Where people bank for good - Freedom First Credit Union

2012
Annual
Report
Where people bank for good
Our Mission
Helping our members prosper—helping our communities thrive.
Our Purpose—as stated in the Credit Union Bylaws
Freedom First is a member-owned, democratically operated, not-for-profit organization managed by a volunteer
board of directors, with the specified mission of meeting the credit and savings needs of consumers, especially
persons of modest means. The purpose of this Credit Union is to promote thrift among its members by affording
them an opportunity to accumulate their savings and to create for them a source of credit for provident, business,
or productive purposes.
Joint Report from the Chairman and President/CEO
In 2012, the term “austerity” came into
common usage to describe the necessary
response of governments, businesses, and
households around the world to a persistent
economic crisis rooted in excessive spending
and an absence of thrift. Throughout the global recession and its slow recovery, consumers
have turned considerable attention to credit
unions: not-for-profit financial institutions
whose careful, prudent management avoids
the volatility resulting from unsustainable
bubbles of growth followed by painful
contractions. Just as the past few years have
shown that a destabilized financial industry
can destabilize the economy, renewed focus
on credit unions reveals that a stable financial
industry that operates with the collective
goals of individual and community prosperity can improve the economy. Freedom First
has been operating under careful, prudent
management since 1956, and in 2012, we reaffirmed our dual goals of helping our members
prosper and helping our communities thrive.
Cooperative Principles. The principles under
which cooperative enterprises all over the
world operate are the same principles that
guide Freedom First’s business decisions
every day. Rather than operating with the
short-term goal of maximizing profits for
shareholders, Freedom First, like all cooperative enterprises, operates with the goal
of long-term financial independence and
security for our members through financial
education, steady credit building, and careful
asset management.
These goals remain true to the roots of the
credit union movement, which began in
Europe in the mid-1800s to make affordable
credit available to borrowers who otherwise
would be locked into the exorbitant interest
rates charged by the moneylenders of the
day. These same principles are reflected in our
bylaws as prescribed by our regulator, the National Credit Union Administration (NCUA). In
2012 we reaffirmed our commitment to those
principles in specific and measurable ways:
Principle 1: Voluntary and Open Membership—In 2012 we expanded our community
charter to include Franklin and Craig counties,
so we are fully open to the entirety of the
Roanoke and New River Valleys.
Principle 2: Democratic Member Control—our
volunteer board of directors embraced a bold
vision in 2012 by charging the Governance
and Ethics Committee with modernizing our
election process in order to increase member
3
participation. New term limits for directors will
facilitate diversity among our board.
Principle 3: Member Economic Participation—
we successfully increased member utilization of our loan, savings, and other services,
thereby fulfilling our purpose and reaching
the unbanked and underserved.
Principle 4: Autonomy and Independence—
we continue to be owned and controlled by
our members, not by outside shareholders.
Our unique structure is designed to allow us
to operate with no reliance on a management
authority outside of our market, so all business decisions are made locally.
Principle 5: Education, Training, and Information—we expanded the reach of our financial
education curriculum in 2012 to schools and
nonprofit agencies; much of our lending and
education staff earned advanced financial
counseling/education certification; and we
made a free online financial management tool
available to our members.
Principle 6: Cooperation among Cooperatives—we forged an unprecedented partnership with local government, businesses,
and the West End Center for Youth to begin a
redevelopment project in 2012 that promises
to transform the struggling urban neighborhood through access to affordable financial
services. Our management and board have
taken on leadership roles in local, state, and
national associations, including the Virginia
Credit Union League and the National Federation of Community Development Credit
Unions.
our successful navigation of the turbulent
economy. We are happy to report that our
momentum entering 2012 continued
throughout the year, resulting in 11% loan
growth and a total $3.26 million in net income.
Our net worth, the primary measure of safety
and soundness, was 13.2% (nearly double
the 7% the NCUA considers to be “wellcapitalized”). Our accounting practices and
financial statements have been independently reviewed by external auditors
Nearman, Maynard, Vallez, CPAs, who
identified no material findings and issued
a clean unqualified opinion. Our continued financial strength allowed us to expand our capacity, add new services, and
make significant upgrades in 2012 while
still offering competitive interest rates and
lower fees.
Net Income
Steady Growth. Your Credit Union
enjoyed steady growth in 2012. Our membership grew by 14.4%,* our assets grew
from $257 million to $292 million, and we
made changes to our branches and our
product and service offerings in response
to the changing needs and preferences
expressed by our members.
Principle 7: Concern for Community—we lived
our purpose through better rates, lower and
fewer fees, and a community development
focus anchored by a nationally recognized
Community Grants program. Our staff, management, and all-volunteer board of directors
offer their time and talents without charge
to many organizations in our service area
throughout the year.
Like our staff, management, and volunteer
board, Freedom First’s members know that
financial security for individuals and the larger
community are interdependent. Freedom
First is not just a place to store your money—
Freedom First is a place where people choose
to bank for the good of the community as
a whole as well as for their own financial
well-being. Our accomplishments in 2012
made clear more than ever before that Freedom First’s commitment to those dual goals
is a good business decision as well as the
right thing to do.
Safety and Soundness. For several years, our
annual reports have necessarily focused on
2011
$2.29M
2012
$3.26M
$0M$1M$2M$3M$4M
Net Worth
2011
10.3%
2012
10.4%
2012
13.2%--with secondary capital
0%
3%
6%
9%
12%
15%
Approximately 3,000 of those new
members joined Freedom First when we
merged with Carilion Federal Credit Union
in March 2012. The transition was remarkably smooth and our newest members
began taking advantage of Freedom First’s
expanded product and service offerings
right away. By the time the lease for the
former Carilion Credit Union branch on
Jefferson Street in Roanoke was up for
renewal, many members had already
transitioned to our nearby Towers branch
because of its close proximity to Carilion
Clinic facilities. The increase in activity
at Towers has prompted us to establish
a drive-up ATM at Towers and relocate
*Our peers averaged a 2% increase in their membership.
4
within the center to a larger space with greater capacity. This new location is scheduled to
open in June 2013.
We expanded our capacity behind the scenes
as well. Construction at our Operations Center
was completed in 2012, creating space for our
growing call center and operations areas.
We remain accountable to our regulator
through strict compliance with the laws and
regulations governing the credit union industry. Our accounting practices are reviewed and
monitored annually by both our regulator and
an independent accounting firm.
To ensure accountability to our members, we
established a robust member survey process
in 2010 that enables us to differentiate between an individual member request, which
we can respond to personally, and a larger
issue that would benefit from an operational
change or a new product or service. Feedback from members through Net Promoter
Surveys informed Freedom First management
and guided our decision process throughout
2012. For example, our new Botetourt County
branch was developed—from the inclusion of
a drive-up teller window to the hours of operation—in direct response to member surveys.
We upgraded to a new, significantly enhanced
online banking and bill pay platform in 2012
in response to feedback from our members.
More than 1,800 members enrolled in the
5
Net Promoter Survey Results, 2012
Relational NPS
Freedom First Score: 49%
Banking Industry
Average: 18%
Health Insurance
Industry Average: 4%
0%10%20%30% 40% 50%60%
Members selected at random from the general membership.
Source: Satmetrix 2012 Net Promoter® Benchmark Study of U.S.
Consumers-NPS®
Transactional NPS
2012 Goal
Accountability. Freedom First has taken steps
to ensure that our accountability to our members, the community, and our regulator and
auditors is tested consistently and effectively.
Accountability starts with our volunteer Board
of Directors, drawn from and elected by our
membership to represent the communities
we serve.
Being a regional employer of choice means
Freedom First can attract and retain highly
skilled, motivated employees who provide
exemplary service to our members while
remaining current with the complex changes
facing the industry. Our internal Net Promoter
Survey® is an effective means of measuring
accountability to ourselves, and we are
pleased to report that once again, Freedom
First was named one of Virginia’s Best Places to
Work in 2012.
2012 Goal
The year also saw the development of a
new branch in Daleville—the first and only
full-service credit union branch in Botetourt
County—and an expansion of our community
charter to allow us to directly serve Craig and
Franklin counties. Although many Craig and
Franklin county residents were already Freedom First members, our regulator recognized
the need to offer credit union services directly
to these underserved counties and approved
our charter expansion request.
Collaborating with various partners to identify and address community needs through
values-based banking services keeps us accountable to our community.
Freedom First Score: 67%
0%
20% 40% 60% 75%
embers selected at random following an interaction with the
M
Credit Union.
“I like the customer service, the online banking has tons of options, I like the fact that when you
deposit money it’s there, you don’t have to rush before 2 p.m. so it goes in that day.” ~Jason C.
new feature-rich platform, joining the 20,000+
Freedom First online banking users who converted from the original system.
Being accountable to our members does
not end with implementation, however.
NPS feedback has clarified for Credit Union
management ways in which we could have executed the transition more smoothly. Ongoing
member feedback allows us to learn from our
mistakes and adjust our project management
practices so that similar conversions are easier
for our members in the future.
Additional projects in response to member
surveys were begun in 2012 and will come
to fruition in 2013. These include customized
mobile banking apps for Apple and Android
devices, remote deposit capabilities, expedited debit card delivery, and an awareness
campaign to educate our members about
Freedom First’s network of 50,000+ surchargefree ATMs.
Impact. True to our purpose and the dual
mission of helping people prosper and helping our communities thrive, in 2012 Freedom
First expanded both our traditional banking
services and Impact Banking—a unique suite
of products and services designed to address
the financial services needs of persons of
modest means.
In the traditional banking area, we established
commercial lending services and laid the necessary groundwork for small business lending
and transaction services (coming in the fall of
2013). With regard to our community development activities, we added to our suite of
Impact Banking options and increased our operational capacity to implement them. In 2012
we significantly expanded our partnership
with the Federal Home Loan Bank of Atlanta,
whose set-aside programs serve veterans, firsttime homebuyers, and homeowners hoping
to improve the safety and energy efficiency of
their homes. Reaching out to unbanked and
underserved populations through affordable
housing, transportation, financial education,
and credit-building opportunities strengthens
our values-based banking proposition.
Much of this capacity building would not
happen without the financial support received
from key stakeholders. Development funding for the West End project and branch
was obtained through an $850,000 grant
from the CDFI Fund; the West End Center for
Youth, which owns the property and will be
the “landlord” for the new branch, secured
additional development funds from the City of
Roanoke. Freedom First is unique in our intent
and ability to establish successful partnerships
like this and leverage the resources each partner brings to the table.
Our community development efforts and
Impact Banking products and services are
outlined in more detail in our 2011-2012 Community Impact Report.
“This [credit union] has been very prompt with any concerns that we have had and
they make banking so much easier.” ~Trista B.
6
Looking Forward. In 2012, Freedom First’s
renewed commitment to the dual purposes
of providing traditional banking and community development services for our members
resulted in a solid bottom line: safe and sound
operation; steady growth and expansion; and
accountability to our regulator, our community, ourselves, and most of all, our members.
This strength and stability allows us to move
into 2013 and beyond with confidence that
the path we’ve chosen is not only true to our
roots as a cooperative, but also sustainable for
many years to come.
Early 2013 saw the launch of a rebranding
effort that reflects our mission, purpose, and
critical goals: Freedom First is Where People
Bank for Good. We believe it speaks to the
strong and lasting relationships we’re able to
build with our members, as well as the good
work we’re able to do in the community as a
member-owned, not-for-profit, democratically
operated credit union. We will remain committed to our dual goals: helping our members
prosper and helping our communities thrive.
Nelson Shibley
Chairman
Paul Phillips
President/CEO
7
Community Impact
COMMUNITY IMPACT
A quick look at some of the programs highlighted in our 2011-2012 Community Impact Report.
Affordable Housing
In 2012 we added a dedicated Affordable Housing Specialist to help borrowers navigate through debt, credit, and financial education on the
path to homeownership.
FHLB Set-Aside Programs
We expanded our partnership with the Federal Home Loan Bank of Atlanta, whose programs address the specific needs of veterans, first-time
homebuyers, and people of modest means who seek to improve the safety, energy efficiency, or accessibility of their homes.
Impact Banking
Borrow & Save loans (128 issued in 2012) • Credit Builder loans (people with no credit averaged an increase of more than 600 points
in 6 months) • Micro Loans (average loan amount: $1,479) • Payday Alternative Loans (average savings per borrower: $575 • Individual
Development Accounts (new in 2012)
Responsible Rides
In 2012 we brought on a full-time coordinator to work directly with borrowers on this popular, award-winning program serving low- and
moderate-income working people who need affordable, reliable transportation.
Financial Education
Our full-time financial educator served 1,460 people in 2012 through partnerships, Money Mondays, and one-on-one counseling. Several staff members
earned certification as financial counselors from the Credit Union National Association.
9
COMMUNITY GRANTS
Promoting a healthy, sustainable quality of life is central to
our mission. To that end, Freedom First Credit Union awarded
more than $25,000 to eight local nonprofits in 2012 to
support their efforts to break down barriers, enable people to
fully participate as local citizens, and provide opportunities
to help families achieve economic independence.
10
Adult Care Center of Roanoke Valley: $2,000
to provide a wheelchair-accessible scale necessary for ACCRV’s medical staff to provide accurate health assessments of center participants.
Boys & Girls Clubs of Southwest Virginia: $4,000
to support the L2Ork (Linux Laptop Orchestra) program, a partnership with Virginia Tech that combines computer technology and music to give students
a creative outlet as well as opportunities to learn about college, computer skills, and collaboration.
Community Outreach Program of Roanoke: $5,000
to fund U Feed Others (UFO), a weekend food security program aimed at families that may be unable to supply enough safe, nutritious food
for themselves.
Intellectual Disabilities Agency of the NRV: $2,250
to defray growing transportation costs IDA-NRV incurs when transporting clients to social and recreational programs.
NRV Cares: $1,750
to support Parenting Young Children, a 9-week course for parents and caregivers of children birth to age 6. The free classes include onsite childcare and
dinner for participating families.
Roanoke Children’s Theatre: $1,000
to support the RCT4TEENS’ 2013 production of “Eric & Elliot,” which uses gentle humor and fantasy to address teen depression and suicide prevention.
Roanoke Redevelopment & Housing Authority: $4,000
to fund a multi-site afterschool program that includes healthy snacks, homework help, recreational activities, and other programming.
Total Action for Progress: $5,000
to support Head Start-Healthy Start, which aims to increase healthy nutrition and physical activity behaviors in Head Start-enrolled children and families.
11
ACADEMIC SCHOLARSHIPS
Charles Perkins Scholarships
Derek Litvak—William Fleming High School, attending Virginia Tech
Kristen Obenchain—Blacksburg High School, attending Virginia Tech
City of Salem/Frank Turk Scholarship
Vickie Sword—City of Salem employee, attending Averett University
Fritz Kehn Scholarship
Lucas Tyree—Salem High School/University of Hawaii, attending Yale University
Torie Phillips Memorial Scholarship
Andrew R. Long—Lord Botetourt High School, attending Virginia Tech
Cabell Brand Center for Global Poverty and
Resource Sustainability Studies Scholarship Program
Tray A. Arthur—Franklin County High School, attending Virginia Western Community College
12
Spirit of Service
INDEPENDENT AUDITOR'5 REPORT
May 8, 2012
Supervisory Committee
Freedom First Credit Union
Roanoke, Virginia
We have audited the accompanying consolidated statements of financial condition of Freedom First
Credit Union as of March 31, 2012 and 2011, and the related statements of income, members' equity,
comprehensive income, and cash flows for the years then ended. These fmancial statements are the
responsibility of the Credit Union's Management. Our responsibility is to express an opinion on these
consolidated 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 audits 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 that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Freedom First Credit Union as of March 31, 2012 and 2011, 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.
Nearman, Maynard, Vallez, CPAs
A-I
.n arman.com
14
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
ASSETS
Cash and cash equivalents $
Investments:
Available-for-sale Other Federal Home Loan Bank (FHLB) stock Loans held-for-sale Loans receivable, net of allowance for loan losses Accrued interest receivable Premises and equipment, net National Credit Union Share Insurance Fund deposit Assets acquired in liquidation Other assets Total Assets March 31,
2012
2011
4,459,695 $ 3,513,679
212,379 38,722,594 1,488,300 2,412,098 210,601,910 708,452 8,895,901 2,000,033 558,170 8,729,498 $ 278,789,030 LIABILITIES AND MEMBERS’ EQUITY
Liabilities
Members’ share and savings accounts $
Borrowed funds Interest payable Accrued expenses and other liabilities Uninsured secondary capital Total liabilities Commitments and contingent liabilities
Members’ Equity
Regular reserve Undivided earnings Accumulated other comprehensive income (loss) Equity acquired in merger Total members’ equity Total Liabilities and Members’ Equity $ 254,086,759
March 31,
2012
2011
219,108,777 $ 198,805,596
20,500,000 20,500,000
86,624 106,497
2,595,026 1,616,430
9,278,000 9,278,000
251,568,427 230,306,523
5,751,716 20,866,578 2,358 599,951 27,220,603 $ 278,789,030 15
503,344
14,087,796
1,911,900
210,053,829
777,321
6 ,684,481
2,072,553
1,303,995
13,177,861
5,751,716
18,426,715
(398,195)
23,780,236
$ 254,086,759
CONSOLIDATED INCOME STATEMENT
Interest Income
Interest on loans receivable $
Interest on investments Interest income Interest Expense
Dividends on members’ share and savings accounts Interest on borrowed funds Interest expense March 31,
2012
2011
12,232,937 $ 45,959 12,278,896 12,812,041
58,368
12,870,409
1,188,666 1,107,202 2,295,868 2,028,750
1,163,057
3,191,807
Net Interest Income 9,983,028 9,678,602
Provision for Loan Losses Net Interest Income After Provision for Loan Losses Non-interest Income
Fees and service charges Other non-interest income Gain on disposition of assets acquired in liquidation, net Gain on disposition of premises and equipment, net Non-interest income 1,381,266 8,601,762 3,220,593
6,458,009
3,830,860 2,659,849 87,012 2,250 6,579,971 3,404,052
2,478,644
5,882,696
15,181,733 Non-interest Expense
Compensation and employee benefits 7,291,827 Operations 2,766,587 Loan servicing 728,897 Education and promotion 684,537 Occupancy 577,308 NCUA assessment 481,800 Professional and outside services 210,914 Loss on disposition of assets acquired in liquidation, net - Non-interest expense 12,741,870 12,340,705
Net Income $
16
2,439,863 $
5,400,272
2,531,403
689,277
602,169
553,708
554,469
218,654
50,023
10,599,975
1,740,730
CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY AND COMPREHENSIVE INCOME
MEMBERS’ EQUITY
Regular
Reserve
Accumulated
Other
Comprehensive
Income (Loss)
Undivided
Earnings
Equity
Acquired In
Merger
Balance, March 31, 2010 $
Net income Change in unrealized
gain/(loss) on securities Change relating to pension
plan accounting 5,751,716 $1
6,685,985 $ ( 262,077) $
- 1,740,730 - Balance, March 31, 2011 Net income Change in unrealized
gain/(loss) on securities Change relating to pension
plan accounting Equity acquired in merger Balance, March 31, 2012 Total
-
$ 22,175,624
- 1,740,730
- - ( 12,756) - (12,756)
- - ( 123,362) - (123,362)
5,751,716 18,426,715 - 2,439,863 ( 398,195) - - - 23,780,236
2,439,863
- - ( 8,874) - (8,874)
- - - - 409,427 - - 599,951 409,427
599,951
$ 5,751,716 $ 20,866,578 $
2,358 $
COMPREHENSIVE INCOME
Net Income $
Other Comprehensive Income or (Loss)
Net unrealized holding (losses)/gains on securities arising during the year Less reclassification adjustment for net losses/(gains) included in net income Adjustment due to pension plan accounting Comprehensive Income $
17
599,951 $ 27,220,603
March 31,
2012
2011
2,439,863 $ 1,740,730
(8,874) - 409,427 400,553 2,840,416 $
(12,756)
(123,362)
(136,118)
1,604,612
CONSOLIDATED STATEMENT OF CASH FLOWS
Operating Activities
Net income $
Adjustments
Provision for loan losses Depreciation and amortization of premises and equipment (Gain) loss on disposition of assets acquired in liquidation, net Gain on disposition of premises and equipment, net Amortization of investment premiums/discounts Amortization of deferred loan origination fees/costs Changes in operating assets and liabilities
Loans held-for-sale Accrued interest receivable Other assets Dividends payable Accrued expenses and other liabilities Uninsured secondary capital Net cash provided by operating activities Investment Activities
Purchases of:
FHLB stock Premises and equipment Proceeds from:
Maturities, paydowns and sales of available-for-sale securities Sale of FHLB stock Sale of premises and equipment Sale of mortgage loans Net change in:
Other investments Loans receivable, net of charge-offs Assets acquired in liquidation NCUSIF deposit Merger activity Recoveries on loans charged off Net cash (used in) provided by investing activities 18
March 31,
2012
2,439,863 $
2011
1,740,730
1,381,266 660,821 (87,012) (2,250) 1,259 835,113 3,220,593
529,326
50,023
-
2,553
701,303
(2,412,098) 68,869 4,857,790 (19,873) 978,596 - 8,702,344 802,215
(773)
(3,900,263)
(76,058)
93,971
9,278,000
12,441,620
- (2,870,071) (225,000)
(92,427)
280,832 423,600 80 25,924,843 447,231
14,140,649
(24,634,798) (29,062,375) 832,837 72,520 599,951 373,072 (28,059,509) 25,847,311
(15,666,940)
(653,599)
100,319
477,810
24,375,354
CONSOLIDATED STATEMENT OF CASH FLOWS (cont.)
Financing Activities
Net change in members’ share and savings accounts Repayments of borrowings Net cash provided by (used in) financing activities March 31,
2012
20,303,181 - 20,303,181 2011
(29,795,627)
(7,000,000)
(36,795,627)
Net Change in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year $
946,016 3,513,679 4,459,695 $ 21,347
3,492,332
3,513,679
Supplemental Cash Flow Disclosures
Dividends and interest paid Loans receivable transferred to assets acquired in liquidation 2 ,315,741 457,170 3,267,865
1,710,966
$
$
$
$
Supplemental Schedule of Noncash Investing and Financing Information
Except for the cash received, the balances acquired in the merger as described in Note 13 of these consolidated financial statements are
not included in the above because no cash was paid. Rather, only the transactions impacting cash flows after the date of acquisition are
reflected in the corresponding sections (operating investing and financing) above.
The following schedule describes the Credit Union’s noncash investing and financing activities relating to the merger during the fiscal
year ended March 31, 2012.
Cash received in merger $
Acquired assets, net of cash received Assumed liabilities Equity acquired in merger $
19
838,034
7,896,123
(8,134,206)
599,951
Gerald Barnes
Judith Harrison
Ira Hartman
Emily Jewett
Michael Williams
Supervisory Committee
Treasurer’s Report
Dear Shareholders,
A year ago, I reported Freedom First Federal
Credit Union was safe and sound and prosperity was just outside our window. Today,
our financial position and opportunities to
enhance membership services continues to
improve. Some of the latest numbers indicate
unemployment continues to decline, the
housing market is improving—although not
as quickly as some may wish—and the purchase of new automobiles is on the rise. All are
key indicators that drive both individual and
Credit Union prosperity.
Your Board of Directors and staff continue to
plan strategically and act in the best interest of you, the owners of this organization.
Over the past 12 months, total assets have
increased from $256,369,000 to $291,889,000,
or 14 percent. Net income increased from
$2,289,000 to $3,267,000, or 43 percent. One
of the most important measures, net worth,
increased from $25,186 million to $29,536
million, a 17-percent increase.
There are a number of reasons for this growth
and success. During 2012, Carilion Federal
Credit Union merged with Freedom First, increasing assets by almost $8 million. Member
shares increased by $25.7 million, while loans
increased by $23.7 million. Consumer vehicle
loans increased by $18 million and the Credit
Union began a program of commercial lend-
ing which stood at $9.2 million at year-end. All
of this occurred with a decline in delinquent
loans and write-offs. The ability to transform
increased savings to increased loans is the
most important factor in generating income
for the Credit Union to support its services
and community activities.
as your Treasurer, and the Credit Union family,
I want to express our sincere appreciation to
the management and staff of Freedom First
Federal Credit Union, because without their
diligence and efforts these successes would
not be possible.
Respectfully,
Our Credit Union has been examined by NCUA,
our regulator, and audited independently.
Both attest to the safety and soundness of our
Credit Union. Looking forward, there is always
a certain amount of uncertainty but progress
continues to be made. Consolidated Financial
Statements for Freedom First Federal Credit
Union are shown below. On behalf of myself
CONSOLIDATED STATEMENT OF CONDITION
(UNAUDITED)
$ Amounts in Thousands
ASSETS
12/31/201112/31/2012
Frank P. Turk
Treasurer
CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
$ Amounts in Thousands
12/31/201112/31/2012
INCOME
Loans (net)
$ 206,542 $ 230,526
Cash 4,073 5,983
Investments 22,21728,786
Other assets
23,537
26,594
Income from
member loans
$ 12,348 12,519
Investment &
other income
6,132 7,885
Total Assets
Total Income
$256,369 $ 291,889
LIABILITIES & NET WORTH
Payables
$23,372$ 29,488
Secondary capital
Member shares
Net worth
Total Liabilities
& Net Worth
9,278
198,533
25,186
9,278
223,587
29,536
$256,369 $ 291,889
20
$ 18,480
$20,404
EXPENSES
Operating expenses
$ 12,100
$ 13,578
Dividends & interest
expenses
2,377 2,167
Loan loss provision
1,714 1,392
Total Expenses
$ 16,191
NET INCOME
$ 2,289 $3,267
$17,137
Nominating Committee Report
Supervisory Committee Report
The Nominating Committee used the Credit
Union newsletter, website, and lobby notices
to inform the membership of the Credit
Union’s nomination and election process for
Board of Directors. This year, the Nominating
Committee nominated five candidates for the
five vacancies on the Board of Directors, and
no members sought nomination by petition.
The five nominees are: Gerald Barnes, Susan
Hall, Judith Harrison, Roger Journell, and Tim
Sutphin. In accordance with Article V, Section
2 of the Bylaws and the official Elections Policy
of Freedom First Federal Credit Union, since
the Nominating Committee has returned
sufficient nominations for all vacancies, there
will be no nominations from the floor at this
year’s Annual Meeting on Thursday, May 9,
2013. Each candidate will officially take office
immediately after the Annual Meeting.
The Credit Union’s Supervisory Committee
has the responsibility to determine that the
operations of the Credit Union are carried out
in accordance with the Federal Credit Union Act
and the rules and regulations of the National
Credit Union Administration. This year, we have
directed an emphasis on internal controls, consumer compliance, fraud prevention, the Bank
Secrecy Act, and other new rules that affect the
Credit Union.
Jared Poff
Chair, Nominating Committee
The Supervisory Committee engaged the
services of a certified public accounting firm to
perform a financial audit of the consolidated
financial statements of the Credit Union and a
verification of member accounts. Their financial
audit report included an unqualified opinion
as to the fair presentation of the Credit Union’s
financial statements. Based on their report and
our own observations, we can report to you that
Freedom First Federal Credit Union continues to
maintain a safe and sound financial institution.
The Supervisory Committee would like to thank
you for your cooperation and support of the
Credit Union.
Gerald Barnes
Chair, Supervisory Committee
Board of Directors, L-R: Nelson Shibley, Chairman;
Tim Sutphin, Vice Chairman; Frank Turk, Treasurer;
Susan Hall, Secretary; Thomas Chapman, Judith
Harrison, Roger Journell, Dan Merenda, Jared Poff.
21
Governance and Ethics
Committee Report
In 2012, the Credit Union’s Governance and
Ethics Committee hired BoardSource, an independent, nonprofit governance consultant,
to assess our adherence to best practices with
regard to accountability, democracy, and skill
development among our directors. The consultant reviewed our board policies, election
process, and training procedures.
In response to the consultant’s recommendations, the Credit Union initiated updates
to modernize its bylaws, board tenure policy,
and election process. These changes will be
implemented in 2013 and 2014.
Dan Merenda
Chair, Governance and
Ethics Committee
Blacksburg
1204 South Main Street
Virginia Tech—Squires Student Center
Christiansburg
417 North Franklin Street
Daleville
1171 Roanoke Road
Roanoke
5240 Valleypark Drive—Operations Center
5102 Williamson Road—Crossroads
2221 Colonial Avenue—Towers Shopping Center
1210 Patterson Avenue—West End Center
(coming soon!)
Steel Dynamics, Inc.
(exclusively serving the SDI workforce)
Salem
1235 Electric Road
1900 Electric Road—LewisGale Hospital
Vinton
203 Virginia Avenue
Phone
(540) 389-0244 / (866) 389-0244
Online
www.freedomfirst.com
Federally insured by NCUA.