Annual Report | 2020 Financials

Caitlin Duma Community Relations Specialist

2020 ANNUAL REPORT

For nearly 70 years, CAP COM has provided financial services to generations of Capital Region residents. Through periods of prosperity, uncertainty, and social change, our mission to serve is a constant.

Each day provides new opportunities to empower credit union members, employees, and our community to pursue personal and financial well-being.

If you’re one of the 143,000 members who own CAP COM, this annual report was prepared with you in mind. It offers a view into your credit union’s finances, how they align with the organization’s mission, and the value your membership provides.

The year 2020 was all-consuming on just about every level imaginable. Yet, the strength of CAP COM’s balance sheet put us on firm footing to reposition resources, expand relief, and provide support to those who needed it most.

Assistance for individuals, families, and local businesses is ongoing, along with substantial community outreach and funding through the CAP COM Cares Foundation.

Meanwhile, CAP COM continues to deliver its full range of financial solutions with the personalized guidance for which we are known.

For example, we assisted more homebuyers in 2020 than ever before. CAP COM now ranks second among area residential mortgage lenders in loans approved, vaulting 62% from the prior year.* And we continue to bring banking directly to members with 24/7 digital services, appointment-setting features, and phone and video meetings.

Every interaction enables us to put our people-helping-people ideals into action.

The pandemic and its aftermath will be with us for a long time — so it’s important to be there for each other. As we set off toward new horizons together, thank you for including CAP COM on your journey.

BUILT TO SERVE

Here are few ways CAP COM provided value to members and the community in 2020.

$750,000

228,000

For 500+ emergency relief loans for members.

Phone conversations with Member Service teams.

$11 MILLION

$1 BILLION

Total purchases made with CAP COM debit cards and low, fixed-rate credit cards.

Interest earned by members on their account balances.

17,000

Loans helped members buy a car, go to college, pay down debt, make home improvements, or stay afloat.

$1.7 MILLION

Total value of rewards points earned by credit card holders.

Christopher McKenna President/CEO

83%

Of CAP COM employees volunteer to serve the community.

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*Albany Business Review, Residential Mortgage Lenders by Volume (2020)

Figures reflect averages and rounding.

During this extraordinary year, we have all felt the effects of a global pandemic ripple across our communities – among family, friends, and colleagues.

Serving on the Board of Directors offers a view into the needs of CAP COM members, local businesses, and our neighbors across the region – and keeps us focused on financial solutions and relief.

We on the Board take CAP COM’s mission to serve to heart.

Financial services, supported with caring personal attention, underpin all that we do. In some cases, these resources are a lifeline.

Understanding needs as they shift is crucial to providing award-winning service. That means hearing from members by phone, in-person, and during virtual meetings — in addition to gathering feedback through member surveys.

Meanwhile, as CAP COM employees advocate for members, we must do the same for them. We support generous workplace benefits that reflect the enormous value employees provide. Knowing that employees have voted CAP COM as the region’s Best Place to Work for 17 consecutive years is an honor we must continue to earn.* In this report, there is room for only a glimpse of CAP COM’s expansive community efforts. Throughout the year, direct aid goes to local nonprofits with significant funding and volunteer support provided through the CAP COM Cares Foundation.

What makes the work we do so meaningful is recognizing the credit union’s positive impact across thousands of people.

On behalf of the entire Board, thank you for giving CAP COM the opportunity to serve you.

Patrick J. Kelly Board Chair *Albany Business Review (2020)

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The role of CAP COM’s asset/liability management team is to manage growth, augment performance, and mitigate risk on the credit union’s balance sheet. As markets and economic conditions fluctuate, this team must be vigilant to changes and agile in its response.

The condition of its financials from year to year enables CAP COM to deliver services that support the financial well-being of 143,000 members, businesses, and communities in New York’s Capital Region and beyond.

But, in a year beset by a global pandemic, economic turbulence, and lost lives and livelihoods — what did that mean for the credit union’s legendary service model? Would squeezed margins hamper CAP COM’s ability to support members and provide vital resources to the community?

In fact, CAP COM redoubled its efforts in 2020 — expanding remote financial services, offering relief for those experiencing financial distress, and substantially increasing support for nonprofits serving people in need.

Fiscal strength made this possible. CAP COM generated exceptional financial results for its member-owners in 2020.

At year-end, CAP COM’s total assets stood at $2.3 billion, increasing $351.7 million, or 18.1% year over year. Notably, members’ equity rose $28.3 million during 2020, or 14.6% — resulting in a net worth ratio of 9.63%. This level of net worth is considered “well capitalized” by the National Credit Union Administration (CAP COM’s federal regulator). We take great pride in this designation because it is the highest a credit union can achieve.

Preserving the organization’s financial health, across decades, enables CAP COM to fulfill its people-helping-people mission — in good times, bad times, every time. Thank you for granting CAP COM the privilege to deliver vital financial services as it has since 1953, especially when they’re needed most.

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

CAP COM FEDERAL CREDIT UNION AND SUBSIDIARIES Consolidated Statement of Financial Condition December 31, 2020 2020

(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 Foreclosed assets 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

$

124,604,515 82,184,832 13,172,278 1,918,660,478

45,087,583 16,849,425 1,247,005 6,927,108 86,057,981 $

2,294,791,205

$

2,008,758,314 41,364,396 21,662,065 2,071,784,775 223,006,430

$

2,294,791,205

CAP COM FEDERAL CREDIT UNION AND SUBSIDIARIES Consolidated Statement of Income For the Year Ended December 31, 2020

CONNECTIONS

Bank any way you like.

2020

(Unaudited)

INTEREST INCOME

Loans to members

Securities and investments

Overnight deposits and other

Total interest income

$

80,608,345 1,609,630 446,063 82,664,038

INTEREST EXPENSE Deposits

Borrowed funds

Total interest expense

11,387,420 535,778 11,923,198

70,740,840

Net interest income before provision for loan losses

PROVISION FOR LOAN LOSSES

Net interest income after provision for loan losses

17,545,000 53,195,840

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

8,687,392 13,495,446 2,628,150 2,908,574 4,326,229 18,690,371 728,901 51,465,063

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

41,939,606 4,525,369 2,011,550 6,709,394 5,898,718 2,709,160 7,680,284 4,308,794 2,050,348 77,833,223

CONSOLIDATED NET INCOME

$

26,827,680

143,000

People, nonprofits and businesses bank with CAP COM. And, we’re growing.

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19,000

Phone calls per month handled by Member Service teams

96,500

Branches in NY’s Capital Region

Digital banking users

6,000

Members use their mobile app each month

30,000

Checks deposited via mobile deposit in 2020

Shared branches across the U.S.

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

70,000

378,000

Figures directly above reflect averages and rounding.

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CAP COM’s Supervisory Committee is made up of volunteers appointed by the Board of Directors. Working in partnership with the credit union’s Internal Audit Department, we are committed to making sure members’ 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, 2020.

The audit is 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 follows 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 CAP COM by 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 by sending your correspondence to: Supervisory Committee, P.O. Box 11279, Albany, NY 12211-0279.

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

Robert Davis Supervisory Committee Chair

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HOW CAP COM CARES

More than $4.5 million donated to serve the community since inception in 2003.

1,100

$528,000

To support needs in the community

Backpacks filled with school supplies delivered to schools

430

$81,500

Scholarships and awards to 38 individuals

Thanksgiving baskets delivered to families

$50,000 To the Regional Food Bank of Northeastern NY

$15,000

Donated, along with masks, to St. Peter’s Health Partners

250

New winter coats to keep kids warm

300+

Bilal Kimble Mortgage Specialist

Seniors and families in need ‘adopted’ during the holidays

Figures reflect averages and rounding.

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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 Marty Finn – Director William Fitzpatrick – Director Chip Lawrence – Director Harold Horning – Board Emeritus Beth King – Associate Director Supervisory Committee Robert Davis – Chair Lou Anne Bigaouette – Vice Chair Paul Dettenrieder – Secretary Marty Finn – Member Kyle Rueckert – Member Board Managers of CAP COM Group Mark Marchand – Chair Lou Anne Bigaouette – First Vice Chair David J. Jurczynski – Treasurer Robert Davis – Member Paul Dettenrieder – Member Marty Finn – Member Chip Lawrence – Member Christopher McKenna – Member Kyle Rueckert – Member Senior Management Christopher McKenna – President/CEO David Jurczynski – EVP/CFO Lee Carman – Chief Lending Officer Susan Rosko Fogarty – Chief Relationship Officer Jason Greco – Chief Technology 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

Federally insured by NCUA