2013 HUECU Annual Report
Harvard University Employees Credit Union is proud to present our 2013 Annual Report.
20 1 3 HARVARD UNIVERSITY EMPLOYEES CREDIT UNION ANNUAL REPORT T H E F U T U R E I S N O W. OUR VISION Harvard University Employees Credit Union aspires to be a trusted partner in our membersâ€™ financial lives. We add value to membership by offering the best possible price, the highest quality personal service, and sincere, sound advice. The Credit Union seeks to be known as a community leader and to deepen its long standing commitment to housing issues, green initiatives, financial literacy and access to credit for low and moderate income borrowers. The Credit Union works toward transformational growth and change without relinquishing the core values we hold today. We are a not-for-profit cooperative which exists solely for the best interest of our members. We value integrity and responsibility in all of our actions. We strive to enhance our communities and create solutions for social, environmental and economic issues. HIGHLIGHTS OF 2013 MEMBERSHIP NET NEW MEMBERS IN 2013 7,266 GEOGRAPHY HUECU members reside in all 50 states. Top states outside of MA include CA & NY. 4 % 4 75 % % 40,825 TOTAL MEMBERS AT YEAR END 2013 HUECU membership grew by 21.7% in 2013, bolstered by the conversion of members from the Harvard Alumni Card acquisition. HUECU NOW SERVES MEMBERS IN 16 countries EFFICIENCY 56% $1.7 million of HUECU members received their statements electronically in 2013, saving over 800,000 pieces of paper. in interest-free Mass Save loans were disbursed to help members make their homes more energy efďŹ cient. OPPORTUNITY 6 3 NEW FULL TIME JOBS ADDED IN 2013 HUECU ANNUAL REPORT | 2013 9 EMPLOYEES RECEIVED PROMOTIONS IN 2013 COMMUNITY COOPERATIVE SPIRIT In 2013, HUECU employees & members generously supported the local community. Focus on Financial Literacy HUECU continues to enhance the financial lives of people within the communities we serve through numerous educational programs. 78 free financial workshops were offered in 2013, covering subjects including first-time home buying, managing credit, personal budgeting, college financing and more. CONVENIENCE Enhanced Mobile Services HUECUâ€™s mobile app received a significant upgrade in 2013. The new features enable members to pay bills, transfer funds and deposit checks using their smartphones. 437 753 Toys were donated for Toys for Tots. Books were donated for Childrenâ€™s Book Month in April. HOPE Candy bars were sold to assist the Massachusetts Coalition for the Homeless. 400 5,000+ SHARED BRANCHING LOCATIONS NATIONWIDE 94 LOCATIONS IN MASSACHUSETTS Nation-Wide Branch Access With the introduction of Shared Branching, members can conduct transactions at thousands of participating credit union locations just as they would at an HUECU branch. Debit Cards in an Instant Our Harvard Square & MGH branches added the ability to instantly issue debit cards on the spot, giving new members quicker access to their Credit Union accounts. FOR THE RECORD... $184,435.71 of coins were counted in our Harvard Square Coin Counter. Approximately 8,500 HUECU pens were acquired by our members. 4 REPORT FROM THE CHAIRMAN & CEO STATE OF THE INDUSTRY Despite the persistently slow pace of economic recovery, the credit union industry had another strong year in 2013. U.S. credit unions’ total assets grew by $40 billion to end the year at just over $1.06 trillion. Membership growth was also impressive, reaching a new high of 96.3 million members, up 2.4 million from the previous year. The number of U.S. credit unions continued its four-decade decline, shrinking by nearly 4% in 2013. The current rate environment continues to be a challenge for profitability, as net interest margins remain on a downward trend. Moving forward, credit unions will need to accept lower returns in the short-term to avoid long-term interest rate risk. OUR MISSION Enhance our members’ lives by providing trustworthy products that are easy to understand, easy to use and best suited to meet their financial needs. OUR CONTINUED SUCCESS We are thrilled to report that in 2013, the Harvard University Employees Credit Union’s growth in assets, membership, and earnings all exceeded the national average. The Credit Union experienced nearly 7% growth in loans 5 HUECU ANNUAL REPORT | 2013 as members continued to take advantage of historically low mortgage rates. We also saw healthy growth in our new Harvard Alumni Credit Card portfolio and in our graduate student loan program, now in its fourth year. Membership growth in 2013 surpassed any year on record. The addition of over 4,000 members converted from the Harvard Alumni Card program acquisition, combined with an organic growth rate of 7.5%, resulted in net membership growth of more than 21%. ENHANCING SERVICE DELIVERY HUECU strives to constantly enhance our product offerings and service delivery to meet the changing needs of our members. In 2013, we furthered our commitment to mobile access with the addition of several services. The introduction of new Apple and Android apps significantly improved member experience in the mobile channel. Functionality was expanded to include Mobile Bill Pay and Mobile Check Deposit, enabling members to pay bills and deposit paper checks anytime, anywhere, using their smartphones. Our Credit Union’s exponential growth over the past several years has resulted in a more geographically dispersed membership, with 25% of members now residing outside of Massachusetts. We have enhanced our ability to serve these members by joining the Co-op Shared Branch network, enabling members to conduct transactions at thousands of participating credit union locations nationwide just as they would at an HUECU branch. ENGAGEMENT MANAGING GROWTH The economic climate of recent years has made managing growth problematic for many institutions. We are proud to say that throughout this difficult period, the Credit Union has achieved strong, stable growth in our asset base, capital position, and earnings. Moving forward, we will continue to proactively manage these three factors to maintain an effective balance and ensure the Credit Union’s short- and long-term success and sustainability. While other institutions rely on automated systems to provide customer service, HUECU makes it easy to speak to a live person. PEOPLE HELPING PEOPLE The Credit Union’s enduring success through the economic challenges of recent years is a testament to the strength and character of our community. We would like to recognize and applaud our volunteer Board, dedicated staff, and most especially our loyal members for their ongoing support of the Credit Union. The cooperative spirit is alive and well at HUECU. We look forward to continuing our tradition of success and making a positive difference in our members’ lives for many years to come. TALKTIME 3,499 : 34 : 27 MINS HOURS SECS In 2013, our call center reps spent on average 3.5 minutes per member call. 55,209 CALLS ANSWERED 14,291 OUTBOUND CALLS George White Chairman of the Board Eugene J. Foley President & CEO 9,298 EMAILS ANSWERED 6 BY THE NUMBERS HOME LOANS The furious pace of refinancing that fueled our mortgage business in 2012 slowed down in the second half of 2013 due to rising interest rates. 51 MORTGAGES TO FIRST TIME HOME BUYERS IN 2013 FIRST MORTGAGE ORIGINATION MILLIONS 2011 $70.4 $134.1 2012 $85.9 2013 STUDENT LOANS Though production was strong, this yearâ€™s growth in our student loan portfolio was comparatively modest as many loans went into repayment. STUDENT LOAN ORIGINATION DISTRIBUTION BY SCHOOL 10% 7% 10% 59% MILLIONS 14% 2011 2012 2013 $15.9 $17.1 Harvard Business School $17.3 Harvard Law School Harvard School of Public Health Harvard Kennedy School Other Harvard Graduate Schools 7 HUECU ANNUAL REPORT | 2013 CREDIT CARDS The acquisition of the Harvard Alumni Card in 2012 more than doubled our card portfolio. In 2013, we continue to see healthy growth in card balances. MEMBERS USED THEIR CREDIT CARDS FOR OVER $16.5 MILLION IN PURCHASES THIS YEAR. 19% 7% RETAIL STORES 8% CREDIT CARD BALANCES MILLIONS 2011 $12.3 $25.3 2012 $26.7 2013 CLOTHING STORES AIRLINES ESERVICES HUECU is committed to constantly enhancing our electronic delivery options to improve member service, increase efficiency and reduce our environmental impact. 146,271 4,536 BILLS WERE PAID WITH ONLINE BILL PAY MEMBERS ENROLLED IN MOBILE BANKING ONLINE BANKING USERS THOUSANDS 12.9 2011 2012 14.9 2013 16.7 CHECKING We’ve experienced steady growth in checking balances as members take advantage of the many perks available with our new Crimson Checking accounts. $195,651 ATM SURCHARGE FEES WERE REFUNDED TO MEMBERS CHECKING BALANCES MILLIONS 2011 2012 2013 $47.4 $57.4 $71.9 8 REPORT FROM THE TREASURER The Credit Union continued to perform strongly, posting solid earnings, despite an economic climate that remained challenging. Assets increased by 7%, with a year-end total of $443 million. where members can feel confident saving and borrowing. The Board, Management and Staff are to be commended for their contributions to our success. Positive growth was realized in all areas of the Credit Union; membership, loans, and deposits. Loan quality remained high within all loan product segments. John T. Lichten Treasurer As reďŹ‚ected in the unaudited financial statements, the Credit Union continues to be a well-capitalized, financially strong institution DEPOSITS OVER 5 YEARS LOANS OVER 5 YEARS $300 $400 $200 MILLIONS MILLIONS $300 $200 $100 $100 $0 2009 2010 2011 2012 $0 2013 DEPOSIT DISTRIBUTION 2009 2010 2011 2012 2013 LOAN DISTRIBUTION <1% 4% CLUBS 5% IRAs AUTO LOANS 5% 4% 2ND MORTGAGES OTHER 9% CREDIT CARDS 30% SHARES 17% CERTIFICATES 19% CHECKING 29% MONEY MARKET 9 HUECU ANNUAL REPORT | 2013 19% STUDENT LOANS 59% 1ST MORTGAGES STATEMENT OF CONDITION ( S E L E C T E D D ATA I N M I L L I O N S ) ASSETS 2013 2012 Cash and cash equivalents Investments Loans to Members, net Property and equipment, net National Credit Union Share Insurance Fund deposit Other Assets 43.1 78.3 310.6 2.5 3.8 4.4 34.7 79.7 291.1 2.8 3.5 3.2 Total Assets 442.7 415.0 Liabilities Members’ Shares Borrowed funds Accrued expenses and other liabilities 400.4 0.0 5.4 372.1 1.4 5.9 Total liabilities 405.8 379.4 Members’ Equity Retained earnings, substantially restricted Accumulated other comprehensive income 37.2 -0.3 34.6 1.0 Total members’ equity 36.9 35.6 442.7 415.0 2013 2012 16.2 -1.5 -0.9 15.2 -2.2 -1.1 13.8 3.7 -14.9 11.9 4.5 -13.8 2.6 2.6 LIABILITIES AND MEMBERS’ EQUITY Total liabilities and members’ equity STATEMENT OF INCOME ( S E L E C T E D D ATA I N M I L L I O N S ) INTEREST INCOME Interest Income from Loans and Investments Interest Expense Provision for Loan Losses Net Interest Income after Provision for Loan Losses Other Income Operating Expenses NET INCOME 10 REPORT FROM THE AUDIT COMMITTEE The Audit Committee is composed of five Directors dedicated to ensuring that the Credit Union’s actions are held to the highest standards of integrity and value. We are assisted in our efforts by outside firms that provide audit support of the Credit Union’s finances, internal controls, and regulatory compliance. Throughout 2013, the Committee met regularly to review audit and compliance reports and to discuss operational topics of interest. Reimbursements to Board Directors in 2013 totaled $19,982. The majority of these costs were related to attending the annual Massachusetts Credit Union League convention. No reimbursable expenses were attributed to the Credit and Audit Committees. All Director expenses and reimbursements were made in compliance with the regulations of the National Credit Union Administration and the Massachusetts Division of Banks. In 2013, the Credit Union’s existing contract with our external auditing firm ended. The Audit Committee, with support from the Credit Union CFO, initiated a competitive process to evaluate potential providers. Proposals were received from four firms and extensive interviews were conducted with each of them. As a result, the Audit Committee selected Wolf & Company, P.C. to perform the audit of our financial statements. The Committee wishes to thank the Credit Union Management for their cooperation, support and assistance throughout the year. Internal audits and compliance training continued to receive significant attention during 2013. We were assisted in these areas by two outside firms, Healy & Healy and FIS. Healy & Healy performed periodic internal audits to test Credit Union procedures and controls in areas such as branch operations, wire transfers, deposit operations, mortgages, and student loans. Having carefully reviewed the findings and management’s responses, the Audit Committee will actively work with management to strengthen processes and risk management systems. FIS performed trainings for Credit Union staff on a range of compliance topics such as the Bank Secrecy Act and Red Flags, and also conducted loan file reviews. 11 HUECU ANNUAL REPORT | 2013 Respectfully submitted, Cheryl Hutt Committee Chair COMMITTEE MEMBERS Guillermo Banchiere Mark Edington Edward Emde Edward Feldman OFFICERS Eugene J. Foley President & CEO Craig Leonard Executive VP, CFO Cheryl Gorman Executive VP, Retail Services Peter Buchanan VP, Lending John Degnan VP, Operations Tom Montilli VP, Marketing BOARD OF DIRECTORS Guillermo Banchiere Since 2007 Dennis Campbell Since 2013 Karen DeBerio Since 2003 Edward Doctoroff Since 1979 Edward Emde Since 1993 Edward Feldman Since 1984 Cheryl Hutt Since 2013 Stephen King Since 2011 John Lichten Treasurer Since 1992 Mary Straub Clerk Since 2004 George White Chairman Since 1999 Thomas Lucey Since 2006 Bill Murphy Since 2010 Jeremiah Murphy Vice Chair Since 2003 Mark Edington Since 2013 12 THANK YOU The Harvard University Employees Credit Union is proud to offer our services to the employees, students and alumni of Harvard University, Harvard teaching hospitals and affiliated organizations. We would like to thank all of our sponsor organizations for their continued support and participation in the Credit Union. OUR SPONSORS Harvard University (Students, Alumni, Faculty and Staff) Medical Associates Joslin Diabetes Center Radcliffe Institute for Advanced Study Judge Baker Children’s Center American Repertory Theater Lesley University Beth Israel Deaconess Medical Center McLean Hospital Boston Shriners Hospital Brigham and Women’s Hospital Cambridge Hospital/ Cambridge Health Alliance Children’s Hospital Massachusetts Eye and Ear Infirmary Massachusetts General Hospital/ Partners Health Care System MGH Institute of Health Professions Dana Farber Cancer Institute Massachusetts Mental Health Center Dumbarton Oaks Research Library Medical Academic and Scientific Community Organization Harvard Business School Publishing Mount Auburn Hospital The Center for Blood Research Harvard/M.I.T. Cooperative Society The Schepens Eye Research Harvard Management Company Institute Spaulding Rehabilitation Harvard Pilgrim Health Care Hospital Veterans Administration Harvard–Smithsonian Center for Astrophysics Boston Healthcare System Harvard Vanguard WGBH Boston HARVARD SQUARE 16 Dunster Street Cambridge, MA 02138 LONGWOOD MEDICAL AREA 677 Huntington Avenue Boston, MA 02115 MASSACHUSETTS GENERAL HOSPITAL 55 Fruit Street Boston, MA 02114 CHARLESTOWN NAVY YARD 149 13th Street Charlestown, MA 02129 HUECU.ORG