We believe in the timeless values of honesty, respect and professionalism.
You’ll see it in everything we do. Our Mission Statement The mission of Erie Federal Credit Union is to responsibly deliver financial solutions that meet the needs of our community.
Our Vision Statement The vision of Erie Federal Credit Union is to be the #1 most trusted financial resource in the region.
Front cover photo provided by Lisa Waugaman
Finding Opportunity in Adversity REPORT OF THE CEO Last year at this time, while sitting down to report on our credit union’s 2019 success, the world was in the throes of a global pandemic, which had shuttered businesses, impacted families and changed the very fabric of ‘normal’ American life. We were all asked to stay-at-home, wear masks and maintain a safe social distance from others at all times. Measures that defy both sense of self and community while also protecting the same. Who would have ever imagined that a full year later, the pandemic would still lead news headlines. The health and well-being of our employees, members and community is of paramount concern to Erie Federal Credit Union. From the onset of the COVID-19 pandemic, Erie FCU quickly responded with increased informational communications to members to ensure you had the information you needed to keep you informed of this rapidly evolving situation, financial relief options, safe banking measures and subsequent operational changes that impacted service delivery channels. We thank you for your understanding, patience and flexibility as we navigated these challenging times together. Adversity allows us the opportunity to find out what we are capable of, to develop our strengths, and to access aspects of ourselves that we did not know existed and inner resources we didn’t know we had. I am very proud of and respect the accomplishments of the Erie FCU team and volunteers over the past year. We have made significant advancements in our operations over the last several months and we are excited for what is on the horizon. Now is a very exciting time to be a member of Erie FCU and our future is as bright and strong as ever.
“Erie’s Choice in Credit Unions” by readers of the Erie Times-News for the eighth year in a row. Erie FCU brought home two additional honors by being named “Erie’s Choice in Mortgage Lender” and our Erie Advisors group won “Erie’s Choice in Financial Advisory Group”. We thank our members and our community for your continued support and trust. Adhering to the credit union philosophy of ‘People Helping People’, Erie FCU committed to supporting seven local food agencies and nonprofit organizations by donating $21,000 through the credit union inspired, “Give Hope - Feed the Need” campaign. The charitable donation was earmarked to provide monetary relief to nonprofit organizations realizing less funding over the year, but increased demand for food assistance caused by the COVID-19 pandemic. This campaign successfully distributed necessary funding to the following seven Erie area organizations: Metro-Erie Meals on Wheels, The Salvation Army of Erie, Emmaus Soup Kitchen, Community of Caring, St. Martin Center, Erie Martin Luther King Center and Second Harvest Food Bank of NWPA, all of which received $3,000 to be used for programs affiliated with supplying meals, nourishment and warm companionship to families and individuals who were affected this past winter. Erie FCU believes strongly in helping our community succeed financially, which is why we remain committed to doing the right things to support our Continued next page.
Erie FCU’s member-first approach to financial services is clearly resonating within our community. Because of member and community support, Erie FCU is now well over 66,000 members STRONG. Erie FCU’s assets grew 22.36%, a total of $122.5 million. Deposits grew 24.30%, a total of $117.8 million. Consumer and business loan portfolios increased a combined total of 7.71%, or $25.8 million. Despite the substantial increase in assets as a direct result of government stimulus, the credit union’s capital level remained at 9.46%, well above the ‘well-capitalized’ threshold of 7.00% established by our federal regulators, the National Credit Union Administration (NCUA). Erie FCU was voted Erie’s “Best Bank” for the seventh consecutive year by Erie Reader, and was chosen as
Brian J. Waugaman, CEO 3
REPORT OF THE CEO, continued from page 2 members and local businesses while promoting our city and region. As a valued member of Erie FCU, you are the purpose behind all we do; the reason for our continued growth and success. Erie FCU remains committed to helping build strong communities and making a positive impact where we live and work. Our continued success relies on the collective support or our members, our dedicated staff, our volunteers and industry partners. Thank you. We cannot make the difference we do without your support.
“Our very survival depends on our ability to stay awake, to adjust to new ideas, to remain vigilant and to face the challenge of change.” —Dr. Martin Luther King Jr. Even with the uncertainty that remains as we venture into 2021, you can be confident that Erie FCU continues to operate with your best interests at heart and will stay true to our common purpose and mission to responsibly deliver financial solutions that meet the needs of our community. Much opportunity exists to further enhance our member experience, and together our combined efforts will strengthen our organization’s long community—and member-centric heritage. We are here for our community. We are here for you. — Kind wishes for a great year.
SUPERVISORY COMMITTEE REPORT Richard Macer, Chair Erie Federal Credit Union’s Supervisory Committee consists of volunteers who are appointed by the Board of Directors in accordance with the Federal Credit Union Act. This Committee is responsible for ensuring that credit union policies, procedures and internal controls are adequately designed to protect the Credit Union and members’ assets against fraud and conflict of interest. The Committee oversees and reviews the work of the internal audit department, who completes independent audits of the policies, procedures and internal controls of the Credit Union. The Committee also ensures the financial condition of the credit union is accurately and fairly represented in their financial statements through a review by an independent audit firm. 4
CliftonLarsonAllen LLP completed an annual audit of our financial statements and verified the accuracy of members’ account statements for the year ending March 31, 2020. CLA confirmed that the financial statements fairly present the Credit Union’s financial position and conform to generally accepted accounting principles. The National Credit Union Administration (NCUA) is an independent federal agency that insures deposits, protects the members, charters and regulates federal credit unions. NCUA conducts periodic examinations of federal credit union’s records and operations. Erie FCU’s last exam performed by NCUA was as of September 30, 2020. The Supervisory Committee is pleased to report these positive results and to be of service to Erie Federal Credit Union. We will continue to work diligently in 2021 Our Checklist: to ensure the Credit Serving the needs Union remains a safe and of our community sound institution. If you NCUA Exam have a question relating to the financial health or management of Erie FCU, please do not hesitate to contact us. We are grateful for the opportunity to serve you!
Safety & Soundness
In closing, I would like to personally thank Mary Swaney & Stephanie Fitzgerald of the internal audit department for all the help they have provided me and for their ability to be flexible during 2020.
SUPERVISORY COMMITTEE MEMBERS Richard Macer, Chair
Dr. Pablo Reyes
Mary Swaney, Internal Audit Manager
Election of Directors: The Nominating Committee nominated Laurie Becker and Daniel Nawrocki for re-election to the Board of Directors. There were no nominations by petition received. Therefore, the nominees will be Elected by Acclamation at the Annual Meeting and serve a 3-year term.
REPORT OF THE BOARD OF DIRECTORS
Adapting to the“NewNormal” Dennis Howard, Board Chair On behalf of the Board of Directors, management and staff, I am pleased to present your credit union’s 2020 Annual Report. Clearly, 2020 was a year unlike any other in our history. The COVID-19 pandemic forced our Credit Union to recalculate priorities, reexamine best practices and readjust operations. Through it all, Erie FCU worked hard to maintain 5-star service levels to meet the needs of our members and communities. Without a doubt, Erie FCU adjusted service delivery at many touch points to ensure the health and safety of staff, while maintaining business continuity with minimal disruption to members. Serving over 66,000 member-owners, your Board of Directors continued to focus on the excellent financial soundness of your credit union. Due to the pandemic, as with all financial institutions, Erie FCU dealt with the compression of margins, lower loan demand and the economic uncertainty in 2020. COVID-19 forced us to do things differently, to pivot if you will, but we managed to weather the storm and continue to remain on solid financial ground. Please review the CFO Report for specific details. Under the leadership of CEO Brian Waugaman and his team, your Credit Union found creative solutions to support you, our loyal members, when you needed it most. For example, within a short timeframe of the governor’s directive to close branch lobbies,
we were able to transition to a remote working environment without a disruption in service to the membership. We were also able to support our dedicated staff, including our frontline employees, who continued to give it their very best every day despite the fears and uncertainty of the pandemic. I am even more proud to report that the credit union made a concerted effort to retain jobs as much as possible during those trying times. We are blessed to have such a wonderful team! Here is a brief look at some of the changes instituted last year with the well-being of our employees and members in mind: • Emergency loans, loan modifications and deferments, small business PPP loans and skip-a-pay options for members. • Processes and best practices, such as thorough cleaning and plexi-glass barrier installations, were established in order to serve members in-branch while ensuring member and staff safety. • Encouragement to members to rely more heavily on online banking, ATM’s and drive-thru services to conduct the bulk of their day-to day type transactions. As we advance and grow throughout 2021, we will be very excited to celebrate the Credit Union’s 85th Anniversary, while remaining rooted in the commitment that a group of local educators made in 1936 to serve their community. Our ongoing commitment remains to offering new products, services and enhancing our delivery channels to continue meeting your financial needs and service expectations. On behalf of every Erie FCU employee, please accept our sincerest gratitude for your business, trust, loyalty, and continued support. We are here for YOU!
YOUR BOARD OF DIRECTORS Richard Macer
Joseph Rys Laurie Becker
Daniel Nawrocki James Lazan
Norb Kaczmarek Dennis Howard
COVID-19 led to hardships that affected everyone. Without missing a beat, Erie FCU, deeply rooted in the credit union philosophy of “People Helping People” since 1936, stepped up in many ways. Culminating at year’s end with our first ever, “Feed the Need” campaign. The holidays were approaching, and we recognized the importance of assisting those in our community who struggle to pay their bills or feed their family. So, in true cooperative spirit, we donated to seven local food banks and pantries to help them fulfill their mission of feeding those who needed a helping hand.
A BIG thank you to our partners, staff and non-staff volunteers who were involved in these inspirational efforts.
Giving back THRU COMMUNIT Y INVOLVEMENT
Our Team AOK was busy in 2020.
Here is a quick look at what they were up to:
• We celebrated a New Year’s baby with a visit and gift basket!
• Held daily Facebook Give-a-ways
• Continued our monthly “Surprise Adoption” program with the ANNA Shelter
And why wouldn’t we celebrate, World Smile Day
We took part in:
During International Credit Union (ICU) Day, we:
• National Law Enforcement Appreciation Day
• Visited local chiropractors & business members (to recognize National Chiropractic Health Month)
• Support Our Veteran’s Week
• Gave away a “Football Lovers & Spa Basket”
• Read Across America (Dr. Seuss’ Birthday)
• Had a surprise pet adoption with the Erie County Humane Society
• Drive-In Day
• Presented a special gift basket to our 65,000th member!
• National Postal Workers Day
• Delivered “Thank You” letters to the Erie VA Medical Center as a “salute to our Veterans”
And of course, offered Member Shred Day & PBJ Collection for the Second Harvest Food Bank
During Member Appreciation Week, we: • Visited Business Member Day Care Centers
And in October, during our Annual “Socktober” campaign to help the homeless, we collected socks and other warm winter clothing and delivered to: The Upper Room, Sisters of St. Joseph Neighborhood Network, St. Patrick’s Haven, and Erie United Methodist Alliance
• Offered Glass Recycling for members • Visited each branch to hand out $10 gift cards to random members • Handed out tickets to families to see the movie, Jurassic Park at UPMC Park 6
• Surprised members celebrating their birthday
Erie FCU’s goal for 2021 is to enhance the communities we serve, support the volunteer efforts of our employees, and improve the quality of life for residents throughout our field of membership.
STANDING WITH YOU OUR COVID-19 RESPONSE
At the onset of the COVID-19 pandemic, Erie Federal Credit Union was forced to pivot quickly and shift all available resources to gathering, comprehending and adapting to a seemingly endless amount of timely, new and important information. Erie FCU began taking immediate and proactive steps to ensure the health and well-being of our members and employees by adjusting internal operations to comply with local, state and federal health authority guidelines and partner dynamics, all while ensuring uninterrupted service to our membership. In the early days of the pandemic, we knew very little about the virus, and our first response was to gather information so that we could prepare staff and members for what was to come. Communication became our top priority. Daily internal staff and volunteer email communications maintained a consistent flow of essential information and operational workflow changes enabling employees to take care of themselves and their families while attempting to maintain morale and reduce potential panic. We had to quickly accept some hard choices... temporary branch closings and employee furlough, as well as learning to effectively work remotely. Member communications were vital at this time. Email, home banking and social network communications quickly transitioned to informational content only to ensure members were well-aware of the operational changes that may have impacted their access to typical credit union services. As an essential service provider, our goal was to limit any potential member service disruption. It remains vital that we are able to provide safe and continued service to our members and the community we serve.
Our Member Communications:
Our Protective Measures in the Early Days of the Pandemic: Limited access to branch lobbies Limited hours and first hour access to higher-risk members Those employees able to do so, allowed to work from home Provided cleaning supplies, masks and protective barriers to staff
Dedicated section of website to provide members up-to-date information regarding lobby availability, alternative and safe banking options, grant and loan options
Established clear and consistent guidelines and procedures for workspace safety
Emails to members providing updated information and links to relevant content on our website, as details became available
Prepared staff and buildings for potential infections
Blogs and social media postings to provide clear guidance for members to manage their finances during the pandemic
Ensured staff were paid for time off required by the pandemic (before Federal Government provided protection) 7
My COVID -19 Story “When COVID-19 became our reality in March (2020), the world and how we live changed overnight. Instead of being able to pop into the Erie FCU branch, everything was done through the drive through. Yes, the lines were long but the service was great. Your representatives were understanding, helpful, courteous and made me feel welcome. I knew my questions would be answered and I would not be made to feel hurried. In the spring, we contemplated taking out a loan for some home improvements. Normally, I would pop into the credit union and chat with one of your loan representatives. I called and the person I worked with was awesome. Again, even over the phone, she answered our questions and made us feel as though we were sitting face-to-face. I am the Executive Director of St. Patrick’s Haven, an emergency overnight shelter. Pre-pandemic, employees of Erie FCU collected and dropped off much needed items for our shelter that helped us get through the winter months. I thought maybe that wouldn’t happen this year. Once again, Erie FCU employees met the challenge. Kim Davis (Director of Community Outreach) and Gretchen Rickrode (Compliance/BSA Officer) did a “socially distant” delivery of items (socks, hats, gloves) that will help our homeless population in the upcoming cold winter months. They didn’t miss a beat — they just readjusted and found a work-around for the Team AOK/Acts of Kindness Team.
I’ve been a member of the Credit Union for almost 40 years and there is no place else I would even consider for my banking needs — even during the pandemic.”
— Betsy W. (Erie FCU Member)
Pictured: Gretchen Rickrode (Erie FCU) and Betsy W. (Member)
Providing Solutions TO AREA BUSINESSES IN NEED In 2020, Erie FCU was proud to deliver exceptional benefits to our valued members, along with critical banking products and services for local businesses including Paycheck Protection Program (PPP) loans. As a result of the COVID-19 crisis, many local small businesses had to drastically curtail operations or close. It was a situation nobody was prepared for. Luckily, the federal government created the Paycheck Protection Program, a stimulus package under the CARES Act that was put in place to provide funds to keep employees on the payroll. Many businesses started calling and our Member Business Lending team, of course, stepped up to the plate! They took on as many businesses as they could handle and worked many long hours to help secure the vital PPP funding. Within the Paycheck Protection Program, Erie FCU’s Business lending team provided 53 loans, helping businesses secure close to $2.4 million dollars. 532 local employee jobs were retained as a result of our team’s efforts. “The PPP program is an extension of how we serve businesses,” said Erie FCU Commercial Lender, Nathan Crouch. “We’re not simply a service provider, we’re a financial partner and here to help”.
Supporting local businesses and our community is what we do! For anything from business checking and savings accounts, to cash management and loans, Erie FCU’s Business Services team is here to help you grow.
“Erie Federal Credit Union has helped my business, Young’s Cedar Log Homes/Young’s Hot Tubs, grow into what it is today. Nate (Erie FCU’s Commercial Lender) is always great to work with and attentive to our needs. I’ve never dealt with such a great team. We are grateful to them for the help and support they’ve shown us. Thanks, Erie FCU!” — Mike Young, Owner
Awards & Recognition In 2020, Erie FCU was honored with a number of awards and recognition. We’re honored by the accolades we’ve received as they represent our “5-Star Service” commitment to our membership and everything we have done to help our members and communities financially thrive. Erie FCU was named by the Erie Times News as “Erie’s Choice in Credit Unions” for the 8th year in a row! The credit union was also recognized as “Erie’s Choice in Mortgage Lender” and our Erie Advisors team located at the credit union was voted “Erie’s Choice in Financial Advisory Group”. Cross State Credit Union Association awarded Erie FCU with two MIC awards for Marketing excellence - Best Annual Report and Best Newsletter. Erie FCU was recognized by the Erie Reader as “Erie’s Best Bank” for the 7th consecutive year!
Thank you to our members and loyal TEAM for helping us to achieve these awards and recognition!
Investment Services REPORT When uncertainty is high and you have questions, access to a professional financial advisor is a valuable asset. Chuck Molloy, Financial Advisor
Dave Garres, Financial Advisor
The Erie Advisors Program located at Erie Federal Credit Union was established by the Credit Union to help our members plan for life’s events—expected and unexpected. Erie Advisors offer a wide array of products including mutual funds, annuities, full service brokerage accounts, IRA’s, 529 educational plans, annuities, stocks, bonds and retirement plan rollover accounts through CUNA Brokerage Services, Inc.* In 2020, we continued to introduce financial advisors, Chuck and Dave, to more members as our credit union membership grew. Amid COVID-19, market volatility, members looked to the advisors for personalized guidance and planning. Continued low rates on deposit accounts and the need to grow funds for increasingly longer retirements makes investment solutions offered by Erie Advisors a viable option. A big thank you to all of our current members who have chosen Erie Advisors to help them achieve financial success. Do not hesitate to contact the Erie Advisors’ team to ask questions or schedule an appointment.
*Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC , a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. FR-3566111.1-0421-0523
Photo: Lisa Waugaman
2020 Financial Overview Year Ending December 31, 2020
Assets Member Loans
Allowance for Loan Losses
Cash 24,870,798 19,395,523 Investments
Building/Equipment 21,122,711 21,542,975 All Other Assets Total Assets
Liabilities Member Savings
Reserves 5,365,745 5,365,745 Unrealized Loss/Gain for AFS CMOs
Earnings Loan Interest
Income from Investments
Fee & Other Income
Interest Expense $ (12)
Total Interest Expense
Operating Expense Compensation, Taxes, Training
Occupancy & Operation
Promotion & Education
Outside Operation Service
Total Operating Expenses
Net Income 10
MESSAGE FROM THE CHIEF FINANCIAL OFFICER
Well positioned for long-term sustainability When we planned for 2020, we certainly did not anticipate having to make major adjustments to our day-to-day operational plans, resulting from a global pandemic. Then it happened... despite these unforeseen circumstances, 2020 was an outstanding year for Erie Federal Credit Union as income topped $3.8 million, loans grew $25.9 million and deposits increased $117.9 million. It bears repeating that earnings remained strong despite the headwind of having to increase our provision for loan loss reserve expense along with other COVID-19 economic challenges. Assets also increased over $122 million as Erie FCU continues to expand its membership base in Erie and Crawford counties. Erie FCU continues to remain top of market in loan and deposit rates. Capital remained very strong at 9.46% —well above NCUA’s adequately capitalized threshold of 7%. The slight drop in capital was due to record-breaking deposit growth, largely due to the CARES Act stimulus payments to members. Erie FCU’s mission continues to be “responsibly serve its membership” — which is clearly evident as loan and deposit growth was exceptional in 2020. Solid financial results have enabled us to offer enhanced products and services to meet the needs of our community through strategic initiatives and technology to serve our members more efficiently.
5-YEAR ASSET GROWTH
Fred Tonty, CFO
Continued growth and financial strength is expected to continue in 2021 as our Board of Directors, Management team and all our staff work hard to provide the financial services Erie FCU members need. Lastly, none of our growth, value and expanded product offerings could have happened without your membership and continued trust in our growing cooperative credit union. Together, we are building and maintaining a strong source of financial security and peace of mind for you and the generations to come.
$700m $600m $500m $400m $300m $200m 2016
Along with the survey results, we also received many “short stories” from you celebrating our team members. Here are just a few of your kind words:
“Your staff is ALWAYS courteous, professional and knowledgeable. It is always a good experience dealing with them.” “Just want to praise the staff for being so helpful with my COVID employment issues and helping me delay car payments. The flexibility has been a life-saver and staff have been very kind and helpful.” “You guys/ladies are freaking awesome. I couldn’t ask for better — thank you!” “I have always had excellent help and service with Erie FCU.” “I think you guys do a great job. One of the best financial institutions I’ve been a part of!” “I think the Credit Union is offering its best products and services. Lifetime member here! No suggestions for change; you can’t improve on perfection.”
EXECUTIVE LEADERSHIP TEAM Brian Waugaman, Chief Executive Officer Brian Warzynak, Chief Information Officer Chris Cortes, Chief Operations Officer Denise Kaczmarek, Chief Lending Officer Fred Tonty, Chief Financial Officer Thomas Brennan, Chief Marketing Officer
“Let it never be forgotten that a credit union is, above all else, an association of people, not dollars.” — Alphonse Desjardins
1109 East 38th Street • 1005 Greengarden Road 2436 Buffalo Road • 518 State Street • 5500 Zuck Road 1220 West 32nd Street • 1825 Downs Drive 101 Washington Towne Blvd. (Edinboro, PA) • 3503 Peach Street
2020 Erie FCU Annual Report