HUECU 2019 Annual Report

2019 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.

2019 Highlights

2,016 NEW MEMBERS NET 2019

4.05%

51,790 TOTAL MEMBERS YEAR END 2019

MEMBERSHIP GROWTH

$16 5.6

$17 1 . 3

$1 28. 1

$1 35.6

MOR T G A G E OR IG I NAT ION

S T U DE N T 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

C R E DI T C A R D SPEND

MILLIONS

MILLIONS

MILLIONS

MILLIONS

80

Years of HUECU

Since 1939, we’ve been committed to the financial health and well-being of our members and our community.

80 years later, HUECU is a thriving cooperative, helping thousands of people reach their financial goals.

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NEWLY CREATED POSITIONS

PROMOTIONS

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HUECU ANNUAL REPORT

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The Upgrade At HUECU, our goal is to provide you the best banking experience possible. That’s why this past fall, we upgraded our technology to deliver new features designed to save you time, give you greater control over your money, and enhance the security of your accounts. We appreciated your patience during these changes!

7,157

34,828 UPGRADE USER GUIDES MAILED TO MEMBERS

541,170 EMAILS SENT TO MEMBERS

PREP QUIZZES SUBMITTED

3,974

TUTORIAL VIDEOS WATCHED

4,409 SUPPORT CALLS WITHIN THE FIRST WEEK

+99% INCREASE IN SUPPORT EMAILS WITHIN THE FIRST WEEK

3,100

TOTAL NUMBER OF AUTOMATIC TRANSFERS CONVERTED

+383% INCREASE IN TYPICAL CALL VOLUME WITHIN THE FIRST WEEK

TOTAL BILL PAY ACCOUNTS MIGRATED

6,000

2019

4

Report from the Chairman

George White Chairman of the Board

Our credit union was established in 1939 by a dozen Harvard employees who volunteered their time not only to provide Board oversight, but also to run daily operations. It was not until 1952 that the first full-time employee was hired as a “Manager-Teller”. In 1955 the Manager-Teller job was replaced by the first full-time professional Manger, Mr. Herbert Collins, who held this position for 40 years. In 1994, Mr. Collins retired and the Board hired the Credit Union’s first President and Chief Executive Officer, Gene Foley.

Under Gene’s leadership over the past 25 years as

Union offers an extensive line of mortgage products.

President, the Credit Union has grown not only in

These have been carefully developed to provide the

size and scale, but also in value for our members and

greatest amount of flexibility for our borrowers and they

the organizations we serve. Gene’s vision has been to

are administrated by a knowledgeable staff who provide

leverage our cooperative structure to become a trusted

guidance and work individually with members on every

resource and partner for our members and sponsors,

single transaction. In addition to credit repair and credit

and to develop and implement innovative and equitable

building programs, which the Credit Union has developed

solutions to meet their financial needs. When the 2008

to help borrowers establish credit safely and affordably,

financial crisis wiped out the graduate student loan

our Board has approved a hardship loan program that

market, Harvard’s international grad students were

provides aid to any member who has lost their home due

stranded without an option for financing their education.

to fire or other disasters.

Working with the university administration, Gene led the Credit Union to step in and quickly develop an affordable option for students to attend Harvard and complete their graduate education. Over the past decade, this student loan program has extended to encompass the entirety of our membership, with programs for any accredited higher educational institution as well as the option to consolidate student debt in a very affordable program that includes one-on-one financial counseling.

In lock step with our Board of Directors, Gene has helped focus the Credit Union on addressing housing issues and providing access to credit, especially for low and moderate income borrowers. In addition to a comprehensive first-time home buyer program, the Credit

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HUECU ANNUAL REPORT

Even more compelling than a sound operating strategy that has propelled the Credit Union’s extraordinary growth and financial success has been the role Gene has played in cementing a culture throughout the organization that is centered on employee engagement and keeping our members’ needs top of mind. I would like to thank and recognize Gene for his 40 years of service and his leadership as our President over the past 25 years.

In closing, I would also like to recognize and thank our members, our staff and my colleagues on the Credit Union Board. We are part of a highly successful organization that is precipitously growing and doing important work.

Report from the President & CEO

Eugene J. Foley President & CEO

I am pleased to report that as evidence of our extraordinary success, our Credit Union achieved its fourth consecutive year of double-digit asset growth in 2019. Membership growth, deposit growth, loan growth and earnings continue to climb as we persevere in our commitment to becoming an even more valuable resource in the financial lives of our members and the communities we serve.

Over the past two years, we have dedicated most of our

In 2019, our Credit Union turned 80 years old and I also

time and resources to implementing a comprehensive

celebrated my 40th year of employment here and my

overhaul of our systems and technology. I would like

25th anniversary as your President. Being an integral part

to once again thank our members for your patience

of the second half of this organization’s life has been an

and understanding during the upgrade. Between our

exciting and inspiring experience. Throughout the years

accelerated growth and the increasingly rapid rate of

I have been a witness to the power of cooperation, as this

technological change now happening, we realized this

organization grew from a dozen employees to more than

extensive project was necessary in order for our Credit

10 times that number and assets went from $20 million to

Union to keep pace and provide leading-edge products

almost $1 billion. More importantly, over this time, I have

and services. The new systems and tools we now have

had the privilege to play a part in helping to improve the

in place will allow for enhanced scale, development,

financial lives of three generations of members.

efficiency and customization of current offerings and future solutions.

We have so much to be proud of in our work together, as we have proven that helping each one of us to be a

While our infrastructure and systems have been

little better off individually helps all of us to prosper

completely revamped, our mission and operating

collectively. I would like to thank our members for

strategy remain unchanged. As a not-for-profit financial

your participation and support, our Board for your

cooperative uniquely serving the Harvard University

commitment and leadership, and all of our employees for

community, we are dedicated to addressing the needs

your talent, dedication and hard work.

and financial pain points of our members and partner organizations in order to create beneficial solutions that are unavailable from any other provider. We take particular pride in helping our members to buy homes, pay for college, establish credit, save for retirement and gain a better understanding of how to maximize their personal finances.

2019

6

Report from the Treasurer

John T. Litchen Treasurer

The Credit Union continued to perform strongly, posting another year of solid earnings. Assets increased by 11.4%, with a yearend total of $816 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

$700

$700

$600

$600

$500

$500

$400

$400

$300

$300

$200

$200

$100

$100 2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

4%

22%

CHECKING

6%

3%

AUTO LOANS

6%

SECOND MORTGAGES

IRAs

CREDIT CARDS

3% OTHER

18%

CERTIFICATES

7

23%

DEPOSIT DISTRIBU TION

MONEY MARKETS

LOA N DISTRIBU TION

25%

STUDENT LOANS

34%

58%

SHARES

FIRST MORTGAGES

HUECU ANNUAL REPORT

Statement of Condition

SEL EC T ED DATA IN M IL L IONS

ASSETS

2018

2019

Cash & Cash Equivalents

33.9

85.2

Investments

30.8

43.3

648.3

664.5

Property & Equipment, net

3.2

3.4

National Credit Union Share Insurance Fund Deposit

5.1

5.5

Other Assets

10.9

14.0

Total Assets

732.2

815.9

Members’ Shares

557.7

609.9

Borrowed Funds

96.0

117.9

Accrued Expenses & Other Liabilities

14.3

16.7

668.0

744.5

Retained Earnings, Substantially Restricted

64.4

71.3

Accumulated Other Comprehensive Income

-0.2

0.1

Total Members’ Equity

64.2

71.4

732.2

815.9

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

2018

2019

Interest Income from Loans & Investments

29.1

34.1

Interest Expense for Members’ Accounts & Borrowed Funds

-3.4

-6.6

Loan Loss Provision

-2.2

-2.5

Net Interest Income After Provision for Loan Losses

23.5

25.0

6.4

7.7

-23.3

-25.8

6.6

6.9

Other Income Operating Expenses Net Income

2019

8

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 2019, 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 2019 totaled $43,889. 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 2019. 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

Eugene J. Foley President & CEO

Craig Leonard Executive VP, CFO

Peter Buchanan SVP, Real Estate Lending

John Degnan SVP, Operations

Tom Montilli Executive VP, Chief Experience Officer

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

2019

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Eugene Foley’s HUECU Legacy

1979 - 2020

Gene Foley will retire in July, 2020 after more than 40 years of commitment to HUECU. Throughout his impressive tenure, he has led HUECU to remarkable growth and success, while being an influential voice and tireless advocate for the credit union movement.

His commitment to our membership, Harvard University, and the industry is unparalleled. Through his efforts he has not only developed an outstanding organization, but has brought positive and meaningful changes for all of our constituents. Thank you Gene, for all you’ve done for the HUECU membership.

1998 Ribbon cutting ceremony at MGH in 1983.

Gene Foley, 1979.

1985 Assets exceed $50 million with 20,000 members.

1979 Gene Foley is hired by the Credit Union as a teller.

1970S

First ATM at Kresge building, 1995.

HUECU launches its first website.

1997 Assets exceed $100 million.

1996 Checking Accounts introduced.

1983

1995

Branch opened at Mass General Hospital.

First ATM installed at the Harvard School of Public Health.

1981 Branch opened in the Longwood Medical Area.

1980S

1993 Credit Cards introduced.

1990S

2000S

2010S

2000

2006

Online banking introduced.

Online Bill Pay is introduced.

2001

2007

Debit Cards introduced.

Online Account opening is launched.

2002 Contact Center added.

2002 Assets exceed $150 million.

2004 HUECU expands membership to include alumni and students.

2005 HUECU President & CEO Eugene Foley’s testimony on behalf of the credit union industry advocating for improved data security requirements before a Congressional Committee.

2008 Assets exceed $250 million.

Online Mortgage applications are made available.

2009

2011 Branch opened in the Charlestown Navy Yard.

Membership reaches 30,000 members.

Assets exceed $350 million.

2012 Harvard Alumni Card introduced.

Assets exceed $400 million.

HUECU joins CO-OP Shared Branch Network.

2014 Mobile Check Deposit is introduced.

2015 Assets exceed $500 million.

2016 Assets exceed $600 million.

2017

Assets exceed $300 million.

HUECU opens its fifth branch inside of Partners Healthcare at Assembly Row, Somerville, MA.

HUECU introduces Graduate Student Loan Program to Harvard.

Assets exceed $200 million.

2013

2018 Assets exceed $700 million.

2019 Harvard Alumni Card Launch Party.

Technology Upgrade successfully completed.

Assets exceed $800 million.

Gene Foley appearing on C-SPAN before a Congressional Committee on May 4, 2005.

Gene delivering coffee to all employees during a long working day.

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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 Children’s Hospital

Harvard Vanguard Medical Associates

Partners HealthCare System

Boston Shriners Hospital

Lesley University

Brigham and Women’s Hospital

Massachusetts Eye and Ear Infirmary

Spaulding Rehabilitation Hospital The Harvard/MIT Coop

Dana Farber Cancer Institute

Massachusetts General Hospital

WGBH Boston

Dumbarton Oaks Research Library

Massachusetts Mental Health Center

Harvard Business Publishing

Medical Academic and Scientific Community Organization

Harvard Management Company

2019

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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.