2014 HUECU Annual Report

Celebrating

75 ye ars

2014 ANNUAL REPORT

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HARVARD UNIVERSITY EMPLOYEES CREDIT UNION

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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.

The Credit Union seeks to be known as a community leader and to deepen its long standing commitment to housing issues, green initiatives, financial literacy and access to credit for low and moderate income borrowers.

The Credit Union works 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.

Looking back & moving forward

HUEcU’S joUrnEy

1939 - 2014

1939 Credit Union founded June 26 on the top floor of Lehman Hall.

Branch at Grays Hall, 1956

Lehman Hall, 1939

1961

1953

Member deposits become insured with the creation of the Massachusetts Credit Union Share Insurance Corporation.

First Direct Deposit received.

1966

1940 First full-time employee hired at $100/month.

Auto loan limits raised to $800.

1941 HUECU offered Defense Bonds to help fund World War II.

1954

1947

1956

Converted from a Federal to State Charter.

1940’s

First home loan granted.

HUECU moves to Grays Hall.

1950’s

The HUECU Board voted to collect $5 from each prospective member before acceptance into the CU, so that each new member would then hold at least one full share.

1960’s

Gene Foley, 1979

1976 HUECU moves to Holyoke Center 5th floor.

1979 Current CEO Gene Foley was hired by the Credit Union as a teller.

1970’s

1980’s

1990’s

1981

1993

Branch opened in the Longwood Medical Area.

Credit Cards introduced.

1983 Branch opened at Mass General Hospital.

1995 First ATM installed at the Harvard School of Public Health.

1996 Checking Accounts introduced.

1998

2000’s 2001

2010’s 2011

Online Banking & Debit Cards introduced.

Branch opened in the Charlestown Navy Yard.

2004

Mobile Banking launched.

2012

HUECU expands membership to include Alumni and Students.

2013

2006

HUECU joins CO-OP Shared Branch Network.

Harvard Square Branch relocates to 16 Dunster St.

2014

HUECU launched its first website.

First ATM in the Kresge building, 1995

Ribbon cutting ceremony at MGH, 1983

HUECU celebrates 75 years serving the Harvard community.

75th celebration at the MGH Branch, 2014

2 01 4 HigHLigHtS of

mEmbErSHip nEt nEw mEmbErS 2014

2,594

43,419 totaL mEmbErS, yEar End 2014

6.4%

mEmbErSHip growtH

ACCOUNTs OPENEd online 51%

in branch 49%

EfficiEncy

dECEmbER 2014:

62%

FOR THE FiRsT TimE HUECU RECEivEd OvER

of mEmbErS EnroLLEd

in eStatEmEntS AS OF 12.31.2014

enEwSLEttEr introdUcEd SPrinG 2014

$1,000,000

in one month

THROUgH mObiLE CHECk dEPOsiTs

5

HUECU ANNUAL REPORT

2014

nEw wEbSitE LaUncH In the summer of 2014, we introduced a new online home for the Credit Union, a key step in the continued evolution of the Credit Union online service delivery. The new HUECU website provides enhanced access, expanded capabilities and a streamlined user experience.

nEw fEatUrES incLUdE: • • • • •

Mobile Responsive Design Site-wide Account Access Secure Document Uploader Extensive Knowledge Base Interactive Branch & ATM Locator

wHat’S nEw? nEw: FOREigN CURRENCy moSt popULar cUrrEncy SoLd eUro 54%

forEign cUrrEncy pUrcHaSEd

$88,740 $32,001

nEw: CHECkiNg OPTiON FOR TEENs The Varsity Life Account allows teens to develop important money-management skills, while also maintaining parental access to their accounts.

nEw: CAsH bACk REwARds CARd The Platinum Rewards MasterCard® gives members cash back every time they shop and bonus points on gas and groceries.

cUrrEncy rEdEEmEd

commUnity SUpport for tEam bLakE In response to the Boston Marathon bombing, a group of MGH Blake nurses ran this year’s marathon to raise money for the victim relief fund. HUECU was happy to support their efforts by setting up an account and by making a donation.

HUEcU partnErS witH artLifting Our Harvard Square branch proudly displayed artwork from the non-profit ArtLifting over the summer. ArtLifting is a social enterprise that empowers individuals who are in art groups at hospitals and shelters by selling their artwork.

Financial literacy: First-time Home buying WorksHops Over the past year, over 600 first-time home buyers attended free seminars hosted by the Credit Union.

Celebrating 75 years: 1939 - 2014

6

REPORT fROM THE CHAIRMAN & CEO STATE OF THE indUSTry While the road to economic recovery has been challenging, our economy exhibited progress in 2014 as the credit union industry experienced another year of strong performance. U.S. credit unions’ total assets grew by $60 billion (a 5.67%

Loan growth was the highest in recent years − at 17% with double-digit growth across all loan categories − we are thrilled to report that 2014 was a record year for HUECU earnings.

EnHAnCinG MEMBEr VALUE

increase from December 2013) to finish at just

HUECU remains abreast of all social and

over $1.12 trillion.

technological trends and the direct influence

Membership growth was also impressive, reaching a new high of 99.3 million members, up 3 million from the previous year.

Despite these increases, the number of credit unions decreased by 4.29% in 2014, continuing this figure’s four-decade decline. Profitability continues to be a challenge as net interest margins remain on a downward trend. Longterm interest rate risk can be avoided if credit unions accept lower returns in the short-term.

OUr COnTinUEd SUCCESS Harvard University Employees Credit Union celebrated its 75th anniversary in style last year with growth rates above the national average in assets, membership, and earnings. Our membership growth, in particular, was more than twice the national average at 6.4%.

that each has on our members’ ever-changing needs. Every enhancement we make to our product offerings and service delivery is designed to empower our members and better the HUECU membership experience.

That is why in 2014, we sourced our members’ feedback to construct a new HUECU website that assures a cross-platform, enhanced user experience. Updates to our mobile app brought about major refinements to key features including quick transfers, bill pay and mobile check deposits, thereby making the app more navigable and seamless.

We also introduced foreign currency services to help our traveling members lock in competitive exchange rates, have currency on hand the moment they arrive at their destination and avoid the security risks associated with having to exchange currency on their trip.

HUECU has always been a proud purveyor of sound financial practices within our

oUr miSSion

community and we believe those practices

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

youth. Our all-new Varsity Life Account was

are especially effective when instilled in today’s introduced this year to help teens (ages 13-17) learn important money-management skills early in life. This specialized, parent-assisted account includes a debit MasterCard with a $300 daily limit and unlimited ATM withdrawals with up to $10 surcharge refunds per month from other institutions.

7

HUECU ANNUAL REPORT

2014

75 YEARS of continUEd growtH

MAnAGinG GrOwTH Despite the struggles that so many institutions have been faced with in this recovering

From the very beginning, helping advance the

economy, we are proud to report that HUECU

lives of our members has been the driving mission

has maintained strong, stable growth in our asset

of the Credit Union. Through a commitment to

base, capital position and earnings. Although the

personal service and straight-forward products,

economy is still in the midst of a slow recovery, a

HUECU has seen consistent growth in both

notable increase in loan demand is a sign that things

total membership and assets. This increase has

are improving. When we consider this, coupled with

only accelerated over the more recent past with

the expectation that the Federal Reserve may begin

the introduction of new technologies and the

raising interest rates this year, we recognize that the

evolution of our field of membership. As the trend

Credit Union is positioned to perform well moving

towards simple and convenient banking continues

forward. We will also achieve a significant growth

to rise, HUECU is poised to continue its success

milestone in 2015, as HUECU will soon surpass $500

for many years to come.

million in assets.

PEOPLE HELPinG PEOPLE Since our inception 75 years ago, the Credit

T O TA L M E M B E r S H i P G r O w T H

Union’s enduring success has been a testament

1939 – 2014

to the strength and character of our community.

The economic challenges of recent years are

45

credit unions, but HUECU continues to prevail because of our dedicated staff, volunteer Board and above all, our loyal members. This unwavering support and cooperative spirit is a constant inspiration that enables our institution to flourish

THOUSAndS

evidenced in the diminishing number of American

even in difficult economic times. 75 years of service

35 25 15 5 0

is a wonderful milestone and we are committed to

1940 1950 1960 1970 1980 1990 2000 2010 2014

continuing our success, as well as our tradition of enriching our members’ lives for many years ahead.

T O TA L A S S E T G r O w T H 1939 – 2014 $500

MiLLiOnS

$400

George white Chairman of the Board

Eugene J. Foley President & CEO

$300 $200 $100 $0 1940 1950 1960 1970 1980 1990 2000 2010 2014

Celebrating 75 years: 1939 - 2014

8

by tHE

numbers 2014 HomE LoanS HUECU saw a significant increase in our Home Equity Line of Credit portfolio as the market continues to rebound.

HELOC BALAnCES MiLLiOnS

2012

$7.9

2013

$9.6

2014

$15.1

93 aUto LoanS Fueled by our seasonal specials, this year we experienced steady growth in our auto loans portfolio.

43.4% of totaL aUto Loan baLancES wErE rEfinancES

9

HUECU ANNUAL REPORT

2014

mortgagES to firSt timE HomE bUyErS

AUTO LOAnS diSBUrSEd MiLLiOnS

2012

$6.9

2013

$8.2

2014

$9.2

cHEcking Crimson Checking continues to benefit our members as both refunded surcharge fees and overall balances continue to rise.

$98,719,157

CHECkinG ACCOUnT BALAnCES MiLLiOnS

2012

$57.4

2013

$71.9

2014

$78.1

dEbit card pUrcHaSES

$226,185

atm SUrcHargE fEES rEfUndEd

crEdit cardS The introduction of our Platinum Rewards MasterCard速 contributed to healthy growth in card balances.

CrEdiT CArd BALAnCES MiLLiOnS

2012

$25.3

2013

$26.7

2014

$31.5

88,085,031 rEwardS pointS EarnEd

Celebrating 75 years: 1939 - 2014

10

rEport from tHE trEaSUrEr The Credit Union continued to perform strongly,

institution where members can feel

posting solid earnings, despite an economic

confident saving and borrowing.

climate that remained challenging. Assets

The Board, Management and Staff

increased by 7%, with a year-end total

are to be commended for their

of $476 million.

contributions to our success.

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

John T. Litchen Treasurer

As reflected in the unaudited financial statements, the Credit Union continues to be a well-capitalized, financially strong

dEPOSiTS OVEr 5 yEArS

LOAnS OVEr 5 yEArS

$500

$400

$400

$300

MiLLiOnS

MiLLiOnS

$300

$200

$100

$0

$200

$100

$0 2010

2011

2012

2013

2010

2014

dEPOSiT diSTriBUTiOn

2011

2012

2013

2014

LOAn diSTriBUTiOn

5%

AUTO LOANS

5%

IRAs

9%

6%

CREDIT CARDS

SECOND MORTGAGES

4%

20%

OTHER

CHECKING

28%

CERTIFICATES

55%

32%

SHARES

11

HUECU ANNUAL REPORT

21%

MONEY MARKETS

15%

2014

1ST MORTGAGES

STUDENT LOANS

StatEmEnt of condition (Selected data in MillionS)

aSSEtS

2014

2013

Cash and cash equivalents

31.6

43.1

Investments

70.7

78.3

362.7

310.6

Loans to members, net Property and equipment, net

1.7

2.5

National Credit Union Share Insurance Fund deposit

4.0

3.8

Other Assets

5.5

4.4

Total Assets

476.2

442.7

428.8

400.4

Borrowed funds

0.0

0.0

Accrued expenses and other liabilities

6.8

5.4

435.6

405.8

40.6

37.2

0.0

-0.3

40.6

36.9

476.2

442.7

2014

2013

Interest Income from Loans and Investments

17.7

16.2

Interest Expense

-1.2

-1.5

Provision for Loan Losses

-1.4

-0.9

Net Interest Income after Provision for Loan Losses

15.1

13.8

4.2

3.7

Operating Expenses

-15.9

-14.9

net income

3.4

2.6

LiabiLitiES and mEmbErS’ EQUity Liabilities Members’ shares

Total Liabilities Members’ Equity Retained earnings, substantially restricted Accumulated other comprehensive income Total Members’ Equity Total Liabilities and Members’ Equity

StatEmEnt of incomE (Selected data in MillionS)

intErESt incomE

Other Income

Celebrating 75 years: 1939 - 2014

12

in rEcognition of oUr 75tH annivErSary,

wE aSkEd oUr mEmbErS:

large service, small bank, perfect fit.

BARBARA MOSCOWITz,

What do you like most

about HUECU?

HErE arE jUSt a fEw of tHE ovEr 1,000 testimonials We received.

MEMBER SINCE 1989

i have always had a great experience for over 24 years. love this place.

CHERYL PIRES-TAYLOR, MEMBER SINCE 1990

Wonderful help for a first time home buyer.

i love the convenience - once upon a time when i worked in the building and you were so close and now i do everything online, even though i live 500 miles away, you’re still my main bank!

MARK MACMILLAN, MEMBER SINCE 2014

HUECU was my 1st bank out of college.

It remains my bank as a professional and now for my family. I have used a variety of HUECU banking services, as my life has evolved. It’s an amazing benefit and institution!

KARIN BLOOM, MEMBER SINCE 2000

What i love most about HueCu is the friendly staff, the excellent service, & the non-corporate feel.

ROBERT COUGHLIN, MEMBER SINCE 1989

The ability to bank on day one upon immigrating to the U.S. from israel with my family − 15 years after graduating from harvard!

AzIzA RIMON, MEMBER SINCE 2013

the coin counter is the best. everyone should have one. thank you!

DANIEL OH, MEMBER SINCE 2013

CINDY POPE MEMBER SINCE 1991

they are just not your normal loan officers or tellers, they trust you like family and try to give you the best that you can afford.

WILLIAM SAWYER MEMEBER SINCE 1978

in 1985, on my first day of work at MGh, i joined the credit Union and started a direct deposit savings account. Three years later, i was able to save enough for a down payment on my first home!

MARY NIEDERBERGER, MEMBER SINCE 1985

i love that hUecU always has my back.

The customer service is impeccable, and they make me feel like family.

SEBASTIAN PLACIDE MEMBER SINCE 2013

HueCu got us smoothly, pleasantly & reassuringly into our mortgage when we bought our first home.

RICHARD BRYDEN, MEMBER SINCE 2002

the HueCu staff is just amazing. it’s their over-the-top customer service that keeps me coming back.

REBECCA COBURN, MEMBER SINCE 1994

I’m a recent graduate and I have to say one of my biggest regrets was waiting so many years to join the HUECU family. And it’s just that: a family. I feel like I’m welcomed here rather than being a nameless patron behind a glass partition elsewhere.

Feels like a family affair.

AARON PALMER, MEMBER SINCE 2014

THADDEUS HOGARTH, MEMBER SINCE 1989

The credit Union has always been there for me financially. i wouldn’t be in the home i am in now without hUecU. AURELIO RAMIREz, MEMBER SINCE 1990

i love being a part of HueCu! Credit unions—especially this one—rock!

HueCu is simple banking with lots of options. i’ve never had any problems turn up and the customer support is wonderful. i love the credit Union’s long-standing commitment to workers and sound financial sense. carry on!

EVAN MULL, MEMBER SINCE 2014

JANELLE MILLS, MEMBER SINCE 2000

I appreciate the great service extended to all the members.

Happy 75th!

PHYLLIS MASIELLO, MEMBER SINCE 1986

MADELEINE STRAUBEL, MEMBER SINCE 2011

the customer service is #1! love this team!

EUGENIA SANCHEz, MEMBER SINCE 1998

i love that HueCu doesn’t nickel and dime me with fees. it is also so convenient to have my mortgage through HueCu, & they were so much easier to deal with than a bank!

MARY LANzAROTTA, MEMBER SINCE 2004

love the fact that i am a member and not a customer. it speaks to the hUecU treatment. everyone is very helpful and friendly.

AMY FAIRHALL, MEMBER SINCE 2007

everything about the credit Union is better than a typical bank: the service, the people who work at hUecU, everything is great!

FREEMAN DEUTSCH, MEMBER SINCE 2000

i have all good memories of the Credit union since 1976! i’ve always said HueCu brought me closer to my money.

ANAHID KRIKORIAN, MEMBER SINCE 1976

rEport from tHE aUdit committEE The Audit Committee is composed of five

FIS performed compliance reviews and

Directors dedicated to ensuring that the

training for Credit Union staff. Reviews

Credit Union’s actions are held to the highest

included compliance with regulations such

standards of integrity and value. Throughout

as the Bank Secrecy Act, Red Flags, loan file

2014, the Committee met regularly to review

reviews, and other areas.

audit and compliance reports as well as to discuss other operational topics of interest.

We are assisted in our efforts by outside firms that provide audit support of the Credit Union’s finances, internal controls, and regulatory compliance. Wolf & Company, P.C. audits our financial statements.

Reimbursements to Board Directors in 2014 totaled $19,998. The majority of these costs were related to attending the annual Massachusetts Credit Union League convention. No reimbursable expenses were attributed to the Credit and Audit Committees.

All Director expenses and reimbursements

Internal audits continued to receive significant

were compliant with the regulations of the

attention during 2014. Healy & Healy

National Credit Union Administration

performed these during the year

and the Massachusetts Division of Banks.

to test Credit Union procedures and controls in branch operations, wire transfers, deposit operations, mortgage and student loans, and other areas. The Committee reviewed their

The Committee wishes to thank the Credit Union Management for their cooperation, support and assistance throughout the year.

findings and management’s responses, and will actively work with management on suggested areas for strengthening processes and risk

Respectfully submitted,

management systems.

committEE mEmbErS cheryl Hutt guillermo banchiere mark Edington edward emde karrie ford

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HUECU ANNUAL REPORT

2014

Cheryl Hutt Committee Chair

officErS

Eugene J. Foley President & CEO

Craig Leonard Executive VP, CFO

Cheryl Gorman Executive VP, Retail Services

Peter Buchanan VP, Real Estate Lending

John degnan VP, Operations

Tom Montilli VP, Marketing

Tom Murphy VP, Consumer Lending

board of dirEctorS

Guillermo Banchiere Since 2007

dennis Campbell Since 2013

karen deBerio Since 2003

Edward doctoroff Since 1979

Edward Emde Since 1993

karrie Ford Since 2014

Cheryl Hutt Since 2013

Thomas Lucey Since 2006

Jason Luke Since 2014

Bill Murphy Since 2010

Jeremiah Murphy Vice Chair Since 2003

Mary Straub Clerk Since 2004

Mark Edington Since 2013

John Lichten Treasurer Since 1992

George white Chairman Since 1999

Celebrating 75 years: 1939 - 2014

16

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.

Harvard University (Students, Alumni, Faculty and Staff)

Joslin Diabetes Center Judge Baker Children’s Center

Radcliffe Institute for Advanced Study

Lesley University

American Repertory Theater

McLean Hospital

Beth Israel Deaconess Medical Center

Massachusetts Eye and Ear Infirmary

Boston Shriners Hospital

Massachusetts General Hospital/ Partners Health Care System

Brigham and Women’s Hospital Cambridge Hospital/ Cambridge Health Alliance Children’s Hospital Dana Farber Cancer Institute Dumbarton Oaks Research Library Harvard Business School Publishing

MGH Institute of Health Professions Massachusetts Mental Health Center Medical Academic and Scientific Community Organization Mount Auburn Hospital The Center for Blood Research The Schepens Eye Research

Harvard/M.I.T. Cooperative Society

Institute Spaulding Rehabilitation

Harvard Management Company

Hospital Veterans Administration

Harvard Pilgrim Health Care

Boston Healthcare System

Harvard–Smithsonian Center for Astrophysics

WGBH Boston

Harvard Vanguard Medical Associates

HUECU.ORg

Federally Insured by NCUA

Federally Insured by NCUA

your savings are federally insured to at least $250,000 and backed by the full faith and credit of the united states government.