Annual Report - Paho/Who Federal Credit Union

2014
Annual Report
65 YEARS OF FINANCIAL SERVICE TO THE PAHO COMMUNITY
Consistent Growth I Member Loyalty I Financial Strength
Federally Insured by the NCUA
65 YEARS OF FINANCIAL SERVICE
TO THE PAHO COMMUNITY
FOR LIFE.
SU FAMILIA FINANCIERA PARA TODA LA VIDA.
YOUR FINANCIAL FAMILY
TEL: 202.974.3453
www.PAHOfcu.org
Management Report
Dear Members:
It’s hard to believe that our credit union just turned
65! We could not have done it without you, our loyal
member-owners and so many others who have provided
insightful leadership and strategic direction throughout
our history ensuring that your financial resources are safe
and sound.
Through the years we have transformed to a full service financial institution serving over 5,000 members
in 73 countries worldwide. As of December 31, 2014,
our assets exceeded $200 million, which demonstrates
your continued trust and willingness to utilize us as your
primary financial institution. Due to our consistently
well capitalized position, we were once again in 2014
able to reward all our eligible members with a year-end
dividend bonus of 3% on interest paid on loans and
2% on dividends earned on deposits. The total amount
given back to members in 2014 was $118, 461. This is a
constant reminder that the more you utilize our products
and services, the bigger your bonus will be at the end of
the year.
In order to facilitate and enhance the way you do business with us, we invested in several new products and
services. Our Online Banking upgrade allows you to
set-up account notifications such as low balances, recent
transactions, and loan payments. In April 2013, we
launched our Mobile Banking App which is available for
downloading on the Apple and Android devices. This
application allows members to view account balances,
make transfers and pay bills through a smart phone
or tablet 24 hours a day. We also introduced both our
desktop and mobile Remote Deposit service. Members
can now easily make check deposits to their credit union
accounts from desktop scanners or through their mobile
devices.
We are well aware that as technology becomes more
prevalent, so are your expectations of our service deliv-
ery to you. We therefore strive to financially invest in our
IT infrastructure to consistently improve all the electronic
channels that are available to you for accessing your
accounts and interacting with us. Our Homebanking,
Mobile Banking, and Remote Deposit applications are
regularly updated to ensure that they are easy to use
and comprehensive. In January 2015, we launched our
redesigned website allowing members to access their
accounts and other useful information through a wide
range of devices. This means that whether you are using
a desktop computer, a tablet, or a Smartphone, our bilingual website adjusts automatically for an optimal viewing experience. Another way we are aiming to be more
technologically savvy is by enhancing our ATM in the
PAHO HQ lobby to accept deposits. This technology will
eliminate the current deposit box that members utilize
which will make the process more operationally efficient
and secure. We encourage you to take advantage of all
our electronic services, especially if your reside outside
of the USA or lack convenient access to our walk-in Columbia Plaza branch or one of our 5,000 shared branch
locations. Our goal is to deliver quality products and
services that fulfill your financial needs from anywhere at
any time.
Training and education have always been an important
organizational focus for our staff and volunteer leaders.
As we plan for 2015 we have listened to your comments
provided in various surveys, focus group sessions, or
one-on-one conversations and we are introducing a
regular schedule of member educational sessions on
topics such as credit reporting, home and auto buying, taxes and retirement. Our goal is to ensure that our
members are financially literate so that they can more
successfully navigate the complicated world of financial
products and services that they are exposed to. We also
know that due to several major data breaches, cyber
security is becoming even more ubiquitous. We have
therefore implemented increased levels of security for
members accessing their accounts via online
2014 Annual Report - page 2 of 8
65 YEARS OF FINANCIAL SERVICE
TO THE PAHO COMMUNITY
FOR LIFE.
SU FAMILIA FINANCIERA PARA TODA LA VIDA.
YOUR FINANCIAL FAMILY
Management Report
TEL: 202.974.3453
www.PAHOfcu.org
(continued)
banking by requiring more complicated passwords and
recently completed the assignment of more complicated
accounts numbers for many of our members. Account
and cyber fraud is sometimes unavoidable, however, you
can minimize your risk of becoming a victim by making
it a practice of regularly checking your account balances
and activity, changing your passwords regularly, not using public computers and not responding to emails or
calls from unknown sources.
Even though we have seen some improvements, the
global economy is still struggling to repair itself following
the recession. The housing market in the United States is
improving with home values at record highs after several years of depressed values. According to the United
States Federal Reserve though, interest rates are still
expected to remain low until 2016 which means this is
an opportune time to purchase a new home or refinance
a current mortgage at a lower rate with us. This is also a
great time to purchase a new car or finance that family
vacation you’ve been dreaming about. In the end, our
primary responsibility is to provide you with the means
to take care of your financial needs and being here for
you through good times and bad is what makes us your
financial family for life.
Looking ahead, we realize that in order to stay competitive and maintain your trust and loyalty, we have to
keep up with technologies and innovation through the
implementation of several new projects. In 2015, we will
begin issuing debit cards to include EMV chips which
will provide an additional layer of fraud protection to our
cardholders. Additionally, we will be introducing a new
premium credit card program that will include a rewards
feature and other card usage incentives for those that
travel or utilize a credit card for everyday purchases such
as gas and groceries. Lastly, we will be expanding our
Columbia Plaza branch location to ensure that we have
proper facilities to best support our expanding service
and technology offerings. The branch expansion design
will be focused on satisfying our member’s preference
for enhanced personalized banking services, especially
in the areas of mortgage lending and financial education.
Our core emphasis is to provide you with an unforgettable member experience that is tied to technological
tools that are more and more commonly used to perform
transactions. We are proud of our strong financial position and our strength to continue operating in a manner
that is prudent and steadfast.
Our dedicated and experienced volunteer Board of
Directors, leadership team and operational staff will
continue to work together to deliver and implement
competitive products and services in the most effective
and efficient way possible. We thank you for constantly
serving as personal advocates of our financial institution.
We invite you to share our product and service menu
with your family or co-workers and encourage them to
begin experiencing the rewarding financial benefits
that come with being PAHO/WHO Federal Credit Union
member-owners.
We appreciate your membership and look forward to
continue serving you in the future.
Sincerely,
Luis Proaño, Chairman
Ricardo de la Torre , Treasurer Miguel Boluda, Jr.,
Board of Directors
Board of Directors
Chief Executive Officer
2014 Annual Report - page 3 of 9
65 YEARS OF FINANCIAL SERVICE
TO THE PAHO COMMUNITY
FOR LIFE.
SU FAMILIA FINANCIERA PARA TODA LA VIDA.
YOUR FINANCIAL FAMILY
TEL: 202.974.3453
www.PAHOfcu.org
2014 Financial Comparisons & Ratios
FINANCIAL PERFORMANCE COMPARISONS
2014
2013
Assets
$201,054,582
$ 200,700,419
.2%
Shares
$165,178,214
$ 165,807,727
- .4%
Loans, Net
$96,962,468 $91,186,450
6%
Reserves
$11,000,965 $11,000,965
0%
Undivided Earnings $25,501,226 $ 24,464,148
4%
Gross Income
CHANGE %
$5,436,823$5,102,512
Operational Expenses$ 3,662,319
7%
$3,471,162
6%
$128,000
$0
100%
Interest Expense $609,426
$790,456
-23%
Provision For Loan
Losses Expense
$1,037,078$
Net Income
ASSETS (in millions)
$200
FINANCIAL RATIOS
$
182.40 188.0
$
$
200.70 201.05
197.8
$200
151.8
$
$150
$150
$100
$100
$50
$50
$0
$0
2010
11
12
13
148.4
$
Net Worth (in millions)
$35
$30
$25
$20
$15
$10
$5
$0
33.4
$
34.6
$
34.6
$
2013
Total Net Loans
to Total Shares
58.70%
55.00%
Total Net
Loans to Total Assets
48.23%
45.43%
Net Worth
to Total Assets
18.16%
17.67%
0.52%
0.42%
Measures the level at which we
lend out the member’s deposits
Measures the level of our lending
within our membership
Measures retained earnings as
determined under GAAP
Return on
Average Assets
165.8 $165.17
$
$
DISTRIBUTION OF
GROSS INCOME
Interest
Expense
2010
14
161.4
2014
Measures net income in
relation to average assets
SHARES (in millions)
$
$
840,89423%
35.5
$
11
12
13
$609,426
11%
14
36.5
$
Operational
Expenses
$3,662,319
68%
Net Income
$1,037,078
19%
Provision for Loan Losses
2010
11
12
13
14
2014 Annual Report - page 4 of 9
$128,000 - 2%
65 YEARS OF FINANCIAL SERVICE
TO THE PAHO COMMUNITY
FOR LIFE.
SU FAMILIA FINANCIERA PARA TODA LA VIDA.
YOUR FINANCIAL FAMILY
TEL: 202.974.3453
www.PAHOfcu.org
Supervisory Committee Report
The Supervisory Committee is an independent body of
Credit Union members whose responsibility is to monitor and evaluate the financial stability and operational
soundness of the Credit Union. Supervisory Committee
members are appointed by the Board of Directors on an
annual basis and, like the Board of Directors, receive no
payment for their services.
This Committee oversees the work of the internal and
external auditors, and communicates with the Board of
Directors and Management for the purpose of ensuring
that the Credit Union’s internal controls are sufficient to
safeguard member assets.
The CPA firm of Rowles & Co performed an independent
audit of the Credit Union’s 2014 financial statements, and
returned an ‘unqualified opinion’ on those statements.
In the context of an audit opinion, unqualified should be
understood as free of restriction or modification. It signifies that the auditor believes the financial statements to
be sound and free of material misstatement. Furthermore,
the CPA firm of Orth, Chakler, Murnane & Co served in
the capacity of internal auditors throughout 2014.
The Supervisory Committee also has a responsibility to
address concerns brought by Credit Union members. If
you have any concern regarding your accounts or transactions that has not been resolved to your satisfaction by
Credit Union staff and management, feel free to contact
us. Our e-mail addresses are listed on the Credit Union’s
website, and all communications are considered confidential.
If you would like to know more about the Supervisory
Committee, do not hesitate to contact me or one of the
other Committee members. If you have any interest in
serving on this Committee, I encourage you to reach out
to the Board of Directors.
Tyson Kidder
Supervisory Committee
2014 Annual Report - page 5 of 9
65 YEARS OF FINANCIAL SERVICE
TO THE PAHO COMMUNITY
FOR LIFE.
SU FAMILIA FINANCIERA PARA TODA LA VIDA.
YOUR FINANCIAL FAMILY
TEL: 202.974.3453
www.PAHOfcu.org
Report of Independent Auditors
Supervisory Committee
PAHO/WHO Federal Credit Union
Washington, D.C.
Report of Independent Auditors on Summary Financial Statements
The accompanying summary financial statements, which comprise the summary balance sheets as of December
31, 2014 and 2013, and the summary statements of income for the years then ended, are derived from the audited financial statements of PAHO/WHO Federal Credit Union as of and for the years ended December 31, 2014
and 2013. We expressed an unmodified audit opinion on those audited financial statements in our report dated
April 29, 2015.
The summary financial statements do not contain the statements of comprehensive income, changes in members’
equity, cash flows, and all the disclosures required by accounting principles generally accepted in the United
States of America. Reading the summary financial statements, therefore, is not a substitute for reading the audited financial statements of PAHO/WHO Federal Credit Union.
Management’s Responsibility for the Summary Financial Statements
Management is responsible for the preparation of the summary financial statements on the basis described in
Note 1 of PAHO/WHO Federal Credit Union’s audited financial statements.
Auditor’s Responsibility
Our responsibility is to express an opinion about whether the summary financial statements are consistent, in all
material respects, with the audited financial statements based on our procedures, which were conducted in accordance with auditing standards generally accepted in the United States of America. The procedures consisted
principally of comparing the summary financial statements with the related information in the audited financial
statements from which the summary financial statements have been derived, and evaluating whether the summary financial statements are prepared in accordance with the basis described in Note 1. We did not perform
any audit procedures regarding the audited financial statements after the date of our report on those financial
statements.
Opinion
In our opinion, the summary financial statements of PAHO/WHO Federal Credit Union as of and for the years
ended December 31, 2014 and 2013, referred to above are consistent, in all material respects, with the audited
financial statements from which they have been derived, on the basis described in Note 1 of the audited financial
statements.
Baltimore, Maryland
April 29, 2015
2014 Annual Report - page 6 of 9
65 YEARS OF FINANCIAL SERVICE
TO THE PAHO COMMUNITY
FOR LIFE.
SU FAMILIA FINANCIERA PARA TODA LA VIDA.
YOUR FINANCIAL FAMILY
TEL: 202.974.3453
www.PAHOfcu.org
Condensed Statements of Financial Condition
December 31, 2014 and 2013
ASSETS
2014
Cash and Cash Equivalents
2013
$13,730,984
$ 29,660,216
Loans to members, net
96,962,468
91,186,450
Investment securities available for sale
64,093,303
52,648,985
Investment securities held to maturity
2,334,276
-
Certificates of deposit
in other financial institutions
14,210,000
19,885,000
NCUSIF Deposit
1,333,721
1,333,408
Perpetual Contributed Capital
853,850
853,850
Accrued interest receivable
433,175
399,436
Credit Union owned life insurance
2,442,212
-
Property and equipment
967,133
996,540
Foreclosed real estate
-
144,880
Prepaid expenses and other assets
3,693,460
3,591,654
TOTAL Assets
$201,054,582
LIABILITIES AND MEMBERS’ EQUITY
LIABILITIES
2014
$200,700,419
2013
2012
2013
Members’ Share Accounts
$164,629,541
$165,204,921
Accrued Expenses
and Other Liabilities
548,673
602,806
TOTAL Liabilities
165,178,214
165,807,727
MEMBERS’ EQUITY
Regular Reserves
11,000,965
11,000,965
Undivided Earnings
25,501,226
24,464,148
Accumulated Other
Comprehensive Income
Unrealized gain on investments
480,297
155,216
Unrealized pension valuation (1,106,120)
(727,637)
TOTAL Members’ Equity
35,876,368
34,892,692
TOTAL Liabilities and
Members’ Equity
$201,054,582
$200,700,419
These summary financial statements do not constitute a complete presentation. The complete set of audited financial statements, including the
statements of comprehensive income, changes in members’ equity, and cash flows, and the notes to the financial statements, are available at
the Credit Union office during normal hours of operation.
2014 Annual Report - page 7 of 9
65 YEARS OF FINANCIAL SERVICE
TO THE PAHO COMMUNITY
FOR LIFE.
SU FAMILIA FINANCIERA PARA TODA LA VIDA.
YOUR FINANCIAL FAMILY
TEL: 202.974.3453
www.PAHOfcu.org
Condensed Statements of Income
Years Ended December 31, 2014 and 2013
2014
2013
INTEREST INCOME
Interest on loans
$3,609,100
$ 3,240,405
Interest on investments 1,168,225
1,287,655
TOTAL Interest Income
4,777,325
4,528,060
INTEREST EXPENSE
Dividends on members’ shares 609,426
790,456
Net Interest Income4,167,899
3,737,604
PROVISION FOR LOAN LOSSES
128,000 Net interest income after provision for loan losses 4,039,899
3,737,604
NON-INTEREST INCOME
Card services 280,684
272,094
Gain on disposition of foreclosed real estate
60,683
16,196
Other 318,131
286,162
TOTAL Non-Interest Income
659,498
574,452
NON-INTEREST EXPENSE
Compensation and benefits 1,564,654
1,419,085
Office occupancy 219,569
206,861
Office operations 427,047
428,492
Loan servicing 171,646
188,903
Professional and outside services 930,974
867,714
NCUSIF stabilization expense
-
106,673
Other 348,429
253,434
TOTAL Non-Interest Expense
3,662,319
3,471,162
NET INCOME
$1,037,078
$ 840,994
These summary financial statements do not constitute a complete presentation. The complete set of audited financial statements, including the
statements of comprehensive income, changes in members’ equity, and cash flows, and the notes to the financial statements, are available at
the Credit Union office during normal hours of operation.
2014 Annual Report - page 8 of 9
65 YEARS OF FINANCIAL SERVICE
TO THE PAHO COMMUNITY
TEL: 202.974.3453
www.PAHOfcu.org
FOR LIFE.
SU FAMILIA FINANCIERA PARA TODA LA VIDA.
YOUR FINANCIAL FAMILY
Benefits of Banking with Us
with PAHO/WHO Federal Credit Union
Free Checking
• Dividend-earning Checking
Columbia Plaza, 506 23rd Street, NW
8am to 3pm; M, T, Th & F
8am to 1:30pm; Wednesday
Website: www.PAHOfcu.org
E-Mail: [email protected]
Telephone: 202-974-3453
Savings & Investments
• Savings Accounts
• Special Savings Accounts
• Certificates of Deposit
• Individual Retirement Accounts
1-866-724-6328 (toll-free/gratuito)
Fax:202-659-4513
Mailing Address:
Affordable Loans & Refinancing
• Vehicle Loans - Car Buying Service
• MasterCard Platinum Credit Cards
• Higher Education Loans
• Personal Loans
• Mortgage Loans - Home Realty Service
• Home Equity Lines of Credit
• Recreational Vehicle Loans
• Overdraft Protection Lines of Credit
24/7 Banking / Going Green
• Online Banking
• Mobile Banking
• Remote Deposit
• eStatements and ePay
• eLerts
2112 F Street, NW, Suite 201
Washington, DC 20037-2761
Board of Directors
Luis Proaño
Chairperson
Isabel Vigil
Vice Chairperson
Ricardo de la TorreTreasurer
Ana Maria Falquez
Secretary
Antonio Hernandez
Director
Eduardo Kalivoda
Director
Christina Marsigli
Director
Federico Ortiz
Director
Luis Velásquez
Banking Convenience Where You Live, Work & Travel
• Over 30,000 Free ATMs nationwide
through CO-OP Network
• CU Service Centers Shared Branching with
over 5,000 shared credit union
branches nationwide
Additional Resources & Services
• Insurance
• Financial Counseling and Education
• Visa Gift Cards
• Wire Transfers
Branch:
• Money Orders
• Notary Public
Director
Supervisory Committee
Tyson Kidder
Deanna Ner-Mardirossian
Gloria Morales
Sylvia Schultz
Chairperson
Member
Member
Member
Executive Staff
Miguel Boluda, Jr.
Shaun Ghaffouri
Patricia V. Ilijic
Araceli Iraheta
Marella Nardotti
Chief Executive Officer
Vice President of Finance
Executive Vice President
Director of Compliance
& Risk Management
Director of Marketing
& Administrative Services
Staff
Rafael Aneiva
Jairol Arias
Esteban Arze
Soledad Casals
Zark Lucas Puh
Yaribeth Hart
Gisella Lanzone
Alberto Meneses
Belinda Vasquez
Wilbur Gil
2014 Annual Report - page 9 of 9