2006 Annual Report - Travis Credit Union

Chairman’s and President’s Report
On behalf of the Board of Directors,
we are pleased to report that 2006 was
another year of growth and solid financial
performance at Travis Credit Union. The
strategies that the management team and
Board of Directors agreed on in 2005
advanced progress on many important
organizational goals in 2006. Without the
dedication and hard work of the TCU
employees and volunteers these goals
would not have been accomplished.
Financial and membership growth
Because of our solid membership base
in Solano County and the opening of
branches in Davis (Yolo County) and
Atwater (Merced County), we experienced
a 7 percent growth in membership and 5
percent increase in assets. We made 20,623
loans in 2006, totaling $431.3 million and
because members continued to honor their
obligations, delinquency remained low at
0.57%. We realized a net increase of loans
of 7.5 percent for 2006. While positive
overall, TCU’s annual net earnings were
less than last year, as planned.
Credit unions and financial institutions
were challenged in 2006 by an unusual
rate environment. Many credit unions, and
other financial institutions, experienced
negative growth and earnings last year.
Since short-term interest rates increased
significantly and longer term rates were
relatively flat, the industry experienced
conditions that were the opposite of what
is “normal.” We are happy to report that
our membership, deposits, and loans
increased last year in spite of the economic
conditions we faced.
As a not-for-profit credit union with strong
capital, we are well-positioned to succeed
and grow in this environment. Furthermore, as a cooperative financial institution,
our Mission is to improve the financial
well-being of our members. We work
towards these ideals by returning profits,
after expenses and reserves, to members
in the form of additional branches,
technological improvements, lower fees,
and better value through our savings and
loan product options.
The meaning of our Mission
Our Mission gives rise to the theme of this
annual report: Building on a solid foundation.
In 2006 we put significant time, effort, and
resources into community involvement and
outreach, financial education, opening new
branches, and reinforcing our relationship
with Travis Air Force Base. It was a year of
building, networking and making these
social commitments visible through
coordinated organizational efforts. In this
report, we look at these four themes as
fundamental to our Mission.
Community involvement
and outreach
In 2006, we reorganized our corporate
relations department, which is charged
with deepening TCU’s relationships with
local, state, and government representatives, Travis Air Force Base, and carrying
our organizational Mission into unserved
and underserved communities within our
12-county service area. The last pages of
this report summarize our 2006 community activities, illustrating our resolve to
offer assistance for improving the wellbeing of members, promoting the credit
union ideal of cooperative self-help, and
bringing about human and social development.
in these cities. Our commitment to provide
new branch locations stems from the
comments, suggestions, and feedback of
members. Researching suitable locations
that can make it easy for existing and new
members to do business with us is a yearround effort. In 2007, we anticipate
opening five branches, based on plans
developed in 2006.
Support of Travis Air Force Base
Our historical ties to Travis AFB grow
stronger each year as we support military
families with on-base financial services.
Our base liaison ensures that we have a
visible presence at military events, activities,
and ceremonies. We continually look for
new ways to make it easier for our military
members to do business with us, no matter
where they are stationed or deployed.
Our commitment to members only deepens
as the years move forward. We appreciate
your loyal membership and the suggestions
you make that inform our board, management team, and staff of what matters most
to you. Helping you meet your financial
goals remains the driving force behind all
of our organization-wide initiatives.
Financial education
Our people helping people philosophy is our
guide for providing members the unbiased
information needed to make essential
financial decisions. In 2006, we developed
an educational publication, Smart Money
Matters, which is sent quarterly to the
household of each member. Coupled with
seminars, workshops, training sessions, and
online information, TCU employees and
members have the tools that make a
difference in helping members meet their
financial goals.
Stuart McIntosh, Chairman of the Board
Branching out
We opened two branches in 2006. Our
Davis branch opened in April and our
Atwater branch in December, extending
full financial services to the 3,500 members
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Patsy Van Ouwerkerk, President & CEO
2006 Financial Highlights
2006
2005
% Change
Total Assets
$1,619,228,082
$1,541,543,562
5.04 %
Shares
$1,424,147,567
$1,359,780,654
4.73 %
Loans
$1,139,711,378
$1,060,554,859
7.46 %
Equity
$186,164,437
$173,986,032
7.00 %
$11,526,821
$13,576,330
-15.10 %
144,773
135,038
7.21 %
Net Income
Members
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Statements of Financial Condition
December 31, 2006 and 2005
Assets
2006
2005
$82,562,488
$61,018,500
Available-for-sale
757,479
0
Held-to-maturity
111,621,585
111,807,228
Other
218,461,881
247,040,319
1,882,700
226,000
1,139,711,378
1,060,554,859
6,930,741
6,052,294
Property and equipment
37,783,346
36,959,869
National Credit Union Share Insurance Fund deposit
10,838,560
10,122,442
Other assets
8,677,924
7,762,051
Total assets
$1,619,228,082
$1,541,543,562
$1,424,147,567
$1,359,780,654
8,916,078
7,776,876
$1,433,063,645
$1,367,557,530
Retained earnings, substantially restricted
188,397,042
$176,870,221
Accumulated other comprehensive income
(2,232,605)
(2,884,189)
$186,164,437
$173,986,032
$1,619,228,082
$1,541,543,562
Cash
Investments
Loans held for sale
Loans, net
Accrued interest receivable
Liabilities and Equity
Liabilities
Shares
Accrued expenses and other liabilities
Total liabilities
Equity
Total equity
Total liabilities and equity
3
Statements of Income and Statements of Comprehensive Income
For the years ended December 31, 2006 and 2005
Statements of Income
2006
2005
$74,574,566
15,381,256
89,955,831
$61,528,735
14,396,404
75,925,139
Interest expense
Dividends on shares
41,214,405
26,949,058
Net interest income
48,741,426
48,976,081
9,648,962
10,153,249
39,092,464
38,822,832
95,154
3,059,549
3,789,364
4,951,875
3,706,772
(352,171)
3,039,246
3,411,196
4,672,263
3,139,904
$15,602,714
$13,910,438
$54,695,178
$52,733,270
22,104,512
17,503,588
3,560,257
18,682,261
17,004,652
3,470,027
$43,168,357
$39,156,940
$11,526,821
$13,576,330
11,526,821
$13,576,330
-
(384,146)
Unrealized losses on investments classified as available-for-sale
651,584
(1,329,345)
Other comprehensive income
651,584
(1,713,491)
$12,178,405
$11,862,839
Interest income
Interest on loans
Interest on investments and cash equivalents
Total Interest Income
Provision for loan losses
Net interest income after provision for loan losses
Non-interest income (Loss)
Realized gains on trading investments
Realized losses on available-for-sale investments
Service charges and other fees
Non-sufficient funds fees
Interchange income
Other non-interest income
General and administrative expenses
Salary and benefits
Operations
Occupancy
Net income
Statements of Comprehensive Income
Net income
Other comprehensive income
Reclassification adjustment for realized gains on investments
included in net income
Comprehensive income
4
Supervisory Committee Report
statements and to review the credit union’s
financial internal control structure. The
firm of McGladrey & Pullen, LLP
conducted the year-end audit. In their
opinion, the financial statements present
fairly the condition and results of Travis
Credit Union’s operations. Based on the
outcome of the audits and reviews
conducted by our internal audit departDuring 2006, a comprehensive audit
ment, the independent audit performed
program was performed by our internal
by McGladrey & Pullen, LLP, and the
audit department. The department
joint examinations performed by federal
conducted numerous audits and internal
and state regulatory agencies, the
reviews, testing internal controls and effiSupervisory Committee reports with conficiencies throughout the credit union. No
dence that Travis Credit Union is finanmajor discrepancies were noted. Our two
cially sound, efficiently managed and oper(L to R) Mary Coburn, Chair, Denton Connor, Member, Arturo Reyes, Member
regulators, the California State Department
ates in the best interest of the membership.
of Financial Institutions (DFI) and the
On behalf of the Supervisory Committee,
National Credit Union Association (NCUA), conducted joint
we wish to express our appreciation to the Board of Directors, the
examinations in 2006, which resulted in the highest rating that is
President and CEO, and an outstanding staff for their continued
given by the regulators. This was further validation of our safety
cooperation and support. The committee commends them for their
and soundness.
excellent performance.
It is my pleasure to provide you with
information on the 2006 activities of the
Supervisory Committee. We continued
to focus our efforts on ensuring that our
credit union maintains its history as a safe
and sound financial institution and that
the interests of the membership
are protected.
One of the committee’s responsibilities is to employ a certified
public accounting firm to conduct a year-end audit of the financial
Mary Coburn, Chair,
Supervisory Committee
Independent Auditor’s Report
We have audited the statements of
financial condition of Travis Credit Union
(a state-chartered credit union) as of
December 31, 2006 and 2005 and the
related statements of income and comprehensive income, members’ equity and
cash flows for the years then ended. These
financial statements are the responsibility
of the credit union’s management. Our
responsibility is to express an opinion
on these financial statements based on
our audits.
We conducted our audits in accordance
with auditing standards generally accepted
in the United States of America. Those
standards require that we plan and
perform the audit to obtain reasonable
assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts
and disclosures in the financial statements.
An audit also includes assessing the
accounting principles used and significant
estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe our audits provide
a reasonable basis for our opinion.
The financial statements presented in this
annual report are condensed, and they do
not include the consolidated statements of
members’ equity or cash flows or the footnotes that are considered integral to the
financial statements. In our opinion, these
financial statements and footnotes provide
information required to be disclosed under
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generally accepted accounting principles.
A complete copy of the credit union’s
consolidated financial statements and our
report thereon may be obtained directly
from the credit union.
In our opinion, except for the omission
of the information as discussed in the
preceding paragraph, the financial
statements referred to above present fairly,
in all material respects, the financial
position of Travis Credit Union as of
December 31, 2006 and 2005 and the
results of its operations and its cash flows
for the years then ended, in conformity
with accounting principles generally
accepted in the United States of America.
McGladrey & Pullen, LLP
Certified Public accountants
Brisbane, California
Board of Directors
Front row, left to right, Stuart S. McIntosh, Chairman, Thomas W. Wells, Treasurer
Back row, left to right, Charles Dawes Director, Curt Newland, Vice Chairman, Tom Kulinski, Director,
Andrew Popenoe, Director, Billy M. Perkins, Director, Pat Moreno, Secretary, and James E. Porter, Director
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Community Outreach and Involvement
We believe Travis Credit Union has a
social responsibility to support the
communities we serve and are committed
to being a model corporate citizen. We
believe our support of community should
include monetary contributions, but also
the time and talents of TCU management,
staff, as well as other resources. To
demonstrate our commitment, we have
established a community involvement
program that includes the following:
•Ongoing monetary and in-kind
contributions, sponsorship of
community organizations and their
events, and activities such as the
following annual programs:
Christmas Wish grants less fortunate
children the one wish they have made
for Christmas and helps children on
AFDC/Cal Works, which includes
children of the working poor as well as
foster children
Children’s Miracle Network
Holiday Stocking Campaign
encourages the sale of paper
stockings for $1 in all TCU
branches during the holiday
season to support the health
needs of children hospitalized
at the University of California,
Davis Medical Center in
Sacramento, and Valley
Children’s Hospital in Merced
Christmas Wish employee gift donations
•A full-time community involvement and
government affairs manager who serves
as a liaison between local community
organizations and the credit union;
participates in local, civic, charitable and
industry-related organizations; and keeps
the credit union informed about upcoming events and activities
•An employee volunteer program to
encourage TCU staff participation in
community events and activities
•A process for community organizations
to request TCU support that ensures all
requests are reviewed and that events and
activities which align with TCU’s
Mission are considered for funding or
other forms of support
•Availability of a meeting room at TCU
headquarters for community conferences,
meetings, and events
Annual Food Drive, sponsored
by the Food Bank of Contra
Costa and Solano, and the Yolo County
Food Bank, provides help to the working
poor, seniors, single parents, and the
homeless in Contra Costa, Merced, Solano
and Yolo Counties
Annual Food Drive
Contribution of more than 1,690 hours
of TCU management personnel time in
2006 to 68 local community and
political organizations, and participation
on the Board of Directors of 23 civic
organizations
Involvement of TCU branches and
departments in more than 64 programs
and activities in 2006 to enhance
community development or investment
and to provide assistance to members who
are financially challenged
Personal donations from TCU employees
totaling more than $96,000 to aide 131
local community and political organizations in 2006 and served approximately
11,940 hours as volunteers, members,
or ambassadors
Serving on the Executive Committee for
the Vacaville Fiesta Days, participation in
the Fiesta Days Youth Golf Tournament,
and TCU staff volunteering to help
facilitate the tournament
More than 95 separate financial contributions to community and Travis Air Force
Base charitable organizations and events
Financial sponsorship of Travis Credit
Union Park and the Solano Thunderbirds
baseball team
Cooperation with local media throughout
the year to support public service issues,
events, and activities
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Fighting Back Partnership crime prevention donation,
Vallejo, Calif.
Financial Education
Travis Credit Union places high value on
consumer financial education and thrift.
Some of the commitments we have made
to these values are described below.
Staff and volunteer education
The Board of Directors and management
team believe in continuing education for
its managers and staff to ensure that they
know about the latest industrywide and TCU developments
in deposit, loan, and investment products, and services.
We know that members expect
employees to be accurate and
knowledgeable about financial
alternatives. Lifelong learning is
the key to helping members
make smart decisions about
meeting their individual financial goals. In 2006, the following training opportunities were
available to employees:
Member education
In the spirit of the the principle of People
Helping People, Travis Credit Union is
committed to providing accurate, objective
financial information to members.
TCU’s full-time financial education officer
establishes, develops, and manages the
credit union's financial education
programs. This officer builds relationships
Youth financial literacy visit to TCU headquarters with
SVP/COO Barry Nelson
•Investment seminars on subjects such as
investing basics, tax-free investing, IRA
rollovers, annuities, asset allocation, and
living trusts
•College funding seminars for parents and
high school students
•Savings programs for children offered in
conjunction with local school districts
•Retirement planning workshops for
retiring Travis Air Force Base military
personnel
•New employee orientations,
with emphasis on the unique
mission of credit unions
2006 TCU-sponsored Cal Grant event, featuring keynote speaker,
•TCU intranet to keep person- Former Lt. Gov. Cruz Bustamante
nel informed about financial
issues and changes in TCU products
with school, county, and community
and services
representatives to develop and implement
•TCU training department—dedicated
financial literacy programs and activities in
to overseeing, scheduling, and conducting
which Travis Credit Union participates. In
ongoing management and staff training
2006, Travis Credit Union offered the
following educational opportunities
•Required product knowledge training
for members:
and testing for all TCU staff
•Special staff workshops and seminars
about financial issues and new products
and services
•Money management,
debt counseling, and
budgeting seminars
•Required training and educational
conferences throughout the year for the
Board of Directors and Supervisory
Committee members
•Home-buying seminars, including details
about financing
options
2006 elder financial abuse seminar in TCU’s Community Room
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•SSmart Money Matters,
a publication to
educate and
provide members
with moneyrelated information to help
them achieve
their financial goals
•Elder financial abuse
seminars that are open to the general
public and provide the necessary tools for
recognizing financial scams and fraud that
may threaten their financial security
Davis branch
ribbon cutting
reception
Branch Expansion
Convenient on-site access to credit union
services for current and potential members
was among our highest priorities in 2006.
Much of our organizational strategy last
year was devoted to finding, evaluating,
and negotiating suitable locations within
our service area.
Our Davis branch opened in April. We are
delighted to have our second branch in
Yolo County and are working to be an
active corporate citizen in Davis.
Our Atwater branch, just north of the city
of Merced, opened in December as our
second location in Merced County. These
two new branches bring ATMs and TCU’s
full line of products and services to about
3,500 members in these communities.
The branching research throughout 2006
supports a strategy for opening five more
branches in 2007, including locations in
Napa, Vacaville, Brentwood and two in
Concord. We believe that our electronic
access options, combined with friendly
branch staff and local management of
accounts, is a winning approach to making
it easy for members to do business with us.
Davis branch grand opening
Some of the new signs installed in all TCU branches.
Branch merchandising
As part of our branching effort, we also
implemented a re-merchandising plan that
began in 2005. The aim was to visually
link our branches with consistent, brightly
colored, friendly graphics that display a
collection of simple product messages to
remind members of their options with
Travis Credit Union.
Spanish signage
The merchandising at all our branches
was completed by year-end. In selected
locations we also incorporated Spanish
language signage to ensure that our
bi-lingual and Spanish-only speaking
members feel welcome and comfortable.
Atwater branch ribbon cutting
Atwater branch entrance
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Support of Travis Air Force Base
It’s been 55 years since Travis Credit Union
was chartered by a small group of volunteers
on Travis Air Force Base. Since 1951, we
have grown into the 12th largest credit
union in California. We are proud of our
military heritage and are committed to
helping our members in the armed forces
meet their specialized financial needs.
Travis Credit Union’s full-time base liaison/
corporate relations coordinator arranges
credit union participation in base-related
programs, ceremonies, and presentations,
maintains a positive and visible presence
at base functions, and communicates to
military personnel about TCU programs,
products, and services.
•Discounted tickets to attend Travis
Credit Union Park ball games
•TCU board and management
participation in base activities: TCU
officers sit as directors on five base boards
of directors and are members of nine
other base organizations.
•Welcome presentations for civilian and
military retirees at quarterly retiree
seminars, letters of introduction, and
personal courtesy calls to all new general
officers, wing commanders, and group
commanders
Arrival celebration for the C-17 aircraft
•TCU staff attendance at base promotions,
retirements, and change of command and
farewell celebrations
•TCU management staff service on the
Travis Regional Armed Forces Committee,
Chief’s Group, and Base Advisory Council
Some services we provided for military
personnel and their families in 2006
include:
•TCU helped launch Travis Air Force Base’s
first Military Saves Week, a program that
encourages and assists personnel and their
families to take actions to save, invest, and
reduce debt
•Financial contributions to and
sponsorship of more than 50 TAFB
functions, annual events, and activities
•Special donations to help recognize
award winners, the Enlisted Widows
Home, USO, Travis Community Ball,
and other wing functions so that more
young airmen will be able to attend
Donation to Fisher House representatives who provide
lodging for military families while visiting their loved
ones who are hospitalized on base.
Families participating in the KUDOS
(Kids Understanding Deployment) program
Col. Mike Shanahan
(right) presents a
C-17 commemorative
memento to TCU’s
EVP Lila Dressen,
TCU Board Chairman
Stuart McIntosh,
and Base Liaison
Bob Purves
Military Day opening pitch at TCU Park
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Branch Locations
Antioch
5819 Lone Tree Way
Atwater
981 Bellevue Road
Davis
1380 E. Covell Boulevard
Dixon
1450 Ary Lane
Fairfield
5075 Business Center Drive
2600 Estates Drive (Paradise Valley residents only)
1340 Gateway Boulevard
2570 North Texas Street
659 Skymaster Drive (Travis Air Force Base)
Merced
510 West Olive Avenue
Napa
3263 Claremont Way
Vacaville
11 Cernon Street
2020 Harbison Drive
One Travis Way
Vallejo
1796 Tuolumne Street
Woodland
1780 E. Main Street
www.traviscu.org • Member Service Center (707) 449-4000 or (800) 877-8328