmembers responded by joining—over 5,500 at year- move also brought the service support in-house to increase end—realizing that their best solution for financial services member support and satisfaction. was Unitus, right in their own community. This renewed Unitus Communit y Credit Union | page 2 | 2011 Annual Report
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  “ Building a legacy demands commitment—a commitment to making changes that will benefit Unitus members now and in the future. “ We redesigned our website with more intuitive navigation will help save small businesses—and our members who own to help our members retrieve information faster, and we them—time and money. With a professional lending team, upgraded our phone system to enrich the member experience. with over 25 years combined commercial lending experience The introduction of iPads to our technology toolbox has and an array of competitive programs, we experienced a proven beneficial on several fronts. Initially, we equipped our 46.8% increase in Member Business Loans. on-site staff at community events prior to the opening of our new branches at Peterkort and Mall 205. The iPads allowed Building a legacy demands commitment—a commitment to our employees to enroll hundreds of potential members on making changes that will benefit Unitus members now and the spot, well in advance of opening day, and firmly establish in the future. their memberships with the credit union. Whenever possible, we help our members get News coverage of our innovative iPad use back on their feet so they can forge their own caught the attention of representatives from thriving financial path. We offer character lending Apple who later visited Unitus to learn more programs that rely on a member’s integrity and about how we integrated the new technology desire to improve their financial well-being—not into our business operations. Additionally, we just a credit score. And our loan modification are testing using iPads in one of our branches to help facilitate transaction service while program helps members experiencing a financial the member waits for the next available member service hardship from losing their home or vehicle. Since inception, representative. By providing ‘convenience’ solutions to we have experienced a success rate in our modification our members, Unitus ultimately incorporates efficiencies program of nearly 80%, while national programs continued into our operations and the member benefits again with to struggle with news headlines reflecting a 70% failure rate. enhanced service.   We foster stewardship of our natural resources by providing We enhanced our business product line with the introduction green loans for eligible automobiles and bike loans to of a new debit and credit card and remote deposit capture that encourage alternative transportation. Building a legacy. one experience at a time.
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  We are dedicatedto helping the organizations and charities industry and we will incorporate those advancements to in and around our community. In 2011, Unitus was recognized enhance the member experience. We plan to introduce as a “Corporate Catalyst” by the Oregon Health & Science remote deposit capture for consumers that will alleviate the University and OHSU Foundation for exhibiting ‘extraordinary need to visit a branch or find an ATM to deposit a check. In generosity, vision, and leadership in philanthropy.’ We also addition, for our business members, we will be enhancing our received the 2011 Corporate Philanthropy Award from the online services with tools created specifically for small- and Portland Business Journal for our support of charities like medium-sized businesses, adding convenience and simplicity. Schoolhouse Supplies, SnowCap and the Good Neighbor Center. Last year, Unitus employees volunteered over 1,089 When we applied for our charter in 1937, our intent wasn’t hours performing activities like filling more than 500 backpacks to be a Top 200 credit union in the country, but that’s what with school supplies for Vestal Elementary students, repairing today’s numbers indicate. It wasn’t to place in the Top 100 and decorating a room in Share’s Vancouver Homestead Best companies to work for in Oregon, but that’s what our shelter, and participating in Adopt-a-Class for the sixth year employees declared. It wasn’t to rank as a top mortgage and in a row. commercial lender, but that’s what the Portland Business Journal revealed. Our mission then, as it is now, was simply Looking back over 75 years to dedicate ourselves to the financial well-being of each and You can see that we changed as the needs of our members every one of our member-owners. We’ve worked tirelessly, for have changed. We started in 1937 with basic savings accounts 75 years, focusing on making a difference in their lives. Along and added mortgages in 1942. We introduced checking in the way we built a legacy. One experience at a time. 1982 and progressed from ATM cards in 1983 to debit and credit cards in 1986. We published our first website in 1998 and launched online banking a year later. We expanded to a community charter in 2001 then changed our name in 2004 to reflect our growing membership. We opened our first branch in 2002 at Mall 205 and now offer our members the convenience of eight locations in 2012. Looking forward, it’s hard not to get excited. Technology continues to advance functions in the financial services Don Mason, Chairperson Patricia E. Smith, President/CEO Board of Directors Audit Committee Don Mason, Chairperson Will Rader, Director Rhonda Cramer, Chairperson Tom Faulkner, Vice Chairperson Jim Lewis, Director Ray Anderson, Committee Member Susan Iggulden, Secretary Scott Thompson, Director Luke Watson, Committee Member Terry Gavin, Director Mike Stepan, Committee Member Lora Dakin, Committee Member Unitus Communit y Credit Union | page 4 | 2011 Annual Report
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  2011 A RewardingYear Your credit union was honored in many ways in the past 12 months: • orporate Philanthropy Award C • mong the highest awards in the Oregon business A Portland Business Journal community are those bestowed each year by Oregon Ethics in Business. This year, Unitus Community • oernbecher Corporate Catalyst D Credit Union was named one of the finalists for the OHSU/Doernbecher/Credit Unions for Kids prestigious honor. • op Residential Mortgage Lenders T • ndividual Innovation: Brett Wooden, Business I Vancouver Business Journal Development Manager, received honors for the Portland Business Journal Credit Union Times’ (industry publication) Trailblazers • op Commercial Lenders T Under 40 as well as the Northwest Credit Union Portland Business Journal Association’s Young Credit Union Professional of • oard Member Volunteering: Barbara Leonard was B the Year. honored for making the Volunteer Honor Roll and Hall • op 100 Best Companies to Work For in Oregon T of Fame by the Northwest Credit Union Association Award, Oregon Business Magazine – we placed #7 for her years of serving the Links, Inc. in the Large Company category; award is based on • pectrum Marketing Awards S our employees’ survey and then our score is ranked Northwest Credit Union Association among other companies that participated. Thank you for being a part of our community! Building a legacy. one experience at a time.
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  Treasurer’s Statement Our country’seconomic challenges continued throughout 2011. Congressional leaders wrangled for months over an agreement to raise the debt ceiling promulgating fears of a government shutdown and double dip recession. Although a deal was eventually reached in late summer, the 625 675 725 775 825 875 2011 credit rating agency Standard Poor’s (SP) referenced 2010 2009 ASSETS the upheaval when it downgraded the U.S. triple A credit 2008 MILLIONS OF DOLLARS 2007 rating to AA+ for the first time. Additionally, business and 7,000 8,000 9,000 10,000 11,000 12,000 consumer confidence remained low and unemployment 2011 2010 remained high for the fourth consecutive year. 2009 Loans Granted 2008 MILLIONS OF DOLLARS 2007 While the economic environment has been challenging 50 55 60 65 70 75 2011 for the past several years, Unitus Community Credit Union 2010 2009 MEMBERSHIP saw a 7.7% growth in membership and a 5.65% growth in 2008 THOUSANDS 2007 deposits in the past year. Unitus was again recognized as 450 500 550 600 650 700 a top commercial lender in the Portland-Metro area by the 2011 2010 Portland Business Journal and maintained its Top 25 ranking 2009 SAVINGS 2008 MILLIONS OF DOLLARS for residential loans in both Portland and Vancouver. All 2007 told, Unitus made more than $300 million in loans in 2011. 55 60 65 70 75 80 2011 2010 2009 CAPITAL RESERVES Market rates continued to fall in 2011, but we were able to 2008 MILLIONS OF DOLLARS 2007 maintain that delicate balance of keeping both deposit and loan rates competitive for our members. Our net worth to assets ratio of 9.51% reflects an increase of six basis points over 2010 and preserves our credit union classification under NCUA as well capitalized and sound. Patricia E. Smith, Treasurer Unitus Communit y Credit Union | page 6 | 2011 Annual Report
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  Report of theAudit Committee The Audit Committee is made up of five volunteer members Committee relies on internal audit to review, measure, and appointed by the Board of Directors whose primary report on the internal control environment and regulatory responsibilities are to retain services for an annual report compliance activities of business processes. on the financial condition of the credit union, coordinate the verification of member accounts, and monitor the review It is the opinion of the Audit Committee that Unitus of internal controls, compliance with laws and regulations, Community Credit Union’s financial operations and and code of conduct activities. system of internal controls is sound based on reports and information received. I’d like to thank the Audit Committee As part of fulfilling its duties, the committee engaged members for their commitment, energy, and enduring the independent accounting firm Moss Adams LLP to effort throughout 2011. conduct the financial audit, manage the process to verify member accounts, and provide an opinion of the financial statements as a whole. Summarized financial statements prepared by management have been included in this annual report. In preparing the financial statements, management depends upon the credit union’s system of internal controls in meeting its responsibility for reliable information. The Rhonda Cramer Independent Auditor’s Report To the Board of Directors and Audit Committee report dated March 5, 2012, we expressed an unqualified Unitus Community Credit Union | Portland, Oregon opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying We have audited, in accordance with auditing standards condensed consolidated financial statements is generally accepted in the United States of America, fairly stated, in all material respects, in relation to the the consolidated statements of financial condition of consolidated financial statements from which they have Unitus Community Credit Union and Subsidiary as of been derived. December 31, 2011 and 2010, and the related consolidated statements of operations, changes in members’ equity Moss Adams LLP and comprehensive income (loss), and cash flows (not Portland, Oregon presented herein) for the years then ended; and in our March 5, 2012
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  Consolidated Statements ofFinancial Condition December 31, Assets 2011 2010 Cash and cash equivalents $ 117,078,021 $ 69,807,526 Investment securities available for sale at fair value 212,556,538 226,171,238 Investment securities held to maturity at amortized cost - 14,669 Restricted equity securities 3,453,000 3,453,000 Loans receivable, net 492,275,309 510,806,440 Accrued interest receivable 2,896,841 2,755,401 Property and equipment, net 11,222,530 11,140,447 National Credit Union Share Insurance Fund deposit 6,824,487 6,533,526 Other assets 5,508,954 5,975,028 Total assets $ 851,815,680 $ 836,657,275 Liabilities Members’ share and savings accounts $ 730,469,561 $ 691,093,877 Borrowed funds 40,008,641 65,012,643 Accrued expenses and other liabilities 12,086,336 9,964,193 Total liabilities 782,564,538 766,070,713 Controlling Interest in Members’ Equity Regular reserves 23,423,471 23,423,471 Undivided earnings 57,648,619 55,634,282 Accumulated comprehensive loss (11,314,446) (7,976,379) Noncontrolling Interest in Subsidiary (506,502) (494,812) Total members’ equity 69,251,142 70,586,562 Total liabilities and members equity $ 851,815,680 $ 836,657,275 Unitus Communit y Credit Union | page 8 | 2011 Annual Report
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  Consolidated Statements ofOperations Years Ended December 31, Interest Income 2011 2010 Loans receivable $ 25,807,093 $ 27,937,381 Investment securities and cash equivalents 9,448,498 9,628,820 Total interest income 35,255,591 37,566,201 Interest Expense Dividends and interest on members' share accounts 7,364,502 9,408,859 Borrowed funds 1,624,310 3,016,176 Total interest expense 8,988,812 12,425,035 Net Interest Income 26,266,779 25,141,166 Provision for loan losses 1,980,524 4,908,811 Net interest income after provision for loan losses 24,286,255 20,232,355 Non-Interest Income Service charges and fees 9,565,976 7,808,769 Mortgage banking and loan servicing income 3,563,075 4,597,076 Gain on sale of investment securities, net 792,178 4,467,233 Total other-than-temporary impairment losses (2,622,237) (742,651) Portion of other-than-temporary impairment losses recognized in other comprehensive income 489,785 (1,305,754) Total gain (loss) on investment securities, net (1,340,274) 2,418,828 Total other noninterest income 240,598 156,663 Total non-interest income 12,029,375 14,981,336 Non-Interest Expense Compensation and benefits 16,176,220 14,865,097 General and administrative 16,346,640 15,306,926 National Credit Union Administration assessments 1,706,120 1,686,938 Total Non-Interest Expense 34,228,980 31,858,961 Net income 2,086,650 3,354,730 Noncontrolling interest in net income of subsidiary 72,313 29,166 Controlling interest in net income $ 2,014,337 $ 3,325,564 Building a legacy. one experience at a time.
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  Statements of Members’Equity Comprehensive Income (Loss) Controlling Interest in Members’ Equity Accumulated Noncontrolling Total Total Members’ Regular Undivided Comprehensive Interest in Comprehensive Equity Reserves Earnings Loss Subsidiary Income (Loss) Balance at December 31, 2009 $ 58,812,317 $ 23,423,471 $ 52,308,718 $ (16,418,606) $ (501,266) Net income 3,354,730 — 3,325,564 — 29,166 $ 3,354,730 Distribution to noncontrolling interest in subsidiary (22,712) — — (22,712) (22,712) Unrealized gains on transfer of held to maturity securities to available for sale 2,804,711 — — 2,804,711 — 2,804,711 Unrealized gains on securities available for sale 8,056,344 — — 8,056,344 — 8,056,344 Reclassification adjustment for realized gains on securities available for sale (4,467,233) — — (4,467,233) — (4,467,233) Reclassification adjustment for other-than-temporary impairment losses realized in net loss 2,048,405 — — 2,048,405 — 2,048,405 Comprehensive income $ 11,774,245 Balance at December 31, 2010 70,586,562 23,423,471 55,634,282 (7,976,379) (494,812) Net income 2,086,650 — 2,014,337 — 72,313 2,086,650 Distribution to noncontrolling interest in subsidiary (84,003) — — — (84,003) (84,003) Unrealized gains on securities available for sale (4,678,341) — — (4,678,341) — (4,678,341) Reclassification adjustment for realized gains on securities available for sale (792,178) — — (792,178) — (792,178) Reclassification adjustment for other-than-temporary impairment realized in net income 2,132,452 — — 2,132,452 — 2,132,452 Comprehensive Loss $ (1,335,420) Balance at December 31, 2011 $ 69,251,142 $ 23,423,471 $ 57,648,619 $ (11,314,446) $ (506,502) Unitus Communit y Credit Union | page 10 | 2011 Annual Report
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  Unitus Communit yCredit Union | P.O. Box 1937 Portland, Oregon 97207-1937 | 503 227 5571 + 800 452 0900 + unitusccu.com