2013 Annual Report

2 O 1 3

A N N U A L

R E P O R T

MAKING AN

MISSION STATEMENT First Community Credit Union is dedicated to providing the members of the community sound financial services in a personal, professional manner. The credit union is committed to the philosophy of “people-helping-people.�

2

Message from Chairman

4

Message from President/CEO

5

Statement of Financial Condition

6

Comparative Operating Statement

7

Financial Graphs

8

Audit Committee Report

9

Credit Committee Report

10

Real Estate Services

11

Business Services

12

HOUSTON TeXANS Partnership

13

Branch Operations

14

Houston Area Locations

15

Board of Directors and Senior Management

16

Credit Union and Branch Management

17 3

A MESSAGE FROM THE CHAIRMAN OF THE BOARD

A MESSAGE FROM THE PRESIDENT AND CEO

The state of Texas is booming in population growth and our local communities have added more than 125,000 people over the last year according to the US Census Bureau. This growth is adding to our growth as we expand the footprint of First Community Credit Union.

It is always a pleasure to report to the membership of First Community Credit Union on a successful year. With your help, we surpassed the 100,000 member mark in 2013 with a total membership of 103,122.

In June 2013, we opened our 18th branch location and our first location in Montgomery County. The Woodlands branch is located on FM 1488 on the north side of The Woodlands inside the HEB grocery store. It is at this location that we premiered our first Interactive Teller Machines moving ahead in technology and finding new ways to serve our members’ needs.

Technology provides opportunities for First Community Credit Union to deploy new ways to do business with us in a convenient manner. For example, 2013 marked the year we opened the deposit channel through the smart phone. By simply using our mobile app in our Online Banking program, members are able to take a picture of their check and make the deposit wherever they are, whenever it is convenient. In addition, First Community Credit Union is the first financial institution in the Houston market to introduce Interactive Teller Machines (ITMs). We opened our Woodlands location, the first in Montgomery County, in June 2013 and deployed two ITM units at that location. We committed to our members to continue growing technology in 2013 and we hit the mark.

In 2013, the membership of First Community Credit Union grew to 103,122 or 9.81% over 2012. This new growth equates to a net increase of 9,215 members. Likewise, we grew the assets of the credit union to $985.8 million which is a 7.8% increase. The auto industry experienced recovery and many buyers chose FCCU for their vehicle financing. Our indirect auto loan portfolio increased by 26.40% followed by our direct auto loan portfolio at 25.04%. Significant increases were also achieved in Real Estate Lending and Business Lending portfolios for an overall increase of 22.88% in gross loans.

Impacting our communities in positive, professional ways is important to the Board of Directors and management of the credit union. We are engaged with organizations that, like First Community, make a first-rate difference in people’s lives. We continued our partnership with the Houston Texans as the Official Credit Union and together brought programs to local schools that taught students financial literacy and honored teachers.

We expect 2014 will be a year of achieving new milestones and our Board of Directors, management and staff are positioned to bring new technology as well as first-class products and services to our members. We thank you for choosing First Community Credit Union and encourage you to use FCCU for all your financial needs!

Douglas Wilcher Chairman of the Board

We continue to be the preferred source by many in the community for lending. The auto industry had a remarkable year with many vehicles financed through First Community Credit Union. The increase in our gross loan portfolio in 2013 was 22.88%. The trust we have built on the consumer side is now evident on the business lending side as we saw an increase of 32.19% in our commercial loans. Whether personal or business, we want to be your first stop for loans that are very competitively priced.

Our member-owners are reaping the rewards of the impact we have on the community. We support a variety of organizations such as our schools, chambers of commerce and other non-profit organizations. Annually, we hold a food drive, two blood drives and a toy drive which are all very successful. This year, we added the Pink on Parade opportunity to help support breast cancer awareness. Thanks to the generosity of our members, we have seen growth in the contributions that are passed along to these groups.

As we continue to serve the communities of Harris, Fort Bend and Montgomery County, we look forward to additional technological upgrades and new ways to serve our members with a standard of excellence not commonly found today.

We thank our members for their business and for allowing us to make a first-rate difference in their financial lives.

Ron Downing President/CEO

4

5

STATEMENT OF FINANCIAL CONDITION ASSETS Cash Investments: Available for Sale Held to Maturity Other Investments Loans to Members, net Accrued Interest Receivable Investments Loans Other Receivables Prepaid and Other Assets Property and Equipment NCUSIF Deposit

TOTAL ASSETS LIABILITIES AND MEMBERS’ EQUITY Liabilities Members' Share Accounts Accounts Payable Accrued Liabilities

TOTAL LIABILITIES Members' Equity Regular Reserves Undivided Earnings Appropriated Undivided Earnings Accumulated Other Comprehensive Gain/Loss

TOTAL MEMBERS' EQUITY TOTAL LIABILITIES AND MEMBERS' EQUITY 6

COMPARATIVE OPERATING STATEMENT 2013

2012

$23,490,412

$64,420,486

219,407,516 0

244,293,614 0

9,359,441

5,689,839

683,951,528

555,763,188

548,760 2,072,865 4,197,846 7,912,291 26,616,888 8,244,748

686,984 1,822,717 3,936,878 3,545,433 26,570,174 7,625,358

$985,802,295

$914,354,671

2013

2012

$893,330,721 6,049,766 7,781,171

$827,603,641 6,453,734 6,391,038

$907,161,658

$840,448,413

13,213,020 62,829,009 4,552,291 (1,953,683)

13,213,020 55,579,263 4,535,259 578,716

$78,640,637

$73,906,258

$985,802,295

$914,354,671

2013

2012

$28,657,001

$26,718,515

3,260,596

3,452,280

$31,917,597

$30,170,795

3,996,771

4,600,385

27,920,826

25,570,410

1,661,000

1,535,000

$26,259,826

$24,035,410

15,054,334 2,948,342

13,967,401 2,497,376

$18,002,676

$16,464,777

19,345,675 14,643,726 2,346,743 659,580 0 0

17,289,266 13,727,845 2,269,445 724,409 100,172 95,783

$36,995,724

$34,206,920

$7,266,778

$6,293,267

Interest Income Interest on Loans to Members Interest on Investments and Cash Equivalents

TOTAL INTEREST INCOME Interest Expense Members’ Share and Savings Accounts Net Interest Income Provision for Loan Losses

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES Non-Interest Income Fees and Service Charges Other Non-interest Income

TOTAL NON-INTEREST INCOME NON-INTEREST EXPENSE Compensation and Benefits Office Operating Costs Education and Promotion NCUA Premium Assessment Other Other-than-Temporary Impairment on Investments

TOTAL NON-INTEREST EXPENSE NET INCOME

7

FINANCIAL GRAPHS

AUDIT COMMITTEE REPORT

ASSETS (millions)

Based on an in-depth independent audit of the operations of First Community Credit Union, the CPA firm of Orth, Chakler, Murnane, and Company concluded that in their opinion, the financial position of FCCU, the operations and the cash flow for the year ending December 31, 2013, conforms with generally accepted accounting principles and practices.

2009

$689.1

2010

$751.7

2011

$824.7

2012

$914.4

2013

$985.8

As a state chartered credit union, FCCU is additionally subject to a review by state examiners. First Community Credit Union has been found sound in both policy and practice during this annual audit. As such, FCCU continues to be Federally Insured by the National Credit Union Administration (NCUA).

MEMBERSHIP 2009

79,339

2010

Sally Moseley Chairman, Audit Committee

82,788

2011

86,227

2012

93,907

2013

103,122

GROSS LOANS (millions) $440.1

2009

$431.9

2010

$496.6

2011

$553.4

2012

$680.0

2013

DISTRIBUTION OF LOANS

New Auto 32.16%

8

Used Auto 30.53%

Commercial 13.34%

Real Estate 12.27%

Unsecured 10.25%

Other Loans 1.45%

9

CREDIT COMMITTEE REPORT

REAL ESTATE SERVICES

The purpose of the Credit Committee is to ensure core lending policies and practices are followed. During 2013, the credit union experienced sound growth in our lending portfolio as our rates stayed extremely competitive across the board.

“The Houston housing market had its best year on record in 2013 according to Houston Association of REALTORS (HAR). Strong gains in sales culminated in 73,232 singlefamily homes sold in 2013.” This allowed First Community Credit Union to partner with our members and assist many in achieving home ownership.

2013 was a strong year in lending. Collectively our Loan Officers reviewed more than 65,000 lending applications; of which, we funded $368.22 million throughout 2013. At the close of business on 12/31/13, our Gross Loans stood at $680.01 million. Below is the breakdown by loan type: • • • • • •

Credit Card Loans Direct Auto Loans Indirect Auto Loans Real Estate Loans Other Loans Business Loans

$ 45,419,327 $ 155,690,664 $ 270,613,592 $ 83,375,405 $ 34,204,787 $ 90,706,392

When members are in need of financing, we encourage them to think of their credit union First. Competitive rates, an online application process and quick closings are great reasons to turn to FCCU whenever the need arises in 2014.

Bob Schumacher Chairman, Credit Committee

10

Real Estate Services funded 377 real estate loans for a total of $56.30 million in 2013.

While there was a slight decrease in home equity type loans, the Real Estate lending portfolio closed out 2013 at $83.38 million, up from $76.1 million the prior year.

The first part of 2013 was a great time for members to refinance their home loans and take advantage of lower interest rates. With all lending decisions being made local, the experts in real estate lending were able to turn around many of these loans in 15-30 days. While many only think of first mortgages when talking about Real Estate, this group handles much more: Home Equity Loans, Home Equity Lines of Credit, Home Improvement Loans and other types of home lending to include Jumbo and Construction loans.

When you need to open the discussion on any type of real estate loan, head to FCCU.org/homeloans. The online application process is easy and is the best way to begin the process. Our Real Estate Services will make a positive impact as we guide you through the real estate lending process.

Steven O’Brien Vice President, Real Estate Services

11

BUSINESS SERVICES

HOUSTON TeXANS

Small business owners are at the heart of the communities served by First Community Credit Union. We recognize the level of local products and services they provide as well as the great number of individuals they employ. This leads to a better than average economy in the Greater Houston market.

Since 2005, we have offered small business loans and continue to support these small business owners by bringing to them the financing they need. Bold solutions are available by working with experienced staff members. Our Business Services Department has the experience and knowledge needed to guide small business owners to the right solution. Whether Commercial Real Estate loans, equipment or vehicle loans, we can help you assess your needs and understand the options available.

PARTNERSHIP

Even when the Houston Texans team struggles on the field, they shine in the community. This is why we partnered with them three years ago and continue the partnership. As we approached the 5,000 member mark in our exclusive Texans Checking Program, we continued to give back to the community through a variety of events.

Stars in the Classroom

During 2013, we funded $41 million in new business loans. This brought the total business loan portfolio to $90.7 million at the close of 2013 which represents 13.34% of all First Community Credit Union loan dollars.

We encourage business owners to think of us for all your business services needs as together we grow and impact our communities.

Elgin Weaver Vice President, Business Services TORO Shoots for the STAAR

Stars in the Classroom is a program that honors 10 heroes currently teaching in a public or private school in the Greater Houston Area. From the large number of student nominations we received, it was inspiring to hear how these teachers are making a difference in the classroom. Our First Community Credit Union Spokesman, Houston Texans Linebacker, Brian Cushing (#56) and his teammates, Wade Smith and Tim Jamison, surprised 10 winning teachers in their classroom with tickets to a game, a signed jersey and the announcement that they rock the classroom.

Additionally, TORO headed out to 50 elementary schools through the FCCU sponsorship to bring them some fun and put a spotlight on the importance of the STAAR test. These programs will continue in 2014 as they have had a tremendous impact on our schools at large.

Texans Checking members are automatically entered to win prizes all year long. Each week a winner is drawn at random to receive autographed merchandise such as an official autographed football or jersey. During the season, tickets to home games are given away along with trips to the Pro Football All Star Game in Hawaii and the Big Game of the Year recently held in New York/New Jersey. All Texans Checking members also get their choice of a Texans Visa速 Debit card to complement their checking account package.

More fun, drawings and exclusive offers will be awarded in 2014. We hope you will join us in cheering on the Houston Texans this next season.

Texans Field Day

12

GO TEXANS! 13

Grand Parkwa y9

(InStore)

Grand Grand Parway Parway 99 99

HWY 6

249

Alief Champions th ou 488 59 S Fairfield 1 Grand Parkway FM (In-Store) (In-Store) 242 Barker Cypress Sam Houston Jones North

uth

No

610 Loop

Copperfield Sienna Plantation (In-Store) Spring Branch

I-10 East

(Corporate Office)

Alief uth

610 Loop

So

45

59

Beltway 8

h ut

So

(In-Store)

No longer the best kept secret in Houston - First Community Credit Union, Making a First-Rate financial difference in our members’ lives!

Houston

59

d. nR

h

ut

so

So

Grand Parkway

249 Beltway 8

th

I-10 West

45

(In-Store)

Nor

Fry

45

Sam Houston

290 Sugar Land

Ma

Beltway 8

5

Barker Cypress (In-Store)

Grand Parkwa y 99

FM 1960

610 Loop

o 9S

rth

(In-Store)

Cinco Ranch

We still have money to loan and the capacity to help more people. We want to be the financial institution that all members recommend to their family members and friends.

Champions

AliefNorth Jones

(In-Store)

(In-Store)

I-10 East

(In-Store)

Spring Branch 249

20 29

(In-Store)

Katy Market

Sienna Plantation

Tomball

Grand Grand Parway Parway 99 99

No r th

d. nR Ma so

Grand Parkwa y 99

Copperfield

(In-Store)

Houston

Spring Market (In-Store)610 Loop

(Corporate Office)

Fairfield

Grand Parkway

h

FM

ut

Cinco Ranch

So

I-10 West

(In-Store)

45

Katy Market

Beltway 8

th

Fry

HWY 6

Community is more than just a part of our name. We sponsor an annual art contest for Spring Branch, Alief and Waller ISDs, hold youth seminars, offer a scholarship program, hold blood drives, toy and food drives. Financial education for the community is also an important factor in reaching out to those we serve. During 2013, we offered seminars on Preventing Identity Theft, Buying a Home, How to Make Your Auto Buying Experience EZ and Investing for Retirement.

In October 2013, we introduced Pink on Parade, a fundraiser specifically targeting breast cancer awareness.

249

The Woodlands 290 (InStore) Sugar Land

(In-Store)

Nor

(In-Store)

Beltway 8 45

(In-Store)

Grand Grand Parway Parway 99 99

610 LoopFM 1960

(In-Store)

59

Cinco Ranch 20 29 FM

HWY 6

Our focus in 2013 continued to be on quality services, easy to access loan products and most importantly technology. The combination of these items is why we celebrated the 100,000th member in 2013.

Spring Branch

CONVENIENT HOUSTON AREA LOCATIONS

The majority of the employees at First Community Credit Union are the ones you see in the Branches and on the front lines. We are proud to serve our communities and employ some of the brightest and best in the industry.

Every year we explore additional branch locations to serve the existing membership as well as expand our footprint within the Greater Houston market. In January 2013, we opened inside the HEB in Fairfield. This location is the furthest out the 290 corridor, a growing commercial and residential area. We applied for and received approval from the State Credit Union Department to add Montgomery County to our field of membership. In June, we opened inside the HEB on FM 1488 on the north side of The Woodlands. We also deployed new technology at this location with Interactive Teller Machines (ITM). First Community was the first in the Greater Houston market to use these teller units which provides teller services in a safe and convenient manner.

I-10 East

(Corporate Office)

Tomball I-10 West

(In-Store)

(In-Store)

Copperfield

(In-Store)

Katy Market

BRANCH OPERATIONS

610 Loop

Spring Market Fry

Sugar Land

Sienna Plantation (In-Store)

ACCESS WHEREVER YOU ARE TJ Tijerina Senior Vice President, Operations 14

Velsie Borja Senior Vice President, Operations

www.FCCU.org

Mobile Banking

55,000+ FREE ATMs

Nationwide Network

15

BOARD OF DIRECTORS

CREDIT UNION MANAGEMENT

Douglas Wilcher

Julie Eisenhauer

Jerald Till

Arlie Beckendorf

Term Expires: March 2014

Term Expires: March 2015

Term Expires: March 2016

Term Expires: March 2014

Chairman

Secretary

Vice Chairman

Treasurer

Sr. Vice President – Lending Sr. Vice President – Operations Sr. Vice President – Operations Vice President – Accounting Vice President – Audit & Compliance Vice President – Asset Recovery Vice President – Business Development Vice President – Business Services Vice President – Consumer Lending Vice President – Human Resources Vice President – Indirect Lending Vice President – Information Technology Vice President – Marketing & Development Vice President – Real Estate Vice President – Special Services Vice President – Staff Development

Don Mozingo T.J. Tijerina Velsie Borja Tricia Smith Matt Smith Mark Palomo Melinda Storrs Elgin Weaver Jill Vinson Amy Pupo Michael Hosen Jon Hartman Nancy Trennel Steven O’Brien Karon McMahan Jody Kohlmaier

BRANCH MANAGEMENT Rob Hauck

Sally Moseley

Robert Schumacher

Term Expires: March 2014

Term Expires: March 2015

Term Expires: March 2016

Director

Director

Director

SENIOR MANAGEMENT

Ron Downing CEO/President

16

Cheryl McCullough CDO/Executive Vice President

David Pittman

COO/Executive Vice President

Keith Domingue

CFO/Executive Vice President

Rito Garza

CIO/Executive Vice President

Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice Vice

President President President President President President President President President President President President President President President President President President President President

– – – – – – – – – – – – – – – – – – – –

Alief Barker Cypress Call Center Champions Cinco Ranch Copperfield Fry Road Fairfield Jones North Grand Parkway Katy Market Sam Houston Sienna Plantation Spring Branch Spring Market Sugar Land Tomball The Woodlands Branch Operations Branch Operations

Joy Stuart Melissa Walls Stefanie Addis Jamie Drohan Eric Peterson Arthur Gordon Jenny Lau Andrew Meese Cynthia Stephenson Alex Barrero Alex Samoilov Ed Dobranich DeAndre Massey Larry Pugh Kelly Fay Lana Huff Mark Vinson Chris Gagne John Littler Yesi Gonzales 17

OUR 60TH ANNIVERSARY As we look ahead to 2014, we are excited to celebrate our 60th anniversary. We are proud to have started in 1954 through the dedication of the employees of Spring Branch ISD who had the vision to start their own credit union. We continue to serve the Spring Branch Community as well as other parts of the Greater Houston Area. Throughout 2014, join us as we celebrate our success because of you – our members.

Technology will play a big role in FCCU in 2014. We will deploy an updated Online Banking system with a new and modern, yet simplified look and feel. This new system will offer individual custom options at the user level. Text banking, deposits through taking a picture with your smart phone and easy online loan requests will continue to connect our members to their finances from anywhere at any time.

We extend our thanks to the Houston Communities we have served for 60 years and we look forward to continuing to serve all your financial needs in the years ahead.

First Community Credit Union of Houston’s legal name is now First Community Credit Union.

281.856.5300 | FCCU.org