CAP COM Annual Report 2018

See the world through members’ eyes.

2018

Annual Report

2 | Report of the Board Chairman

“It was a major business endeavor.

CAP COM made it seamless.”

Chris’s

ADVOCATE

When we talk about how CAP COM aims to provide the ultimate member experience, we recognize that is a lofty goal. Simply put: to help members flourish, we must deepen the relationship we share.

This is not something new from a credit union whose mission is to “benefit every member, every time, every day.” Yet, we understand that excellent relationships require constant attention and the good sense to listen to those we serve.

Today, CAP COM serves 150,000 members: individuals, local businesses, and non-profits in the Capital Region. To enhance each member’s experience with CAP COM, we must embark on a never-ending journey of discovery and action. That means identifying members’ needs and vigorously pursuing solutions.

Since members own CAP COM, the organization exists purely to serve them. And, the best way to find out what people need is simply to ask.

In 2018, CAP COM surveyed members for their direct input and ideas. Thousands of members responded. Now, those survey results help drive decisions to

enhance members’ experiences with CAP COM. Ongoing surveys, to smaller sets of members, will help maintain connections and keep those insights rolling in.

The digital landscape in financial services also presents opportunities.

For example, interactive budgeting tools are built into every CAP COM online account. These tools enable members to set goals, monitor progress, and manage their finances.

Members also enjoy the ease of LoanXpress to obtain a pre-qualified loan or credit card with the click of a mouse (or a tap in the app).

On the credit union’s website, members can find an array of educational materials, calculators, and other resources to help them save money for major purchases, reduce debt, and get ahead.

Yet, as technology expands possibilities, what about the human touch? The CAP COM difference relies heavily on personal interactions and we plan to keep it that way.

Opening a new branch in Albany in 2018 means we can serve more Capital Region residents in person,

just as we do at our other 10 locations. And CAP COM’s member service center is as busy as ever, assisting thousands of members over the phone.

The CAP COM Cares Foundation takes the human touch to new levels with active community outreach all year. Since its inception, $4 million has gone to those in need.

Support from sustaining Patrons and individual donors is growing, so we can continue to make a meaningful local impact.

A strong service culture keeps everyone in this organization aligned.

We are deeply invested in the future of CAP COM as your representatives on the board – and as credit union members ourselves. So, as we keep finding ways to enhance your banking experience and give back to the community, we all benefit.

On behalf of the Board of Directors, thank you for your support.

Edward A. Gilligan Board Chairman

Report of the President/CEO | 3

members?” As we strive to create strategic opportunities and manage change, this question keeps us focused on our mission to serve.

During 2018, CAP COM laid the groundwork for a major system upgrade. This upgrade leverages powerful technology to support an intricate web of financial transactions behind the scenes – while keeping banking simple yet feature-rich for Lately when I enter CAP COM each members. morning, I find myself thinking back Once the upgrade is complete in to the credit union’s early days. the first quarter of 2019, CAP COM Sometimes, the past feels like just will be well positioned to expand its yesterday and the memories come digital services. Combined with the rushing in. credit union’s high-touch personal When I began my career 39 years service, we plan to provide an ago, the organization was small yet mighty. Some of you may remember ever more holistic and meaningful member experience. when we had one branch and nine Being an advocate for members employees. Since we each wore lots and the community means of hats, we learned about financial maintaining a strong local presence. services from the ground up.

We do this through a network of From the beginning, we set out local branches and by reaching out to make a positive difference in the to those in need. As the employer of lives of members and others in the nearly 400 Capital Region residents, community. We focused on making each interaction more personal, even we advocate for employees so they can develop their careers, and keep as the banking industry lurched in CAP COM’s operations humming. the opposite direction.

In April 2018, CAP COM opened its Fortunately, some things never 11th location on Western Avenue in change. Here, people will always Albany. We’re delighted to welcome come first. At the top of our priority new members who live in the list is helping members fulfill their neighborhood, study at the nearby dreams with accessible financial university and colleges, and travel solutions, education, and friendly along this busy corridor to work. one-on-one guidance.

We also welcomed members One question has served as a of a local credit union, Albany guide for every major business decision I’ve made in my 15 years as City Lodge Knights of Pythias President/CEO: “How will this benefit FCU, who joined CAP COM in late

2018. And, we welcome additional merger opportunities to grow the membership.

I believe we have a special duty to give back by uniting people to deliver kindness and care. The CAP COM Cares Foundation’s community outreach is continuous, thanks to tireless volunteers and generous donors. The Foundation magnifies the credit union’s positive impact – and I consider its formation in 2003 a personal highlight.

In May when I retire from CAP COM, I look forward to enjoying all the benefits as a member of the institution I worked to grow.

I will pass the torch to Christopher McKenna, the credit union’s next President/CEO, a talented, longstanding member of the executive leadership team. As CAP COM continues to build on the progress we’ve made, we welcome fresh perspectives and new energy.

I encourage members to experience CAP COM to the fullest.

Let us help you create the life you want today, and make plans for the future.

Helping people thrive is how we measure success. Service has been a wonderful vocation for me, and I can report that it feels extraordinary, too. Thank you, now and always, for being a CAP COM member.

Paula A. Stopera President/CEO

Kathryn’s

ADVOCATE “CAP COM genuinely cares about me.”

4 | Financial Statements

CAP COM FEDERAL CREDIT UNION AND SUBSIDIARIES Consolidated Statement of Financial Condition December 31, 2018 2018

(Unaudited)

ASSETS Cash and cash equivalents

Investments

Loans held for sale, at market value Loans to members, net of allowance for loan losses

Premises and equipment, net NCUSIF deposit Other real estate owned Goodwill and other intangible assets, net Other assets

TOTAL ASSETS

LIABILITIES AND MEMBERS’ EQUITY

Liabilities Deposits Borrowed funds Accrued expenses and other liabilities

Total liabilities

Total members’ equity

TOTAL LIABILITIES AND MEMBERS’ EQUITY

$

$26,849,382 76,436,787 4,815,603 1,546,714,573 50,493,902 13,663,394 1,714,790 6,550,596 24,467,159

$

1,751,706,186

$ 1,469,146,848 75,587,111 30,035,280 1,574,769,239 176,936,947 $

1,751,706,186

Financial Statements | 5

CAP COM FEDERAL CREDIT UNION AND SUBSIDIARIES Consolidated Statement of Income For the Year Ended December 31, 2018 2018

(Unaudited)

INTEREST INCOME Loans to members Securities and investments Overnight deposits and other Total interest income

$

65,123,607 1,845,106 466,257 67,434,970

INTEREST EXPENSE Deposits Borrowed funds Total interest expense

10,009,401 997,411 11,006,812

56,428,158

Net interest income before provision for loan losses

PROVISION FOR LOAN LOSSES Net interest income after provision for loan losses

8,700,000 47,728,158

NON-INTEREST INCOME Commissions and member service fees Card interchange fees Mortgage banking income Investment and brokerage services Insurance premiums Net gain on investments Other Total non-interest income

9,066,904 11,192,027 6,593,479 2,776,992 3,967,053 545,352 988,169 35,129,977

NON-INTEREST EXPENSE Compensation and employee benefits Office operations Loan servicing Card servicing Office occupancy and equipment Marketing and promotions Data processing Professional fees and services Other non-interest expense Total non-interest expense

36,689,256 4,419,232 1,771,250 5,166,086 4,904,359 3,007,744 4,534,795 3,036,822 2,217,181 65,746,725

CONSOLIDATED NET INCOME

$

17,111,409

6 | Reports of Executive Vice President/Chief Financial Officer and Supervisory Committee Chairman

To maintain its fiscal strength consistently from year to year, CAP COM employs a comprehensive yet agile balance sheet management strategy. The rigorous application of best practices by the credit union’s assetliability management team delivers sustainable and healthy financial performance.

Chief among these practices are managing growth while mitigating risk – and responding to market and economic conditions as they arise.

Members enjoy outstanding products and services provided by CAP COM employees who advocate for them. Behind every personal interaction and banking transaction is a foundation of solid financial performance and stability.

I am pleased to report that in 2018, CAP COM achieved exemplary results once again. I invite you to review the financial statements in this report for evidence of the credit union’s strength.

At the end of 2018, total assets were $1.75 billion, increasing $155.5 million, or 9.74%, from year-end 2017.

Yet, growth in total assets alone does not signify fiscal strength or stability. Combined with total asset growth, CAP COM increased members’ equity by $15.2 million during 2018, or 9.39% – resulting in a net worth ratio of 10.23%. The National Credit Union Administration, the federal regulatory body for credit unions, defines this level of members’ equity as “well capitalized.” The well-capitalized designation is the highest a credit union can earn. As stewards of members’ equity, we take great pride in that designation.

On a personal note, it has been an incredible joy and privilege to work closely with CAP COM President/CEO, Paula Stopera, for the past 19 years. As you may know, she plans to retire in May 2019. CAP COM today is a testament to Paula’s 39-year mission to lead by serving others.

We look forward to continuing to embrace Paula’s vision to elevate the financial wellbeing of each member, while giving back to the community.

Thank you for your involvement and support as we keep building a credit union that delivers on that promise, while striving to enhance each member’s experience.

David Jurczynski Executive Vice President/Chief Financial Officer

CAP COM’s Supervisory Committee is made up of volunteers appointed by the Board of Directors.

Working in partnership with CAP COM’s Internal Audit Department, we are committed to making sure your funds and interests are protected and that the credit union’s financial condition is fairly and accurately represented.

The committee chose the CPA firm of Crowe Horwath, LLP to perform the audit for the year ending December 31, 2018. The audit is being conducted in accordance with generally accepted auditing standards, which require that it be planned and performed in order to obtain reasonable assurance that the financial statements are free from material misstatement. This audit also assesses the operations of the credit union to determine that no material weaknesses exist.

The results provide us with the confidence that the credit union is safeguarding members’ assets, is in compliance with applicable regulations, and is following policies and procedures approved by the credit union Board of Directors.

A copy of the Consolidated Financial Statements, including the Independent Auditor’s Report may be obtained from the credit union upon written request.

In addition to these audits, the National Credit Union Administration (NCUA) performs periodic regulatory examinations and reviews.

Please notify us of any situations you feel were not handled to your satisfaction. Our address is Supervisory Committee, P.O. Box 11279, Albany, NY 12211-0279.

On behalf of the members of the Supervisory Committee and of the Internal Audit Department, thank you for putting your trust in CAP COM.

Marty Finn Supervisory Committee Chairman

CAP COM Cares Foundation | 7

Giving makes the heart grow stronger Thanks to the help of generous donors and community partners like you, we are proud to share a snapshot of some ways we were able to have an impact on the community during the past year.

Thank you for helping us change lives! To get involved, visit: www.capcomfcu.org/give

375

winter jackets provided to children

{ {

400

families shared a Thanksgiving meal

Donated more than

$4 million since inception

$83,000 in scholarships & awards given out

800 backpacks filled with school essentials

40+

volunteers delivered random acts of kindness during the CAP COM Cares Tour

24 CARE Package bins were assembled by credit union volunteers for local students in need

8 | Management and Locations

Board of Directors Edward A. Gilligan – Chairman Patrick Kelly – First Vice Chair Harold Horning – Second Vice Chair Daniel Johnson – Secretary Paula A. Stopera – Treasurer Mark Marchand – Director James Thomas – Director John Ericson – Director William Fitzpatrick – Director

Supervisory Committee Marty Finn – Chairman Kyle Rueckert – Vice Chairman Paul Dettenrieder – Secretary John Ericson – Member Lou Anne Bigaouette – Member

Board of Managers of CAP COM Group Patrick Kelly – Chairman Mark Marchand – Vice Chairman David Jurczynski – Treasurer Paula A. Stopera – Member Robert Davis – Member Chip Lawrence – Member Judy Sogoian – Member Lou Anne Bigaouette – Member Marty Finn – Member

Senior Management Paula A. Stopera – President/CEO David Jurczynski – EVP/Chief Financial Officer Chris McKenna – EVP (Incoming President/CEO May 2019) Jason Greco – Chief Technology Officer Christine Horne – Chief Experience Officer Lee Carman – Chief Lending Officer John Shartrand – Chief Investment Officer, CAP COM Financial Services Julie Hughes – Sr. VP of Risk Management Johanna Robbins – Sr. VP of Finance Robert Roemer – Sr. VP of Systems Delivery Ginny VanAmburgh – Sr. VP of Consumer and Mortgage Lending Diana VanAmerongen – Sr. VP of Member Services Sharon Phillips – VP of Organizational Development Lauren Tatro – VP of Marketing

Locations Albany Financial Center 4 Winners Circle Western Ave 899 Western Avenue Brunswick 799 Hoosick Road (Route 7) Clifton Park 1744 Route 9 Cohoes 219 Ontario Street Colonie 341 New Karner Road (Route 155) Glenmont 384 Bender Lane Latham 4 Century Hill Drive Malta 2439 Route 9 Niskayuna 582 Balltown Road North Greenbush 100 Van Rensselaer Square (near Routes 4 and 43)

Contact Us Member Service Center CCFCU Fax Corporate Headquarters

(800) 634-2340 (518) 458-2261 (800) 468-5500

Online & Mobile Banking www.capcomfcu.org

Federally insured by NCUA