HUECU 2020 Annual Report

2020 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

2020 Highlights

14.8%

$937

ASSET GROWTH

TOTAL ASSETS

million

NET 2020

New

YEAR END 2020

CEO $ 41 4. 1

$201 . 2

$16 3.9

MOR T G A G E OR IG I NAT ION

E DUC AT ION L O A N B A L A NC E S

C H E C K I NG A C C OU N T B A L A NC E S

MILLIONS

MILLIONS

MILLIONS

MILLIONS

+28%

+2 3%

+1 50%

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This year, HUECU announced Craig Leonard as our new President and Chief Executive Officer! Craig has served HUECU for the past ten years as our Executive Vice President & Chief Financial Officer.

+17 %

$752 . 1 DE P O S I T G ROW T H

NEWLY CREATED POSITIONS

PROMOTIONS

1

HUECU ANNUAL REPORT

12

Navigating the Pandemic The events of the past year have challenged us all in many ways and had dramatic effects on our everyday lives. As the emerging pandemic caused major disruption to the work and personal lives of our members, we moved quickly to provide payment relief, suspend fees, and offer low-cost emergency loan options. In the months that followed, we expanded our financial education programs to include virtual workshops on reducing debt, improving cash flow, and preventing various types of COVID-19 related fraud.

$4.9

million

AUTO LOANS REFINANCED

2,100

WEBINAR ATTENDEES

$3.5

748

million

IN HARDSHIP AND RELIEF LOANS

LOANS GRANTED PAYMENT RELIEF

$170,000

GIVEN TO CHARITABLE ORGANIZATIONS

+29%

-67%

HOME SUPPLY STORES

+13%

HOTELS

COVID-19 CREDIT CARD SPENDING

-77%

GROCERIES

AIRLINES

2020

2

Report from the Chairman & CEO

George White Chairman of the Board

Craig Leonard President & CEO

A N U NPRECEDEN T ED Y E A R 2020 was a year unlike any other. A public health crisis transformed our everyday lives in an instant, distancing us from friends and family. The economic impacts that followed created widespread hardship. Cries for social justice and a sharply divided political climate shook the foundations of our society. No person or business was spared the effects of 2020, but through it all we found new opportunities to connect, learn, grow, and move forward. Thanks to the resilience of our communities, the perseverance of our staff, and the trust and loyalty of our members, HUECU has emerged from 2020 stronger than ever and poised for enduring success.

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HUECU ANNUAL REPORT

TRANSFORMING OUR OPERATIONS

cards, while also providing robust fraud detection and

In March, as the threat of COVID-19 was becoming clear, HUECU moved quickly to enable all non-branch staff to work from home. Though only a fraction of the Credit Union team had previously worked remotely, we were able to deploy necessary hardware, enhance our network, and adopt new communication tools to make a near seamless transition. We have kept our two largest branches fully open throughout the pandemic by implementing rigorous safety protocols to protect our staff and members. Though HUECU’s three smaller branches closed along with the facilities in which they operate, HUECU did not eliminate any jobs, instead redeploying the displaced team members to our Mortgage and Support areas to assist with additional demand.

prevention capabilities. Online tools and internal controls were developed so that processes that had previously required a branch visit could be accomplished virtually.

All HUECU cards were upgraded to utilize contactless payment technology that will now be included in all new cards and re-issues. As many of the lifestyle changes brought on by the pandemic will continue, so will HUECU’s commitment to providing a frictionless member experience through digital channels.

REACHING NEW MILESTONES Despite the many challenges we faced as individuals and as an organization, HUECU experienced strong financial performance and continued growth. Total assets grew by double-digits for the fifth consecutive year, ending 2020 at $937 million. Mortgage originations shattered all previous

RESPONDING TO MEMBER NEEDS

records, hitting an annual total of $414.1 million as falling The far-reaching impacts of COVID-19 created immediate

rates drove enormous demand for refinances. The reach

financial hardship for many in our communities. The

and impact of HUECU’s financial education programs

Credit Union took a comprehensive approach to our

also grew significantly in 2020 as we expanded our

response, developing new programs, modifying policies,

virtual learning opportunities, with over 2,100 community

and providing individual assistance to address the specific

members attending an online workshop or counseling

needs of each impacted person. Common fees, such as

session.

ATM fees and late payment charges, were indefinitely suspended. Payment relief was offered across all HUECU credit cards and consumer loans, allowing members with reduced income to pause their monthly bills. Personal loan rates were dropped significantly to give members access to low-cost funds. Modifications to mortgages and student loans were offered to all members struggling to meet their obligations. As the pandemic continues to

SALUTING OUR TEAM The unparalleled talent and dedication of the HUECU staff and volunteer board is what has carried us through this year. The gratitude we have for these professionals that represent HUECU, working tirelessly for the financial wellbeing of our members, cannot be overstated.

create financial challenges for our communities, HUECU

While we cannot predict what changes 2021 will bring,

remains committed to providing assistance and relief to

the experiences of the last year have demonstrated that

all who need it.

HUECU is prepared for whatever comes. As members continue to turn to their Credit Union during times of

EVOLVING OUR SERVICE Investments

that

HUECU

struggle or uncertainty, we remain committed to helping made

in

technology

infrastructure and digital service delivery over the last several years were critical to our success during 2020.

That said, we knew much more was needed to meet the changing needs of our members. The ”HUECU Cards”

people weather even the worst financial storms. The HUECU staff, board, and members together make up a remarkable family—one colored by loyalty, strength in the face of hardship, unity, and prosperity. We look forward to working together and setting new precedents in 2021.

mobile app was introduced to give members a powerful tool to manage and monitor their use of Credit and Debit

2020

4

Report from the Treasurer

John T. Litchen Treasurer

The Credit Union continued to perform strongly, posting another year of solid earnings. Assets increased by 14.8%, with a year-end total of $937 million.

Positive growth was realized in many areas of the Credit Union, including 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

$800

$800

$700

$700

$600

$600

$500

$500

$400

$400

$300

$300

$200

$200

$100

$100 2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

2%

24%

CHECKING

4%

2%

AUTO LOANS

5%

CREDIT CARDS

IRAs

SECOND MORTGAGES

2% OTHER

16%

CERTIFICATES

5

23%

DEPOSIT DISTRIBU TION

MONEY MARKETS

LOA N DISTRIBU TION

25%

STUDENT LOANS

35%

62%

SHARES

FIRST MORTGAGES

HUECU ANNUAL REPORT

Statement of Condition

SEL EC T ED DATA IN M IL L IONS

ASSETS

2019

2020

Cash & Cash Equivalents

85.2

90.5

Investments

43.3

57.3

664.5

761.4

Property & Equipment, net

3.4

3.6

National Credit Union Share Insurance Fund Deposit

5.5

6.4

Other Assets

14.0

17.6

Total Assets

815.9

936.8

Members’ Shares

609.9

752.1

Borrowed Funds

117.9

90.2

16.7

14.4

744.5

856.8

Retained Earnings, Substantially Restricted

71.3

79.3

Accumulated Other Comprehensive Income

.1

.7

71.4

80.0

815.9

936.8

Loans to Members, net

LIABILITIES & MEMBERS’ EQUIT Y Liabilities

Accrued Expenses & Other Liabilities Total Liabilities Members’ Equity

Total Members’ Equity Total Liabilities & Members’ Equity

Statement of Income

SEL EC T ED DATA IN M IL L IONS

INTEREST INCOME

2019

2020

Interest Income from Loans & Investments

34.1

32.6

Interest Expense for Members’ Accounts & Borrowed Funds

-6.6

-5.6

Loan Loss Provision

-2.5

-3.9

Net Interest Income After Provision for Loan Losses

25.0

23.0

7.7

10.5

-25.8

-25.5

6.9

8.0

Other Income Operating Expenses Net Income

2020

6

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 2020, 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

conferences, trainings, committee meetings and

topics of interest. We are assisted in our efforts by

planning sessions within 2020 totaled $130,283. No

external firms that provide audit support of the

reimbursable expenses to members of the Audit

Credit Union’s finances and internal controls. Wolf

Committee and Credit Committee occurred. All Board

& Company, P.C., audits our financial statements.

Director expenses and reimbursements were made

Internal audits continued to receive significant attention during 2020. Healy & Healy, our partnered firm, performed internal audits

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

throughout the year to test Credit Union

The Committee wishes to thank the Credit Union

procedures and controls in branch operations, wire

management for their cooperation, support and

transfers, deposit operations, mortgage and student

assistance throughout the year.

loans, among other areas. The 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

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HUECU ANNUAL REPORT

Officers

Craig Leonard President & CEO

Tom Montilli EVP, Chief Experience Officer

Katie Armstrong SVP, Chief Financial Officer

Peter Buchanan SVP, Real Estate Lending

John Degnan SVP, Operations

Amy Murphy Associate Director of Human Resources

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

2020

8

9

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

Boston Children’s Hospital

Lesley University

Boston Shriners Hospital

Massachusetts Eye and Ear Infirmary

Brigham and Women’s Hospital

Massachusetts General Hospital

Dana Farber Cancer Institute

Mass General Brigham HealthCare System

Dumbarton Oaks Research Library

Massachusetts Mental Health Center

Harvard Business Publishing

Medical Academic and Scientific Community Organization

Harvard Management Company

MGH Institute of Health Professions Mount Auburn Hospital Spaulding Rehabilitation Hospital The Harvard/MIT Coop WGBH Boston

2020

10

Not a bank. A benefit.

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.