2017 HUECU Annual Report

2017 A N N UA L R E P OR T

H A RVA R D U NI V ERSI T Y EMPL OY EE S CR EDI T U NION

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

A RECORD-SETTING YEAR

1,692

48,899

4%

NEW MEMBERS NET 2017

TOTAL MEMBERS YEAR END 2017

MEMBERSHIP GROWTH

Surpassed $635 million in assets 1940

18

1950

1960

1970

1980

1990

2000

2010

2017

NEWLY CREATED POSITIONS

1,565,200 HUECU ANNUAL REPORT

10

PROMOTIONS

CUMULATIVE HOURS OF WORK EXPERIENCE

4%

GENERATION Z (1996 – 2 010)

33%

MILLENNIALS (1980 – 1 995)

7%

HUECU members by

THE SILENT GENERATION (1925 – 1 945)

GENER ATION

28%

28%

GENERATION X (1965 – 1 979)

BABY BOOM GENERATION (1946 – 1 964)

STUDENT LOA NS

FINA NCI A L W ELLNESS

COMMUNIT Y IN V ESTMENT

SERV ICED LOA NS TO 27 DIFFER EN T SCHOOLS IN 10 STAT ES.

1 47 FINA NCI A L W EL L N ESS PR ESEN TAT IONS GI V EN. 2,852 COM MU N I T Y MEMBERS AT T EN DED.

5 SCHOL A RSHIPS AWA R DED TO LOC A L HIGH SCHOOL SEN IORS.

249,791

BR A NCH T R A NS AC T IONS

80,578

CON V ERS AT IONS W I T H T HE CON TAC T CEN T ER

2017

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

Eugene J. Foley President & CEO

In 2017, Harvard University Employees Credit Union continued to shatter records. We reached $635 million in total assets, a pinnacle for HUECU, while our mortgage servicing portfolio hit an all-time high of $647 million.

These unprecedented achievements, along with vigorous growth in membership and products, are testament to the top quality benefits HUECU continues to provide to the communities we serve.

A NOT HER R ECOR D -SET T ING Y E A R

S TAT E OF T H E I N DU S T RY Across the nation,

total of $635 million by the end of the year, with solid

the credit union industry built on three years of strong

earnings performance.

performance to reach new milestones in 2017.

Meanwhile, our mortgage servicing portfolio hit

Overall assets experienced a robust growth of 6.8%,

an all-time high of $647 million. More than 700

with total assets of U.S. credit unions at more than

community members started their home buying journey

$1.36 trillion by the end of the third quarter in 2017.

by attending one of our workshops. First mortgage

Loan balances rose by 10.6%, marking four consecutive

originations for the year climbed to $208.6 million, a

years of double-digit growth—something we haven’t

growth of 15% year-over-year. Purchases rose by 27%,

seen since 1988, nearly 30 years ago. Credit union

which helped overcome a slow-down in refinancing

membership in the U.S. also saw robust growth, with 4.3

activity. These strong performances, along with a 4%

million new members joining a credit union by the end

membership growth, demonstrate that our community

of the third quarter in 2017.

continues to find significant value in products and

The total number of U.S. credit unions continued to

services offered by HUECU.

decrease in 2017, albeit not as quickly as the year before.

E VOLV I NG A N D E X PA N DI NG OU R

Falling by 3.7%, the year-over-year decline is consistent

SE RV IC E In 2017 we further developed several

with long-running industry consolidation trends.

member benefits and expanded our footprint to help

R E A C H I NG N E W M I L E S T ON E S In 2017 we

our members meet their financial goals.

saw record-breaking performance across the board.

In April of 2017, HUECU opened a new full-service

Overall assets grew by a remarkable 11.3% to reach a

branch in the Partners HealthCare facility at Assembly

HUECU ANNUAL REPORT

Row in Somerville, MA. This was an exciting opportunity to come together with Partners HealthCare, the largest private employer in Massachusetts, and better serve our members.

Partners HealthCare is a not-for-profit health care system that is committed to patient care, research, teaching, and service to the community. Several of the group’s hospitals are teaching affiliates of Harvard Medical School, and Partners is a national leader in

community C A R D S F OR K I D S For the third year in a row, HUECU gathered the community at Partners HealthCare to craft cards and create messages of inspiration for hospitalized children at Boston Shriner’s Hospital for Children, Boston Children’s Hospital, Dana Farber Cancer Institute, MGH Hospital for Children, and Spaulding Rehabilitation Hospital.

biomedical research. The new full-service branch along with an ATM serves the 4,500 employees that reside in the new building.

The Partners HealthCare departments in the new facility serve key support functions including finance, human resources, information systems, communications, legal, and more.

We are also continuing to support members’ financial wellbeing

B O S T ON T O Y S F OR T O T S DR I V E HUECU partnered with the U.S. Marine Corps Reserve to collect toys to distribute to less fortunate children during the holidays. HUECU joins fellow credit unions in the Boston area as one of the largest contributors to the Toys for Tots organization.

through counseling and education initiatives. In 2017, the Credit Union awarded five deserving high seniors with an $1,000 HUECU

T H I N K P I N K C A M PA IG N

scholarship. HUECU is proud to invest in the futures of its

In support of National Breast Cancer Awareness Month, HUECU staff and members joined together in October to raise funds for research conducted at Dana-Farber, MGH, and Mount Auburn Hospitals.

young members by providing scholarship awards towards higher education for the first time.

In HUECU’s own financial literacy workshops, we are making good on our promise to be a trusted partner in the community

C H A L K T H E WA L K

for financial services and advice. Last year HUECU hosted over

Once again, HUECU volunteered their artistic abilities at Harvard Square’s annual MayFair fundraiser. This year over $22,000 was raised for local charities and scholarships in support of children’s welfare, clean water projects, global healthcare and more.

140 workshops that were attended by 2,850+ members of our community on a variety of topics including the home buying process, financing college, establishing or repairing credit, creating a personal budgeting, and how to save money. Additionally, over 1,300 of our members took advantage of calling the free financial counseling service we provide.

A C K NOW L E D GI NG T H E H U E C U T E A M Exceptional service, delivered with quality and integrity, is a long tradition for HUECU — one that would be impossible without the talent and dedication of our staff.

As we work toward yet another year of growth, HUECU will continue to enhance our members’ lives and financial wellbeing through sound business practices, innovative development strategies, our hardworking staff and Board, and of course, the loyalty of our over 48,000+ members—for whom we will continue to provide sincere, best-in-class service.

CREDIT UNION COMMUNITY HOPE BOOK DRIVE HUECU worked with the Cooperative Credit Union Association’s charitable partner, the Massachusetts Coalition for the Homeless, to collect and distribute children’s books to non-profit agencies in cities and communities across Massachusetts. HUECU collected 190 books this year!

E A R T H DAY, C L E A N T H E S QUA R E Changing the world starts by changing our own little corner of it. HUECU volunteered with other members of the Harvard Square Business Association at their Earth Day Clean Up initiative. Our team assisted in sweeping over 75lbs of trash while raising Earth Day awareness.

B O S T ON M A R AT HON TEAMS For the 121st annual Boston Marathon, HUECU was honored to support the initiatives of several local marathon teams from the communities we serve.

Funds were raised in support of teams from Harvard College, MGH, Dana-Farber, Mount Auburn Hospital and Spaulding.

2017

By the Numbers HOME LOA NS

MORTGAGE OR IGINAT ION

201 5

$1 21 . 3

2016

$1 81 .6

2017

$208.7

MILLIONS

268

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

713

OF OU R M E M BE R S S TA RT E D T H E IR HOM E BU Y ING JOU R N E Y WITH US

ST U DEN T LOA NS

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

201 5

$ 8 4.4

2016

$95.9

2017

$10 4.0

MILLIONS

$ 4.5

MIL L ION

S T U DE N T L OA NS R E F INA NC E D

HUECU ANNUAL REPORT

2017 CHECK ING

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

201 5

$90.0

2016

$9 9. 2

2017

$1 10.9

MILLIONS

5,142 MOBIL E C H E C K DE P O SI T U SE R S

CREDI T C A RDS

CR EDI T C A R D SPEND

201 5

$1 22 . 5

2016

$1 26.0

2017

$1 33.9

MILLIONS

9,003,027 R E WA R D S P OIN T S E A R N E D

2017

Report from the Treasurer

John T. Litchen Treasurer

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

Assets increased by 11%, with a year-end total of $635 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

2013

2014

2015

2016

2017

2013

2014

2015

2016

2017

4%

23%

CHECKING

6%

3%

AUTO LOANS

7%

SECOND MORTGAGES

IRAs

CREDIT CARDS

2% OTHER

12%

CERTIFICATES

26%

DEPOSIT DISTRIBU TION

MONEY MARKETS

LOA N DISTRIBU TION

19%

STUDENT LOANS

36%

62%

SHARES

FIRST MORTGAGES

HUECU ANNUAL REPORT

Statement of Condition

SEL EC T ED DATA IN M IL L IONS

ASSETS

2017

2016

Cash & Cash Equivalents

33.8

35.9

Investments

39.4

45.1

545.3

476.8

Property & Equipment, net

1.7

2.3

National Credit Union Share Insurance Fund Deposit

4.8

4.4

Other Assets

10.0

7.8

Total Assets

635.0

572.3

Members’ Shares

525.8

493.2

Borrowed Funds

39.0

18.0

Accrued Expenses & Other Liabilities

12.6

10.7

577.4

521.9

Retained Earnings, Substantially Restricted

57.8

50.4

Accumulated Other Comprehensive Income

-0.2

0.0

Total Members’ Equity

57.6

50.4

635.0

572.3

Loans to Members, net

LIABILITIES & MEMBERS’ EQUIT Y Liabilities

Total Liabilities Members’ Equity

Total Liabilities & Members’ Equity

Statement of Income

SEL EC T ED DATA IN M IL L IONS

INTEREST INCOME

2017

2016

Interest Income from Loans & Investments

25.2

21.7

Interest Expense for Members’ Accounts & Borrowed Funds

-1.9

-1.2

Loan Loss Provision

-1.5

-1.2

Net Interest Income After Provision for Loan Losses

21.8

19.3

6.5

5.4

-20.8

-19.3

7.5

5.4

Other Income Operating Expense Net Income

2017

Report from the Audit Committee

Dee Dee Chen 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 2017, the Committee met regularly to

Reimbursements to Board Directors, including other

review the monthly financial statements 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 are assisted in our efforts by external

planning sessions within 2017 totaled $114,208.

firms that provide audit support of the Credit Union’s

Reimbursable expenses of $169 were attributed to the

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

Credit Committee, and no reimbursable expenses to

audits our financial statements.

members of the Audit Committee occurred. All Board

Internal audits continued to receive significant attention during 2017. Healy & Healy, our partnered firm, performed internal audits throughout the year to test Credit Union procedures and controls in

Director expenses and reimbursements were made in compliance with the regulations of the National Credit Union Administration and the Massachusetts Division of Banks.

branch operations, wire transfers, deposit operations,

The Committee wishes to thank the Credit Union

mortgage and student loans, among other areas. The

management for their cooperation, support and

Committee reviewed their findings and management’s

assistance throughout the year.

responses and continues to actively work with management on suggested areas to strengthen our processes and mitigate risk.

Committee Members

Guillermo Banchiere

Karrie Ford

Jim Barrows

George White

Dee Dee Chen

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 Montilli SVP, Chief Marketing & Retail Officer

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

April D. Edrington Since 2016

Karrie Ford Since 2014

John Lichten Treasurer Since 1992

Thomas Lucey Since 2006

Jason Luke Since 2014

Jeremiah Murphy Vice Chair Since 2003

Susan G. Simon Since 2017

Mary Straub Clerk Since 2004

George White Chairman Since 1999

Shahar Ziv Since 2016

2017

HUECU ANNUAL REPORT

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

Our Partners 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

McLean Hospital

Beth Israel Deaconess Medical Center

Harvard/M.I.T. Cooperative Society

Medical Academic and Scientific Community Organization

Boston Children’s Hospital

Harvard Pilgrim Health Care

Boston Shriners Hospital

Harvard–Smithsonian Center for Astrophysics

MGH Institute of Health Professions

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

Mount Auburn Hospital

Harvard University

Partners HealthCare System

Harvard Vanguard Medical Associates

Radcliffe Institute for Advanced Study

Joslin Diabetes Center

The Schepens Eye Research Institute

Judge Baker Children’s Center Lesley University Massachusetts Eye and Ear Infirmary Massachusetts General Hospital

Spaulding Rehabilitation Hospital Veterans Administration Boston Healthcare System WGBH Boston

Massachusetts Mental Health Center

2017

617.495.4460 huecu@harvard.edu @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.