2015 HUECU Annual Report

2015 A N N UA L R E P OR T

H A RVA R D U N I V E R SI T Y E M PL OY E E S C R E DI T U N ION

Our Vision

Harvard University Employees Credit Union aspires to be a trusted partner in our members’ financial lives. We add value to membership by offering the best possible price, the highest quality personal service, and sincere, sound advice.

We seek to be known as a community leader and to deepen our long standing commitment to housing issues, green initiatives, financial literacy and access to credit for low and moderate income borrowers.

We work toward transformational growth and change without relinquishing the core values we hold today. We are a not-for-profit cooperative which exists solely for the best interest of our members.

We value integrity and responsibility in all of our actions. We strive to enhance our communities and create solutions for social, environmental and economic issues.

Highlights

2,342 NEW MEMBERS NET 2015

5.4%

45,761 TOTAL MEMBERS YEAR END 2015

MEMBERSHIP GROWTH

JULY 2015

Surpassed $500 million in assets 1940

3 2

2015

15 NEW EMPLOYEES

PROMOTIONS

HUECU ANNUAL REPORT

New Branch In August of 2015, the HUECU Harvard Square branch moved across the square. Our new location at 104 Mount Auburn Street offers the same great service you’ve come to expect along with an updated banking experience.

The CO-OP Shared Branch Network Surpasses Bank of America in Number of Branches What’s New

ST U DEN T LOA N R EFINA NCING

FR EE CR EDI T SCOR E ACCESS

R E A L ESTAT E A DVA N TAGE PROGR A M

EM V SEC U R I T Y

A PPL E PAY

ON L IN E BA N K ING U PDAT E

ArtLifting

Furthering our partnership with this local non-profit, our new Harvard Square branch proudly displays their artwork throughout the facility. ArtLifting was founded by a Harvard graduate and aims to empower disabled and homeless artists through the sale of their work.

2015

3

Report from the Chairman & CEO George White Chairman of the Board

Eugene J. Foley President & CEO

Harvard University Employees Credit Union made history in 2015, surpassing the $500 million mark in total assets for the first time since our founding in 1939. This milestone was a powerful testament to our commitment to provide trustworthy products and services that help our members achieve financial security and independence.

A MIL E STONE Y E A R

S TAT E OF T H E I N DU S T RY Nationwide,

A Y E A R OF S UC C E S S Across the board

the credit union industry experienced a noteworthy

performance was HUECU’s hallmark in 2015.

2015, continuing recent trends of strong performance,

Overall assets increased by 8%, ahead of the national

expansion and realignment.

average, with a year-end total of $516 million.

Overall asset growth was a robust 7.1%, with total assets of U.S. credit unions at more than $1.28 trillion

Membership growth was also strong, as we rode a

at the end of the year. Loan balances grew by 10.2%,

5.4% increase to reach a new high of over 45,000

marking the second consecutive year of double-

total members. Callahan & Associates, the leading

digit growth, something which has not happened in

market intelligence firm for the industry, listed us in

more than a decade. U.S. credit unions also outpaced

the top 1% for membership growth over the last five

membership growth forecasts, picking up an impressive

years for all U.S. credit unions regardless of assets or

3.8 million new members. Almost one of every three

membership size.

U.S. residents is now a member of a credit union.

Consolidation, another recent trend, showed no signs of slowing. The total number of U.S. credit

A R E N E W E D C OM M I T M E N T T O SE RV IC E HUECU redoubled our commitment to enhancing our members’ financial

unions decreased by nearly 5%, as smaller institutions

well-being as we launched a number of new

continued to struggle with lower net interest margins

products and services.

and growing competitive pressure to meet member demands for more products, services and access channels.

4

Earnings performance was solid.

HUECU ANNUAL REPORT

To help not only those who are looking to establish credit, but also those seeking to repair or rebuild a less-than-perfect

Community

credit history, we launched the Credit Builder Loan program.

In partnership with Harvard University, the program pairs

THINK PINK

loan services with financial counseling, instruction in budgeting and reading credit reports, and action plans that will help keep our members’ financial lives on track over the long term.

To further help our members manage and understand their personal finances, we debuted the FICO Open Access

HUECU’s Think PINK campaign was a great success. Over $1,000 was raised to support breast cancer research conducted at Dana-Farber, MGH, and Mount Auburn Hospitals.

program, which provides members free access to their FICO credit scores both online and via their monthly credit card

MG H H A L L OW E E N PA R A DE

statements. HUECU is one of the few credit unions to offer access to their credit scores without charge.

We also launched our Low-to-Moderate Income Mortgage program, which provides a new path to home buying for anyone where home-ownership has traditionally not been an option. Ensuring that all our members have the ability to experience financial freedom and security is one of HUECU’s core values.

The MGH pediatric nurses held a trick-or-treat parade for children at the hospital unable to go trickor-treating on Halloween night.

HUECU MGH branch employees joined the parade and gave out candy to children ranging in age from 3 to 13.

C L E A N T H E S QUA R E

The Credit Union continues to serve our unique community through counseling and financial literacy programs. The BALANCE Financial Fitness program offers budget and debt-management advice through one-on-one counseling sessions, as well as access to a wide range of online financial resources. HUECU also sponsors group workshops ranging from home buying to personal budgeting. For students, the Credit Union offers a Personal Financial Management Seminar for Harvard undergrads during Wintersession, that is designed to help students learn about disciplined budgeting, the building blocks of financial independence, personal credit management, taxes, insurance and even saving for retirement.

P E OP L E A R E OU R S T R E NGT H As our reputation for value and integrity continues to grow in the communities we serve, our record-setting growth and industry-leading financial performance demonstrate that our message

HUECU employees volunteered for Earth Day in Harvard Square.

This community effort involved emptying trash barrels, raking up debris, and removing stickers as part of the Harvard Square Business Association’s Earth Day Clean Up initiative.

C A R D S F OR K I D S AT C N Y HUECU hosted an event at our CNY branch where staff and community members designed handmade cards to be donated to area hospitals. Over 100 cards were made and delivered to the Spaulding Rehabilitation Hospital, Shriners Hospital for Children, and the Dana Farber Cancer Institute.

and programs are resonating with members. All of us at HUECU attribute our exceptional financial performance to sound business practices, innovative growth strategies, the dedication and talent of our exceptional staff and Board, and the loyalty of our over 45,000 members.

The continued growth in our membership and our asset base is a strong sign that we have emerged from difficult times as a shining example of what a service-focused financial

C H A L K ON T H E WA L K HUECU members and staff volunteered their artistic talents for Chalk on the Walk at the Harvard Square MayFair annual fundraiser. HUECU won the People’s Choice Award, based on the votes submitted by thousands of visitors who attended the fair.

institution can offer its members.

2015

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By the Numbers HOME LOA NS

HEL OC B A L A NCE S

201 3

$9.6

201 4

$1 5. 1

201 5

$17. 3

MILLIONS

139

MORT G AGE S T O F IR S T-T I M E HOM E BU Y E R S

ST U DEN T LOA NS

ST U DEN T L OA N B A L A NCE S

201 3

$6 3.6

201 4

$74.7

201 5

$ 8 4.4

HUECU ANNUAL REPORT

TR

IBUT

I

N

6

55%

IS

O

D OM E S T IC GR A D S T U DE N T S

D

MILLIONS

45%

IN T E R NAT IONA L GR A D S T U DE N T S

2015 CHECK ING

CHECK ING ACC OU N T B A L A NCE S

201 3

$7 1 .9

201 4

$78. 1

201 5

$90.0

MILLIONS MOB I L E C H E C K DE P O S I T S

29,157

$16,748,301

CHECKS

DE P O SI T E D

CREDI T C A RDS

CR EDI T C A R D B A L A NCE S

201 3

$26.7

201 4

$ 31 . 5

201 5

$ 33. 1

MILLIONS

30,327,590 R E WA R D S P OIN T S R E DE E M E D

2015

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Report from the Treasurer

John T. Lichten Treasurer

The Credit Union continued to perform strongly, posting another year of solid earnings.

Assets increased by 8%, with a year-end total of $516 million.

Positive growth was realized in all areas of the Credit Union; membership, loans, and deposits. Loan quality remained high within all loan product segments.

As reflected in the unaudited financial statements, the Credit Union continues to be a well-capitalized, financially strong institution where members can feel confident saving and borrowing.

The Board, Management and Staff are to be commended for their contributions to our success.

DEPOSITS OVER 5 YEARS

LOANS OVER 5 YEARS

IN MILLIONS

IN MILLIONS

$500

$500

$400

$400

$300

$300

$200

$200

$100

$100

2011

2012

2013

2014

2015

2011

2012

2013

2014

2015

4%

22%

CHECKING

6%

4%

AUTO LOANS

8%

SECOND MORTGAGES

IRAs

CREDIT CARDS

4% OTHER

12%

CERTIFICATES

8

27%

DEPOSIT DISTRIBU TION

MONEY MARKETS

LOA N DISTRIBU TION

20%

STUDENT LOANS

35%

58%

SHARES

FIRST MORTGAGES

HUECU ANNUAL REPORT

Statement of Condition

SEL EC T ED DATA IN M IL L IONS

ASSETS

2015

2014

Cash & Cash Equivalents

36.4

31.6

Investments

57.4

70.7

408.4

362.7

Property & Equipment, net

2.5

1.7

National Credit Union Share Insurance Fund Deposit

4.2

4.0

Other Assets

7.0

5.7

Total Assets

515.9

476.4

Members’ Shares

459.0

428.8

Borrowed Funds

5.0

0.0

7.1

7.0

471.1

435.8

Retained Earnings, Substantially Restricted

44.9

40.6

Accumulated Other Comprehensive Income

-0.1

0.0

Total Members’ Equity

44.8

40.6

515.9

476.4

Loans to Members, net

LIABILITIES & MEMBERS’ EQUIT Y Liabilities

Accrued Expenses & Other Liabilities Total Liabilities Members’ Equity

Total Liabilities & Members’ Equity

Statement of Income

SEL EC T ED DATA IN M IL L IONS

INTEREST INCOME

2015

2014

19.6

17.7

-1.1

-1.2

Loan Loss Provision

-0.9

-1.4

Net Interest Income After Provision for Loan Losses

17.6

15.1

4.5

4.2

-17.8

-15.9

4.3

3.4

Interest Income from Loans & Investments Interest Expense for Members’ Accounts & Borrowed Funds

Other Income Operating Expense Net Income

2015

9

Report from the Audit Committee

Karrie Ford Committee Chair

The Audit Committee is composed of five Directors dedicated to ensuring that the Credit Union’s actions are held to the highest standards of integrity and value.

Throughout 2015, the Committee met regularly to

Reimbursements to Board Directors, including other

review the monthly financial statement and audit

general expenses associated with Board meetings,

reports, as well as to discuss other operational topics

conferences, trainings, committee meetings and

of interest. We were assisted in our efforts by external

planning sessions within 2015 totaled $32,491. No

firms that provide audit support of the Credit Union’s

reimbursable expenses were attributed to the Credit

finances and internal controls. Wolf & Company, P.C.,

and Audit Committees. All Board Director expenses

audits our financial statements.

and reimbursements were made in compliance

Internal audits continued to receive significant attention during 2015. Healy & Healy, our partnered firm, performed internal audits throughout the

with the regulations of the National Credit Union Administration and the Massachusetts Division of Banks.

year to test Credit Union procedures and controls in

The Committee wishes to thank the Credit Union

branch operations, wire transfers, deposit operations,

management for their cooperation, support and

mortgages and student loans, amongst other areas. The

assistance throughout the year.

Committee reviewed their findings and management’s responses, and continues to actively work with management on suggested areas for strengthening our processes and mitigating risk.

Committee Members

Guillermo Banchiere

Mark Edington

James Barrows

Karrie Ford

Dee Dee Chen

10

HUECU ANNUAL REPORT

Officers

Eugene J. Foley President & CEO

Craig Leonard Executive VP, CFO

Peter Buchanan SVP, Real Estate Lending

John Degnan SVP, Operations

Tom Murphy SVP, Consumer Lending

Board of Directors

Guillermo Banchiere Since 2007

Jim Barrows Since 2015

Dennis Campbell Since 2013

Dee Dee Chen Since 2015

Ann Dexter Since 2015

Edward Doctoroff Since 1979

Mark Edington Since 2013

Karrie Ford Since 2014

Cheryl Hutt Since 2013

John Lichten Treasurer Since 1992

Thomas Lucey Since 2006

Jason Luke Since 2014

Jeremiah Murphy Vice Chair Since 2003

Mary Straub Clerk Since 2004

George White Chairman Since 1999

2015

11

12

HUECU ANNUAL REPORT

Thank You We would like to thank all of our sponsor organizations for their continued support and participation in the Credit Union.

Our Sponsors The Harvard University Employees Credit Union is proud to offer our services to the employees, students and alumni of Harvard University, Harvard teaching hospitals and affiliated organizations.

American Repertory Theater

Harvard Management Company

Beth Israel Deaconess Medical Center

Harvard/M.I.T. Cooperative Society

Boston Children’s Hospital

Harvard Pilgrim Health Care

Boston Shriners Hospital

Harvard–Smithsonian Center for Astrophysics

Brigham and Women’s Hospital Cambridge Hospital/ Cambridge Health Alliance The Center for Blood Research Dana Farber Cancer Institute Dumbarton Oaks Research Library Episcopal Divinity School Harvard Business School Publishing

Harvard University Harvard Vanguard Medical Associates Joslin Diabetes Center

Massachusetts Mental Health Center McLean Hospital Medical Academic and Scientific Community Organization MGH Institute of Health Professions Mount Auburn Hospital Radcliffe Institute for Advanced Study

Judge Baker Children’s Center

The Schepens Eye Research Institute

Lesley University

Spaulding Rehabilitation Hospital

Massachusetts Eye and Ear Infirmary

Veterans Administration Boston Healthcare System

Massachusetts General Hospital/ Partners Health Care System

WGBH Boston

2015

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617.495.4460 huecu@harvard.edu @myHUECU facebook.com/myHUECU

H U EC U.ORG

OU R M I S S ION

Enhance our members’ lives by providing trustworthy products that are easy to understand, easy to use and best suited to meet their financial needs.

Your savings are federally insured to at least $250,000 and backed by the full faith and credit of the United States Government.