GECU OF EL PASO

GECU OF EL PASO
2004
ANNUAL REPORT
BOARD OF DIRECTORS
MANAGEMENT TEAM
Manuel R. Ybarra,
Chairman of the Board
Harriet May,
President and CEO
Gregory J. Watters,
Vice Chairman
Fermin Acosta, Jr.,
Senior Vice President,
Administrative Services
Frank Garcia,
Secretary/Treasurer
Harriet May,
President/CEO
John Fernandez
Annie Koch
Luis Mata
Robert C. Nagel
Rudolf Kuehne,
Senior Vice President,
Data Processing
Crystal Long,
Senior Vice President,
Consumer Loans and
Remote Services
Steven G. Lutz,
Senior Vice President,
Chief Financial Officer
T. C. Prewitt
Musette Bracher,
Vice President,
Marketing
ADVISORY MEMBERS
Arturo Moreno,
Vice President,
Business Services
Jose I. Quiñonez, Jr.
Maria Appelzoller
Art Werge, Jr.
AUDIT COMMITTEE
Gregory J. Watters,
Chairman
Al Perez,
Vice President,
Sales and Service
Operations
Janie Shockley,
Vice President,
Human Resources
Barbara Franco,
Director,
Internal Audit
Frank Garcia
Luis Mata
It was a year when taking a closer look meant not
only looking with our eyes, but with our minds and
CREDIT COMMITTEE
Fermin Acosta, Jr.,
Chairman
hearts at what we value the most… the financial well-
Harriet May
Crystal Long
being of our member-owners.
1
The spirit of GECU and our
philosophy of "people helping
people," is exemplified by our
volunteer Board of Directors.
C H A I R M A N ’ S
R E P O R T
Taking a Closer Look
A Focus on Governance
Your Board of Directors, who represent you, the members, honored me nearly one year ago, by
electing me Chairman of the Board. My pledge to you is to continue to strengthen the Board’s
leadership responsibilities, internalize the Board’s stewardship responsibilities, and fulfill the Board’s
duties of providing the general direction and policy guidance to our professional team of employees
led by President and Chief Executive Officer Harriet May. In furtherance of these responsibilities, the
Board’s vision for the credit union is one of improving the quality of life of our members while
ensuring the long-term success of your credit union. Our aim is to provide our member-owners a
not-for-profit financial institution with a full range of financial services dedicated to the credit union
philosophy of “people helping people.”
Your Board of Directors brings to the credit union the strength of a range of experience in the
financial, management and government sectors. These unpaid volunteers give to your credit union
valuable leadership skills to represent the needs of our members -- whether it’s a new car, a home,
financial security, or access to cash. Your Board of Directors translate those needs into
direction and policies that are consistent with the law and sound financial principles. In turn,
our professional staff transforms the Board’s direction and policies into lending programs,
savings programs, or new facilities.
Your credit union experienced an exceptional year in 2004. Financial performance was
sound, asset quality was positive, earnings were strong and membership growth was steady.
Your credit union’s total assets topped the $1 billion level. Nearly one out of every three El
Pasoans is a member-owner of our credit union. GECU’s full range of services is keeping
up with today’s need for convenience and dependability, fitting of El Paso’s largest locallyowned financial institution. Credit goes to our team of professionals, who diligently worked
on projects to improve the quality of your life, while maintaining the financial soundness of
your credit union.
As we look forward to another exciting year, let me assure you that your Board of Directors
is always focused on what’s important to you, GECU’s member-owners.
Manuel R. Ybarra,
Chairman of the Board
Standing (L-R): John Fernandez, T.C. Prewitt, Luis Mata, Robert C. Nagel, Gregory J. Watters, Jose I. Quiñonez,
Manuel R. Ybarra. Seated (L-R): Frank Garcia, Annie Koch, Harriet May, Maria Appelzoller, Art Werge, Jr.
3
GECU’s low-cost mortgage loans helped the Vargas family purchase
a larger home without raising their monthly payment.
P R E S I D E N T ’ S
Angie and Victor Vargas and their
two daughters Victoria and Elisa
R E P O R T
During 2004, we took every opportunity to ask our members to “Take A Closer Look” at all the benefits, products
and services available through the credit union they own. We, too, spent a lot of time taking a closer look at our
members’ needs. Using professional research tools, such as our annual Member Satisfaction Survey and our daily
transaction surveys, we studied your feedback about the financial products we offered, as well as the quality of service
you received in our lobbies and on the telephone. While pleased with the confidence you have placed in us, we
continued to look for more efficient and innovative ways to serve you.
As our community continued to grow further East, it became abundantly clear that we needed a facility closer to
members’ homes. In response, we opened a new, state-of-the-art drive-thru at 3037 Trawood Drive, featuring 12
drive-thru lanes, three drive-up ATM units and one night depository. Since opening in April 2004, transaction
volumes have increased rapidly, and wait times have been reduced at our other East Side branches.
With the rapid growth on El Paso’s far west side, we knew we needed to expand our services on that
side of town. We broke ground on a new office at 1500 North Resler Drive on April 20, 2004.
Construction is now almost complete and we are planning an official grand opening toward the end
of the first quarter 2005.
Our Viscount office has served us well as our corporate headquarters since 1968, but we’ve been
“bursting at the seams” for several years. After an extensive search, we purchased new property in
Central El Paso at the corner of Edgemere and Airway (formerly the Far West Rodeo). The demolition
of the existing building is nearly complete and construction of a new corporate facility will begin shortly, with
completion anticipated in mid-2006.
Looking to help more members realize the American dream of home ownership, we partnered with
Fannie Mae (FNMA) to offer more mortgage loan opportunities, including loans that require little or no down
payment. I am pleased to report that through this expanded relationship, our mortgage loan production between April
and December 2004 doubled over last year, a clear indication that more
members are realizing the dream of home ownership.
Our industry faced new legislative challenges in 2004 and will continue to do so through 2005. Bankers have revived
the argument that credit unions have an unfair tax advantage and are pouring millions of dollars into renewed efforts
to eliminate our tax-exempt status and our very existence. Individual credit unions, local credit union chapters, state
leagues and national credit union organizations must continually share their stories of “people helping people” with
government officials and the press – even with their own members – if we are going to retain our tax-exempt status
and continue to provide members with affordable financial services. We fought this battle before and won, and the
only way we will win again
is by making our legislators “Take a Closer Look” at what we do that truly sets us apart from other financial
institutions.
As we look to the future, we must stay focused on our mission to serve our members and our communities with
convenient locations and quality, affordable financial services. GECU exists to serve our member-owners and we will
continue to work hard to meet your growing needs.
Harriet MaY,
President and CEO
5
Perspectiva, a locally-owned architectural firm, is experiencing
tremendous growth. A business loan from GECU is helping the
four owners expand their successful partnership.
C R E D I T
C O M M I T T E E
R E P O R T
Two-Thousand Four was a phenomenal year at GECU. Loan volumes reached new heights as members
borrowed over half a billion dollars to improve their financial position.
Here is a snapshot of our loan activity over the last twelve months:
GECU’s loan portfolio increased over $122 million or 15.8%, ending the year at $902,750,385, with an
average loan-to-deposit ratio of 93.53%.
Indirect Lending led the way with $282 million in automobile loans.
SmartCall funded loans totaling $77 million.
The Mortgage Department followed suit with nearly $27 million in first-lien mortgages and over $31
million in home equity loans.
GECU reduced interest rate risk by selling over $30 million in mortgages to Fannie Mae,
while
retaining the servicing side of the loans and the relationship with our members.
SmartBranch (Internet) loans exceeded $7.5 million.
Business Services funded over $8 million in small business loans.
THE CHART BELOW CATEGORIZES
SOME OF THE LOANS MADE IN 2004:
Loan Type
Loan Totals
New Autos (At Dealerships)
7,375
$200,686,143
Used Autos (At Dealerships)
4,985
81,610,020
New Autos (Lobby/SmartCall)
3,589
55,204,335
Used Autos (Lobby/SmartCall)
2,435
22,643,011
13,722
62,318,896
Mortgage Loans (1st Lien)
392
26,913,654
Home Equity Loans
874
31,851,426
744,757
61,040,370
Other Installment Loans
GECU’s success in 2004 was a direct result of
our member-owners “Taking A Closer Look”
Member Business Loans
60
8,115,331
at the products and services offered at your
credit union. We appreciate the trust and confidence you have placed in us and look forward to serving you
throughout 2005.
Credit Card Advances
Rodolfo Uria,
Lorenzo Aguilar,
Martin Needle,
Eugenio "Pacelli" Mesta
Number of Loans
In 2004, bankruptcies continued to rise
significantly across the nation. GECU
experienced an increase as well, with a 6%
increase in bankruptcy filings. The Bankruptcy
Abuse Prevention and Consumer Protection
Act, intended to deter bankruptcy abuse, again
failed to pass in the United States Senate. As a
stop gap measure, our lending staff will
continue to look closely at the bankruptcy
indicator score shown on credit reports for
additional underwriting guidance.
Fermin Acosta, Jr.,
Chairman
Harriet May
Crystal Long
7
A Family Account MasterCard gives your loved ones access
to credit for everyday uses or in an emergency.
A U D I T
C O M M I T T E E
R E P O R T
Once again it is my pleasure to report that your credit union is financially sound. Your
commitment to, and confidence in, your member-owned credit union resulted in a very
successful year for GECU.
The Audit Committee, made up of three volunteer member-owners, oversees the
Internal Audit Department which conducts comprehensive internal audits throughout
the year ensuring: 1) accounting records and reports are prepared promptly and
accurately reflect operations and results; 2) established internal controls are effectively
maintained and adequately protect the credit union, its assets, members, management
and employees; 3) each area of the credit union is carrying out the plans, policies and
procedures for which it is responsible as directed by the Board of Directors.
The Audit Committee also oversees the annual comprehensive year-end audit
conducted by the independent certified public accounting firm of Lauterbach,
Borschow & Company, P.C. Their examination was conducted in accordance with
generally accepted auditing standards as issued by the American Institute of Certified
Public Accountants.
As a result of the internal and independent audits, the Audit Committee believes the
financial statements included in the 2004 Annual Report fairly present the financial
condition and earnings of Government Employees Credit Union of
the year ended December 31, 2004.
El Paso for
Gregory J. Watters,
Chairman
Frank Garcia
Luis Mata
9
Through a new partnership with MEMBERS Trust Company, GECU
members now have access to a full range of affordable trust services.
R E T U R N
T O
M E M B E R S
Interest - CDs ............................48.12%
Life Savings..............1.35%
Life Savings
214,176
1.35%
Dividends - Shares
2,945,445
18.59%
Interest - MMA
1,014,513
6.40%
Interest - Checking
1,007,129
6.36%
Interest - IRAs
3,039,665
19.18%
Interest - CDs
7,626,266
48.12%
$ 15,847,194
100.00%
Total Return to Members
$
Interest - IRAs...19.18%
Interest - Checking......6.36%
Interest - MMA.....................6.40%
Dividends - Shares...................18.59%
D I S T R I B U T I O N
O F
Operating Expenses...........32.80%
Judy Monteleone,
Reserves.........13.29%
Trust Officer/Agency Manager
E A R N I N G S
Return to Members
$ 15,847,194
22.35%
Employee Compensation
and Benefits
22,371,044
31.56%
Operating Expenses
23,249,593
32.80%
9,421,160
13.29%
$ 70,888,991
100.00%
Reserves
Total Earnings
Return to
Members......22.35%
Employee
Compensation
and Benefits.....................31.56%
11
S T A T E M E N T S
O F
F I N A N C I A L
C O N D I T I O N
2004
Investments:
Securities available for sale
Securities held to maturity
Other investments
Loans held for sale
Loans receivable, net
Accrued interest receivable
Accounts receivable and other assets
Mortgage servicing rights
Property and equipment, net
NCUSIF deposit
Total assets
LIABILITIES AND MEMBERS’ EQUITY
Members’ share and savings accounts
Interest and dividends payable to members
FHLB advances
Accrued expenses and other liabilities
Total liabilities
O F
I N C O M E
Years Ended December 31, 2004 and 2003
December 31, 2004 and 2003
ASSETS
Cash and cash equivalents
S T A T E M E N T S
$
2004
2003
50,400,797
$ 74,034,904
13,682,600
17,853,212
6,379,093
631,400
896,543,249
3,074,147
45,234,411
14,576,147
4,768,304
2,882,315
771,257,461
2,790,845
2,457,813
893,900
25,464,357
8,527,837
5,258,456
753,435
16,380,236
8,107,137
$ 1,025,908,405
$ 946,043,651
$ 929,649,229
887,567
6,928,326
4,218,147
$ 862,027,083
832,410
4,850,251
3,713,987
941,683,269
871,423,731
Commitments and contingencies
Interest income
Loans
Investments
$ 49,893,850
1,933,133
$ 50,482,997
1,992,526
51,826,983
52,475,523
15,633,018
186,883
16,980,650
40,884
15,819,901
17,021,534
36,007,082
35,453,989
4,057,818
4,450,571
Net interest income after provision for loan losses
31,949,264
31,003,418
Fees and other operating income
Service fees
Loan late charge fees
Net (loss) on securities held for sale
Net gain on sale of mortgage loans
Net mortgage servicing income (loss)
Other
16,583,766
701,504
(519,361)
950,556
65,456
1,252,418
13,317,109
491,624
0
1,352,811
(11,508)
1,075,957
19,034,339
16,225,993
22,371,044
12,946,636
2,116,517
2,125,199
2,030,716
20,825,342
12,106,559
1,960,551
1,770,949
2,167,253
41,590,112
38,830,654
9,393,491
8,398,757
27,669
38,133
9,421,160
$ 8,436,890
Interest expense
Members’ share and savings accounts
Borrowed funds
Net interest income
Provision for loan losses
Operating expenses
Compensation and benefits
Office operations
Occupancy
Education, promotions and conferences
Other, net
Members’ Equity
Retained earnings, restricted
84,225,136
74,619,920
Income from operations
Total members’ equity
84,225,136
74,619,920
Non-operating income
Gain on sale of property and equipment
$ 1,025,908,405
$ 946,043,651
Total liabilities and members’ equity
Net income
For a full GECU 2004 Audit Report, please contact the office of President/CEO Harriet May.
2003
$
SHARES AND DEPOSITS
Share Accounts
Christmas Club Accounts
Youth Savings Accounts
Certificates of Deposit
Money Market Accounts
Checking Accounts
Senior Privilege Checking
Individual Retirement Accounts
Business Checking Accounts
MAIN OFFICE
7227 Viscount Boulevard
LOANS
Personal Loans
New & Used Auto Loans
Home Mortgage Loans
Home Equity Loans
Home Improvement Loans
MasterCard® Credit Cards
Line of Credit Accounts
Business Loans
EAST OFFICES
10435 Vista Del Sol Drive
11987 Rojas Drive
3037 Trawood Drive (Drive-thru)
SPECIAL SERVICES
SmartBranch®
NORTHEAST OFFICE
5625 Transmountain Road
WEST OFFICE
5670 North Mesa Street
LOWER VALLEY OFFICE
8936 Alameda Avenue
DOWNTOWN OFFICE
700 East San Antonio Street,
1st Floor, Federal Building
(online services) www.gecu-ep.org
SmartLine
(24-hour account information)
SmartCall
(call center for new accounts and loans)
MAILING ADDRESS
P. O. Box 20998
El Paso, Texas 79998-0998
ATMs
MasterMoney® Check Card
Direct Deposit
Automatic Transfers
TELEPHONE NUMBERS
(915) 778-9221
Toll-Free 1-800-772-GECU (4328)
(between GECU accounts)
Safe Deposit Boxes
Night and Lobby Depositories
IRnet
(International Remittance Network
for international wire transfers)
Overdraft Privilege
WEB ADDRESS
www.gecu-ep.org