HUECU 2018 Annual Report

2018 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

875

49,774

2%

NEW MEMBERS NET 2018

TOTAL MEMBERS YEAR END 2018

MEMBERSHIP GROWTH

Surpassed $732 million in assets 1940

19

1950

1960

1970

1980

1990

2000

2010

2018

NEWLY CREATED POSITIONS

1,685,325 HUECU ANNUAL REPORT

11

PROMOTIONS

CUMULATIVE HOURS OF WORK EXPERIENCE

4%

GENERATION Z (1996 – 2 010)

34%

MILLENNIALS (1980 – 1 995)

6%

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 41 DIFFER EN T SCHOOLS FROM MEMBERS IN 49 DIFFER EN T STAT ES.

3 ,2 42 COM MU N I T Y MEMBERS AT T EN DED A PERSONA L FINA NCE CL A SS HOST ED

BY H U EC U.

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

237,146

BR A NCH T R A NS AC T IONS

79,474

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

2018

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

Eugene J. Foley President & CEO

In 2018, Harvard University Employees Credit Union continued to shatter records. We reached $732 million in total assets, a pinnacle for HUECU, while our mortgage servicing portfolio hit an all-time high of $789 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 Banks and

R E A C H I NG N E W M I L E S T ON E S In 2018 we

credit unions have long been subject to disruptive

saw record-breaking performance across the board.

technologies, shifts in government regulations and

Overall assets grew by a remarkable 15% to reach a

tax codes, inflation rates, economic policies, and

total of $732 million by the end of the year, with solid

more. Across the nation, the credit union industry

earnings performance.

experienced another year characterized by major changes and another year of strong performances.

Our mortgage servicing portfolio hit an all-time high of $789 million. More than 700 community members

New digital solutions and automation have helped the

started their home buying journey by attending one

industry increase productivity and improve member

of our workshops designed for first time home buyers.

experiences.

First mortgage originations for the year amounted to

Overall assets experienced a robust growth of 6.5%, with total assets of U.S. credit unions at more than $1.45 trillion by the end of the third quarter in 2018. Loan

$201.3 million, while purchases rose by 14%, which helped overcome a continued slow-down in refinancing activity.

balances rose by 9.0%. Credit unions in the U.S. also

HUECU continues to strengthen its commitment to

saw a robust 3.5% growth in new members by the end

higher education by ensuring students and families

of 2018.

within the Harvard community have access to

The total number of U.S. credit unions continued to decrease in 2018, albeit not as quickly as the year before.

Falling by 2.4%, the year-over-year decline is consistent with long-running industry consolidation trends.

HUECU ANNUAL REPORT

affordable educational loans, and the resources to help make smart borrowing decisions. This year, our educational lending hit an all-time high of $45.9 million in new loans. This is a result of innovation in our

graduate student loan programs, significant improvements to our online applications, and a focus on the member online experience.

In addition, the Educational Lending team has grown, allowing HUECU to invest additional time and resources in educating members on debt management, counseling and outreach initiatives.

These strong performances, along with a 2% membership growth, demonstrate that our community continues to find significant value in products and services offered by HUECU. E VOLV I NG A N D E X PA N DI NG OU R S E RV IC E In 2018 we further developed several benefits to help our members meet their financial goals.

We continue to be deeply committed to helping students reach their financial and academic goals. In 2018, we awarded five $1,000 scholarships to deserving high school students preparing to start their first year of college. We are proud to invest in the future of our young members by supporting their higher education goals.

As a community partner, we seek to provide students with handson experience that will prepare them to excel as thoughtful, balanced community and business leaders. With that goal in mind, in the fall of 2018 we launched a new undergraduate student group called the Student Advisory Council that aides us in our pursuit of campus-wide financial wellness. The inaugural cohort is consulting with us on our financial education programming, university engagement events, and student banking services.

Moreover, through harnessing emerging technology and digital communication channels, our free financial education is reaching more community members than ever before. Last year, we led or contributed to over 150 workshops, seminars, and talks that were

community E A R T H DAY, C L E A N T H E S QUA R E Our employees joined other members of the Harvard Square Business Association in spring cleaning the square on Earth Day. Trash was swept from the streets, garbage bins were powerwashed, and walls were primed for colorful murals.

Y2Y YOU T H S H E LT E R A N D T O Y DR I V E Over the holidays, employees donated winter clothing, nonperishable food, and over three dozen children’s toys to the Y2Y Youth Shelter run by students from Harvard College.

Additional funding was raised to cover gas money for the toy distribution van, as well as fresh meals, laundry services, and cleaning supplies inside the shelter.

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

J E A N S F OR T H E J I M M Y F U N D Together we celebrated the start of Boston’s baseball season at work, while also supporting critical cancer research and patient care at Dana-Farber Cancer Institute. Our employees rallied to support the Jimmy Fund by donating and wearing jeans on Opening Day at Fenway Park.

F E N WAY C OM M U N I T Y DE V E L OPM E N T We celebrated Fenway Community Development Corporation’s 45th Anniversary at the annual Fenway Ball, which benefits the programs of Fenway CDC that work to improve the economic and social well-being of thousands of low and moderate income residents in the Fenway neighborhood.

attended in-person or virtually by over 3,200 members of our community worldwide. We are proud to share our expertise on

HOF F M A N B R E A S T C E N T E R

a variety of topics including the home buying process, financing

In recognition of National Breast Cancer Awareness Month, HUECU staff and members wore pink in October to raise funds for research and treatment at the Hoffman Breast Center at Mount Auburn Hospital.

college, establishing or repairing credit, creating a personal budgeting, and saving money.

S A LU T I 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.

B O S T ON M A R AT HON T E A M S In honor of the strength of our city, its people, and their generosity, we supported many local charity runners in the Boston Marathon, including MGH teams for Pediatric Oncology and Emergency Medicine, Team Mass Eye and Ear, and Harvard College Marathon Challenge team raising money for Phillips Brooks House Association.

As we work towards yet another year of growth and technology enhancements, 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 nearly 50,000 members—for whom we will continue to provide sincere, best-in-class service.

BUILD-A-BED A giant stuffed teddy bear named Tuck had a week-long sleepover in our Harvard Square branch to raise funding and community awareness for the “A Bed for Every Child” initiative from the Massachusetts Coalition for the Homeless. Together our community raised enough money for a bed to be built for a local child.

2018

By the Numbers HOME LOA NS

MORTGAGE OR IGINAT ION

2016

$1 81 .6

2017

$208.7

201 8

$201 . 3

MILLIONS

297

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

742

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

2016

$95.9

2017

$10 4.0

201 8

$1 2 3.6

MILLIONS

$ 3.3

MIL L ION

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

HUECU ANNUAL REPORT

2018 CHECK ING

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

2016

$9 9. 2

2017

$1 10.9

201 8

$1 1 4.8

MILLIONS

6,049 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

2016

$1 26.0

2017

$1 33.9

201 8

$1 37.8

MILLIONS

123,394,335 R E WA R D S P OIN T S E A R N E D

2018

Report from the Treasurer

John T. Litchen Treasurer

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

Assets increased by 15%, with a year-end total of $732 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

$600

$600

$500

$500

$400

$400

$300

$300

$200

$200

$100

$100

2014

2015

2016

2017

2018

2014

2015

2016

2017

2018

4%

22%

CHECKING

6%

3%

AUTO LOANS

6%

SECOND MORTGAGES

IRAs

CREDIT CARDS

3% OTHER

14%

CERTIFICATES

25%

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

2018

Cash & Cash Equivalents

33.8

33.9

Investments

39.4

30.8

545.3

648.3

Property & Equipment, net

1.7

3.2

National Credit Union Share Insurance Fund Deposit

4.8

5.1

Other Assets

10.0

10.9

Total Assets

635.0

732.2

Members’ Shares

525.8

557.7

Borrowed Funds

39.0

96.0

Accrued Expenses & Other Liabilities

12.6

14.3

577.4

668.0

Retained Earnings, Substantially Restricted

57.8

64.4

Accumulated Other Comprehensive Income

-0.2

-0.2

Total Members’ Equity

57.6

64.2

635.0

732.2

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

2018

Interest Income from Loans & Investments

25.2

29.1

Interest Expense for Members’ Accounts & Borrowed Funds

-1.9

-3.4

Loan Loss Provision

-1.5

-2.2

Net Interest Income After Provision for Loan Losses

21.8

23.5

6.5

6.4

-20.8

-23.3

7.5

6.6

Other Income Operating Expenses Net Income

2018

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 2018, 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 2018 totaled $79,465. No

firms that provide audit support of the Credit Union’s

reimbursable expenses to members of the Audit

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

Committee and Credit Committee occurred. All Board

audits our financial statements.

Director expenses and reimbursements were made

Internal audits continued to receive significant attention during 2018. Healy & Healy, our partnered firm, performed internal audits throughout the

in compliance 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

mortgage and student loans, among 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 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

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

2018

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 Pilgrim Health Care

Beth Israel Deaconess Medical Center

Harvard University

MGH Institute of Health Professions Mount Auburn Hospital

Boston Shriners Hospital

Harvard Vanguard Medical Associates

Partners HealthCare System

Brigham and Women’s Hospital

Lesley University

Spaulding Rehabilitation Hospital

Dana Farber Cancer Institute

Massachusetts Eye and Ear Infirmary

The Harvard/MIT Coop

Dumbarton Oaks Research Library

Massachusetts General Hospital

Harvard Business Publishing

Massachusetts Mental Health Center

Harvard Management Company

Medical Academic and Scientific Community Organization

WGBH Boston

2018

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.