Report of the CEO, Brian J. Waugaman Erie Federal Credit Union completed a monumental year in 2017, filled with much success and continued growth. We began the year by re-opening our newly remodeled Buffalo Road branch location providing enhanced access and increased member and staff security. With much anticipation after 18 months of construction, the former Glenwood Elementary School modernization project was successfully completed. Erie Federal Credit Union’s new full-service member branch location and centralized operations center officially opened with a ribbon-cutting ceremony held June 7, 2017, and was complimented by a grand opening celebration held between June 20 – June 24, 2017. Please come and visit us at our newest location. In coordination with the opening of the new Glenwood facility, #TeamAOK, or Team Acts of Kindness, was introduced to help raise awareness of Erie FCU’s continued community outreach initiatives. #TeamAOK worked to deliver positivity throughout the community by providing free breakfast; free coffee, free ice cream, and free admission to patrons visiting the Breakfast Place, Tim Hortons, Dairy Queen and the Erie Zoo, to providing in-kind and service donations to the Tom Ridge Environmental Center, ServErie, Habitat for Humanity, and St. Martin Center. #TeamAOK delivered donuts, cookies and smiles in celebration of National Nurses week, National Donut Day, National Cookie Month, and International Credit Union day. Not to mention, delivering lunch to firefighters at Erie Fire Departments South Central Station, Engine Company #12. #TeamAOK is a total team effort that positively brands the Credit Union while spreading neighborhood “goodwill!” Staff consistency and member experience training initiatives continued throughout 2017 aimed at enhancing the five star service provided to our growing membership. Our commitment to providing exceptional five star service was acknowledged as Erie FCU received local, national and industry recognition including: the Erie Times-News “Erie’s Choice in Credit Unions” award for the sixth year in a row, Erie Readers “Best of Erie” award for “Erie’s Best Bank/Credit Union” for the fourth year running, Junior Achievement of Western Pennsylvania “Education Leadership Company” award, and various marketing awards, including the esteemed CUNA “Diamond Award” for Erie FCU’s 80th Anniversary year-long celebration. Erie FCU was ranked by Advisory HQ, an independent online news source that provides extensive research, independent reviews and top rankings of financial institutions across the U.S., U.K., and Canada, as one of the top 15 Credit Unions in Pennsylvania. Finally, we were extremely proud to announce Erie FCU’s first-ever Patronage Bonus Program. The Patronage Bonus Program was developed to distribute an equitable bonus from Credit Union earnings back to members based on their individual account relationship and usage of Erie FCU products and services over the 2017 calendar year. The Patronage Bonus Program is just another way to thank our members for over 81 years of loyalty and trust. Erie FCU looks forward to another busy year in 2018. Plans are already underway to further enhance overall operational efficiencies and implement structural changes necessary to support future member service initiatives. I am proud to report that in 2017 assets grew by a total of $10.2 million, and consumer and business loan growth remained strong at 11.95% or $26.9 million. Most importantly, our capital level of 11.55% remains well above the ‘well-capitalized’ Credit Union threshold of 7.00% set by the National Credit Union Administration (NCUA). We thank you for the privilege to serve you and our community, and for your continued patronage and support of Erie Federal Credit Union. It is our sincere hope that you will share the excellent benefits of membership with your family, friends and co-workers. Our goal is Building Lifelong Relationships! 1
Sticking By Our Principles As financial cooperatives, Credit Unions operate under a different set of rules than for-profit banks.
Here are 7 principles of cooperatives, as explained by the National Credit Union Foundation (NCUF) that make them stand out:
Voluntary and open membership Cooperatives are voluntary organizations, open to all persons able to use their services and are willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. As not-forprofit institutions, Credit Unions are devoted to their members’ financial wellness, and not to make a profit. Democratic member control Cooperatives operate on a democratic platform, meaning one vote, one member no matter their financial status. Each Credit Union has a board of directors that serve on a volunteer basis. Member economic participation Members are both owners and customers. The more members that participate, the more can be given back in the form of more products, lower loan rates, higher savings yields, and fewer fees. Autonomy and independence Cooperatives are owned by members, not shareholders, making each member an owner. Financial education, training, and information Credit Unions are committed to providing financial education/literacy to their members and to the community at large. From budgeting basics to retirement planning and how credit works, Credit Unions do all they can to ensure that the community—particularly young people and opinion leaders— is informed. Cooperation among cooperatives Working together, financial cooperatives are there when you need them. For example, Credit Unions collectively provide more ATMs than the world’s largest bank.
Concern for the community Credit Unions are passionate about serving their members and about making an impact in the community. Credit Unions volunteer for local charities andparticipate in numerous causes to make a difference.
Report of the Board of Directors
James Lazan, Board Chair
Election of Officers: Daniel Nawrocki and Laurie Becker were nominated for re-election to the Board of Directors. They were elected to a 3-year term commencing May 14, 2018. On behalf of the Board of Directors, it is my privilege to report that 2017 was an exceptional year of growth and stability for Erie FCU… and it’s all thanks to you, our loyal members! Our Credit Union continues to operate in a financially sound manner as we saw increased membership (we had a total of 4,603 new members join our Erie FCU family), an improved capital position (capital increased to 11.55%) and robust loan growth (total loans increased by 11.95% growing to more than $252,530,214). Member business lending also remained strong in 2017 with our commercial loan portfolio nearing $30 million at year’s end. However, loan rates remained historically low in 2017 causing pressure to our interest margins. Fortunately, successful operational efficiencies and growth in non-interest income helped offset some of this pressure. While these results show that we continue to prosper, one constant remains; our commitment to helping people. And, instead of returning our profits to corporate stockholders (like banks do), we return them to our member-owners in the form of better rates, lower fees and more free services. In 2017, we continued to invest in new technology, tools, and infrastructure to further improve convenience, access, and security. We also heightened our focus on community outreach and volunteerism. We’ve always been strong supporters of our community, but we took it to another level last year as our TeamAOK handdelivered hundreds of gifts, sweets, goodwill and more to Credit Union members, restaurants, fire departments, hospitals, and other nonprofits and community partners all throughout our operating area. Clearly, we are dedicated to being your first choice in banking, and the feedback we received from you in response to Member Satisfaction Surveys indicates that we’re doing our job, with a 5-star overall satisfaction rating. It goes without saying that the grand opening of Glenwood was a momentous event in our history. We’ve definitely come a long way since our humble, but proud, beginnings in 1936. Glenwood reflects our financial strength and success as northwest PA’s largest Credit Union. Now we have ample room to grow. Strong, confident leadership is necessary to continue this success. Our CEO, Brian Waugaman, leads a talented management team who collectively ensure the Credit Union is accomplishing its goals. We are very proud of their professionalism and especially the manner in which they transitioned staff and operations into the new building, without negatively disrupting Credit Union business. I would also like to convey my personal gratitude to my fellow Board of Directors’ for their hard work and dedication. At Erie FCU, we value you, our member owners. In December, we declared our first ever Patronage Bonus and gave you back over a HALF MILLION DOLLARS (to be distributed in January 2018)! It is a joy to be able to share the Credit Union’s success with you. All in all, it was very much a transformational year where we made significant and very important investments for the future of our Credit Union. I speak for the entire Erie FCU Board of Directors when I say it has been a genuine pleasure serving you in 2017. We have an even brighter 2018 to look forward to.
Report of the Supervisory Committee The Supervisory Committee is responsible for ensuring the financial condition of Erie Federal Credit Union is accurately and fairly represented in the Credit Union’s financial statements. The committee members, Norbert Kaczmarek, Ruth Waidley, Rick Macer, Phyllis Ferguson, and William Liebel, also ensure established internal controls are effectively maintained and adequately protect the Credit Union and its members. Additionally, they oversee the internal audit department, who work independently, to conduct ongoing internal audits, to review policies and procedures to mitigate financial, operational, and compliance risks facing the Credit Union, and to assist the NCUA (federal regulator) with their annual examination. In order to meet the financial responsibilities, the committee retained the services of CliftonLarsonAllen 4
Norb Kaczmarek, Chairman, Supervisory Committee
LLP., an independent CPA firm, to complete an annual audit of Erie FCU’s financial statements for year ended March 31, 2017 and to verify accuracy of members’ account statements. This year, as is customary, an unqualified opinion was issued on the financial statements of the Credit Union. This means the financial statements fairly represent Erie FCU’s financial results and that practices and procedures followed are in accordance with generally accepted accounting principles. If you have a question relating to the financial health or management of the Credit Union, please do not hesitate to contact us. We are grateful for the opportunity to serve you. As the Chairman of the Supervisory Committee, I speak on behalf of the Committee members when I say it has been our pleasure to serve you in 2017. The Committee will continue to work diligently in 2018 to ensure the Credit Union remains a safe and sound institution.
We knew it was time to plan for the future… Erie FCU has come a long way since 1936. Our steady growth over 80 plus years created a need, a dream if you will, for additional staff and space in order to meet the evolving needs of our membership. The Board of Directors and the leadership team felt that a new corporate headquarters and branch would help us to be better deliver our ‘people helping people’ approach to financial services to even more individuals, families and small businesses in both Erie and Crawford counties.
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
This dream of was realized in June 2017 by Erie FCU’s move to its state-of-the-art corporate headquarters and full service branch location at the former Glenwood Elementary School. We were excited about the prospects of opening a new facility at a time when so many other institutions were cutting services or raising fees. This building being a former elementary school spoke not only to our history, but also looked forward to our future of being a bigger part of such a great community. This was by far the most significant investment Erie FCU had ever made. The process of procuring this site had been years in the making. Almost ten years of study and analysis backed the decision to build in this prime location connecting downtown Erie and the upper Peach Street corridor. The Glenwood property was purchased in 2013 and the “Build Team” spent over three years developing their ideas to ensure it was done right. The vision for this design was to introduce a new landmark to Erie that everyone can be proud of as well as create new efficiencies in our operations. It is truly an exciting time to be a part of Erie FCU.
A New Landmark in Erie
Erie FCU Open New Branch and Headquarters June 7, 2017 was a very proud day for Erie FCU and its members. After more than four years in planning and design, and 18 months of construction, the transformation of the previous Glenwood Elementary School was complete.
Keeping things local was a priority for us. From the beginning, it was extremely important to us that we ensured the majority of the economic impact generated by this project stayed local, right here in Erie. This is why we partnered with a highly talented team of local architects, planners, designers, contractors, artisans, vendors, and suppliers. We were successful in delivering on this promise and the local providers we engaged delivered as well.
Building Lifelong Relationships. Among its many outstanding features, the renovated 41,000 square foot facility included a 3,000 square foot full service branch dedicated to member facing operations. The remainder of the facility provides a flexible floor plan allowing for future growth and expansion to support increasing member demand. A variety of financial services are offered at this location including: new account opening, consumer and business loans, traditional face-to-face teller transactions, drive-thru service including drive-up ATM and night depository, safe deposit boxes and wealth management services. With the community as a main focus and priority, there is a large multi-purpose community room available for local partner and special event gatherings. Like every decision we make, each step toward the opening of Glenwood was made with the best interests of our members in mind. Please enjoy this minitour and please stop by for a look around. We look forward to seeing you!
Weâ€™re more than a place to bank. Weâ€™re a place to Belong.
As our way of saying thank you and to celebrate the opening of our Glenwood corporate headquarters and branch office, we decided to perform some random acts of kindness all around the Erie area throughout last year. It was a small way for us to give back to our community that has trusted us with their financial needs since 1936. We are continuing this â€œPay it Forwardâ€? initiative in 2018, hoping to have an even greater impact on the communities we serve.
MEMBERS SAY IT BEST! “Our experience with Erie FCU was terrific! When we set up our mortgage (first time homebuyers), we felt really comfortable – During the long process, they were warm and inviting; we weren’t just another number. Our loan Erie Federal Credit Union is proud to be recognized for our accomplishments in the Credit Union industry and our commitment to our members and the community. • Top 15 ranked Credit Union in Pennsylvania - Advisory HQ Advisory HQ based their top 15 ranking of Erie FCU on a number of factors, including advantages, benefits, and value-creating products and service that benefit the consumers they serve. • For the 5th consecutive year, Erie FCU was named “Erie’s Choice in Credit Unions” according to the Erie Times News “Erie’s Choice” awards. • In a competition that included both Erie area banks and Credit Unions, Erie FCU came out with top honors being voted “Erie’s Best Bank/Credit Union” by the readers of the Erie Reader Magazine.
officer was very professional answering all our questions and keeping us in the loop throughout. We also love the fact that Erie FCU invests in the community. They’re not in it just for their financial gain. We’re happy members of Erie FCU — that’s for sure.”
— Jon & Aubry D.
“Erie FCU has been there for my family and I for a long time. While my dad went back to handle business, I remember coming into the office and getting my favorite suckers and one of the employees asking me what college I wanted to go to. Now an adult, I’m still a member. Not because of the financial services they offer, but because I’m confident that when I walk into those doors I’ll be getting consultation from people who genuinely care about me on a personal level. Not a lot of institutions can say that in today’s society.”
7: 1 20 n I
! W O W $466 MILLION Membership grew to 56,835
Total assets were close to
Member deposits increased to
just over $411 MILLION Total loans grew to nearly
— Terry C.
“I have been an Erie Federal Credit Union member for approximately 40 years. About 20 years ago I discovered just how fortunate I was to be a member, when I found myself in the middle of an unexpected divorce. Even though I was in a financial tailspin the Credit Union stood by me ‘unconditionally’ and provided the necessary support to help me get back on my feet financially. Erie FCU is all about supporting its members and the Erie community and is evidenced by their beautiful new office built in the City center. They invest here while so many other businesses are leaving; it truly shows that Erie FCU cares about Erie.”
— Mary K. D.
At December 31, 2017
Success by the numbers Fred Tonty, CFO 2017 certainly was a challenging and exciting year as Erie FCU completed and opened up our new Glenwood Corporate facility and branch. Even with this massive undertaking, Erie FCU continues to show financial strength as income exceeded $2.5 million, which included accruing almost $550,000 for our first ever Patronage Bonus that will be paid out in January of 2018. Assets increased over $10 million as Erie FCU continues to expand its membership base in Erie and Crawford counties. Loans grew a robust 11.95%, far exceeding expectations as Erie FCU remains top of market in loan and deposit rates. Capital increased to 11.55%, well above NCUAs adequately capitalized threshold of 7%.
With the completion of the Glenwood project, Erie FCU will focus on various strategic initiatives as we look to add to additional products and/or services for the benefit of our membership in 2018. Erie FCU is well positioned financially to continue to improve delivery channels; as well as thrive in an increasing interest rate environment, which we have not seen since prior to the financial crisis in 2008. Our growth and financial strength can be attributed to the support of Erie FCUâ€™s 57,000+ members in Erie and Crawford County and we look to continue this in 2018 and beyond.
Year Ending December 31, 2017
Member Loans $ 252,530,214 $ 225,566,876 Allowance for Loan Losses (1,791,985) (1,695,964) Cash 9,659,825 10,408,765 Investments 173,278,397 193,421,441 Building/Equipment 22,595,001 19,138,800 All Other Assets 9,542,472 8,751,145 Total Assets $ 465,813,924 $ 455,591,063
Liabilities Member Savings $ 411,115,546 $ 404,063,151 Reserves 5,365,745 5,365,745 Unrealized Loss/Gain for AFS CMOs (578,893) (431,912) Undivided Earnings 48,458,571 45,901,774 Other Liabilities 1,452,955 692,305 Total Liabilities $ 465,813,924 $ 455,591,063
Earnings Loan Interest $ 12,277,797 $ 11,214,873 Income from Investments 3,382,070 3,244,219 Fee & Other Income 6,908,664 6,967,512 Total Earnings $ 22,568,531 $ 21,426,604
Interest Expense $ (58,977) Dividends Total Interest Expense
$ (2,975,361) $ (3,034,338)
$ (10,323) $ (2,522,576) $ (2,532,919)
Operating Expense Compensation, Taxes, Training $ 7,840,079 $ 7,603,340 Occupancy & Operation 3,829,161 3,482,349 Promotion & Education 607,297 694,120 Loan Processing 2,074,781 1,895,157 Outside Operation Service 904,517 863,367 Member Insurance 14,951 14,724 Federal Supervision 97,984 79,276 Other Expenses 1,608,626 1,521,534 Total Operating Expenses $ 16,977,396 $ 16,153,867
PERSONAL SERVICE. TRUSTED ADVICE. When it comes to making decisions about your financial future, you want a partner: an experienced, knowledgeable advisor who takes the time to understand your family’s unique needs and goals. That’s the Credit Union way. Designed exclusively for Credit Union members and located at Erie Federal Credit Union, Erie Advisors offers a variety of insurance, investment and retirement programs that complement traditional Credit Union savings plans.
Erie Advisors can assist you with: • 401(k) / 403(b) / Pension Rollovers
• Whole and Term Life Insurance
• Retirement Planning
• Disability Insurance
• Fixed, Variable and Immediate Annuities
• Managed Account Investing
Brandon Armella, Stacey Iadeluca and Larry Amenta
• Mutual Funds To get in touch with Financial Advisors Brandon Armella and Larry Amenta, contact Program Coordinator Stacey Iadeluca at 814-897-2500 or email to Stacey.Iadeluca@cunamutual.com Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. 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. CBSI is a registered broker/dealer in all fifty states of the United States of America. The representative may also be financial institution employee that accepts deposits on behalf of the financial institution. © 2017 CUNA Mutual Group
We Want to Connect with You!
Here at Erie FCU, we love connecting with our members! We invite you to follow us on Facebook, Instagram, LinkedIn and Twitter to stay up to date on the latest Credit Union news, promotions, and contests, as well as
community events and financial education resources. Credit Union members and consumers in general look to
In 2017, the Credit Union completed a major refresh of our
social media to both learn and to obtain service. During
website, eriefcu.org. It was designed with our member’s needs
calendar year 2017, Erie FCU’s Facebook page likes
in mind and is responsive on all devices (desktop, laptop, iPad,
grew by 18%; Instagram likes grew by 279%, LinkedIn by
or smart phone) making information streamlined and easier to
14% and Twitter followers increased by 5%.
access. The website project required many hours of development from Eric Brotherson and Ron Hickoff of our marketing department. They both did a great job working on the evolution and launch of the site.
We also intensified our efforts to effectively communicate with members and the communities we serve via email. In 2017, we sent more than 990,000 member email communications, which were opened 30% of the time.
The greatest adventure is what lies ahead. — J.R.R. Tolkien
Our Family of Branches to Serve You: 1109 East 38th Street 518 State Street
1005 Greengarden Road
5500 Zuck Road
2436 Buffalo Road
1220 West 32nd Street
101 Washington Towne Blvd. (Edinboro, PA)
1825 Downs Drive
3503 Peach Street
2017 Erie FCU Annual Report