Welcome! Please review your Annual Meeting Packet and help yourself - - PowerPoint PPT Presentation

2019 Annual Membership Meeting

Welcome!

Please review your Annual Meeting Packet and help yourself to refreshments. The meeting will convene at 3:05.

Agenda

▪ Call to Order ___________________________________ ▪ Minutes ________________________________________ ▪ Governance Reports (Printed) ______________________ ▪ 2018 Community Impact Report _____________________ ▪ 2018 Treasurer’s Report ___________________________ ▪ Elections _______________________________________ ▪ Unfinished Business _______________________________ ▪ New Business: Community Initiatives, ________________________

Board Initiatives, & Succession Planning

▪ Q&A ________________________________________ ▪ Election Results __________________________________ ▪ Meeting Evaluation _______________________________ ▪ Adjournment & Dinner _____________________________

3/31/2019 2 Cooperative Federal Annual Meeting

3:05 3:08 3:10 3:10 3:20 3:50 4:05 4:05 4:40 4:55 4:55 5:00

• Board of Directors’ Report
• Supervisory Committee Report
• Credit Committee Report

Governance Reports

(Printed Reports)

Christina Sauve, Chief Operating Officer/Assistant Treasurer

Community Impact

Loan Impact Summary

3/31/2019 Cooperative Federal Annual Meeting 5 New loans opened in 2018 (approved loan amount and LOC limits) Homeownership $3.3 M Personal $2.3 M Small Business $522 K Loan funds disbursed in 2018 (LOC draws and term loan disbursements) Homeownership $3.3M Personal $4.4M Small Business $1.2M Aggregate loan and LOC balances at 12/31/18 Homeownership $13.4M Personal $ 4.7M Small Business $ 3.6M Loans Outstanding $21.7 M Loans Granted $ 9 M Loans Opened $6.0 M

3/31/2019 Cooperative Federal Annual Meeting 6

Geographic Impact

 2018 Loans Originated

81% to Syracuse Residents ➔ 62% in Census Tracts with High Poverty ➔ 69% in Census Tracts with Above Average Poverty

3/31/2019 Cooperative Federal Annual Meeting 7

Home Ownership

 Strengthening neighborhoods. Building a sense of “home.”

Chelsea joined the First Home Club at Cooperative Federal and fulfilled her dream of homeownership. She also joined the team powering the credit union, and has helped

• thers walk into a house

knowing they made it their very own home – with loans, grants, and advising from Coop Fed.

Home Ownership

▪ 2018 Home Lending – Owner Occupied

• Purchase, refinance, improvement and repair
• Home Equity Lines of Credit
• ROC Manufactured Homes

3/31/2019 Cooperative Federal Annual Meeting 8

Home Loans Originated: 42 $3.3 million

Loans Opened 2018 ($)

Home Ownership

▪ 2018 Home Lending

• Total Originated: 42, $3.3 million

3/31/2019 Cooperative Federal Annual Meeting 9

Purchase Loans: 32 $2.9 M

Loans Opened 2018 ($)

Loans Opened 2018 ($)

Home Ownership

▪ 2018 Home Lending

• Total Originated: 42, $3.3 million

– Purchase Loans: 32, $2.9 M

3/31/2019 Cooperative Federal Annual Meeting 10

76% to First Time Homebuyers ($)

Home Ownership

▪ 2018 Home Lending

• Total Originated: 42, $3.3 million

– Purchase Loans: 32, $2.9 M

• 76% to First Time Homebuyers ($)
• Home Equity LOC Disbursements: $181 K

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▪ Financial Counseling

• HUD-approved housing and financial counseling
• Credit advising
• Open to members and nonmembers
• 99 households served in 2018

3/31/2019 Cooperative Federal Annual Meeting 12

Home Ownership

▪ Homebuyer Matched Savings

• Open to low and moderate-income first time buyers
• Participants get at least $7,500 in matching grants
• 17 members received $132,500 in downpayment

assistance matching grants in 2018

• 25 members enrolled as of 12/31/18

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Home Ownership

3/31/2019 Cooperative Federal Annual Meeting 14

Personal Finance

 Affordable credit. Gateway to asset-building.

Mark knew he needed a chance to do his banking better. The Start Over & Credit Builder program helped him boost his credit score by 100

• points. Now, he’s a

graduate of the First Home Club.

Personal Finance

▪ 2018 Consumer Lending

• New/used auto, debt consolidation, credit builder, credit

cards, lines of credit, and other personal uses

3/31/2019 Cooperative Federal Annual Meeting 15

Personal Loans Originated: 448 $2.3 million

Loans Opened 2018 ($)

Personal Finance

▪ 2018 Consumer Lending

• Personal Loans Originated: 448, $2.3 million

3/31/2019 Cooperative Federal Annual Meeting 16

Alternative to Predatory: 201 $540 K

Loans Opened 2018 ($)

Personal Finance

▪ 2018 Consumer Lending

• Personal Loans Originated: 448, $2.3 million

– Alternative to Predatory Loans: 201, $560 K

• Line of Credit & Credit Card Disbursements:

$2.5 million

3/31/2019 Cooperative Federal Annual Meeting 17

▪ Financial Capability

• Workshops and courses on banking, credit, money

management, homeownership, car buying and more

• English, ESL, and other languages with volunteer

translators

• 700 adult and youth participants in 2018

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Personal Finance

3/31/2019 Cooperative Federal Annual Meeting 19

Small Business

 Building an independent, local economy.

Lanel kicked off her business with funding from Coop Fed and training from Up Start. “For them to offer me what they offered me when I started, I was

• ver the moon. I didn’t

expect that much.” Co-Owners of Tboy Shique, Clarissa and Lanel (left to right)

Small Business

▪ 2018 Small Business Lending

• Microloans, working capital, equipment, commercial real

estate and responsible, local landlords

• Businesses, non-profits, & co-ops

3/31/2019 Cooperative Federal Annual Meeting 20

Business Loans Originated: 21 $522 K

Loans Opened 2018 ($)

Small Business

▪ 2018 Small Business Lending

• Business Loans Originated: 21, $522 K

3/31/2019 Cooperative Federal Annual Meeting 21

43% (#) to M/WBE, Co-ops, Non-Profits 34% ($) to M/WBE

Small Business

3/31/2019 Cooperative Federal Annual Meeting 22

▪ 2018 Small Business Lending

• Business Loans Originated: 21, $522 K

– Average non-RE loan size: $16,900

– 40 local jobs supported

• Revolving Credit Disbursements: $936 K

Small Business

▪ Education & Advising

• Individual assistance with credit building, business

financing, and business plan feedback

• Classes with community partners
• Referrals to partners for courses, mentorship
• pportunities, and intensive business planning

assistance

• Over 120 participants in 2018

3/31/2019 Cooperative Federal Annual Meeting 23

3/31/2019 Cooperative Federal Annual Meeting 24

In School Savings Branches

 Hands-on learning in under-served communities.

“I want to learn to save money to help control my spending,” said Lal, a senior at the Public Service Leadership Academy @ Fowler High School. Coop Fed’s In School Savings Branches help students like Lal take control of their own financial education. Lal is saving for a Go Pro camera so he can make even better videos for his You Tube channel and, maybe someday, become a videographer.

In-School Savings Branches

▪ 2018 Initiatives:

• School-based branches at Fowler, Nottingham

and Henninger High Schools

• Ongoing partnership with REACH CNY

3/31/2019 Cooperative Federal Annual Meeting 25

• Student Saving Days at Ed Smith K-8
• Treehouse Saver accounts for any

member

• 208 active Youth Credit Union

members as of 12/31/18

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Congratulations on Your Retirement!!!

 These folks help make it all happen.

Susan Hamilton

3/17/19

Jim Doyle

4/5/19

3/31/2019 Cooperative Federal Annual Meeting 27

In Memory: Greg Knipe

 Colleague, “Loan Arranger,” Friend

Ron Ehrenreich, Treasurer/CEO

Treasurer’s Report

*Please see the Welcome table for copies of our Summary Financial Statement, Ratio Analysis and FPR Guide

Key Financial Ratios

▪ Earnings ▪ Capital Adequacy ▪ Asset Quality ▪ About Peer Ratios

• Average for CUs with $10 - $50 million in assets
• Less than 4% of all CUs are certified Community

Development Financial Institutions (CDFIs)

3/31/2019 Cooperative Federal Annual Meeting 29

Key Ratio 1: Earnings

3/31/2019 Cooperative Federal Annual Meeting 30

• 1.0
• 0.8
• 0.6
• 0.4
• 0.2

0.0 0.2 0.4 0.6 12/14 12/15 12/16 12/17 12/18

Return On Average Assets (%)

Net Income / Average Assets (annualized) Peer

Earnings

▪ Loss in 2018 for second consecutive year ▪ Thin margins are typical

• Cost of fulfilling our mission: hands on, high touch
• More staff and more branches than peer CUs

▪ Slower growth in interest income

• 6% up in 2018, compared to 10% avg 2015-17
• Lost income from refinanced mortgages

▪ Unusually high Provision for Loan Loss

• Expense set aside to fund Allowance for Loan Loss
• Determined by historic and projected loss trends

3/31/2019 Cooperative Federal Annual Meeting 31

Earnings

3/31/2019 Cooperative Federal Annual Meeting 32

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 2014 2015 2016 2017 2018

Provision for Loan Loss ($)

Earnings

▪ Reduced operating expenses in 2018

• Still added staff (+3 FTE), upgraded technology and

maintained Living Wage plan goals

▪ Positive earnings 1982-2008, 2012-2016 ▪ Positive earnings as of 3/31/19

3/31/2019 Cooperative Federal Annual Meeting 33

Key Ratio 2: Asset Quality

3/31/2019 Cooperative Federal Annual Meeting 34

1 2 3 4 5 6 7 8 9 10 01/14 01/15 01/16 01/17 01/18

• a. Delinquency (%)

Delinquent loans / loans Peer Delinquency

Typical “for us” Delinquency

▪ Some members are more vulnerable

▪ Unemployment, slow job growth, stagnant wages ▪ Generational poverty & lack of family assets

▪ Artifact of being a Mortgage Lender

▪ If a member’s mortgage payments are behind, the entire balance is delinquent, distorting our DQ rate

▪ Hands-on approach to delinquency

▪ Added staff and oversight to better control DQ ▪ Risk-Based Rates pay for active DQ management

▪ DQ rates commonly as high as 15% in other CDFI sectors

3/31/2019 Cooperative Federal Annual Meeting 35

Key Ratio 2: Asset Quality

3/31/2019 Cooperative Federal Annual Meeting 36

0.00 0.20 0.40 0.60 0.80 1.00 1.20 01/14 01/15 01/16 01/17 01/18

• b. Net Charge Offs (%)

Net Charge-offs / Averge Assets Peer Net Charge-offs

Unusual Loan Losses

▪ $240,000 net charge offs in 2018

▪ 2x more than 2017 ▪ Losses were near or below peer for past 20+ years

▪ Detected problems in Q2 2018

▪ Inconsistent application of policies and procedures ▪ Gaps in administrative oversight ▪ “Exceptions gone wrong”

▪ Course corrections made

▪ New Loan Administrator position ▪ 100% loan audits for quality assurance

3/31/2019 Cooperative Federal Annual Meeting 37

Our Trends in Context

3/31/2019 Cooperative Federal Annual Meeting 38

Effective management, consistent losses

From the Filene Institute:

▪ “The lending experience of Community Development Credit Unions (CDCUS)… indicates that delinquency rates run higher in CDCUS than in other credit unions, but the charge-off rates are consistent with overall credit union rates.”

– Albert E Burger & Mary Zellmer, in Strategic Opportunities in Serving Low to Moderate Income Members

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2 4 6 8 10 12 14 12/14 12/15 12/16 12/17 12/18

Net Worth To Assets (%)

Net Worth / Assets Peer

Key Ratio 3: Capital Adequacy

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Key Ratio 3: Capital Adequacy

3/31/2019 Cooperative Federal Annual Meeting 41

2 4 6 8 10 12 14 12/14 12/15 12/16 12/17 12/18

Net Worth To Assets (%)

Net Worth / Assets Peer

Capital Adequacy

▪ “Adequately Capitalized” – 6.52% 12/31/2018 ▪ Negative earnings dropped us below the 7% “well capitalized” benchmark for one quarter ▪ Back above 7% as of 3/31/18

▪ Secondary Capital ▪ Grant revenue

▪ Goal: Reach 8% for the first time since the “Crash”

▪ Allows us to grow our assets, income, and impact

3/31/2019 Cooperative Federal Annual Meeting 42

▪ CDFIs are also evaluated based on

• Growth in members, loans, assets

– Meeting community needs – Achieving a sustainable scale

• Deployment of shares & assets in the form of loans

– Using our resources to improve communities – Local and socially responsible

3/31/2019 Cooperative Federal Annual Meeting 43

Impact Ratios

Growth

▪ Where we are at 12/31/2018:

• $26.5 million in Assets
• $21.7 million in Loans Outstanding
• $23.4 million in Shares & Deposits
• 4,779 members

– Households, individuals, businesses and organizations

3/31/2019 Cooperative Federal Annual Meeting 44

Growth in 2018

▪ No net growth in loans, deposits & overall assets

• Growth without positive earnings squeezes our net

capital ratio

• More secondary market mortgage sales
• Returned some non-member deposits
• Panic refinancing of some ARMs

▪ 5% growth in members

• 91st percentile among peer CUs

3/31/2019 Cooperative Federal Annual Meeting 45

3/31/2019 Cooperative Federal Annual Meeting 46

$0 $5 $10 $15 $20 $25 $30 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18

Growth of Assets Since Our Founding

Deployment

3/31/2019 Cooperative Federal Annual Meeting 47

▪ Assets focused on loans to members – not stock market investments, Euro funds, or gold ▪ More than 100% of member shares are kept working in the local economy

• 12/31/2018: 109% loans to member deposits
• Average from 2014 - 2017: 117%

▪ Mission-based nonmember deposits increase our lending capacity ▪ Since 1982 we’ve made $150.9 million in loans to members

Deployment

3/31/2019 Cooperative Federal Annual Meeting 48

10 20 30 40 50 60 70 80 90 12/14 12/15 12/16 12/17 12/18

Loans To Assets (%)

Loans / Assets Peer

Looking Forward: 2019

Profitability Plan for sustainability & community impact: ▪ Accelerated business lending

• Supported by capital grants

▪ More earnings from mortgage lending

• Higher volume with full “in house” origination

▪ Enhanced physical, management & IT infrastructure

• N Salina Office reconfigured; Westcott Office entrance
• Restructured loan department
• Core Conversion
• Staff training and new intranet

3/31/2019 Cooperative Federal Annual Meeting 49

Reports Q&A

Elections

Unfinished Business

New Business

▪Community Initiatives ▪Succession Planning ▪Board Initiatives

Part One

Community Development Partnerships

Meagan Weatherby, Development & Communications Manager Thom Dellwo, Financial Counselor & IT Manager

Investing in Local Business

Community Impacts 2006 - 2018

$9.7 million loaned 52% M/WBEs 1,200+ jobs

Alliance for Economic Inclusion

Business Opportunity Fund

Bring your vision to life with a different kind of loan.

Funding that fits

Start Up Working Capital Equipment Real Estate

Terms that work for you

Flexible criteria No minimum loan size No minimum equity Start ups welcome

Help along the way

Hands-on guidance Resource connections Network of advisors Ongoing support

Alliance for Economic Inclusion

3/31/2019 Cooperative Federal Annual Meeting 57

Syracuse Financial Empowerment Center

▪ Free, professional financial counseling for any city resident ▪ Led by City of Syracuse and Home HeadQuarters ▪ Scattered sites for community access ✓Coop Fed South Ave ✓Coop Fed Burt St ✓and more!

3/31/2019 Cooperative Federal Annual Meeting 58

Syracuse Financial Empowerment Center

▪ Replicating a national,

• utcome-driven model

▪ Focused on

✓ Increasing credit scores

✓ Reducing debt ✓ Increasing savings ✓ Access to Fair Banking

▪ Broad coalition of community partners

The Reinvestment Alliance

An alliance of individuals, organizations and companies that are using the integration of sustainability principles into our financial systems as a tool to effect positive change.

The Reinvest CNY! Campaign

• Launched in

September, 2018

• $5,000,000 Goal
• Call to Action:

➔ Investments ➔ Philanthropy ➔ Accounts & Loans

Upcoming Initiatives

• Cooperative Business

Development

• Financial Education &

Empowerment

• Municipal Divestment

You Can Join!

Welcoming all individuals &

• rganizations

Membership & General Interest Meeting Tuesday, 5/21 8:30 am CNY Philanthropy Center

Part Two

Board Initiatives

Frank Cetera, President

Part Three

Succession Planning

Frank Cetera, President

New Business Q&A

Elections Results

Meeting Evaluation

Adjournment & Dinner