PAHO/WHO FCU 2013 Annual Report

2013
Annual Report
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Growth I Personalized Service I Technology
Federally Insured by the NCUA
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TEL: 202.974.3453
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Management Report
Dear Members:
The PAHO/WHO Federal Credit Union continuously
strives to operate at optimal levels while researching
new ways to better serve our member-owners. The past
year was filled with growth and development stemming
from the contributions of a dedicated Board of Directors, diligent staff and loyal members. We closed 2013
with 4,885 members and $200,700,419 in assets. Our
historically well capitalized position has consistently
given us the opportunity to “give back” to our members with a distribution of a year-end dividend bonus.
At year-end 2013, we rewarded all eligible members
with a 4% year-end bonus on interest paid on loans and
3% bonus on dividends earned on deposits. The total
amount given back to member owners was $144,626.
As you can see, the more you utilize our products and
services, the bigger the bonus dividend you may receive at the end of the year!
Globally, economic challenges were still present in
2013; however, we were strategically prepared to ensure that your credit union remained financially strong
and prospered during this economic cycle. Most importantly, we were willing and able to assist you, our members, searching for ways to manage your financial issues.
We understand the importance of living a debt-free life
so we are consistently working with members on debtreduction strategies that allow them to increase their
personal savings by transferring higher rate loans from
other institutions to the credit union and lowering their
debt payments. As a member focused financial institution we also proactively responded to various credit and
debit card security breaches and other online security
threats by immediately reissuing compromised cards
and adopting initiatives that enhance the privacy of our
member information. To further protect our members
from credit card fraud we replaced 100% of our MasterCard credit cards with chip enhanced cards that provide
greater fraud protection. We were pleased to be one
of the first United States financial institutions to have
introduced a chip based credit card program. We have
stayed abreast of constantly changing regulatory issues
and we will continue to ensure that we perform in a safe
and sound manner while protecting your valued assets.
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.
As a member owned cooperative we are regularly
evaluating opportunities which allow us to personally
interact with our members. In support of this commitment we recently visited with our members and PAHO
staff located at the Country Offices in Brasilia and Rio de
Janeiro with the hopes of strengthening ties and bringing back suggestions on how we can improve the way
we conduct business. We will continue planning visits
to additional offices in the near future and look forward
to getting to know our global member base. As you can
see, we have made great efforts to maintain a competitive edge and prove to you, our member-owners that
we will continue offering the most beneficial products
and services in order to help you achieve sustainable
financial stability.
Looking ahead, interest rates are anticipated to increase
in late 2014 as economic growth improves and inflation picks up. As the world’s economic state continues
to progress, we will undeniably focus on continuously
researching innovative ways to improve technology,
service distribution and support. In order to make our
website more of a convenient online branch, we
are working on a new design that will improve
2013 Annual Report - page 2 of 8
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Management Report
(continued)
accessibility and usage. We will be conducting member
focus groups so we can analyze your concerns regarding your relationship with us and how we can improve
our ties and product offerings. We will also be regularly
sponsoring educational seminars on topics such as first
time homebuyers, credit reports, budgeting and other
relevant financial topics. In a recent electronic satisfaction survey distribution, 74% of you that participated
indicated that you would recommend us to a family
member or co-worker. We thank you for your loyalty and
we vow to continue improving and operating in a manner that demonstrates our dedication to you.
On behalf of the Board of Directors and Staff, we thank
you for putting your trust in us. Our promise to you is
that we will make every effort to serve you in the most
efficient way possible while helping you achieve and
maintain the financial freedom you deserve. Our friendly
and dedicated staff will go above and beyond to assist
you in a manner that most fits your needs. Please continue to share the benefits of our products and services
with your family and co-workers and encourage them to
become member-owners too!
We look forward to 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
Supervisory Committee Report
The Supervisory Committee is an independent body that
monitors and evaluates the Credit Union’s finances and
operations. All credit unions are required by law to have
a supervisory committee. The Supervisory Committee is
responsible for overseeing ongoing reviews and audits in
order to safeguard the assets of the Credit Union and its
members.
Supervisory Committee members are appointed by
the Board of Directors from among the Credit Union
membership. Like the Directors, Supervisory Committee
members are volunteers who receive no payment for
their services.
In order to fulfill its responsibility, the Supervisory Committee of the PAHO/WHO Federal Credit Union relies on
the professional services of certified public accountants.
The CPA firm of Rowles & Co performs an annual external audit of the financial statements, and the CPA firm
of Orth, Chakler, Murnane & Co performs internal audit
reviews at intervals throughout the year.
It is my pleasure to report that Rowles & Co has returned
an unqualified audit opinion on the PAHO/WHO Federal
Credit Union’s financial statements for the year ended
December 31, 2013. Please be reminded that in the context of an audit opinion the adjective unqualified should
be read to mean free of restriction or modification. This
is known as a clean audit opinion; it signifies that the
auditors believe the financial statements to be fair and
accurate in all material respects.
Another responsibility of the Supervisory Committee is
addressing member concerns. Please feel free to contact
the Supervisory Committee if you have a concern regarding your accounts or transactions, and it has not been
resolved to your satisfaction by Credit Union staff and
management. Our e-mail addresses are posted on the
Credit Union’s website. Your input can provide a valuable
contribution to our work.
Tyson Kidder
Supervisory Committee
2013 Annual Report - page 3 of 8
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2013 Financial Comparisons & Ratios
FINANCIAL PERFORMANCE COMPARISONS
2013
2012
Assets
$200,700,419
$197,840,900
1%
Shares
$165,807,727
$161,402,837 3%
Loans, Net
$91,186,450
$79,653,933
14%
Reserves
$11,000,965
$11,000,965
0%
Undivided Earnings $24,464,148
$ 23,623,254
4%
Gross Income
CHANGE %
$5,102,512 $5,416,651 Operational Expenses$ 3,471,162
-6%
$3,729,238
-7%
$0
$514,697
-100%
Interest Expense $790,456$1,116,788
-29%
Provision For Loan
Losses Expense
$840,894
$
Net Income
ASSETS (in millions)
$200
FINANCIAL RATIOS
173.6
$
182.4
$
188.0
$
197.8
$200
$150
$150
$100
$100
$50
$50
$0
$0
2009
10
11
12
140.2
148.4
$
$
32.2
$
33.4
$
34.6
$
Total Net Loans
to Total Shares
55.00%
49.35%
Total Net
Loans to Total Assets
45.43%
40.26%
Net Worth
to Total Assets
17.67%
17.50%
0.42%
0.03%
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
151.8
$
161.4
$
165.8
DISTRIBUTION OF
GROSS INCOME
Interest
Expense
Net Worth (in millions)
$35
$30
$25
$20
$15
$10
$5
$0
2012
$
2009
13
2013
Measures net income in
relation to average assets
SHARES (in millions)
200.7
$
$
55,9281,404%
34.6
$
10
11
12
$790,456
15.5%
13
35.5
$
Operational
Expenses
$3,471,162
68%
Net Income
$840,894
16.5%
Provision for Loan Losses
2009
10
11
12
13
2013 Annual Report - page 4 of 8
$0 - 0%
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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, 2013 and 2012, 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, 2013 and 2012. We expressed an unmodified audit opinion on those audited
financial statements in our report dated April 23, 2014.
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, 2013 and 2012, 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 23, 2014
101 E. Chesapeake Avenue, Suite 300, Baltimore, Maryland 21286
410-583-6990 FAX 410-583-7061
Website: www.Rowles.com
2013 Annual Report - page 5 of 8
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Condensed Statements of Financial Condition
December 31, 2013 and 2012
ASSETS
2013
Cash and Cash Equivalents
2012
$29,660,216
$ 32,780,229
Loans to members, net
91,186,450
79,653,933
Certificates of deposit
in other financial institutions
19,885,000
18,154,000
Investment securities available for sale
52,648,985
61,559,557
NCUSIF Deposit
1,333,408
1,288,168
Perpetual Contributed Capital
853,850
853,850
Property and equipment
996,540
1,105,764
Prepaid expenses and other assets
4,135,970
2,445,399
TOTAL Assets
$200,700,419
LIABILITIES AND MEMBERS’ EQUITY
$197,840,900
2013
2012
LIABILITIES
2013
2012
Members’ Share Accounts
$165,204,921
$161,402,837
Accrued Expenses
and Other Liabilities
602,806
993,877
TOTAL Liabilities
165,807,727
162,396,714
MEMBERS’ EQUITY
Regular Reserves
11,000,965
11,000,965
Undivided Earnings
24,464,148
23,623,254
Accumulated Other
Comprehensive Income
Unrealized gain on investments
155,216
1,476,907
Unrealized pension valuation
(727,637)
(656,940)
TOTAL Members’ Equity
34,892,692
35,444,186
TOTAL Liabilities and
Members’ Equity
$200,700,419
$197,840,900
These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements,
including the statements of comprehensive income, cash flows, and changes in members’ equity, and notes to the financial statements,
are available at the Credit Union office during normal hours of operation.
2013 Annual Report - page 6 of 8
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Condensed Statements of Income
Years Ended December 31, 2013 and 2012
2013
2012
INTEREST INCOME
Interest on loans
$3,240,405
$ 3,406,708
Interest on investments 1,287,655
1,535,783
TOTAL Interest Income
4,528,060
4,942,491
INTEREST EXPENSE
Dividends on members’ shares 790,456
1,116,788
Net Interest Income 3,737,604
3,825,703
PROVISION FOR LOAN LOSSES
-
514,697
Net interest income after provision for loan losses 3,737,604
3,311,006
NON-INTEREST INCOME
Card services 272,094
259,458
Other 302,358
214,702
TOTAL Non-Interest Income
574,452
474,160
NON-INTEREST EXPENSE
Compensation and benefits 1,419,085
1,499,678
Office occupancy 206,861
203,879
Office operations 428,492
444,578
Loan servicing 188,903
227,205
Professional and outside services 867,714
876,910
NCUSIF stabilization expense 106,673
122,376
Other 253,434
354,612
TOTAL Non-Interest Expense
3,471,162
3,729,238
NET INCOME
$840,994
$ 55,928
These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements,
including the statements of comprehensive income, cash flows, and changes in members’ equity, and notes to the financial statements,
are available at the Credit Union office during normal hours of operation.
2013 Annual Report - page 7 of 8
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Benefits of Banking with Us
with PAHO/WHO Federal Credit Union
Free Checking
• Dividend-earning Checking
Savings & Investments
• Savings Accounts
• Special Savings Accounts
• Certificates of Deposit
• Individual Retirement Accounts
Affordable Loans & Refinancing
• Vehicle Loans & Refinancing
• MasterCard Platinum Credit Cards
• Higher Education Loans
• Personal Loans
• Mortgage Loans
• 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
Banking Convenience Where You Live, Work & Travel
• Over 28,000 Free ATMs nationwide
through CO-OP Network
• CU Service Centers Shared Branching with
over 5,000 shared credit union
branches nationwide
• 24/7 Telebanking - manage accounts anytime, anywhere
Additional Resources & Services
• eLerts - free email notifications concerning fraud, security
& other money saving news
• Insurance
• Financial Counseling and Education
• Visa Gift Cards
• Money Orders
• Wire Transfers
• Notary Public
Branch:
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
1-866-724-6328 (toll-free/gratuito)
Fax:202-659-4513
Tele-BANK:202-659-4517
Mailing Address:
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
Federico Ortiz
Director
Luis Velásquez
Director
Supervisory Committee
Tyson Kidder
Deanna Ner-Mardirossian
Gloria Morales
Christina Marsigli
Sylvia Schultz
Chairperson
Member
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
2013 Annual Report - page 8 of 8