20 1 3 HARVARD UNIVERSITY EMPLOYEES CREDIT UNION
T H E F U T U R E I S N O W.
OUR VISION Harvard University Employees Credit Union aspires to be a trusted partner in our membersâ€™ 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.
HIGHLIGHTS OF 2013 MEMBERSHIP NET NEW MEMBERS IN 2013
GEOGRAPHY HUECU members reside in all 50 states. Top states outside of MA include CA & NY.
TOTAL MEMBERS AT YEAR END 2013
HUECU membership grew by 21.7% in 2013, bolstered by the conversion of members from the Harvard Alumni Card acquisition.
HUECU NOW SERVES MEMBERS IN
of HUECU members received their statements electronically in 2013, saving over 800,000 pieces of paper.
in interest-free Mass Save loans were disbursed to help members make their homes more energy efďŹ cient.
NEW FULL TIME JOBS ADDED IN 2013
HUECU ANNUAL REPORT
EMPLOYEES RECEIVED PROMOTIONS IN 2013
COOPERATIVE SPIRIT In 2013, HUECU employees & members generously supported the local community.
Focus on Financial Literacy HUECU continues to enhance the financial lives of people within the communities we serve through numerous educational programs. 78 free financial workshops were offered in 2013, covering subjects including first-time home buying, managing credit, personal budgeting, college financing and more.
CONVENIENCE Enhanced Mobile Services HUECUâ€™s mobile app received a significant upgrade in 2013. The new features enable members to pay bills, transfer funds and deposit checks using their smartphones.
Toys were donated for Toys for Tots.
Books were donated for Childrenâ€™s Book Month in April. HOPE Candy bars were sold to assist the Massachusetts Coalition for the Homeless.
SHARED BRANCHING LOCATIONS NATIONWIDE
LOCATIONS IN MASSACHUSETTS
Nation-Wide Branch Access With the introduction of Shared Branching, members can conduct transactions at thousands of participating credit union locations just as they would at an HUECU branch.
Debit Cards in an Instant Our Harvard Square & MGH branches added the ability to instantly issue debit cards on the spot, giving new members quicker access to their Credit Union accounts.
FOR THE RECORD...
$184,435.71 of coins were counted in our Harvard Square Coin Counter.
HUECU pens were acquired by our members.
REPORT FROM THE CHAIRMAN & CEO STATE OF THE INDUSTRY Despite the persistently slow pace of economic recovery, the credit union industry had another strong year in 2013. U.S. credit unions’ total assets grew by $40 billion to end the year at just over $1.06 trillion. Membership growth was also impressive, reaching a new high of 96.3 million members, up 2.4 million from the previous year. The number of U.S. credit unions continued its four-decade decline, shrinking by nearly 4% in 2013. The current rate environment continues to be a challenge for profitability, as net interest margins remain on a downward trend. Moving forward, credit unions will need to accept lower returns in the short-term to avoid long-term interest rate risk.
OUR MISSION Enhance our members’ lives by providing trustworthy products that are easy to understand, easy to use and best suited to meet their financial needs.
OUR CONTINUED SUCCESS We are thrilled to report that in 2013, the Harvard University Employees Credit Union’s growth in assets, membership, and earnings all exceeded the national average. The Credit Union experienced nearly 7% growth in loans
HUECU ANNUAL REPORT
as members continued to take advantage of historically low mortgage rates. We also saw healthy growth in our new Harvard Alumni Credit Card portfolio and in our graduate student loan program, now in its fourth year. Membership growth in 2013 surpassed any year on record. The addition of over 4,000 members converted from the Harvard Alumni Card program acquisition, combined with an organic growth rate of 7.5%, resulted in net membership growth of more than 21%. ENHANCING SERVICE DELIVERY HUECU strives to constantly enhance our product offerings and service delivery to meet the changing needs of our members. In 2013, we furthered our commitment to mobile access with the addition of several services. The introduction of new Apple and Android apps significantly improved member experience in the mobile channel. Functionality was expanded to include Mobile Bill Pay and Mobile Check Deposit, enabling members to pay bills and deposit paper checks anytime, anywhere, using their smartphones. Our Credit Union’s exponential growth over the past several years has resulted in a more geographically dispersed membership, with 25% of members now residing outside of Massachusetts. We have enhanced our ability to serve these members by joining the Co-op Shared Branch network, enabling members to conduct transactions at thousands of participating credit union locations nationwide just as they would at an HUECU branch.
ENGAGEMENT MANAGING GROWTH The economic climate of recent years has made managing growth problematic for many institutions. We are proud to say that throughout this difficult period, the Credit Union has achieved strong, stable growth in our asset base, capital position, and earnings. Moving forward, we will continue to proactively manage these three factors to maintain an effective balance and ensure the Credit Union’s short- and long-term success and sustainability.
While other institutions rely on automated systems to provide customer service, HUECU makes it easy to speak to a live person.
PEOPLE HELPING PEOPLE The Credit Union’s enduring success through the economic challenges of recent years is a testament to the strength and character of our community. We would like to recognize and applaud our volunteer Board, dedicated staff, and most especially our loyal members for their ongoing support of the Credit Union. The cooperative spirit is alive and well at HUECU. We look forward to continuing our tradition of success and making a positive difference in our members’ lives for many years to come.
3,499 : 34 : 27 MINS
In 2013, our call center reps spent on average 3.5 minutes per member call.
55,209 CALLS ANSWERED
George White Chairman of the Board
Eugene J. Foley President & CEO
BY THE NUMBERS HOME LOANS The furious pace of refinancing that fueled our mortgage business in 2012 slowed down in the second half of 2013 due to rising interest rates.
MORTGAGES TO FIRST TIME HOME BUYERS IN 2013
FIRST MORTGAGE ORIGINATION MILLIONS
STUDENT LOANS Though production was strong, this yearâ€™s growth in our student loan portfolio was comparatively modest as many loans went into repayment.
STUDENT LOAN ORIGINATION
DISTRIBUTION BY SCHOOL 10% 7% 10%
2011 2012 2013
Harvard Business School
Harvard Law School Harvard School of Public Health Harvard Kennedy School Other Harvard Graduate Schools
HUECU ANNUAL REPORT
CREDIT CARDS The acquisition of the Harvard Alumni Card in 2012 more than doubled our card portfolio. In 2013, we continue to see healthy growth in card balances. MEMBERS USED THEIR CREDIT CARDS FOR OVER $16.5 MILLION IN PURCHASES THIS YEAR.
CREDIT CARD BALANCES MILLIONS
ESERVICES HUECU is committed to constantly enhancing our electronic delivery options to improve member service, increase efficiency and reduce our environmental impact.
BILLS WERE PAID WITH ONLINE BILL PAY
MEMBERS ENROLLED IN MOBILE BANKING
ONLINE BANKING USERS THOUSANDS
CHECKING We’ve experienced steady growth in checking balances as members take advantage of the many perks available with our new Crimson Checking accounts.
$195,651 ATM SURCHARGE FEES WERE REFUNDED TO MEMBERS
CHECKING BALANCES MILLIONS
2011 2012 2013
$47.4 $57.4 $71.9 8
REPORT FROM THE TREASURER The Credit Union continued to perform strongly, posting solid earnings, despite an economic climate that remained challenging. Assets increased by 7%, with a year-end total of $443 million.
where members can feel confident saving and borrowing. The Board, Management and Staff are to be commended for their 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. Lichten Treasurer
As reďŹ‚ected in the unaudited financial statements, the Credit Union continues to be a well-capitalized, financially strong institution DEPOSITS OVER 5 YEARS
LOANS OVER 5 YEARS $300
HUECU ANNUAL REPORT
STATEMENT OF CONDITION ( S E L E C T E D D ATA I N M I L L I O N S )
Cash and cash equivalents Investments Loans to Members, net Property and equipment, net National Credit Union Share Insurance Fund deposit Other Assets
43.1 78.3 310.6 2.5 3.8 4.4
34.7 79.7 291.1 2.8 3.5 3.2
Liabilities Members’ Shares Borrowed funds Accrued expenses and other liabilities
400.4 0.0 5.4
372.1 1.4 5.9
Members’ Equity Retained earnings, substantially restricted Accumulated other comprehensive income
Total members’ equity
16.2 -1.5 -0.9
15.2 -2.2 -1.1
13.8 3.7 -14.9
11.9 4.5 -13.8
LIABILITIES AND MEMBERS’ EQUITY
Total liabilities and members’ equity
STATEMENT OF INCOME ( S E L E C T E D D ATA I N M I L L I O N S )
INTEREST INCOME Interest Income from Loans and Investments Interest Expense Provision for Loan Losses Net Interest Income after Provision for Loan Losses Other Income Operating Expenses NET INCOME
REPORT FROM THE AUDIT COMMITTEE 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. We are assisted in our efforts by outside firms that provide audit support of the Credit Union’s finances, internal controls, and regulatory compliance. Throughout 2013, the Committee met regularly to review audit and compliance reports and to discuss operational topics of interest.
Reimbursements to Board Directors in 2013 totaled $19,982. 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 were made in compliance with the regulations of the National Credit Union Administration and the Massachusetts Division of Banks.
In 2013, the Credit Union’s existing contract with our external auditing firm ended. The Audit Committee, with support from the Credit Union CFO, initiated a competitive process to evaluate potential providers. Proposals were received from four firms and extensive interviews were conducted with each of them. As a result, the Audit Committee selected Wolf & Company, P.C. to perform the audit of our financial statements.
The Committee wishes to thank the Credit Union Management for their cooperation, support and assistance throughout the year.
Internal audits and compliance training continued to receive significant attention during 2013. We were assisted in these areas by two outside firms, Healy & Healy and FIS. Healy & Healy performed periodic internal audits to test Credit Union procedures and controls in areas such as branch operations, wire transfers, deposit operations, mortgages, and student loans. Having carefully reviewed the findings and management’s responses, the Audit Committee will actively work with management to strengthen processes and risk management systems. FIS performed trainings for Credit Union staff on a range of compliance topics such as the Bank Secrecy Act and Red Flags, and also conducted loan file reviews.
HUECU ANNUAL REPORT
Cheryl Hutt Committee Chair
COMMITTEE MEMBERS Guillermo Banchiere Mark Edington Edward Emde Edward Feldman
Eugene J. Foley President & CEO
Craig Leonard Executive VP, CFO
Cheryl Gorman Executive VP, Retail Services
Peter Buchanan VP, Lending
John Degnan VP, Operations
Tom Montilli VP, Marketing
BOARD OF DIRECTORS
Guillermo Banchiere Since 2007
Dennis Campbell Since 2013
Karen DeBerio Since 2003
Edward Doctoroff Since 1979
Edward Emde Since 1993
Edward Feldman Since 1984
Cheryl Hutt Since 2013
Stephen King Since 2011
John Lichten Treasurer Since 1992
Mary Straub Clerk Since 2004
George White Chairman Since 1999
Thomas Lucey Since 2006
Bill Murphy Since 2010
Jeremiah Murphy Vice Chair Since 2003
Mark Edington Since 2013
THANK YOU 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.
We would like to thank all of our sponsor organizations for their continued support and participation in the Credit Union.
OUR SPONSORS Harvard University (Students, Alumni, Faculty and Staff)
Medical Associates Joslin Diabetes Center
Radcliffe Institute for Advanced Study
Judge Baker Children’s Center
American Repertory Theater
Beth Israel Deaconess Medical Center
Boston Shriners Hospital Brigham and Women’s Hospital Cambridge Hospital/ Cambridge Health Alliance Children’s Hospital
Massachusetts Eye and Ear Infirmary Massachusetts General Hospital/ Partners Health Care System MGH Institute of Health Professions
Dana Farber Cancer Institute
Massachusetts Mental Health Center
Dumbarton Oaks Research Library
Medical Academic and Scientific Community Organization
Harvard Business School Publishing
Mount Auburn Hospital The Center for Blood Research
Harvard/M.I.T. Cooperative Society
The Schepens Eye Research
Harvard Management Company
Institute Spaulding Rehabilitation
Harvard Pilgrim Health Care
Hospital Veterans Administration
Harvard–Smithsonian Center for Astrophysics
Boston Healthcare System
HARVARD SQUARE 16 Dunster Street Cambridge, MA 02138
LONGWOOD MEDICAL AREA 677 Huntington Avenue Boston, MA 02115
MASSACHUSETTS GENERAL HOSPITAL 55 Fruit Street Boston, MA 02114
CHARLESTOWN NAVY YARD 149 13th Street Charlestown, MA 02129