Annual Report 2019

Thrive Financial resources with award-winning service empower people, businesses, and the community.

2019 | Annual Report

Each year, this report compresses a year’s worth of CAP COM financial activity into just a few pages.

Yet these numbers, from calendar year 2019, illustrate so much more. Each CAP COM member is represented by the financial statements at the center of this report. That’s every individual and family we serve, across all neighborhoods. Kids growing up, young people starting out, a new car, college or careerbound, a first home, vacations, and the many journeys life takes.

A successful major system upgrade in 2019 puts CAP COM on firm footing for more strategic initiatives to serve members. The newly upgraded system utilizes powerful technology to maintain accurate data, power an intricate web of financial transactions, and keep banking easy to use for members.

Investment in CAP COM’s digital capabilities will continue to produce benefits for members. This includes technology that facilitates more meaningful interactions and potent service opportunities – for members, businesses, and non-profit partners in the community.

Direct feedback from members through surveys and other means helps the organization match shifting needs with solutions, and develop new ones. Combined with an investment in CAP COM’s award-winning personal service, every stakeholder stands to gain.

We’re proud to provide resources to businesses so they can grow and strengthen communities. Our presence in schools promotes financial literacy for life, and scholarships help students afford college. To help provide safety nets for those in need, the CAP COM Cares Foundation supports local non-profits.

Once you see the annual report as a record of personal interactions, it’s impossible to un-see the power of people helping people and financial resources enhancing lives. Count on CAP COM throughout your own life to help you reach for your dreams and guide you through difficult times.

There’s no greater privilege than leading teams passionately committed to your financial wellbeing. Thank you for making CAP COM part of your life.

Built to Serve

A few ways CAP COM provided value to members in 2019.

$15,786,626 Total earned by members on their account balances.

$1,574,495 Total value of rewards earned by credit card holders.

335,805 Phone conversations with Member Service teams.

$866,595,145 Total purchases made with a CAP COM debit or

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Christopher McKenna President/CEO

low, fixed-rate credit card.

Empowering individuals, families, businesses and the community to thrive is the vision that unites initiatives across this organization.

Superior financial services must be built on a foundation of advanced technologies, supported by a deep bench of service professionals. That’s how CAP COM delivers.

The financial industry continues to evolve, creating opportunities to enhance credit union services. By putting systems in place to meet needs on an individual level, we can synchronize award-winning service excellence with operational proficiencies.

This annual report is really your “owners report” because CAP COM belongs to every member-owner. As you read the words on this page, the stories of more than 135,000 CAP COM members continue to unfold. Each of these stories requires financial sustenance.

Whether you prefer to bank online, with a phone call, or in person, CAP COM is committed to delivering services that are convenient and comfortable for you.

CAP COM’s strong service orientation makes direct support to local non-profits and volunteerism a natural extension of its mission. The board remains strongly committed to community outreach through the CAP COM Cares Foundation.

As your representatives on the board and members ourselves, we evaluate CAP COM’s success by how effectively the credit union can deliver financial services that enhance lives. On behalf of the Board of Directors, thank you for giving CAP COM the opportunity to serve you.

Patrick J. Kelly Board Chair

Connections

Bank any way you like.

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24,461 Checks deposited via mobile deposit in the CAP COM app each month (average).

CAP COM branches throughout New York’s Capital District.

135,800+

5,900 Shared branches across the U.S. serve travelers and members who relocate.

People, non-profits, and businesses bank with CAP COM. And, we’re growing.

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30,000

Times per month a member logs in to their online account or mobile app (average).

Surcharge-free CO-OP ATMs in all 50 states and 10 countries.

27,983 Phone calls per month to Member Service teams (average).

2019 figures 3

A strong balance sheet is evidence of CAP COM delivering on its mission to serve members, businesses, and the community at large. Preserving financial health, cultivated over decades, relies on financial management conducted in a fiscally prudent manner.

The role of the credit union’s asset-liability management team is to maintain a healthy financial position from year to year and capitalize on opportunities to augment performance. Whether this team acts, pauses, or stays the course, every decision is guided by rigorous analysis and best practices.

Agility is critical. As markets and economic conditions fluctuate, managing growth while mitigating risk requires constant attention.

I am pleased to report that in 2019, CAP COM achieved outstanding financial results once again. The financial statements in this report present a summary of the year.

At the end of 2019, CAP COM’s total assets were $1.94 billion, increasing $191.4 million, or 10.92%, from year-end 2018. Yet, viewing assets alone as a measure of fiscal strength is too narrow. Notably, members’ equity rose $17.7 million during 2019, or 10.02% – resulting in a net worth ratio of 9.97%.

This level of members’ equity is considered “well capitalized” by the National Credit Union Administration (the federal regulator for credit unions). As stewards of members’ equity, we take great pride in the well-capitalized designation because it is the highest a credit union can earn.

CAP COM strives for solid financial performance as the foundation on which to build every member interaction and banking transaction.

Thank you for your confidence and support as your credit union continues to invest in services that enable members, businesses, and the community to thrive.

David J. Jurczynski Executive Vice President / Chief Financial Officer 4

CAP COM FEDERAL CREDIT UNION AND SUBSIDIARIES Consolidated Statement of Financial Condition December 31, 2019 2019

(Unaudited)

ASSETS Cash and cash equivalents $ 20,777,072

Investments 73,500,588

Loans held for sale, at market value 9,255,798 Loans to members, net of allowance for loan losses 1,713,490,583

Premises and equipment, net 47,768,891 NCUSIF deposit 14,330,625 Foreclosed assets 1,779,597 Goodwill and other intangible assets, net 6,632,593 Other assets 55,536,038

TOTAL ASSETS $ 1,943,071,785

LIABILITIES AND MEMBERS’ EQUITY

Liabilities Deposits $ 1,659,879,513 Borrowed funds 70,821,537 Accrued expenses and other liabilities 17,709,905

Total liabilities 1,748,410,955

Total members’ equity 194,660,830

TOTAL LIABILITIES AND MEMBERS’ EQUITY $ 1,943,071,785

CAP COM FEDERAL CREDIT UNION AND SUBSIDIARIES Consolidated Statement of Income For the Year Ended December 31, 2019 2019

(Unaudited)

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

$

74,086,715 2,160,877 288,049 76,535,641

INTEREST EXPENSE Deposits Borrowed funds Total interest expense

15,786,626 993,593 16,780,219

59,755,422

Net interest income before provision for loan losses

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

8,250,000 51,505,422

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

10,003,430 12,115,388 8,744,785 2,688,389 4,072,095 265,490 346,354 38,235,931

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

41,880,509 4,770,766 1,753,526 5,866,378 5,669,482 2,892,560 5,316,192 3,474,519 2,553,990 74,177,922

CONSOLIDATED NET INCOME

$

15,563,431 5

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, LLP to perform the audit for the year ending December 31, 2019. 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

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How CAP COM Cares: 2019 in Review The CAP COM Cares Foundation has given $4 million back to the community and donated 35,000 volunteer hours since its inception in 2003.

These are some of our 2019 highlights.

20 Community projects during CAP COM Cares tour week

$75,000 Scholarships and awards to 35 individuals

274 Brand new, warm coats for kids

1,020 Backpacks filled with supplies and delivered to schools

402 Thanksgiving baskets delivered to local families

225 Seniors adopted during the holiday season, as well as 30 families and 18 students 7

Board of Directors Patrick J. Kelly – Board Chair Edward A. Gilligan – First Vice Chair Mark Marchand – Second Vice Chair Christopher McKenna – Treasurer Daniel Johnson – Secretary John Ericson – Director William Fitzpatrick – Director Chip Lawrence – Director Supervisory Committee Marty Finn – Chair Kyle Rueckert – Vice Chair Lou Anne Bigaouette – Member Paul Dettenrieder – Member John Ericson – Member Board of Managers of CAP COM Group Mark Marchand – Chair Lou Anne Bigaouette – First Vice Chair David Jurczynski – Treasurer Robert Davis – Member Paul Dettenrieder – Member Marty Finn – Member Chip Lawrence – Member Christopher McKenna – Member Kyle Rueckert – Member

Federally insured by NCUA

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Senior Management Christopher McKenna – President/CEO David Jurczynski – EVP/CFO Jason Greco – Chief Technology Officer Lee Carman – Chief Lending Officer Susan Rosko Fogarty – Chief Relationship 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 Delivery Systems Ginny VanAmburgh – Sr. VP of Consumer and Mortgage Lending Lauren Tatro – VP of Marketing

4 Easy Ways to Bank Connecting members everywhere with CAP COM.

CLICK Bank Online www.capcomfcu.org

TAP Mobile Banking App www.capcomfcu.org/mobile

CALL Member Services or Automated Phone Banking (800) 634-2340

VISIT Neighborhood Branches & ATMs Shared Branches Across the U.S. www.capcomfcu.org/locations