6 3 R D A N N U A L R E P O R T 2 0 1 5

6
A
R
2
3 RD
N N U A L
E P O R T
0 1 5
HAPO 2015
6 3 RD A N N U A L R E P O R T
3
O R G A N I Z AT I O N A L C O M M I T M E N T
BE IN THE MOMENT
We commit to listening to our
members to clearly understand
what’s needed and to respond
efficiently and professionally
every time.
4
6 3 RD A N N U A L R E P O R T
HAPO 2015
O R D E R O F B U S I N E S S / 6 3 RD A N N U A L M E E T I N G
W E D N E S D A Y, A P R I L 2 7 t h , 2 0 1 6
1. Call to Order – William Tanner
2. Reading of Minutes, 62 nd Annual Meeting – Ken Bays
3. A Message from HAPO Leadership – Steve Anderson & William Tanner
4. Supervisory Committee Report – David Beach
5. Unfinished Business – William Tanner
6. New Business – William Tanner
7. Door Prize Drawing – Annie Jacobs & Carlo Chavez
HAPO 2015
6 3 RD A N N U A L R E P O R T
1
2
6 3 RD A N N U A L R E P O R T
HAPO 2015
THE OFFICIAL SPONSOR OF SUMMER
Summer in our community is always a lively time of year for us and
2015 was no different! While we participate in many events and
sponsorships throughout the year, our summer lineup is comprised
of outdoor activities that bring families together for a safe and fun
summer. Since trademarking the “Official Sponsor of Summer®” in
2009, we have grown our lineup exponentially, sponsoring events in
the various areas we service, including the Tri-Cities, Yakima, Sunnyside,
Hermiston and Walla Walla.
This past year was an exciting year for HAPO Community Credit Union
as we had the honor of hosting the “HAPO Gold Cup”, the premier
event and race in H1 Unlimited hydroplane racing. The HAPO Gold Cup
marked the 50th anniversary of Unlimited Hydroplane racing on the
Columbia River between Richland, Kennewick, and Pasco. The Gold
Cup, the oldest trophy in motorsports, was last held in the Tri-Cities
in 1984 and has been held exclusively in Detroit since 1990. We were
honored to have had the opportunity to be the exclusive title sponsor of
this Tri-Cities race during the “Golden” year of hydroplane racing on the
Mighty Columbia!
In addition to the HAPO Gold Cup sponsorship, in 2015 we were also
the premier sponsor of the HAPO Live @ 5 Summer Concert Series, Cool
Desert Nights, The River of Fire Festival, Free Ice Cream Fridays, Hot
Shots 3-on-3 Tournament and HAPO “Over the River” Air Show.
We’re committed to our community and are dedicated to bringing you
events that impact the health and liveliness of each member in our
region. Each year we review all of the events we sponsor to ensure we
are participating in the events that give so much back and are nothing
short of the best.
While we look forward to summer, we take time to enjoy the other
seasons by volunteering for the various events throughout the year.
HAPO employees make it happen by giving year round to causes that
are most important to them. Whether it’s raising funds for Junior
Achievement to bring innovative in-school programs to children in our
area, or walking to support our friends, family and neighbors battling
cancer – we are committed to you.
Year after year, we are proud to partner with the amazing organizations
who show great support toward different causes. Without their support
and dedication, none of the impact we have on our community would
be possible.
®
THE OFFICIAL SPONSOR OF
SUMMER® EVENTS
• HAPO Columbia Cup
• HAPO “Over the River”
Air Show
• Live @ 5 Summer
Concert Series
• Cool Desert Nights
• River of Fire Festival
• Grand Old 4th of July
Parade
• Free Ice Cream Fridays
• Yakima Cinco de Mayo
Fiesta
• Gap2Gap Dash
• Yakima 4th of July
• Hot Shots 3-on-3
Basketball Tournament
• Sunnyside Cinco de Mayo
Fiesta
• National Night Out
• Girls on the Run 5K
• Miss Sunnyside 5K
• Hermiston Family Funfest
• Takin’ it to the Streets 3-on3 Basketball Tournament
• Relay for Life
• Walla Walla Sweets
Baseball
SPONSORSHIPS,
DONATIONS AND EVENTS
• Tri-Cities Cancer Center
• CBC Foundation
• Kadlec Foundation
•MESA
• Kadlec 4 Kids-a-Thon
• Run for Ribbons
• The Arc of Tri-Cities
• Please Don’t Quit
Foundation
• Junior Achievement
• Kennewick Man &
Woman of the Year
• Tri-Citian of the Year
• Gourmet Gala March of Dimes
• Martin Luther King Jr.
Jazz Event
• Faith Assembly Missions
Sponsor
• 12 Days of Giving Red Cross
• Hermiston Festival of Trees
• Sunnyside Festival of Trees
• Sunnyside Chamber
Awards Dinner
• Cuisine de Vin
• Coats for Kids
• Toys for Kids
• Reading Foundation
• Bikes for Tikes
• Real Heroes Breakfast
• Every 15 Minutes
• Walla Walla Chamber
After Hours
• Evening of Elegance
for Hospice
• Convoy of Hope
GOLF
• Kadlec Foundation
Golf Classic
• The Arc of Tri-Cities
Golf Tournament
• Tri-Cities Cancer Center
Golf Tournament
• TCRCC Golf Classic
• Columbia Crimson
Golf Classic
• CBC Foundation
Golf Tournament
HAPO 2015
6 3 RD A N N U A L R E P O R T
3
F I N A N C I A L S TAT E M E N T S
C OMPAR ATIV E BALANCE SHEETS*
As of December 31, 2015 and 2014
A S SETS
Cash and Cash Equivalents
Investments – Net
Loans to Members – Net
NCUSIF Deposit
Land and Buildings – Net of Depreciation
Furniture and Equipment – Net of Depreciation
Other Assets
TO TAL ASSETS
L I A B IL ITIES, DEPOSI TS & MEMBERS’ EQUI TY
Liabilities
Borrowed Funds
Accrued and Other Liabilities
Deposits
Savings Accounts
Checking Accounts
Money Market Accounts
Certificates of Deposit
IRA Accounts
Members’ Equity
Retained Earnings
Other Comprehensive Income
ASSETS (in millions)
4
2011
2012
2013
6 3 RD A N N U A L R E P O R T
2014
2014
$74,957,499
6,547,804
1,185,769,504
11,195,208
51,536,415
9,013,058
22,122,379
$79,414,319
2,414,783
1,054,865,812
10,675,370
51,489,722
9,086,647
30,584,998
$1,361,141,867
$1,238,531,651
$25,000,000
24,386,854
49,386,854
–
$19,682,538
19,682,538
285,529,815
154,556,398
289,870,866
391,966,905
82,743,229
1,204,667,213
244,282,395
136,907,104
282,284,840
446,450,790
11,809,728
1,121,734,857
104,598,450
(7,484,194 )
97,114,256
115,070,726
(7,982,926)
107,087,800
TO TAL L IAB IL ITI ES & MEMBERS’ EQUI TY
$1400
$1350
$1300
$1250
$1200
$1150
$1100
$1050
$1000
$950
$900
$850
$800
$ 0
2015
MEMBER LOANS (in millions)
2015
HAPO 2015
$1250
$1200
$1150
$1100
$1050
$1000
$950
$900
$850
$800
$750
$700
$650
$ 0
$1,238,531,651
$1,361,141,867
2011
2012
2013
2014
2015
MEMBER DEPOSITS (in millions)
$1250
$1200
$1150
$1100
$1050
$1000
$950
$900
$850
$800
$750
$700
$650
$ 0
2011
2012
2013
2014
2015
S TATEMENTS O F OPERATI ON*
For the years ended December 31, 2015 and 2014
O P ER ATING INC OME
Interest on Member Loans
Income from Investments
Member Dividends
Interest on Borrowed Funds
Net Interest Income
Provision for Loan Losses
Other Operating Income
Total Operating Income
O P ER ATING EX PE NSES
Employee Costs
Facilities Costs
Operational Costs
Marketing and Community Giving
Loan Servicing
Professional/Outside Services
Other Operating Expenses
Total Operating Expenses
Net Operating Income
$49,001,025
233,926
(7,146,758 )
(204,128 )
41,884,065
(5,295,803 )
18,468,555
55,056,817
$48,590,979
169,999
(6,751,399 )
(234,643 )
41,774,936
(4,748,292 )
16,120,600
53,147,244
24,140,065
3,457,327
10,243,128
1,200,436
2,837,066
1,766,355
1,419,578
45,063,955
9,992,862
23,828,613
3,459,191
9,590,283
1,296,290
2,525,860
1,548,482
1,999,984
44,248,703
8,898,541
(637,421)
138,885
NON-O PER ATING I NCOME (LOSS)
NET INCOME
$10,131,747
DISTRIBUTION OF 2015 INCOME
Retained
Earnings
15%
2014
2015
Members
17%
Operating
Expenses
68%
DISCLOSURE TO MEMBERSHIP: BOARD OF DIRECTORS COMPENSATION SCHEDULE
As permitted by law and the Credit Union’s Bylaws,
HAPO provides reasonable compensation to the
Board of Directors for their service to the Credit
Union. An annual stipend is payable in quarterly
installments in recognition of the education and
time requirements that are necessary and expected
of Board Members, who set the general direction
and control of the Credit Union.
Compensation Schedule for 2016
As required by law, the members of the Credit
Union shall be informed of the compensation
provided to Directors.
Compensation Paid in 2015
Compensation Plan. The annual stipend ranges
between $15,000 and $20,000 for Board Members
and is based on leadership positions held.
* The accompanying financial
statements are unaudited.
$8,261,120
Director & Board Chair .................................. $20,000
Director & Board Secretary ............................ $18,000
Director & Supervisory Committee Member.... $16,000
Director ........................................................ $15,000
William Tanner .............................................. $20,000
Ken Bays ....................................................... $18,000
Ken Gale ...................................................... $16,000
Bill Tyler ........................................................ $15,000
William Clarke .............................................. $15,000
Ken Hohenberg ............................................ $15,000
Rich Cummins .............................................. $15,000
William Tanner .............................................. $20,000
Ken Bays ....................................................... $18,000
Bill Tyler ........................................................ $15,000
William Clarke .............................................. $15,000
Ken Gale ...................................................... $15,000
Ken Hohenberg ............................................ $15,000
Rich Cummins .............................................. $15,000
HAPO 2015
6 3 RD A N N U A L R E P O R T
5
MINUTES OF THE 62
ND
ANNUAL MEETING
AP RIL 22 N D , 2 01 5
Nominating Committee Report
Call to Order and Welcome
Board Chairman, Bill Tanner, called the 62nd Annual Membership
Meeting of HAPO Community Credit Union to order at 6:30 p.m.
Wednesday, April 22, 2015, held at the Richland High School
Cafeteria. Chairman Tanner declared a quorum present.
Mr. Tanner welcomed those present. A motion was made and
seconded from among the membership to dispense with the reading
of the minutes and approve them as presented. The motion was
approved by voice vote.
Mr. Tanner introduced Rich Cummins, Chairman of the Nominating
Committee, who summarized the nominations for the Board and
Supervisory Committee. The number of applications matched the
number of vacancies on the two entities:
For three year terms on the Board, effective April 22, 2015, Bill Tanner,
Bill Tyler, and Ken Gale.
For three year terms on the Supervisory Committee, effective April 22,
2015, Ken Gale and Bill Saraceno.
No other applications for the Board or Supervisory Committee were
received.
Statement of election closure.
Chairman’s Report
Chairman Tanner introduced the Board Members and thanked the
Board, senior staff, and employees for their excellent service to the
members. He added that the Credit Union was healthy and continued
to grow.
Mr. Tanner introduced Dave Schulz, President and Chief Executive
Officer.
President’s Message
Dave Schulz, President and CEO thanked members for attending
and for their continued loyalty to the Credit Union over the years. He
introduced members of the senior staff and thanked the Board and
employees for their efforts on behalf of HAPO. He noted that, in an
increasingly regulated environment, the Credit Union continued to
grow and be profitable, while offering the most attractive rates in the
area.
Chairman Tanner announced that since the number of applicants
for the Board and Supervisory Committee equaled the number of
vacancies on those bodies, pursuant to Credit Union By-Laws, the
applicants were deemed elected.
Unfinished and New Business
Chairman Tanner asked for any unfinished or new business and there
was none.
CEO Question and Answer Period
President and CEO Schulz responded to questions from the members
in the audience.
Adjournment:
A motion was made and seconded from among the membership that
the meeting be adjourned at 7:05 p.m. The motion was approved by
voice vote, at which time a drawing for door prizes was conducted.
Supervisory Committee Report
The Chairman introduced David Beach, a member of the Supervisory
Committee.
Mr. Beach introduced other committee members and commented on
the successful financial statement audit by Moss Adams, and recently
completed examination by regulators.
6
6 3 RD A N N U A L R E P O R T
HAPO 2015
William Tanner
Chairman
A MESSAGE FROM HAPO LEADERSHIP
It is a tremendous privilege to report that 2015 was yet another great
year for HAPO Community Credit Union. We were well-prepared
to meet the much anticipated rising interest rate environment but
effectively, it never really came. A modest rate increase near the
end of the year had no impact to our operations. Another great
lesson in life – even the “experts” aren’t always right. Nonetheless,
it did provide us an opportunity to thoroughly examine and test
our strategies and confirm we will weather and remain strong even
against the most aggressive rise in interest rates, if and when it does
happen.
The “credit union movement” continues to be challenged. Smaller
credit unions in particular are feeling the stress of increasing demands
for greater technology, products and services while simultaneously
meeting more stringent regulatory and compliance requirements.
Simply put; they can’t compete in today’s world very effectively. In
2015 HAPO Community Credit Union merged one such credit union;
America’s Best Community Federal Credit Union in Hermiston,
Oregon. This $4 Million Dollar credit union was successfully merged
and welcomed into HAPO in October 2015. We anticipate at least
one additional opportunity in the coming year to offer our full
spectrum of products and services to another small credit union
through a merger. We look forward to expanding our field of
membership wherever and whenever it makes the most sense with
other credit unions.
It is through our financial strength and stability that HAPO is able
to maintain such a strong presence with our community support
endeavors. Most notably in 2015 is our increased participation in
multiple summer events throughout the area. These not only benefit
the community-at-large but also provide HAPO an opportunity to
promote itself in some form or fashion and attract new members.
This is one of the busiest times of the year and our excellent staff are
eager to participate.
Change happens. Who would have believed several years ago
that people would “bank” just by using their telephone? “Mobile
Banking” is just one example of how HAPO must always be on the
lookout for and anticipate changes that may occur in the future.
People and products come and go but the core mission of HAPO
Community Credit Union remains the same; provide our members a
safe and secure place to save and borrow money. Your Leadership
Team remains committed to this basic mission and is grateful for your
continued loyalty to HAPO. On behalf of the entire HAPO staff, we
thank you.
William Tanner
Chairman
Steve Anderson
President/CEO
We have maintained a productive relationship with our State and
Federal Examiners. We have conveyed our growth strategies in
great detail along with supporting analytics to provide a greater
understanding of our specific, local operating environment.
Economists continue to predict that the Tri-Cities in particular will
continue to enjoy a robust economy in the coming year and HAPO will
be right there to serve our members as well as those new to the area.
HAPO 2015
6 3 RD A N N U A L R E P O R T
7
SUPERVISORY COMMITTEE REPORT
In accordance with the Washington State Credit Union Act and the
rules and regulations of the National Credit Union Administration
(NCUA), the Supervisory Committee is required to “Perform or
arrange for a complete annual audit of the credit union, as well as
a verification of members accounts (required every other year).” To
satisfy these requirements the Supervisory Committee contracted with
the certified public accounting firm, Moss Adams, LLP, to perform the
audit of our financial statements and the verification of members’
accounts.
As a result of the audit, Moss Adams, LLP issued an Independent
Accountants’ Report of the credit union’s financial statements as of
and for the fiscal year ended June 30, 2015. Their report included an
unqualified opinion that those financial statements presented fairly,
in all material respects, the credit union’s financial position as of June
30, 2015 and the results of its operations and its cash flows for the
year then ended, in accordance with accounting principles generally
accepted in the United States of America.
Moss Adams also issued an Independent Accountants’ Report
detailing the agreed upon procedures they performed and the results
of those procedures regarding the member verification process.
The Supervisory Committee also approves the annual comprehensive
internal audit plan and regularly meets with the credit union’s Vice
President of Internal Audit regarding the results of the activities of the
Internal Audit Department.
The Supervisory Committee is here to serve as the oversight arm of
the credit union. Members may contact the Committee confidentially
or they may directly contact any of the Committee members.
As Chairman of the Supervisory Committee during 2015, I wish
to thank the other Committee members for their many hours of
volunteer service during the past year, as well as HAPO’s staff and
management for their assistance.
Respectfully submitted,
David Beach
Chairman
8
6 3 RD A N N U A L R E P O R T
HAPO 2015
OFFICIALS
BOARD OF DIRECTO RS
William Tanner – Chairman
William Tyler – Vice-Chairman
Ken Bays – Secretary
Ken Gale – Treasurer
William Clarke – Director
Ken Hohenberg – Director
Rich Cummins – Director
SUP ERVISORY C O M M I TTEE
David Beach – Chairman
Ken Gale
William Saraceno
NO M I N AT I N G C O MMI T T E E
Ken Bays – Chairman
William Saraceno
William Tyler
EXECUT I V E S TA F F
Steve Anderson – President / Chief Executive Officer
John Schnellbach – Senior Vice President / Chief Financial Officer
Carolyn O’Niel – Senior Vice President / Chief Development Officer
Ruby Campos – Senior Vice President / Branch Operations
Dolores Broeske – Senior Vice President / Human Resources
Scott Mitchell – Senior Vice President / Chief Risk & Analytics Officer
HAPO 2015
6 3 RD A N N U A L R E P O R T
9
MAIN LINE
509.943.5676
MORT GAGE
DIVISION
509.946.2044
w w w. H A P O . o r g
LOCATIONS IN WASHINGTON & OREGON
For hours and maps to all our branches, please visit www.hapo.org
RICHLAND - MAIN BRANCH
601 Williams Blvd.
Richland, WA 99354
YAKIMA - CASTLEVALE
903 Seattle Slew Run
Yakima, WA 98908
RICHLAND MEADOW SPRINGS
631 Gage Blvd.
Richland, WA 99352
YAKIMA - TERRACE HEIGHTS
3001 Stonewood Ct.
Yakima, WA 98901
RICHLAND - QUEENSGATE
3034 Duportail St.
Richland, WA 99352
KENNEWICK - UNION ST.
4 North Union
Kennewick, WA 99336
KENNEWICK - SOUTHRIDGE
4851 W. Hildebrand Blvd.
Kennewick, WA 99336
KENNEWICK HAPO BUSINESS COMPLEX
7601 W. Clearwater Ave.
Kennewick, WA 99336
PASCO - BY THE AIRPORT
2701 North 20th Ave.
Pasco, WA 99301
PASCO - WEST PASCO / RD 68
4902 Road 68
Pasco, WA 99301
2
6 3 RD A N N U A L R E P O R T
HAPO 2015
YAKIMA - NOB HILL
6401 W. Nob Hill Blvd.
Yakima, WA 98908
SUNNYSIDE - DOWNTOWN
322 South 6th Street
Sunnyside, WA 98944
HERMISTON
1905 N. 1st Street
Hermiston, OR 97838
WALLA WALLA COLLEGE PLACE
2376 Taumarson Rd.
Walla Walla, WA 99362
WALLA WALLA - EASTGATE
1850 E. Isaacs Ave.
Walla Walla, WA 99362