2014 annual report. innovation. Federally insured by NCUA

Transcription

1 2014 annual report innovation Federally insured by NCUA

2 New State-of-the-Art Santa Monica Branch 1

3 Table of Contents Board of Directors & Supervisory Committee...3 Executive Team...4 Board Chair & President s Message...5 Innovation...7 Our Community...9 Consolidated Statements of Financial Condition Consolidated Statements of Income Treasurer s Report Supervisory Committee Report

4 Leadership Board of Directors Robert L. Hale Chairman G. David Mills Director Walter Finnigan Vice Chairman Dolores M. Arriola Director Annie Perez Secretary/Treasurer Angie Avery Director William de la Garza Director Supervisory Committee Bradley P. Silcox Committee Chair Credit Union 3 Southland Jose L. Manzano Committee Secretary Morris J. Litwack Committee Member

5 Executive Team Ferris R. Foster President & CEO Rene M. LeJay Senior Vice President & COO Thomas G. Lent, CPA Senior Vice President & CFO Curt A. Bannock Vice President & CIO Matthew P. Herrick Vice President of Sales & Marketing Patty Jimenez Vice President of Lending Tim Labuda Vice President of Patriots Operations Cynthia E. Smolinski Vice President of Human Resources Bertrand Villavert Vice President & Controller Mission Statement is dedicated to exceptional Member service resulting in superior financial strength, offering convenience, courtesy, and valued solutions. 4

6 { Board Chair & President s Message An Exceptional Year to Remember Southland developed an innovative, strategic plan with several initiatives specifically created to stabilize the organization in the wake of the economic downturn, as well as position the Credit Union to be a formidable, highly competitive financial institution by the end of As we concluded the final year of our three-year plan in 2014, we are happy to report that not only did we exceed everything we planned by a wide margin, but 2014 was yet another terrific year for your Credit Union. We dramatically improved our asset size, market share and capital position, ending the year with the highest levels in our 78-year history. The year was highlighted by an unprecedented eighteen percent growth in assets and a net increase of over 8,700 new Members while still maintaining an exceptionally strong capital position. Building for Success Reaching out and making it easier to do business with Southland was an area of focus in Several organizational projects improving Member access to the Credit Union were completed, such as debuting our popular Mobile Banking Application in 2014, online check deposits, smart ATM enhancements, etc. In addition, we expanded into two new communities via mergers, ultimately resulting in the acquisition of two additional branches benefiting our Membership, their Memberships, and the surrounding communities. One merger was with Westside Employees Federal Credit Union, serving the healthcare professionals of Saint John s Health Center in Santa Monica, CA. The second merger was with Patriots Federal Credit Union, chartered in 1962 to serve the military personnel of the El Toro Marine Corp Air Station in Tustin, CA. Through the 5

7 successful internal and external infrastructure expansion completed in 2014, we broadened our operational platform in preparation for our continued future of success. This past year was an innovative year, staging the credit union for our future success. Innovation Driving Southland Forward Our Membership continued to be the foundation of our terrific year of success. Our core values of exceptional service with integrity, honesty and creativity with our Members in mind at all times continually motivates everything we do to improve our products, services and delivery channels. Being innovative and continually exploring new and even more creative ways to not only meet, but exceed your expectations will continue to ensure Southland remains one of the most successful Credit Unions in the country. However, we remain committed to be an even better Credit Union for you, our Members. We will continue to make enhancements to our culture, invest in our staff, improve our infrastructure, expand our technology and renew our commitment to our Members. { Leading With Vision In 2014, we developed a new strategic plan, which maps our course for success over the next three years. We are constantly thinking of new products and services you may need in the future and are always focused on providing our Members with leading edge technology. Your financial needs and our commitment to you, along with our strategic thinking and innovative ways, will help us envision what Southland will look like in the next three years. While we cannot predict the future, we will stay true to our mission, vision and core values at all times. Our fundamental principles and our emphasis on innovation, coupled with your support, have ensured our success since Serving You We exist because of you and appreciate your loyalty and support. On behalf of the Board of Directors, the Management team and our terrific Staff at Southland, we are honored to have the privilege of serving you. Thank you for a successful Robert L. Hale Board Chair, Board of Directors Ferris R. Foster President and Chief Executive Officer 6

8 Innovation distinguishes between a leader and a follower. -Steve Jobs Credit Union 7 Southland

9 Innovation 8

10 Our Community A strong community is made through the active participation of local businesses. That is why is committed to supporting our local communities. Our Associates volunteer and support our community throughout the year with various charities, toy drives, food drives, women and children s causes, local school programs, community events, and many other important community needs. Through helping support local non-profits, community projects and our schools, Southland is a partner in improving the areas our Members live, work, worship and attend school. Santa Monica Grand Opening Celebration and Community Event launched the new Santa Monica Branch in style, offering free burgers from Original Tommy s, prizes and promotions. New Members who joined at the event took a spin in the famous Money Booth! Santa Monica Branch Ribbon Cutting Over two dozen Santa Monica dignitaries, including Southland s Board of Directors and Executive Team and Santa Monica Mayor Pam O Connor took part in the ribbon cutting ceremony for the new Santa Monica Branch. 33rd Annual Race on the Base Southland returned as the title sponsor of the 33rd Annual Race on the Base. The annual event takes place on the Los Alamitos Joint Forces Training Base and is the largest reverse triathlon in the United States. Proceeds from the event benefit local military families and the Los Alamitos Education Foundation. Run Seal Beach We were honored to sponsor the 40th Annual Run Seal Beach. The 5k and 10k run takes place in the heart of Seal Beach and benefits a variety of local non-profits and the Los Alamitos Unified School District. Downey Kids Day Southland sponsored the 27th Annual Downey Kids Day that promotes healthy living in a caring community. The festival gives youth and teens an opportunity to participate in a 2k Fun Run, enjoy entertainment from their peers, participate in carnival games, visit informational booths, and included demonstrations from the Downey Police and Fire Departments. 9

11 Garden Grove Strawberry Festival 5k Southland supported the first Strawberry Festival 5k in the City of Garden Grove. The race navigated Downtown Garden Grove and finished near the Garden Grove Branch. 4th Annual Cypress Police Appreciation Recognizing the men and women of the Cypress Police Department, the fourth Annual Police Appreciation luncheon honored those officers who went above and beyond in the line of duty and helped make our community safe. Orange County Sugar Beet Festival and 5k-ish Challenge Over 3,000 people participated in the second annual Sugar Beet Festival and 5k-ish Challenge, presented by. The title event featured vendor booths, historical exhibits, a kids zone and, of course, truckloads of sugar beets! Cypress Festival The 34th Annual Cypress Community Festival was kicked off with the Cypress 5k/10k Run/Walk one leg of the OC California Race Series that includes the Race on the Base and Run Seal Beach. Southland was proud to return as a Bronze sponsor for the event. Los Alamitos School Ghoul The School Ghoul is a district-wide event that raises awareness of the importance of physical fitness and helps to raise funds for local schools. The goal is to promote physical fitness and a sense of community working with local businesses and neighbors. Youth Center Shocktoberfest For the first time ever, the Youth Center partnered with St. Isidore Historical Plaza to bring this fun annual event to the Los Alamitos community and Southland was proud to help sponsor. Shocktoberfest provided a Haunted plaza, costume contests, German music, live bands, amazing vendors, bratwursts, pretzels, kids and adult games, photo memories, fun atmosphere and prizes! Los Alamitos Wings Wheels & Rotors Attracting over 40,000 enthusiasts from all over Southern California, Southland participated in the annual Wings, Wheels & Rotors Expo that showcased vintage airplanes, vehicles and helicopters. The free event held at the Los Alamitos Joint Forces Training Base also included a car show and vendor exhibits in coordination with each branch of the Armed Services. Proceeds from sponsorships and donations benefited the Morale, Welfare & Recreation Fund for members of the armed forces. Walk to End Alzheimer s Team Southland and family showed up to support the fight to end Alzheimer s. 10

12 Our Community Seal Beach Christmas Parade participated in style at the 2014 Seal Beach Christmas Parade and Tree Lighting Ceremony as the event s Title Sponsor. Driving the parade in a classic convertible, CEO Ferris Foster was accompanied by Board Chair, Bob Hale, and Southland Executives. Over 15,000 parade attendees were treated to candy canes as the fun and festive event strolled through the heart of Main Street Seal Beach. Los Alamitos Winter Wonderland The City of Los Alamitos and the Los Alamitos Area Chamber of Commerce turned the streets of Los Alamitos into a snow-filled wonderland for children of all ages. The free event included performances by local school groups, arts and crafts and a food drive benefiting local charities. Southland was proud to participate as a Platinum Sponsor in an event that gathered over 2,500 people in celebration of the holidays. 11

13 Mobile Banking Deposit Checks View Balances View Transactions Transfer Funds Pay Bills Locate CO-OP ATMs & Shared Branches Pay Bills And More! Mobile Banking now with Mobile Deposits Southland Membership 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 17,000 29,000 31,000 46, ,617 12

14 Financials Co n s ol id ate d S t ate m e n t s o f Fi n a n c i a l Co n d i t i o n As of December 31, 2014 and 2013 (in thousands) (unaudited) Assets Cash and Cash Equivalents Investment Securities: Available-For-Sale Other Investments Federal Home Loan Bank Stock Loans to Members, Net of the Allowance for Loan Losses Accrued Interest Receivable NCUSIF Deposit Property and Equipment, Net Other Assets $ ,138 $ 65,349 29,745 2, ,873 1,428 4,917 12,214 20, ,992 84,451 6,812 2, ,856 1,231 4,137 8,609 17,479 TOTAL ASSETS $ 567,931 $ 480,798 Liabilities Members Shares and Savings Accounts Accounts Payable and Other Liabilities $ 499,727 6,461 $ 419,954 4,555 TOTAL LIABILITIES Members Equity Regular Reserve Undivided Earnings Equity Acquired in Merger Accumulated Other Comprehensive Income TOTAL MEMBERS EQUITY TOTAL LIABILITIES AND MEMBERS EQUITY Credit Union 13 Southland $ 506, ,509 12,887 42,158 7,221 (523) 12,887 40,509 4,574 (1,681) 61,743 56, ,931 $ 480,798

15 Consolidated Statements of Income For the years ended December 31, 2014 and 2013 (in thousands) (unaudited) Interest Income Loans to Members $ ,436 $ ,073 Investment Securities and Cash Equivalents 1,087 1,128 Total Interest Income 17,523 17,201 Interest Expense Members Shares and Savings Accounts 1,489 1,852 Borrowed Funds Total Interest Expense 1,489 1,976 Net Interest Income 16,034 15,225 Provision for Loan Losses Net Interest Income After Provision for Loan Losses 15,260 14,691 Non-Interest Income Fees and Charges 4,299 4,189 Other Non-Interest Income 1,748 2,212 Other Non-Interest Gains Total Non-Interest Income 6,555 6,413 Income Before Non-Interest Expense 21,815 21,104 Non-Interest Expense Compensation and Benefits 10,514 9,937 Operations 7,085 5,875 Occupancy 2,566 2,090 NCUSIF Premium Assessment* Total Non-Interest Expense 20,165 18,233 NET INCOME $ 1,650 $ 2,871 * NCUA mandated charge for Corporate Stabilization Program. Total Assets (In Millions) $570 $550 $530 $510 $490 $470 $450 $486 $483 $ $568 14

16 Treasurer s Report The 2014 year was a groundbreaking time for, resulting in record-breaking growth while maintaining exceptional financial security. The Credit Union not only surpassed the half billion-dollar mark in total assets, finishing at an all-time high of $568 million (18% growth), but completed two mergers that expanded the Credit Union s reach into new areas. These advancements allowed the Credit Union to continue to build its capital, which is also at an all-time record level of $61.7 million. The 11% Net Worth ratio places the Credit Union more than 50% above the minimum well capitalized regulatory requirement. During 2014, loans and deposits both increased significantly. Loans increased Vision Statement 24% to $390 million, while Member deposits increased $80 million (19%) to $500 million, both all-time record highs. We returned $1.5 million in dividends and interest to our Members and funded 7,500 in new loans in 2014 totaling $185 million. is in excellent financial condition, and is poised for continued success and future growth. We look forward to continuing to serve our Member/Owners and your families for years to come. will be a dynamic, innovative and exemplary financial institution dedicated to meeting the needs of its Members. Your volunteer Board of Directors and Supervisory Committee Members work diligently to ensure the continued safety and soundness of the Credit Union and we thank you for your Membership. It has been my pleasure to serve as Secretary/Treasurer of your Credit Union. Sincerely, Annie L. Perez Secretary/Treasurer Board of Directors Annie L. Perez Credit Union 15 Southland

17 Member Loans (In Millions) $400 $390 $380 $360 $340 $320 $338 $316 $314 Real Estate 34% Loan Mix (In Millions) $ Home Equity 14% Commercial 8% Multi-Family 1% Other 5% Vehicle 38% Vehicle Home Equity Real Estate Commercial Multi-Family Other $151,234 $56,043 $133,124 $31,578 $3,273 $19,822 Member Shares (In Millions) $550 $500 $500 $450 $400 $350 $391 $420 $ Checking 20% IRA Shares 1% Money Market 20% Deposit Mix (In Millions) Term Share Certificates 30% Regular Shares 29% Regular Shares Term Share Certificates Checking IRA Shares Money Market $145,003 $149,408 $97,102 $6,257 $101,958 16

18 Supervisory Committee Report The Supervisory Committee is responsible for ensuring that the Board of Directors and Management of the credit union (1) meet required financial reporting objectives and (2) establish practices and procedures sufficient to safeguard Members assets. The Committee is elected by the Membership and is comprised of three volunteers. To fulfill these duties, two independent CPA firms are engaged by the Supervisory Committee. These firms, with the oversight of the Supervisory Committee, complete the external financial statement audit and Member account verification, as well as ongoing internal audits of the Credit Union operations. The Committee also communicates directly with Federal and State examiners to facilitate routine regulatory reviews of the Credit Union. The Supervisory Committee provides an open avenue of communication for the Members of the Credit Union. Members benefit from this communication because comments and feedback help to ensure Southland maintains the highest level of integrity and service. The Independent Auditor s Report as of and for the years ended December 31, 2014 and 2013 indicated that the Credit Union s financial statements are fairly stated in accordance with generally accepted accounting principles. It is the opinion of the Supervisory Committee that your Credit Union is financially strong, and its operations comply with sound business practices to protect and safeguard the Members assets. Core Values Provide exceptional service with integrity, honesty and creativity. Provide staff with an atmosphere of respect, education, and career growth. Sincerely, Bradley P. Silcox Committee Chair Supervisory Committee Credit Union 17 Southland Bradley P. Silcox

19 Proudly Serving the Employees of over 300 Companies PROVIDENCE ST. JOHN S HOSPITAL MILITARY PERSONNEL OF THE FORMER MARINE CORPS AIR STATION EL TORO SO CAL PENSKE AUTO GROUP LOS ANGELES COUNTY EMPLOYEES SANTA MONICA CITY EMPLOYEES RETIRED EMPLOYEES OF LOS ANGELES COUNTY (RELAC) INTERNAL REVENUE SERVICE LOS ANGELES COUNTY BAR ASSOCIATION LOS ANGELES TIMES LOS ANGELES COUNTY SANITATION DISTRICT DEPARTMENT OF PARKS & RECREATION DEPARTMENT OF BEACHES & HARBOR DEPARTMENT OF PUBLIC WORKS HYDRAFLOW USA COLDWELL BANKER CENTURY 21 LONG BEACH CONVENTION & ENTERTAINMENT CENTER MANHATTAN BEACHWEAR OPTIONS FOR YOUTH HATHAWAY-SYCAMORES CHILD & FAMILY SERVICES SEDGWICK S CMS LA FREIGHTLINER COMMERCE CASINO LOS ALAMITOS RACE COURSE TARZANA TREATMENT CENTER, INC U.S. MARSHALL SERVICES U.S. BANKRUPTCY COURT AND DISTRICT COURTS U.S. SECURITIES EXCHANGE COMMISSION 18

20 DOWNEY 8545 Florence Ave. Downey, CA GARDEN GROVE Euclid St. Garden Grove, CA LOS ALAMITOS (Corporate Office) Los Alamitos Blvd. Los Alamitos, CA BRANCHES LOS ANGELES 200 S. Spring St. Los Angeles, CA LOS ANGELES (Federal Building) 300 N. Los Angeles St. Los Angeles, CA SANTA MONICA 525 Santa Monica Blvd. Santa Monica, CA SANTA MONICA (St. John s Branch) 2020 Santa Monica Blvd. Koll Building Third Floor Santa Monica, CA TUSTIN (Patriots Branch) East 17th St. Tustin, CA SHARED BRANCHING Access to over 5,000 shared branch locations Nationwide. ATMs Nearly 30,000 Surcharge-FREE ATMs Nationwide that s more FREE ATMs than the largest banking network. To find a Shared Branch or ATM near you, visit P.O. Box 3003 Los Alamitos, CA Federally insured by NCUA