2004 - Xceed Financial Credit Union

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Mission Statement
We intend to become the financial institution of choice for our
field of membership through a focus on quality and customized
service. We intend to offer primary financial services that
represent a competitive advantage to our member-owners.
Core Values
Member Focus • Sponsor Loyalty • Commitment to Staff •
Teamwork Everyday • Innovation • Community Outreach
m e s s a g e
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Remember ing the real reasons for 40 years of success
As 6th century philosopher, Lao-Tzu,
wrote, “A journey of a thousand miles begins
with a single step.” I’m humbled by the
thought that our growth to over 77,000
members began with just one. And from
a single member deposit, we’ve grown to
over $1 billion in membership assets.
ownership easier, as well as partnering with real estate firms
to secure special rebates and rewards for members.
40th Anniversary Specials — To celebrate our milestone,
we offered unique Home Equity Programs, 4-Year
Certificate Accounts, and Checking specials in June.
The paradigm of it all may be that —
from 1964 until this very moment — your
Credit Union has never lost sight of the
“individual” member. Our core “MemberFirst”
philosophy is built on urgently serving your
financial needs, in a very personable and
uniquely friendly style. And your loyalty and support in
return has transformed your Credit Union into one that’s
admired nationwide.
This is a banner year for XFCU as we proudly
commemorate our 40th anniversary. And the following
accomplishments from the past year are certainly cause for
great celebration.
A+ Member Satisfaction — You told us that our
uncompromising dedication to service continues to pay
off. Our member survey returned a 97 percent “satisfaction”
rating. In fact, nearly 70 percent were “very satisfied.”
Diversity in the Workplace Award — Our efforts were
honored for a fourth consecutive year.
This handful of highlights is just a small part of our
anniversary-year accomplishments. Unfortunately,
I don’t have the space to touch on every achievement,
and acknowledge each individual. Let me just convey
that our team has worked tremendously hard all year.
And I speak for the dedicated staff, volunteers and
Board of Directors when I express thank you for
your gratitude, trust and loyalty.
As great and memorable as our first 40 years have
been, we look forward to breaking new ground,
and increasing member satisfaction, in the
coming years.
On the following pages, it’s my pleasure to present
last year’s accomplishments, and a stroll down
memory lane with highlights from 1964 – 2004.
Sincerely,
New Web Branch — Now even more user-friendly, and
tremendously more functional for really easy banking.
More Affordable Mortgage Programs — We reacted to
the active housing market by offering loans that make
Bill Cheney
President/CEO
m essa ge f ro m th e c hair
Another year of sharing success
and service all around
It is apropos that our institution is referred
to as a “financial cooperative” or as a “credit
union.” For 40 years we have excelled at
supporting the members we serve, the
communities we share, and the commitment
to offering you a financial choice other than
the big banks. It really is a true “union.”
During 2004, we further enhanced popular
services and launched new banking conveniences
and programs. One in particular that has a
special place in my heart is the Romeo Doty
Scholarship Program. Mr. Doty was an integral part of XFCU
for over half of its existence — 21 years! His namesake
scholarship gives aid to standout high school seniors.
We also continued to reach out to several communities by
expanding and opening membership to prime areas in
California, Texas, Florida, Illinois and New York. As we have
seen, a growth in membership equals a broadening of banking
benefits for you.
I am honored to serve as your Chairman, and proud to represent
our entire Board of Directors in presenting the following recap
of our top financial and community achievements. Success is
only possible through your support. Thank you.
Best regards,
Murray Spector
Chair, Board of Directors
f i n a n c i a l
h i g h l i g h
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XFCU News:
1964 — Origin. Started as Scientific
Data Systems Credit Union and ended
the year with $61,728 in assets and
620 members.
Growing “up” through the years, including last year
• Delinquency Ratio — Like golf, the lower the score,
the better. We dropped to a record low of .39 percent.
• Growth in 2003 vs. 2004 — In just one year, XFCU has
increased $25 million in assets, $26 million in loans and
$24 million in savings.
• Net Worth Ratio — A well-capitalized
level is 7 percent, but the better news is
that XFCU came in at 10.65 percent.
1969 — New Building. The Credit
Union broke ground for its new
headquarters in El Segundo.
World News:
751
726
537
512
475
544
1964 — The Beatles. The mop
tops took the world by storm.
521
432
• IDC Rating — We’re “Excellent” once
again, as judged by one of the nation’s
most prestigious groups.
• Bauer Rating — Another 5-Star
Rating of “Superior” from the industryleading analyst organization.
1969 — Xerox. Scientific Data
Systems acquired by Xerox
Corporation.
• Return on Assets Ratio — Favorable results once again,
including a .77 percent return.
Even as we continue to increase membership and raise your
credit union’s assets, we will never lose sight of keeping on
top of XFCU’s cherished banking conveniences and awardwinning service. While we prove year after year that there is
strength in numbers, it is your complete satisfaction that
returns the greatest rewards.
Million
636
437
571
385
1967 — Heart Transplant.
First successful procedure in
Cape Town, South Africa.
Million
2001
2002
2003
TOTAL
MEMBER
SAVINGS
2004
2001
2002
2003
TOTAL
ASSETS
2004
Million
2001
2002
2003
TOTAL
MEMBER
LOANS
2004
1969 — Moon Landing.
Neil Armstrong took giant
leap for mankind.
The ‘70 s
XFCU News:
1970 — XEFCU. Name
changed to Xerox Employees
Federal Credit Union and
served 3,718 members with
$2.5 million in assets.
1975 — Expansion. Services
offered to all Xerox
employees.
1976-77 — New Branches.
Opened offices in Texas and
Rochester.
World News:
1974 — Nixon Resignation.
Richard Nixon is the first
President in history to resign.
1976 — Bicentennial. 200-year
celebration of the Declaration of
Independence.
1978 — Test-Tube Baby.
The first test-tube girl was born
in England.
,
inventing more of what you’
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and adding more of what y
ou like
Innovations & Security Updates
Expanded Conveniences
Transformed Web Branch Launches — Banking has never
clicked so easily before.
• Search engine on every page — Find what you want quicker.
• Related services links so you can tap into other helpers
(i.e. loan calculators, insurance info and more)
• Express access to Web Banking/e-Statements, and
Visa Online.
• Easy check reordering while logged in to Web Banking.
• Wireless Web Banking — The ultimate convenience.
• e-Statement direct access (in case you forget your PIN)
to view past 12 months and check images.
• Funds transfer upgraded for transactions to XFCU
accounts and other financial institutions.
We put the “more” in Mortgage Program
• All-new Housing Partner Program featuring real estate
contacts and substantial cash rebates for members.
Cash in on buying and selling through XFCU’s partners.
• Developed Online Application for convenience and
ease, with some approvals as quickly as one day!
• Interest-only mortgage loan — We’re offering more
members a chance for home ownership with these
lower payments.
• First-time homebuyer mortgage — This generous
97 percent LTV program rewards members with
good credit, but limited down payment, a chance to
affordably own.
Automated Security System — Our audit team and fraud
filter systems are aggressively hard at work protecting your
accounts from possible identity manipulations and possible
account takeovers. Every new account is reviewed under a risk
management program to protect you and the Credit Union.
We maintain critical security by keeping computer
system virus clean year after year.
Remodels and Relocations
• Enhanced the member experience and in some
communities gave our entire membership easier
access to a branch.
Upgraded 42 XFCU ATMs for faster, easier service
Prompt Service — XFCU’s popular TeleServices
Department is answering member calls in less than
11 seconds!
s t i l l m a k i n g “ n e w s ,”
even after 40 years
Community Service
Sponsor Relations
Our Communities — Throughout the year, the XFCU staff
volunteered their time to causes such as Beach Clean-Up Day
for Heal the Bay; Revlon Breast Cancer Walk; MS Walk; Red
Cross of Los Angeles; Troop Homecoming; Children’s
Advocacy Center; Fund Raiser for Ovarian Cancer; and Toys
for Tots, as well as many other worthwhile causes.
The Women’s Alliance — Diane McGarry, Vice President,
Chief Marketing Officer, Xerox Corporation, stated
“The Women’s Alliance organization might not have
survived without XFCU’s continued support.”
Camp XFCU for Kids — Life-enhancing financial retreats in
El Segundo, Rochester, Dallas and Parsippany, and solely for
kids ages 6 to 11.
XFCU was flattered by numerous awards in 2004:
• Desjardins Youth Financial Education Award from the
Credit Union National Association.
• 4th consecutive year honored with the Dora Maxwell
Social Responsibility Award by the New York State
Credit Union League.
• 4th consecutive year XFCU has been highlighted for
diversity in the workplace — this time from the
California Credit Union League.
• 3rd year recognized for our community service
initiatives from Xerox Management Association.
• Safety Team won “best of best” safety practices.
Industry Support — Staff have participated on committees
like the annual Xerox Women’s Conference and Xerox
Management Association, and were featured speakers on
numerous key issues, including Identity Theft.
XFCU News:
1980 — El Segundo. Placed
headquarters in California, and offered
Checking with Direct Deposit.
1985 — $100 Million. Asset size
ranked XFCU as one of nation’s
biggest; ATM service started.
1986 — New Products. Launched
Mortgage Loans, Visa® Credit
Cards and 24-hour phone service.
1987 — Subsidiaries. Started XCU
Capital, Inc., and Focus Insurance.
Xerox Teamwork Day — We were out in numbers
showing our support for the corporation.
World News:
Associational Partnerships — Supported our partners
at Bay Days for Heal the Bay, Zoobilation and ZooFest
for the Seneca Park Zoo, and Wines of the Wild for the
Buffalo Zoo.
Supporting Our Neighbors — Raising money and
satisfying appetites at Chili for Charity in Rochester, and
providing ongoing support to the Lewisville
community and Chamber of Commerce.
Plus, we welcomed 3,900 new
memberships by extending XFCU services
to the communities of San Jose, Rochester,
Dallas, Chicago and St. Petersburg.
1981 — Royal Wedding. Prince
Charles married Lady Diana
Spencer with 700 million TV
viewers.
1986 — Challenger Tragedy.
The space shuttle exploded 73
seconds after launch.
1989 — Wall Crumbles.
Communist government of
East Germany collapsed;
Berlin wall came down.
XFCU News:
1995 — Online First. First
credit union to offer online
Bill Payer service; started
PC-based 24-hour Home
Banking.
1997 — Web Winner. Web
site, xfcu.org, went live and
won multiple awards.
1999 — Extra Services. Began
Housing Partner Program and
Credit Union Auto Finance,
plus nationwide mortgages.
World News:
1992 — LA Riots. Unrest followed
the not guilty ruling of officers
involved in Rodney King case.
1997 — Dolly the Sheep. First
cloning by scientists at the Roslin
Institute in Scotland.
1999 — Y2K. Over-hyped
computer software glitch set the
world into panic.
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XCU Capital & Focus
Insurance
2004 was another remarkable year for XCU
Corporation, Inc., the holding company for XCU
Capital Corporation, Inc. and Focus Insurance
Agency, Inc. While four existing credit union clients
became owners, XCU welcomed six new credit unions
as partners. The only nationwide, 100% credit unionowned broker/dealer, XCU Capital, launched a new
technology platform and added Financial Advisors to
many programs. Focus Insurance, the 100% credit
union-owned subsidiary, introduced several credit
union insurance products this year through “aggregate
negotiation” benefiting the members of Xerox Federal
Credit Union.
By year’s end, XCU had 30 credit union partners,
including 21 owners with a combined membership base
of nearly 3.2 million and assets totaling more than $50
billion. XCU provides investment and insurance services
to more than 47,000 retail clients nationwide
and remains committed to offering high
quality products and services for all of our
shareholders, partner credit unions, Financial
Advisors, and members.
Credit Union Auto Financing (CUAF)
CUAF, co-owned by XFCU and ESL FCU, celebrates seven
years of indirect auto lending in Rochester and Buffalo,
New York. XFCU members shop for their vehicle at preferred
dealerships, and get on-site Credit Union financing.
In July 2004, XFCU launched one-stop vehicle shopping in
Texas. XFCU grew by $70 million through our indirect
lending channels and added over 6,000 new members. With
five dealers producing over $9 million in sales in Texas alone,
success is well under way. XFCU continues to add dealerships
to our portfolio in Buffalo, New York, and Texas. Through
controlled growth, XFCU and CUAF continue to solidify
their positions in these markets, and aim to remain strong in
the indirect automobile lending market for years to come.
Credit Union Direct Lending (CUDL)
CUDL allows auto dealers in select markets throughout the
United States to partner with credit unions who offer
automobile lending programs in these selected areas. XFCU
has been a part of this credit union-owned program in El
Segundo, California for over two years. In late 2004, we
added our St. Petersburg, Florida market to the CUDL
family, and we are looking to expand our California market
into San Jose in 2005.
the repor ts are in ...
and the performance is on top
Loan Review
Committee Report
The Loan Review Committee is pleased to
report that our Credit Union continues to
have a strong loan portfolio.
By the end of 2004, our total
member loan portfolio reached
$544 million. Credit Union
policies ensure that our loans
are the highest quality and in the
best interest of each member.
At year-end, 100 percent of Credit
Union membership savings dollars
were loaned out to the membership. This
attests to our commitment to member service
and to performing in the best interest of all
our members.
Rick Schmidt
Chair, Loan Review Committee
Supervisory Committee Report
The Supervisory Committee is responsible for overseeing
your Credit Union’s business affairs and monitoring
operating procedures and policies to ensure absolute
financial integrity and soundness. We continue our
commitment to maintaining Xerox
Federal Credit Union’s high standards
and financial performance.
The committee reviews account records
and reports regularly to check their
accuracy and timeliness. We also
conduct periodic on-site unannounced
branch audits and oversee audits by our
independent auditing firm, McGladrey
& Pullen, Certified Public Accountants.
I am pleased to report again that the affairs of this
Credit Union are in outstanding order.
Wayne Johnson
Chair, Supervisory Committee
2000-2004
XFCU News:
2000 — Express Mortgage. Started
online and phone-in mortgage service;
national ATM deposit-taking service.
2001 — $1 Billion. Membership
assets reached all-time high; New York’s
first mortgage e-Close loan.
2002-03 — Banking Breakthroughs.
Started e-Statements, Shared Branching,
online access to Visa® accounts, and
community expansion.
2004 — Web Enhancements.
The easiest access to Web Banking,
e-Statements, Visa® Online.
World News:
2000 — Dot com Bust.
Beginning of the end of the
Internet stock boom.
2001 — 9/11. Hijackers crashed
jetliners into New York City’s
World Trade Center and
Pentagon.
2004 — Red Sox Win. After
an 86-year drought, the boys
from Boston won World Series.
y our di s ti ngui s h ed
1
Volunteers &
Executive Staff
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
1) Dennis Ruffner
2) Murray Spector
3) Roni Crichton
4) Bill Cheney
5) John Antonio
6) Christina Brown
7) Raleigh Steinbach
8) Jon Fate
9) Richard Jones
10) Lois McFarland
11) Timothy Myers
12) Rick Schmidt
13) Michael Mishkin
14) Gretchen Valentine
15) Loren Winckler
16) Fred Nichols
17) Barbara Bannister
18) Lewis Siegler
19) Wayne Johnson
19
XEROX FEDERAL CREDIT UNION
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2004 AND 2003
ASSETS
2004
Cash and cash equivalents
Investments
Available-for-sale
Other
Loans, net
Accrued interest receivable
Property and equipment
National Credit Union Share Insurance Fund deposit
Other assets
$
45,875,992
2003
$
37,654,676
67,919,226
69,447,290
552,268,363
2,508,135
5,697,749
4,499,120
3,117,949
88,741,493
56,394,736
528,996,836
2,460,692
5,547,676
4,403,552
1,756,660
$ 751,333,824
$ 725,956,321
$
$
LIABILITIES AND MEMBERS’ EQUITY
Liabilities
Notes payable
State of California Treasury deposits
Accrued expenses and other liabilities
Total Liabilities
84,200,000
47,000,000
4,356,158
89,200,000
47,000,000
4,336,356
135,556,158
140,536,356
537,125,279
80,021,261
(1,368,874)
511,974,714
74,370,540
(925,289)
615,777,666
585,419,965
$ 751,333,824
$ 725,956,321
Commitments and contingent liabilities
Members’ Equity
Members’ shares
Retained earnings, substantially restricted
Accumulated other comprehensive loss
Total members’ equity
Savings Mix 2004
Savings Accounts
Checking Accounts
IRA Accumulator
IRA Certificates
Share Certificates
Money Market Accounts
Non-Member Savings
This is an unaudited financial report. For a complete auditor’s report and opinion,
please visit our Web Branch at www.xfcu.org or contact a Credit Union representative.
Loan Mix 2004
New Autos
Pre-owned Autos
Other Secured Loans
Real Estate First TD
Real Estate Second TD
Home Equity Lines of Credit
PowerLines of Credit
Other Unsecured Loans
Participation Loans (Net)
XEROX FEDERAL CREDIT UNION
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004
INTEREST INCOME
Interest on loans
Interest on investments and cash equivalents
$
INTEREST EXPENSE
Dividends on members' shares
Interest on notes payable and State of California
Treasury deposits
NET INTEREST INCOME
PROVISION FOR LOAN LOSSES
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
NON-INTEREST INCOME
Service charges and other fees
Debit card interchange income
Rental income
Net (loss) gain on sale of residential mortgage loans
Other
GENERAL AND ADMINISTRATIVE EXPENSES
Salaries and benefits
Operations and occupancy
NET INCOME
$
29,735,255
5,769,554
2003
$
30,176,756
5,817,424
35,504,809
35,994,180
8,707,724
9,381,991
3,146,474
2,419,931
11,854,198
11,801,922
23,650,611
24,192,258
2,498,605
1,464,330
21,152,006
22,727,928
4,665,886
1,258,716
1,205,336
(99,208)
280,463
3,826,514
1,315,776
798,592
786,234
110,986
7,311,193
6,838,102
28,463,199
29,566,030
11,257,869
11,554,609
10,561,310
12,116,707
22,812,478
22,678,017
5,650,721
$
This is an unaudited financial report. For a complete auditor’s report and opinion,
please visit our Web Branch at www.xfcu.org or contact a Credit Union representative.
6,888,013
COMMITTEES
Executive Committee
Murray Spector, Chair
John Antonio
Roni Crichton
Dennis Ruffner
Nominating Committee
John Antonio, Chair
Roni Crichton
Loren Winckler
Finance & Investment
Committee
Christina Brown, Chair
Richard Jones
Lois McFarland
Anita Moore-Millon
Fred Nichols
Dennis Ruffner
Gretchen Valentine
Supervisory Committee
Wayne Johnson, Chair
Fred Nichols
Michael Mishkin
Lewis Siegler
Gretchen Valentine
OFFICERS & DIRECTORS
Planning & Marketing
Committee
Jon Fate, Chair
John Antonio
Roni Crichton
Richard Jones
Timothy Myers
Michael Mishkin
Lewis Siegler
Raleigh Steinbach
Gretchen Valentine
Loren Winckler
Loan Review Committee
Rick Schmidt, Chair
Kathy Hansen
Debra Terrill
Board of Directors
Murray Spector, Chair
John Antonio, Vice Chair
Roni Crichton, Secretary
Bill Cheney
Richard Jones
Lois McFarland
Dennis Ruffner
Raleigh Steinbach
Loren Winckler
Senior Management
Bill Cheney, President/CEO
Jon Fate, Executive Vice
President/COO
Christina Brown, Senior Vice
President/CFO
Barbara Bannister, Senior Vice
President, Human Resources &
Organizational Effectiveness
Rick Schmidt, Vice President,
Operations
Timothy Myers, Vice President,
Sales & Marketing
XCU Corporation, Inc.,
XCU Capital Corp., and Focus
Insurance Agency
Board of Directors
Bill Cheney, Chair
Wayne Johnson, Vice Chair
Henry Wirz, Treasurer
John Bommarito
Roni Crichton
Scott Jenner
Lois McFarland
John Merlo
Michael Mishkin
Fred Nichols
Barry Nelson
Credit Union Auto Finance,
L.L.C. Board of Directors
David Fiedler, Chair
Bill Cheney, Vice Chair
Don Aldred
Jon Fate
For a listing of XFCU and XCU offices, visit our Web Branch
at www.xfcu.org or give us a call at 800.XFCU.222.
40 Years, Over 77,000 Reasons
to Celebrate. XFC-You.
There are over 77,000 reasons that go into
this successful organization. And they are all
the members of Xerox Federal Credit Union.
Year after year, we can only be as good as our
people — and thanks to you, the Credit Union
has continued to be a great success.
happy anniversary!
Annual Report • The Creative Lab • Lake Forest, California
800.XFCU.222 • (310.640.0543 outside the U.S.) • www.xfcu.org
2200 E. Grand Avenue • El Segundo, CA 90245