VolCorp 2021 Annual Report

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“Life really does begin at 40. Up until then, you are just doing the research.” - Carl G. Jung


40 YEARS BOLDER

Serving members since 1981... And we’re just getting started!

FORUM’21

At FORUM’21 we were able to “Come Together” once again! 2021 SURVEY

Reassuring results from our 2021 Member Survey


TABLE OF CONTENTS

OUR SERVICES

Our many services helping members reach new heights

YOUR CORPORATE

Corporate Reports Senior Leadership Team Board of Directors Supervisory Committee


What does it mean to be bold? The dictionary defin confident and courageous.” What does bold mean to us at VolCorp?

Bold is making capital investments in technolo products, and services to better serve the cred union movement.

Bold is investing in staff with new and unique skillsets to serve credit unions today and well in the future.

Bold is being innovative, evolving our organizat and culture, refusing to rely on our past succes

At VolCorp, we realize our best years lie before us. see the results of our boldness over the next 40 ye

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nes it as “showing an ability to take risks;

gy, it

nto

tion s.

. And we can hardly wait for our members to ears.

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Volunteer State Corporate Central Credit Union Chartered April 21, 1981. - $38M in Assets employees -4 E mployees

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Volunteer Corporate Credit Union 2021... forty years bolder. - $2.5 inAssets Assets 2.5BBin -- 54 54employees Employees

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We were excite with members an our 40th An

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FORUM’21

d to “Come Together” nd friends to celebrate niversary at Forum’21!

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2021 Member Su high level of me VolCorp as

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AND THE SURVEY SAYS...

rvey results reveal a ember confidence in s a strategic partner.

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STRONGLY/SOMEWHAT AGREE

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

I view VolCorp as a strategic partner.

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VolCorp is an innovative company.


NEITHER AGREE NOR DISAGREE OR DISAGREE

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Doing business with VolCorp is easy.

Overall, I am satisfied with my relationship with VolCorp. 40 YEARS BOLDER

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In 2021, VolCo monthly newsle e to be er communica can help our members

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OUR SERVICES

orp introduced a new er, The FrontBurner, ate how our services s reach new heights.

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MEMBER SERVICES ACH Services ACH Se lement ACH Receipt ACH Origination ACH Returns ACH Contingency

ALM Services ALM Report Packages Expert Consulting ALM & Investment Training

Cash Services FRB Coin & Currency Cash Vault Program

Consulting Services ACH Risk Assessment BSA Audits Strategic Planning Charter Expansion and Conversion

Design Services Logo Design Print Design Web Design/Hosting/Maintenance

Electronic Funds Transfer Services Domestic and International Wire Transfers Tele-Transfers and Electronic Debit Transfers

International Services Foreign Currency International Wires U.S. Dollar International Wires FedGlobal International ACH Transfers Foreign Item Processing International Cash Le ers International Collection Items

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Investment Services Brokerage Services SimpliCD Corporate Accounts

V-Portfolio Online Trading Portfolio Analytics and Bond Accounting

Item Processing Services Member Share Dra s Corporate Share Dra s Money Orders Cashier’s Dra s Check Collection X9 Check Collection Check Collection Returns Paper Item Processing of Deposit Return Items Image Delivery of Deposit Return Items Early Notice of Check Collection Returns

Loans and Liquidity Services Line of Credit Term Loans Unsecured Short-Term Loans Le ers of Credit SimpliCD Issuance Central Liquidity Facility CU Business Group Loan Participation - LoanStreet®

Safekeeping Symphony LLC Strategic Partnerships CU Business Group Sallie Mae Student Loan Program Bill Pay TransFund Dolphin Debit Card@Once I-Care Current Expected Credit Losses Compliance Zogo

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YOUR TR

Corpor Leadership Team and Sup

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RUSTED STRATEGIC PARTNER

rate Reports, Senior m, Board of Directors pervisory Commi ee

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CHAIRMAN & PRESIDENT’S REPORT

JOHN JACOWAY Board Chairman

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We have all heard the saying “good things come to those who wait.” Well, a er a year like 2020, VolCorp was ready for, and experienced, some very welcomed good things in 2021, and the momentum that comes with them is even more important. The biggest highlights of the year were the launch of a new CUSO, the return of a large portion of our US Central capital, the distribution of some of that capital, and, of course, the feedback we received from our members when asked how we were doing. Despite the tight interest rate environment and the tough hiring realities, 2021 was a great year for VolCorp. And, when we prosper, our members prosper. As the calendar turned to January 2021, so opened the doors to VolCorp’s new wholly-owned CUSO, Symphony LLC. Symphony was created as a result of our research to find out what some of our members’ pain points are and how we can cure them with the appropriate service offerings. Symphony aims to help credit unions be able to focus on their members while Symphony focuses on some of the tedious, but necessary, tasks which are critical to their success. The feedback led to the creation of a CUSO with offerings such as Enterprise Risk Consulting, Business Continuity Consulting, Supervisory Commi ee Audits, and Vendor Contract Optimization and the tagline Instruments for Success. As soon as Symphony’s doors opened (figuratively, of course), credit


unions started showing interest and Symphony’s first year was more successful than we could have hoped. The best part is, just as we envisioned, members were able to leverage the instruments provided by Symphony to be more successful in 2021, as well, and have already begun signing repeat engagements in 2022 and beyond. The momentum of Symphony and our credit unions is a shared momentum leading to shared success. It wasn’t long a er we started to realize the momentum for Symphony that VolCorp experienced the next notable good thing of 2021. In April, we received the first of a series of distributions of our capital back from the US Central Asset Management Estate. In fact, we received two distributions in 2021 with more to come in 2022. This is particularly meaningful because VolCorp was one of only five corporates who did not have to charge-off member capital during the financial crisis of 2008. We did, however, have to charge-off approximately $33 million of our retained earnings. Much of that money is coming back to us as a result of the US Central securities outperforming expectations as well as legal recoveries as pursued by the NCUA and their legal team. VolCorp immediately began pu ing that money to work to invest in our foundation and our future to ensure we can support our credit unions the way they need to be supported.

JEFF MERRY President and Chief Executive Officer

Continued...

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Chairman & President’s Report Continued... The most ‘feel good’ part of the year may have been at the end when we paid out special dividends to our West Virginia and Kentucky credit unions who did have charge-offs during the crisis. Post-crisis, we merged in the corporates in West Virginia (2012) and Kentucky (2014). Members of those two corporates did experience charge-offs when US Central failed. As a result of the mergers, VolCorp acquired the rights to the charged-off US Central capital of those two entities as well. Once we knew we were ge ing monies that belonged to those credit unions, the mantra of do the right thing rang loud and clear and we began working with the NCUA and TDFI on how to pay a special dividend to the credit unions who lost money. We successfully executed that program on December 31, 2021. We can now say that ALL of our members are whole as if they never had charge-offs to begin with and it is due to either the way VolCorp managed its balance sheet to begin with or the generosity of the Board in approving these distributions back to the credit unions to whom the money belonged. It was truly a great thing to be able to do and was a game-changer for many of the smaller credit unions who never thought they would see that money again.

...members were able to leverage the

instruments provided by Symphony to be

more successful in 2021.

And, of course, we always like to report back how we are doing based on the feedback we receive in our annual member survey of over

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330 credit unions of all sizes in nearly 20 states across the country. Our goal is to serve you in a way that positions us, not as your vendor, but as your Trusted Strategic Partner. In 2021, 95% of respondents agreed with the statement that they view us as such.

...as your Trusted

VolCorp made a conscious decision when the pandemic began not to hunker down and wait for ‘normal’ to return, but rather, to create a new normal…to generate some momentum during this time…to come out of the pandemic healthier, stronger, and more valuable to our credit unions than ever before. In 2021, we made great strides to that end. We couldn’t do that without the unwavering support of those we serve. We are forever humbled and honored to serve the credit unions we partner with and we look forward to using the momentum we achieved in 2021 to continue to accomplish big things in the years ahead that enable our credit unions to reach new successes as we work alongside each of you as your Trusted Strategic Partner.

Strategic Partner. In 2021, 95% of respondents agreed with the statement that they view us as such.

Respectfully submi ed.

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VolCorp is in the midst of executing an ambitious, multi-year strategic plan. We recognize the need to remain bold and continue moving forward in our mission to support credit unions as their trusted strategic partner. While we’re focused on

TREASURER’S REPORT

the future of the industry and the health of VolCorp’s membership, it’s impossible to discuss 2021 from a financial perspective without understanding the history that led us here. Yes, many events from 2020 still carried into 2021, namely low rates and an inflated balance sheet, but events from even longer ago echoed into 2021. In 2021, the NCUA, acting as administrator of the US Central Asset Management Estate, began making distributions to the claim holders on the estate. These distributions reflect recoveries made since corporate credit unions, and some natural person credit unions, absorbed the water fall of

RON SMITH Treasurer Enbright Credit Union

capital charge-offs over a decade ago. At the time VolCorp was known as one of the “Solvent Five,” or one of the few corporate credit unions with sufficient retained earnings to sustain losses on US Central capital. Today, VolCorp holds legal claims, not only for its losses at the time, but also for its former merger partners. We recognized that a portion of the recoveries should be retained, but also understand capital holders of VolCorp’s former merger partners had to share in the losses as the magnitude grew. A detailed proposal was ultimately approved enabling

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VolCorp to voluntarily make distributions to its


natural person credit union members who suffered

corporate. Net income totaled $29.9 million. Tier 1

charge-offs at its former merger partners as a

capital grew over $18 million throughout 2021,

result of these events. This enabled funds from the

ending the year at $123.6 million. At December 31,

estate to ultimately se le in both the retained

2021, the retained earnings ratio of 2.21% sat well

earnings of VolCorp and natural person credit

above the minimum regulatory requirement of

unions where they would reside had the events not

0.45%. Despite significant residual dilution from

occurred, while strengthening all of VolCorp’s

stimulus deposits, at year-end VolCorp’s Tier 1

membership and displaying

capital ratio was considered

the cooperative principles

adequately capitalized at

that make our industry unique.

4.72%. The financial success

From a financial

story of 2021 leaves VolCorp moving into 2022 in a very

During 2021 VolCorp and its membership also benefited

strong financial position and

lens, all of these

poised to continue to invest in your tomorrow and ours.

from investment into the long-term vision of the organization. VolCorp’s wholly-owned CUSO, Symphony LLC, began

milestones combine

monthly overseeing asset-

for a historically

liability management, investments, and credit risk. The

supporting credit unions through Supervisory Commi ee Reviews,

commi ee monitors corpo-

successful year

rate liquidity in order to ensure funds are available

Enterprise Risk Consulting, Business Continuity Consulting, and Vendor

VolCorp’s ALCO meets

for your corporate.

to members in times of need, while also allowing earnings

Contract Optimization.

and growth opportunities

VolCorp continued to

for both the corporate and

expand and improve its

member credit unions. During

digital footprint through

the year, VolCorp maintained

application development,

a strong cash position, a high

enhancing your experience and holding your data

credit quality securities portfolio heavily weighted

to the highest security standards. VolCorp also

with floating rate instruments, and maintained

began to lay the foundation for participation in

access to multiple lines of credit.

faster payment networks in order to sustain credit union relevancy within the ever-evolving payments

A review of the audited financial statements

landscape. These, and numerous other initiatives,

indicates internal operations are sound. VolCorp

illustrate the investment VolCorp is making into

is well-positioned to serve members in 2022 and

both its own, and, more importantly, your future.

for many years to come.

From a financial lens, all of these milestones combine for a historically successful year for your

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The focus of the Supervisory Commi ee is to oversee management practices and policies, safeguard member assets and ensure that VolCorp’s financial reporting objectives are

SUPERVISORY COMMITTEE’S REPORT

met. To administer these responsibilities the Commi ee must establish audits, inspect or cause to be inspected the securities portfolio, cash and other accounts of VolCorp, to inspect or cause to be inspected the internal controls over financial reporting, to opine on the financial statements at the end of the fiscal year and to cause a full report of these audits to be made to the Board. In accordance with these responsibilities, the independent accounting firm of Carr, Riggs & Ingram, LLC was engaged to perform VolCorp’s annual audit. Their le er renders an “unmodified”

RICK MIKELS Committee Chairman Tennessee Members 1st Federal Credit Union

opinion on the consolidated financial statements of Volunteer Corporate Credit Union as of December 31, 2021, and the year then ended. Mr. Phillip Reynolds, CPA, CIA, was engaged by the Commi ee to perform the internal audit function for VolCorp during 2021. All audits and their recommendations were reported to the Supervisory Commi ee. Information Security reports were provided to the Commi ee monthly by Mr. Tyler McNair, Director, Enterprise Risk.

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Based on the results of the internal audits, security reports, external audit and the joint examination by Tennessee Department of Financial Institutions and the National Credit Union Administration conducted during 2021, the Commi ee believes that it has properly represented the interests of the membership and its responsibilities to VolCorp.

RICK MIKELS Committee Chairman Tennessee Members 1st Federal Credit Union

KAREN WOODALL Veritas Federal Credit Union

NICK ARVON West Virginia Federal Credit Union

COMMITTEE MEMBERS

PAM CASE Jack Daniel Employees Credit Union

DAVID KING Heritage South Community Credit Union

The Commi ee would like to commend the board of directors, management and staff for their support and commitment to the audit and review process and for their continuing dedication of services to member credit unions.

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2021 S

LEADERS

PHILLIP COCHRAN Chief Investment Officer Series 7 & 63

JEFF DATO EVP and Chief Operating Officer

JEFF M

Preside Chief Execu

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SENIOR HIP TEAM

CHRISTINA ADKISON Chief Experience Officer

JUSTIN HOLT Chief Financial Officer

MERRY

ent and utive Officer

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2021 BO RICK MIKELS Tennessee Members 1st Federal Credit Union

DIREC

DEBBIE JONES UT Federal Credit Union

JOHN JA

Chai Southeas Credit

TODD SWIMS Vice-Chairman Leaders Credit Union

RON SMITH Treasurer Enbright Credit Union

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OARD OF CTORS

BRIAN TROTTER EPB Employees Credit Union

JUDY HESTER Northern KY Educators’ Federal Credit Union

ACOWAY

irman st Financial t Union

SANDY YOCUM Strip Steel Community Federal Credit Union

MIKE COOPER Secretary AllWealth Federal Credit Union

40 YEARS BOLDER

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ADDRESS 2460 Atrium Way Nashville, TN 37214

ONLINE volcorp.org vportfolio.org symphonycuso.org volcorpdesign.org

NUMBERS (615) 232-7900 (800) 470-3444 After Hours: (615) 232-7977 Operations Fax: (615) 232-7979

EXTENSIONS 1 - Member Services/Operations/Item Processing/ACH 2 - Investment Sales 3 - Marketing and Business Development 4 - Administration and President’s Office 8 - Symphony CUSO 9 - Dial By Name Directory 0 - Operator

HOURS Monday, Tuesday, Wednesday and Friday: 7:30 a.m. to 4:30 p.m. (Central time). Thursday: 8:30 a.m. to 4:30 p.m. (Central time).

Our Member Services Department closes at 4:15 p.m. (Central time) each day. Office closings are coordinated with the Federal Reserve Bank holiday schedule.

NCUA

Savings Federally Insured to at least $250,000. NCUA, a U.S. Government Agency.


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