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Date
3/11/13
Annual Report 2012
Your Preferred Financial
Partner for life.
2012 Community Events
MSDFCU held its 13th Annual Cow Plop benefiting Manna
on Main Street and The Shepherd’s Shelf, raising $24,792 for
the two charities. Manna on Main is a multi-service, interfaith
outreach organization serving the North Penn Community.
The Shepherd’s Shelf is a food pantry. With this donation, the
Credit Union’s 13-year total contributions to the community
for the Cow Plop are now over $229,000.
The North Penn Music Aides requested assistance
to purchase stadium coats for their band. Employees
responded with a donation of $500 from the Friday jeans
fund and MSDFCU also contributed $100 to the cause.
Three times this year, our staff volunteers cleaned a stretch of
local highway spanning two miles of a busy section of County
Line Road between Route 202 to Route 309. A total of 24
employees volunteered, some multiple times, to participate
in the clean-up sessions. This is the fourth year MSDFCU has
committed to the Adopt-A-Highway program.
During the annual Lansdale Day community event, we
provide over 200 children an updated ID, including their
photo through the KidCare ID Program. When the children
and parents stop into the booth, each child can enter a
drawing for a gift card valued at $100. We divide the children
into three age groups and randomly select one child to win
from each category.
MSDFCU held its 14th Annual Charity Golf Open at the
Mainland Golf Course. The event raised $10,000 for Bridge
of Hope Buxmont, a Lansdale, Pennsylvania-based charity
working to break the cycle of homelessness. With this
donation, the Credit Union’s 14-year total contributions to
charities from the Golf Open are now over $137,000.
We’d like to thank our primary sponsor
Merck & Co., Inc.
for their continued support of
Merck Sharp & Dohme Federal Credit Union.
01
Annually, the bankers in our area have held a softball
tournament to raise funds for those in need. Merck Sharp &
Dohme FCU has participated in the event for the last four
years by selling tickets and sponsoring a team
of employees. This past year, $9,000 was raised for charity
through the Banker’s Bash.
Community Housing of Lansdale, which serves needy
families in the North Penn area, received $500 from MSDFCU
employees by donating money to wear jeans on Fridays. The
funds are used to purchase food and gifts for local families
during the holiday season.
To help members prevent identity theft, MSDFCU held
two shredding days this past year. Both events were well
attended and the truck left with at least half of it filled
each time.
For the 11th year in a row, our Lansdale branch collected
money in jars for the Montgomery County SPCA, along with
blankets, sheets, towels, pet food, pet toys and whatever
else members donated. A total of $350 was collected along
with several bags of other supplies.
In addition to actively collecting and participating,
Merck Sharp & Dohme Federal Credit Union helps sponsor
many local charitable events. This past year, over $9,000
went to more than 45 organizations in the communities in
which we are located.
02
Chairman’s Report
Past Chairmen and Executive Committee
Past Chairmen of the Board
Two thousand and twelve brought exciting additions to our line of services for our members.
Most notably, were the creation of New Britain Mortgage, a wholly owned subsidiary of
MSDFCU, offered members and non-members the absolute best in mortgage services
and our new partnership with INVEST Financial Corporation, called Investment Services
@ MSDFCU, offered a “no obligation, wealth management service designed to help you
organize your financial affairs and plan for the future.” At the end of 2012, your Credit
Union also added Business Services to our portfolio of member-focused products, offering
commercial and investment property loans, credit cards, checking accounts, among others,
for our members seeking to improve the bottom line of their businesses.
The addition of these new services permitted us to fulfill our mission to you of delivering
beneficial and convenient services while continuing to create a sound financial institution.
Both mortgage and wealth management services saw strong usage in 2012 and contributed
positively to building the future of MSDFCU. We look forward to the same member
acceptance of Business Services in 2013.
We welcomed two new members to the team of tenured employees of MSDFCU in Bryan
Pecherek, Senior Financial Advisor with INVEST Financial Corporation and Ken Hilbert,
Business Services Manager. Both Bryan and Ken are based out of the Chalfont Operations
Center. Additionally, the Board and Volunteers would like to take the opportunity to
recognize the Credit Union’s employee retention achievements with an average of nine
years of service per employee and less than a 3% turnover rate in 2012! In addition, two
new volunteers, Donald Baines and Douglas Chubb, joined the Supervisory Committee.
On behalf of the Board of Directors, I would like to thank our membership for supporting
our efforts in representing, you, our stakeholders as well as their confidence in the Credit
Union staff in providing industry-leading financial solutions. Your faith in our competence for
leading this Credit Union is a profound statement of your trust and support of the corporate
endeavors of MSDFCU. I also extend my gratitude to senior management, the entire Credit
Union staff, and our volunteers for their tremendous effort and dedication in fulfilling the
Credit Union mission here at Merck Sharp & Dohme Federal Credit Union.
Jeffrey James
Chairman
03
Jeffrey James
Chairman
1950–1970
1985–1986
1995–1996
Raymond O. Hoffman
Peter Nebenfuhr
Carter LeBrocq
1970–1973
1986–1989
1996–2001
William E. Gadd
Thomas D. O’Connor
Bonnie Folgia
1973–1976
1989–1992
2001–2004
John D. Stevens
W. Andrew McPherson
Marjorie D. Reed
1976–1979
1992–1993
2004–2012
Joseph G. Robinson
John D. Stevens
W. Andrew McPherson
1979–1982
1993–1994
Kenneth L. Brehm, Sr.
W. Andrew McPherson
1982–1985
1994–1995
W. Andrew McPherson
John D. Stevens
Executive Committee
Jeffery James
Chairman
Joseph Robinson
1st Vice Chairman
Nancy James
Secretary
Christine Egolf
Treasurer
Robert Muzslay
2nd Vice Chairman
04
Board of Directors
Treasurer’s Report
Financial institutions continued to face challenges in 2012 of protracted high
unemployment and low consumer confidence while attempting to increase lending
and accounts. Throughout 2012, the Federal Reserve’s sustained low interest rate
policy kept deposit and lending rates at all-time lows. Despite these challenges,
Merck Sharp & Dohme Federal Credit Union saw significant improvement in loan
demand and member usage of the Credit Union.
Jeffery James
Chairman
Joseph Robinson (B, P)
1st Vice Chairman
Robert Muzslay (A, B, P)
2nd Vice Chairman
Nancy James (B, P)
Secretary
Christine Egolf
Treasurer
With increased member demand, our loan portfolio achieved positive results in
2012. First mortgages and auto loans were the prime stimulants as loans granted
increased 15.75%; dollars lent increased 27.7%; and loan balances increased 13.5%
to $222 million. Members seeking value continued to increase their usage of
MSDFCU with an increase of 9.5% in checking accounts.
We continued our tradition of excellent audit reports from our regulator, external,
and internal auditors. Their reports indicate we maintain a high level of financial
strength and management. Capital reserves, an excellent measure of strength,
increased 9.2% in 2012 to $44,376,010 resulting in a capital ratio of 8.02%.
Additional financial results in 2012 were an 8.0% increase in assets to $493,100,574;
net income was up 48%; and expenses remained flat.
Christine Egolf (A)
Treasurer
Thomas Eisenberger (A, N)
Bonnie Folgia (B, P)
Michael Gordon (P, N)
Velma Hendricks (A, B)
Director Emeriti
MSDFCU is well positioned to build on the successes of 2012 with excellent financial
strength, an excellent line of products and services, and a solid member base. As
always, your continued participation in MSDFCU helps the Board and management
provide the best possible products and services for all of our members. Thank you
for the honor of being your Treasurer.
John Becker
Jack Rubinsohn
Andy Pinckney
Carter LeBrocq (A, B, P)
W. Andrew McPherson
Marjorie Reed (A, N)
John C. Waddington (P)
Christine Egolf
Treasurer
Standing Committees: A – Asset/Liability Management, B – Bylaws, N – Nominating, P – Policy
05
06
Financial Reports
(Year Ending December 31, 2012, unaudited)
BALANCE SHEET
2012
2011
ASSETS
Loans
2012
2011
Interest Income
$222,476,874
$196,175,559
Income from Loans
$9,113,813
$9,649,992
(801,500)
(901,500)
Investment Income
4,873,763
5,114,706
221,675,374
195,274,059
Total Interest Income
$13,987,576
$14,764,698
50,190,240
42,861,789
Interest Expense
$2,780,534
$3,681,125
2,500,000
2,500,000
$11,207,042
$11,083,573
199,234,655
196,013,425
$328,713
$1,058,385
Furniture & Fixtures
7,532,433
7,615,097
Other Assets
11,967,872
12,383,774
$10,878,329
$10,025,188
$493,100,574
$456,648,144
$1,339,440
$1,120,628
Other Non-Interest Income
1,769,102
1,590,957
Net Gain on Sale of Loans
520,350
706,264
$3,628,892
$3,417,849
$5,375,839
$4,969,909
1,830,539
1,872,697
402,389
995,885
3,675,714
3,432,912
$11,284,481
$11,271,403
$3,222,740
$2,171,634
Allowance for Loan Losses
Net Loans
Cash and Cash Equivalents
Deposits in Other Financial Institutions
Investments
Total Assets
Shares
$91,294,835
$73,326,814
17,410,757
17,409,009
Share Certificates
108,271,106
107,527,295
Money Markets
157,145,785
146,128,668
Share Drafts
65,538,953
59,051,711
Borrowings
6,500,000
9,588,464
IRA Shares
Other Liabilities
2,563,128
2,981,419
Regular Reserves
3,825,775
3,825,775
40,550,235
36,808,989
$493,100,574
$456,648,144
Undivided Earnings
Total Liabilities & Equity
Net Interest Income
Provision for Loan Losses
Net Interest Income After Provision
for Loan Losses
Non-Interest Income
Service Charges and Fees
Liabilities & Equity
07
Statement OF INCOME
Total Non-Interest Income
Non-Interest Expense
Employee Compensation and Benefits
Office Occupancy and Operations
Share Insurance Premium
Other Operating Expenses
Total Non-Interest Expense
Net Income
08
Analysis of Loans Granted
CEO’s Report
(Year Ending December 31, 2012)
Merck Sharp & Dohme Federal Credit Union (MSDFCU) has always maintained as its primary
objective to be a strong and trusted financial institution—2012 was no exception. Our
commitment to being your preferred financial partner for life was exhibited in many ways
during 2012. New services were introduced and others were enhanced; all focused on
simplifying and enriching our members’ financial lives.
Member service improvements began with increasing convenience by the offering of mobile
banking allowing members to perform financial transactions on their cell phone. In the
first year, nearly 20% of our members signed up for this service. Our wealth management
program was enhanced by partnering with a new service provider, INVEST Financial. We
also hired a new financial advisor, Bryan Pecherek, who brought over 15 years of financial
planning experience to assist our members. As a result, the program saw a record number
of referrals and new clients.
David B. Whitehead
CEO
We continued to place an emphasis on exceptional member service. This was reflected
in increased member usage of financial services, such as loans, and a solid financial
performance. We granted $43 million in mortgage loans—an increase of over 50%, $12
million in auto loans and $31 million in home equity loans. Our capital ratio, a measure of
financial strength, ended the year at 8.02%. Our federal regulator, the National Credit Union
Administration, has recognized us as a well-capitalized credit union.
Total Amount
(in thousands)
Purpose of Loan
Number
New Automobiles
282
$7,250
Used Automobiles
797
13,691
Home Equity Lines
371
13,582
Second Mortgage (fixed)
227
18,175
Personal Loans
462
4,317
Other Secured
7
145
Overdraft Lines
219
53
First Mortgages
206
42,955
Student Loans
42
615
Credit Cards
524
3,947
Total
3,137
$104,730
As in the past, we support the communities our members resided and worked in. Our Cow
Plop raised $25,000 for Manna on Main Street and The Shepherd’s Shelf. Our Golf Outing
raised $9,000 for Bridge of Hope BuxMont. We even teamed up with local bankers for a
charity softball event raising $9,000 for local families in need. MSDFCU employees came
through with weekly Jeans Day donations and adopting a two mile stretch of highway to
clean four times a year. This all demonstrates our desire to fulfill the credit union philosophy
of “People Helping People.”
Your support and participation are vital to the success we achieved throughout the year. I
thank you for the trust you placed in us and look forward to providing the financial services
you deserve as a member-owner of Merck Sharp & Dohme Federal Credit Union.
Assets
Net Income
Loans
Members’ Equity (Capital)
David B. Whitehead
CEO
09
10
Supervisory Committee’s Report
Second Annual Community Service Award
The MSDFCU Community Service Award is presented
to an individual who exemplifies selfless commitment to
their community through volunteer efforts that make a
difference in others’ lives. Their voluntary efforts of time
and talent to improve the community are being recognized.
The award embodies the credit union philosophy of
“People Helping People.”
In fulfilling regulatory requirements and internal policies, audits were performed in 2012 to assess
the safety and soundness of the Merck Sharp & Dohme Federal Credit Union (MSDFCU).
The Supervisory Committee engaged CliftonLarsonAllen, LLP to complete an audit of the Credit
Union’s financial statements as of December 31, 2012. The Committee met with representatives
of CliftonLarsonAllen to review their findings and no material weaknesses were identified. As
well, no issues were identified as a result of the required annual sample member verification. The
Credit Union received a clean opinion overall from CliftonLarsonAllen.
A plan was put in place and various audits were carried out by Accume Partners to assess internal
processes and procedures of the Credit Union. The results of these audits revealed no significant
issues and the Credit Union achieved the highest rating offered. We continue to work with
Accume Partners to continuously improve our internal processes and to benchmark against other
similar credit unions.
Finally, the Credit Union is examined by the National Credit Union Administration (NCUA), the
federal agency that regulates, charters and supervises federal credit unions. The results of this
examination are that Merck Sharp & Dohme FCU remains financially sound and well managed.
The combined results of these three audits indicate that our Credit Union is operating in a
satisfactory manner and in compliance with existing Federal rules and regulations.
hong qi
John Frazzette
Chair
This year’s recipient was nominated
by three separate individuals for the
Community Service Award. Hong
Qi is a volunteer for the Guang
Hua Chinese School where she has
volunteered countless hours since
2005 to promote diversity and
cultural exchange. Bringing together
over 70 students and coordinating five Performing Arts
classes to bring a successful program to cultural events in the
community requires dedication, patience and perseverance.
Hong has brought dance and music celebrations to the
Rockhill Mennonite Community, the Lansdale International
Oktoberfests, the Lansdale Spring Festival, the Children’s
House Montessori Horsham’s International Event, and the
American Chinese Profession Association’s Autumn Festival
this past year. Each event requires costumes, programs,
practice and coordination taking approximately 20 to 30
hours of preparation. As an inspiration to the community and
as a testament to her commitment to bridging cultural gaps,
Hong has earned the 2013 Community Service Award.
The Supervisory Committee continues its role as independent, objective body, to ensure the
Credit Union meets its financial reporting objectives and has processes and procedures in place
to safeguard member assets. We remain confident that MSDFCU is prepared to meet ongoing
regulatory requirements going forward.
The Committee is also charged with and continues to respond to comments and suggestions
from Credit Union members and raising these to our Board of Directors and management team
when appropriate. In 2013, we will make it even easier for members’ to submit suggestions for
improvements or concerns about operations of your Credit Union via our Credit Union website.
You can also continue to mail inquiries to MSDFCU Supervisory Committee at P.O. Box 33,
Lansdale, PA 19446-0033, or contact any member of the Supervisory Committee, directly. All
correspondence will receive prompt and confidential attention.
Donald Baines
Douglas Chubb
William Cook
Thomas Eisenberger
The committee would like to thank the Credit Union staff, Management team and the Board of
Directors for their consistent high quality work and excellent cooperation throughout the year. We
also thank the membership for their confidence in and continued support of the MSDFCU. The
Supervisory Committee will continue to place member needs and a sound Credit Union as our
priority during 2013.
priority during 2013.
John Frazzette
Supervisory Committee Chair
11
12
Raymond O. Hoffman
Memorial Award Recipients
Kelly Moore
Each year Merck Sharp & Dohme Federal Credit Union awards
a select group of high school students with the Hoffman Award.
The award, which recognizes graduates who are active in their
community, was created in honor of Raymond O. Hoffman, founder
and first president of MSDFCU. Hoffman contributed many hours of
volunteer service to the Credit Union’s formation and success.
iris chan
Iris is a senior at Upper Dublin High School
in Fort Washington, PA. One of her many
talents is playing the piano, which Iris has
used to bring joy to others. The Jacob
Music Company sponsors recitals for the
benefit of the Hope for Henry Foundation,
a non-profit organization that purchases
holiday gifts, holds birthday parties, and
makes life more enjoyable for children
with cancer. When Iris decided she wanted to share her talents
and help others, she began organizing recitals and also playing
the piano for them. To set up a recital, Iris starts several months in
advance to arrange and organize the event. She found the week of
the recital to be hectic and exhausting, yet well worth the temporary
fatigue knowing others would benefit from her efforts. Through her
determination and her talent as a leader and pianist, over $10,000
has been raised for the charity.
Iris is also active in the Book Bridge Club, an organization benefiting
underprivileged students in Asia. She has served as Treasurer and
is currently the President. The group works to raise funds to improve
the learning environment of students in China, bring international
communities closer, and assist with natural disaster relief efforts.
Iris visits local senior centers where the club performs chamber music
for the senior residents and also plays at cultural events to raise funds.
In 2011, as a testament to her volunteer efforts, Iris received the
President’s Volunteer Service Award from President Barack Obama,
an award requiring over 800 hours of community service in one year.
In addition to the Book Club and recitals, Iris tutors, teaches piano
to Chinese students, acts as a tour guide for the community, and has
even made crafts for victims of the Japanese tsunami.
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olivia mccoy
Olivia McCoy is a senior at Napa High
School in Napa, CA. While many people
tend to avoid the homeless, Olivia has
found befriending the homeless to be
rewarding. When she went with the St.
Apollinaris Youth Ministry to Hollywood
and Skid Row to minister to the homeless,
it changed her life as she found the
homeless were not just street people,
they had stories to tell. Olivia learned to listen from this experience.
Through the stories, Olivia also found a connection. Since that first
visit, she has gone on to found a club known as P.A.T.H., Providing
Assistance To Homeless. Her charity provides food and water to the
homeless, and has raised several thousand dollars to help care for
the destitute.
Through Olivia’s Youth Ministry, she discovered a group called
Friday Night Live (FNL). This group works to educate teens and
prevent underage drinking in Napa County. Olivia participated in
compiling data from student assessments, analyzing the data to
determine action steps, attended leadership training, participated
in presentations to help pass a new Social Host Ordinance, assisted
in assessments of stores for their compliance, and even presented
awards to the Napa Police Department. Olivia is currently serving as
the president of the FNL. Olivia has helped to create awareness of
underage drinking at her school by passing out candy with quotes to
raise awareness and help prevent it and by conducting an egg hunt
around the school. The eggs contained information on the impact of
underage drinking.
Olivia finds time to participate in the American Cancer Society’s
Relay for Life, The Interact Club, and numerous other service projects
through the Youth Ministry, including the annual service trip.
She serves on the leadership core team which helps plan the
year’s activities.
Kelly is a senior at Hempfield High School
in Landisville, PA. For any group, raising
over $275,000 over a three year period
for charity is a daunting task. For Kelly,
it’s part of her daily routine. Currently
serving as Co-Overall for her school’s
MiniTHON, Kelly spends hundreds of hours
to overseeing and planning the activity
throughout the year. The MiniTHON is the
second largest event of the current 60 held in Pennsylvania each year
to raise money for The Four Diamonds Fund at Penn State Hershey
Children’s Hospital, a support fund for children fighting pediatric
cancer. Kelly has been the top individual fundraiser for the past two
years and has chaired the Entertainment Committee before being
selected as the Co-Overall by the school coordinator this year. Kelly
plans to continue her efforts to fight cancer when she attends college
in the fall.
Kelly’s compassion and desire to help others was fortified when
she spent a week in Costa Rica working at the Robleato Day Care
Center for children in the slums of San Jose along with others from
the Hempfield Church of the Brethren. She helped care for the
children and make repairs to the facility during the week. Kelly assists
the church in its other ministries and was an asset in preparing and
teaching the Vacation Bible School the past two years.
As a coach for TOP Soccer at Schreiber Pediatric Rehabilitation Center,
Kelly has enjoyed seeing children with physical disabilities succeed in
the little things most teens take for granted, like kicking a soccer ball.
These experiences have led her to a future career helping children with
disabilities, which she will begin pursuing during her second semester
as an intern in the Physical Therapy Department at Schreiber.
Dylan Ritter
Dylan is a senior at Rutgers Preparatory
School in Somerset, NJ. Dylan has grown
up with a younger sibling who was
diagnosed with isodicentri-15 and autism.
As Dylan got older, his curiosity regarding
his brother’s illness drove him to become
an advocate and leader in helping those
with disabilities. His parents founded Tend
to a Friend, a charity to bridge the gap
between children with special needs and those without. Dylan was
instrumental in helping his family plan and create the organization. He
helped choose a name, logo, form the mission statement, and choose
activities. Once a month, the organization holds a Kids’ Night Out
where parents can leave their child with volunteers who interact and
care for them while their parents get a respite from the daily routine of
caring for their child. Dylan organizes the student volunteers and works
with the children during these Friday evenings when most teenagers
are out with friends. Dylan remarked that it is an eye-opening
experience for other teens to see what living with a disability means,
which makes the teens more appreciative of their health and abilities.
Dylan is also an active participant in the Cedar Hill Prep AfterSchool Program (ASP) where he has helped other children with
their homework and enjoyed activities with them. He impressed
the ASP professionals with his work ethic so much that he has now
been hired to work with the program this year in the same capacities
as he volunteered last year averaging 15 hours a week. Other
volunteer activities include working the concession stands for St.
Matthias basketball, working the St. Matthias Carnival and Summer
Camp, assisting with the Cedar Hill Swim Club, and other schoolrelated activities.
Ashley Walter
Ashley is a senior at Central Bucks South
High School in Warrington, PA. When
mission work is presented at St. Peter’s
Evangelical Lutheran Church, Ashley can
be found embedded in the planning,
fundraising and trips. She has participated
in five trips during the past few summers.
The church works within the United States
in the poorest areas, recently in New York,
New Jersey, West Virginia and central Pennsylvania. Ashley co-chaired
fundraising which prepared her to coordinate the whole trip this past
year. She helped combine the efforts of two churches to form one joint
mission trip. It was the most successful trip for the church, which they
attribute to Ashley’s dedication. Locally, Ashley worked with God’s
Mission in Motion (GMiM) through the church to help residents and
groups for a week in the summer. Ashley assisted in repairing homes,
gardening, spending time with shut-ins and anything else required
during the week.
At the age of 14, Ashley joined the Hilltown Township Fire Company.
She has become an integral part of the fire prevention team working
with local schools and the community. As part of the Fund Raising
Committee, Ashley has participated in car washes, coin drop
collections, car show stands, and more. The membership specifically
requested Ashley to work on a larger fund raiser this year, the first
Hilltown Fire Company Wine Festival. She attends training activities
and responds to fire calls as well.
As an active soccer player, Ashley found volunteering for the
Harleysville TOP Soccer program to be another interest where she
can share her talents. She is a valued volunteer and has helped design
activities and games for the players for the past four years. In addition
to her volunteer efforts, Ashley is employed at Regal Entertainment.
14
335 West Butler Avenue | Chalfont, PA 18914
(215) 996-3700 | www.msdfcu.org
Federally insured by NCUA.
Cert no. SGS-COC-006480