2016 Annual Report of the Supervisory Committee

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2 Annual Meeting Agenda May 23, 2017 Presiding Officer, Chairman I. Ascertain that a quorum of fifteen members is present Response Phil F.T. Bauccio II. Call meeting to order III. Pledge of Allegiance IV. Introduction of Officials and Volunteers V. Reading and approval of the Minutes of the last annual meeting VI. Report of the Chairman VII. Report of the President/CEO Ralph D. Spencer, Jr. VIII. Report of the Member Services Committee Frank C. Trotta IX. Report of the Supervisory Committee from Independent Auditor Lorraine Hickey X. Report of the Security Coordinator Richard J. Bishop XI. Election XII. Unfinished Business XIII. New Business XIV. Presentation of Service Awards XV. Adjournment 2016 Annual Report of the Supervisory Committee The Supervisory Committee, consisting of five members appointed annually by the Board of Directors, has two primary responsibilities: to ensure Board of Directors and Management meet all financial reporting objectives and to see that the Credit Union s established practices and procedures safeguard members assets. The Committee engaged the firm of AVZ, Certified Public Accountants, to conduct the 2016 Annual Audit of Financial Statements and we are pleased to say there were no significant findings. The Committee also engaged the firm of Nawrocki Smith, Certified Public Accountants and Business Consultants, to conduct monthly internal audits of Credit Union operations to ensure they are in compliance with the practices and procedures established to safeguard members assets. Internal audit findings were very favorable and management and staff cooperated fully with any recommended changes the Supervisory Committee proposed. The Committee reports with confidence no areas of concern were found. On behalf of the Supervisory Committee, 2 Lorraine Hickey Chairwoman

3 2017 Chairman s Message Each year, it is a true honor to serve Suffolk Federal as the Chairman of the Board and to be part of a leadership team that works diligently to provide the very best in banking to our growing membership. Suffolk Federal continues to flourish, annually delivering top-flight member service, innovative products including the latest in technology like our leading mobile banking app and new programs that protect our members against fraud. Suffolk Federal annually demonstrates incredible advancements as an institution while improving its financial strength. The credit union is well-capitalized and has excellent assets, liquidity, earnings and management. Along with this accomplishment, Suffolk Federal has also received excellent audits from both our internal and external auditors, proving to be a leader in the financial industry. In 2016, our branch network extended to the Sayville community, bringing the conveniences and exceptional credit union products and services to our membership while providing Suffolk Federal the opportunity for increased growth. We also had the pleasure of welcoming Ralph D. Spencer, Jr. as our new President & CEO. With more than 37 years of lending and retail banking experience, the Board of Directors are confident that under Ralph s leadership, Suffolk Federal will continue to escalate its products, services and member relationships to the next level. Moving forward, we will continue to offer a wide range of services comparable to no other, develop new products for greater banking ease, serve the community and embrace the professionalism and strength of our Board of Directors, volunteers, leadership staff and winning team of employees that provide caring and exceptional member service. I extend my gratitude to each of them. We thank all of our members for their business, and continued trust and loyalty. Sincerely, Chairman of the Board, Suffolk Federal 3

4 2017 President s Message I am honored to report on the success and accomplishments of Suffolk Federal. Since our establishment 50 years ago in 1967, Suffolk Federal s primary focus has been to provide our members with the very best in banking. The many products and services that we offer help us to do just that. In the past year, we ve celebrated many accomplishments including the grand opening of our ninth branch in Sayville; the new First Home Club account that rewards first-time home buyers for savings; a new rewards program for debit cardholders; a new, user-friendly and mobile responsive website and much more. The credit union continued to show membership growth throughout 2016 reaching more than 56,000 members and achieving more than $1 billion in assets. Moving forward, we will continue to work on improved service, while providing the latest innovative products and services that meet the growing needs of our membership. In 2017, Suffolk Federal will offer the latest in mobile apps that help protect your debit and credit cards from fraud, mobile payments to make your shopping experiences even more convenient and greater member benefits like loan and fee discounts based on your participation at the credit union. Suffolk Federal continues its work in local high schools by providing award-winning Financial Literacy program technology through the Suffolk Federal Scholars Program and of course, maintains its strong commitment to the communities in which we live and work. Throughout the year, our team joins forces with our membership to make Long Island a better place by creating lasting change in people s lives. In 2016, we supported Hope for the Warriors, the LT Michael P. Murphy Memorial Scholarship Foundation, Timothy Hill Children s Ranch, Long Island Cares: Harry Chapin Food Bank, Girl Scouts of Suffolk County, LI2Day Breast Cancer Walk, Long Island Blood Services and many more which you can see on pages 6 and 7. We re also proud to continue our scholarship program, which provides thousands of dollars to high school students entering college. I extend my heartfelt gratitude to our Board of Directors, volunteers, and staff for their commitment and dedication to our institution. Each day, we work together to improve how we do business. We re proud to be celebrating another successful year at Suffolk Federal as we continue to strive for the very best in the years to come. Sincerely, Ralph D. Spencer, Jr. President & CEO, Suffolk Federal 4

5 SUFFOLK FEDERAL CREDIT UNION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION* December 31, 2016 and ASSETS Cash and cash equivalents $ 53,237,441 $ 55,136,665 Investments 344,742, ,426,537 Loans 611,242, ,387,560 Other assets 32,677,550 33,800,161 Total Assets $ 1,041,900,050 $ 975,750,923 LIABILITIES AND MEMBERS EQUITY Liabilities Members shares $ 899,057,855 $ 830,131,164 Other liabilities 50,086,990 52,537,348 Total Liabilities $ 949,144,845 $ 882,668,512 Commitments and Contingent liabilities Total members equity 92,755,205 93,082,411 Total liabilities and members equity $ 1,041,900,050 $ 975,750,923 SUFFOLK FEDERAL CREDIT UNION CONSOLIDATED STATEMENTS OF INCOME* December 31, 2016 and Interest income $ 29,096,492 $ 27,211,323 Interest expense 4,397,400 4,303,150 Net interest income 24,699,092 22,908,173 Provision for loan losses 2,113,926 1,067,883 Net interest income after provision for loan losses 22,585,166 21,840,290 Non-interest income 6,942,061 7,150,029 Non-interest expense 27,990,703 27,100,970 Net income $ 1,536,524 $ 1,889,349 *The reports are an excerpt from audited financial statements in condensed formats. 5

6 Suffolk Federal provides Suffolk County residents and merchants with a safe place to borrow and save. While our main goal is to serve our members with quality banking products at the best rates, our deeper commitment extends to the entire community in which we do business. Here is a look back at Suffolk Federal Arrives in Sayville Suffolk Federal opened its newest branch at 213 North Main Street in Sayville that features a user-friendly building design complete with 24-hour ATM access, a technology bar where members can learn about mobile banking, and much more! Pictured left to right: Frank C. Trotta, Vice Chairman, Suffolk Federal Board of Directors; Ralph D. Spencer, Jr., President & CEO, Suffolk Federal; Grand Prize Winners Lucy F. and Judith M.; and Sana Ashfaq, Sayville Branch Manager. Team E.V.A. 7 Marathons in 7 Days Suffolk Federal was the proud lead sponsor of Vice President of Information Technology Eva Casale s Team Eva event. Casale ran seven marathons in seven days to honor the members of the military from Suffolk County who have been killed in action in Iraq and Afghanistan since Along with membership's support, she raised more than $40,000 in support of Hope for the Warriors. SFCU Crew Walks the Walk In The Fight Against Breast Cancer Suffolk Federal and its members annually support the LI2Day Breast Cancer Walk, a local nonprofit that raises funds and awareness for families affected by breast cancer. Along with contributions of more than $5,300 the SFCU Crew hit the pavement demonstrating their true commitment to the cause. Pictured left to right: SFCU Crew Patricia Matuozzi, James Gallagher, Richard Klefsky, Brian Armstrong and Megan Diehl 6

7 Taking Steps to End Alzheimer s Suffolk Federal s members and staff raised more than $1,400 to benefit those affected by Alzheimer s disease in our community. The funds help to further care, support and research efforts of the Alzheimer s Association on Long Island. Happiness is Making A Difference Suffolk Federal presents a $1,000 contribution to Helping Makes U Happy, a nonprofit founded by Keith Caputo, a young man with Down s Syndrome. Donations provide scholarships, clothing and food. Pictured left to right: Debra Castro, Eastport Branch Manager and Helping Makes U Happy Founder Keith Caputo Paws and Protection for Local Veterans Suffolk Federal presents Paws of War with a $500 contribution. Paws of War dogs serve veterans suffering the effects of war by providing emotional and physical support. Pictured left to right: Christopher McNamara, Sponsor and CEO of Mac Abstract; Dori Scofield, Executive Director of Paws of War; and Gail DiGiacomo. Hope for the Holidays Suffolk Federal s holiday fundraiser raised $4,244 in support of Timothy Hill Children s Ranch, a farm-style campus providing a safe environment to children, young adults and families in crises. The ranch focuses on counseling, education, work-readiness programs and horseback riding. Pictured left to right: Thaddaeus Hill, Executive Director, Timothy Hill Children s Ranch; and Ralph D. Spencer, Jr. President & CEO, Suffolk Federal. Running in the Spirit of Christmas Suffolk Federal s team of elves ran in the Patchogue Kiwanis Toy Trot 5K and delivered plenty of toys to the cause too! Pictured left to right: Barbara Scozzari, Vincent Hardalo, Desiree Errigo, Kevin St. Jean and Megan Diehl Inspiring & Enabling our Youth Suffolk Federal presents a $500 contribution to the Bellport Boys & Girls Club. The Boys & Girls Club offers vital programs in academic success, good character and citizenship and healthy lifestyles. Pictured left to right: Vagira Seedeen, Medford Branch Manager with Sybil Mimy Johnson. 7

8 At Suffolk Federal, our leadership team works together towards an important common goal: to provide better banking for Long Island. Suffolk Federal s Board of Directors, committee members and management staff are dedicated to you our members making sure that all of the products and services we provide are the very best. Board of Directors, Chairman Frank C. Trotta, Vice Chairman Phil F. T. Bauccio, Secretary Edward J. Reilly, Treasurer Mark G. Creighton, M.D., Director Gary J. Lamm, Ed. D., Director Robert Schaefer, Director President & CEO Ralph D. Spencer, Jr. Supervisory Committee Lorraine Hickey, Chairwoman Todd C. Johnson, Vice Chairman/Secretary Joseph Blaettler, Member Russel S. Danna, CPA, Member Daniel J. Murphy, Member Member Services Committee Frank C. Trotta, Chairman Robert Schaefer Edward J. Reilly James J. Maggio Jr. (alternate) Security Coordinator Richard J. Bishop General Counsel Nicholas V. Campasano, Esq. Management Officers Sarah McCandless, CPA, Executive Vice President & Chief Financial Officer Keith Miller, Chief Lending Officer James E. Gallagher, Vice President of Credit Union Services LLC Richard Klefsky, Vice President of Retail Banking Pamela Palleschi, Vice President of Human Resources Krista Svedberg, Vice President of Marketing Credit Union Services, LLC Robert Schaefer, Chairman James E. Gallagher, Vice President of Credit Union Services LLC Richard Conzo, Manager Diane C. Rafferty, Manager Frank A. Zvanovec, Manager Suffolk Federal Branch Locations Commack 6150 Jericho Turnpike Commack, NY Eastport 5 Eastport Manor Road Eastport, NY Islandia 1282 Motor Parkway Islandia, NY Medford 3681 Horseblock Road, P.O. Box 9005 Medford, NY Miller Place 691 Route 25A Miller Place, NY Riverhead Route 24 at 2 Enterprise Zone Drive Riverside, NY Sayville 213 North Main Street Sayville, NY Southampton 850 County Road 39 Southampton, NY West Babylon Route 109 West Babylon, NY Your savings federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. National Credit Union Administration, a U.S. Government Agency We do business in accordance with the Federal Fair Housing Law and Equal Credit Opportunity Act.