VolCorp 2022 Annual Report

ANNUAL

2022 REPORT

TABL

CONT

LIKE NEVER BEFORE

Experience a partnership... like never before FORUM22

AIM...INGNITE...EMERGE!

MEMBER SURVEY

Results reveal trust in VolCorp as Trusted Strategic Partner

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LE OF

TENTS

OUR SERVICES

Continuing to help our members reach new heights

YOUR CORPORATE

Corporate Reports and Leadership

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VOLC

LIKE N

BEFO

Experience partnership

VolCorp has proudly served the cred 40 years. And we’re just ge ing star

As we look to the future, members a new VolCorp. More agile. More adap unions, but inspiring them to reach n

It’s more than a new logo. More than partnership...like never before.

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CORP

NEVER

ORE

like never before.

dit union movement for more than rted.

and non-members alike will see a ptive. Not just working with credit new heights.

n a change in color scheme. It’s a

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2022 REPORT

VOLC FORU

2022 was the year that sa from the pandemic and retu and conventions. VolCorp m and were rewarded with firs accommodations, and a c friendships with

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CORP UM22

aw credit unions EMERGE rn to in-person conferences members came to Nashville st class speakers, top notch chance to make and renew their colleagues.

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MEM

SURV

2022 Member Surv

high level of mem VolCorp as a st

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MBER VEY22

vey results reveal a mber confidence in rategic partner.

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2022 REPORT

STRONGLY AGREE

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

I view VolCorp as a strategic partner.

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SOMEWHAT AGREE

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

Overall, I am satisfied with my relationship with VolCorp.

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2022 REPORT

MEM

SERV

2022 saw VolCorp c new services and ones in order to emp with exceptio

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MBER

VICES

continue to develop improve existing power credit unions nal solutions!

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2022 REPORT

TRUS

STRAT

PART

Corporate Re Leadership Team, B and Superviso

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STED

TEGIC

TNER

eports, Senior Board of Directors, ory Commi ee

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2022 REPORT

Bigger. Be er. Bolder. Those three words really highlighted the mentality of VolCorp over the last couple of years. When the pandemic hit, we vowed to keep our feet moving and to come out of it an even stronger corporate than when

CHAIRMAN & PRESIDENT’S REPORT

we went into it. We wanted to have bigger ideas, provide even be er solutions for our members, and to have a bolder approach to everything we do. By those measures, among many others, 2022 was a very successful year.

2022 also required us to be nimble, however, as we, like everyone else, had a few unexpected curveballs thrown our way. We seamlessly worked those into our roadmap and, again, never stopped moving. In fact, those curveballs turned out to be opportunities merely disguised as setbacks to enable us to execute on the vision of bigger, be er, and bolder.

VolCorp’s wholly-owned CUSO, Symphony LLC completed its second year of

JOHN JACOWAY

operations in 2022 and the momentum only got

Board Chairman

stronger. You will likely recall Symphony aims to help credit unions to focus on their members while Symphony focuses on some of the tedious, but necessary, tasks which are critical to credit unions’ success. The CUSO offers such services as Enterprise Risk Consulting, Business Continuity Consulting, and Supervisory Commi ee (and other accountingrelated) Audits with additional service offerings

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on the horizon. We are proud to report Symphony is adding value for credit unions of all sizes all over the country with no marketing, minimal advertising, and just a lot of word of mouth. Symphony is earning the trust of credit unions, following the ‘we must earn it every day’ mentality VolCorp possesses. As a result, many credit unions have signed up for services and come back for repeat engagements. The momentum of Symphony continues to lead to shared success for the CUSO and those it serves.

Just as in 2021, VolCorp received additional distributions from the U.S. Central Asset Management Estate in 2022. This year, we received two distributions totaling $23.9 million. Those distributions continue to come back to VolCorp as a result of the U.S. Central securities outperforming expectations as well as legal recoveries as pursued by the

JEFF MERRY

NCUA and their legal team. We are thrilled to have that capital returned to us and to use it to

President and Chief Executive Officer

both bolster our capital position and to put it to work to support the bigger, be er, bolder future of VolCorp and our members. We anticipate a couple more modest distributions in 2023 and maybe into 2024 and then that chapter will finally be behind us. continued...

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2022 REPORT

ItChairman is virtually impossibleReport to discuss 2022 without & President’s Continued... acknowledging the unprecedented rate hikes and asset size corrections we all experienced.

Given the business model of a corporate credit union, the near-zero interest rate environment we have all operated in for such a long time puts considerable strain on the financials and operations of a corporate. Rates increasing, on the other hand, can cause interest rate risk for any organization depending upon your balance

Our goal is to serve you in a way tha

but as your Trusted Strategic Partne

of respondents agreed with the sta sheet composition. For a corporate, however, we maintain minimal fixed rate exposure and, as such, interest rate hikes present minimal IRR risk. At the same time we have been managing the IRR, we have also remained very prepared for the inevitable run-off of assets we have all expected since the Federal Government first started distributing checks. We remained cautiously invested and very liquid in anticipation of both of these events. Bo om line – our members can rest easy knowing VolCorp was postured and ready for what we experienced in 2022.

And, of course, we always like to report back how we are doing based on the feedback we

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receive in our annual member survey of over 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 2022, a VERY humbling 100% of respondents agreed with the statement that they view us as such.

We cannot thank you enough for continuing to place your trust in us. We strive every single day

at positions us, not as your vendor,

er. In 2022, a VERY humbling 100%

atement that they view us as such. to use that day to earn your trust so we may be blessed with the opportunity to serve you the next. We never take it for granted. We never rest on our laurels. And, we know complacency is the biggest risk for any organization. In the year(s) ahead, we will continue a never-ending pursuit of bigger, be er, and bolder. Stay tuned throughout 2023 and 2024 as the byproduct of these efforts are revealed and our members can see what a bigger, be er, and bolder VolCorp looks like. We are excited and we think you will be too.

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2022 REPORT

From a broad view, credit unions will likely associate 2022 with heated inflation, significant increases in short term interest rates and, in general, changes to the liquidity landscape. There is a significant difference between a credit union’s ability to withstand economic shi s and the ability

TREASURER’S REPORT

to capitalize on these shi s for the good of the membership. We are pleased to report VolCorp did the la er, and, in many respects, served its member credit unions and our collective mission in a greater capacity than any other time in its history.

Providing member credit unions reliable access to liquidity is one of VolCorp’s foundational pillars and a primary reason for its charter over forty years ago.

Although 2022’s year-end outstanding loan balance of $55 million is only a small portion of approved lines of credit and VolCorp’s lending capacity, loan activity was

RON SMITH

notably higher during the year. 2022 marked the

Treasurer

final year of the temporary CLF agent program which granted CLF access for the majority of VolCorp’s membership. While a great amount of past and ongoing effort was expended to make the program permanent, VolCorp was proud to serve as your agent during those uncertain years.

Supporting member liquidity is only possible with a solid financial foundation. Tier 1 capital grew

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over $26 million during 2022 and exceeded $150

unrealized loss position stood at only 2% of its

million at year-end. Although capital growth and

portfolio book value, an impressive feat consider-

comparative annual earnings have been skewed in

ing the portfolio’s short duration and the 425

recent years due to recoveries from the U.S.

basis point upward movement in the Federal

Central Asset Management Estate, both ‘one-time

Reserve Bank’s target range during the year.

events’ and operational performance further

VolCorp’s assets are heavily concentrated in risk-

strengthened our foundation. VolCorp’s earnings

free or low-risk assets such as the Federal

and member share rates both benefited during

Reserve Bank, government guaranteed securities,

2022 with the relatively rapid increases in over-

and agency securities. The investment portfolio is

night rates, resulting in 2022’s net interest income

primarily composed of floating rate instruments

of $9.9 million. U.S. Central distributions and

and VolCorp only holds high credit quality securi-

growth in service-driven revenue bolstered non-

ties. The quality of assets held is ultimately

interest operating income to $31.9 million. A er

reflected in the current Tier 1 risk-based capital

operating expenses of $14.9 million and non-

ratio of 71.92%, which is far greater than its

operating expenses, 2022’s net income rested at

respective “well capitalized” threshold of 6.00%.

There is a significant difference between a credit union’s ability to withstand economic shi s and the ability to capitalize on these shi s for the good of the membership. $26.6 million. At year-end, VolCorp’s leverage ratio

VolCorp’s ALCO meets monthly overseeing

stood “well capitalized” at 8.26% and the retained

asset-liability management, investments, and

earnings ratio of 4.60% sat well above regulatory

credit risk. The commi ee monitors corporate

requirements.

liquidity to ensure funds are available to members in times of need, while also allowing earnings and

VolCorp must also maintain high-quality assets to

growth opportunities for both the corporate and

support member liquidity and provide for safety of

member credit unions. A review of the audited

deposits. Recently the downside of higher rates,

financial statements indicates operations are

namely depressed investment values and unreal-

sound. VolCorp is well-positioned to serve its

ized losses, has garnered much a ention in the

members for many years to come.

news. However, VolCorp’s portfolio management philosophy negated the pitfalls affecting the headline institutions. At year-end, VolCorp’s net

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2022 REPORT

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

opinion on the consoli-

Committee Chairman

dated financial statements of Volunteer Corporate Credit Union as of December 31, 2022, and the year then ended. Mrs. Marla Mackie, CPA, was engaged by the Commi ee to perform the internal audit function for VolCorp during 2022. All audits and their recommendations were reported to the

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Supervisory Commi ee. Information Security reports were provided to the Commi ee monthly by Mr. Tyler McNair, Director, Enterprise Risk and Mr. Cody Lee, Information Security Officer.

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 2022, the RICK MIKELS Committee Chairman Tennessee Members 1st Federal Credit Union

Commi ee believes that it has properly represented the

NICK ARVON West Virginia Federal Credit Union

interests of the membership and its responsibilities to VolCorp.

2022 COMMITTEE MEMBERS

The Commi ee

PAM CASE Jack Daniel Employees Credit Union

would like to commend the board of directors, management and staff for their support

KAREN WOODALL Veritas Federal Credit Union DAVID KING Heritage South Community Credit Union

and commitment to the audit and review process and for their continuing dedication of services to member credit unions.

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2022 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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2022 BO

DIREC

RICK MIKELS Tennessee Members 1st Federal Credit Union

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

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2022 REPORT

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.