Annual Report 2015

Annual Report 2015

Statements of Income
Years Ended December 31, 2015 and 2014

 

2015

2014
INTEREST INCOME
Interest on Loans $1,375,285 $1,463,097
Interest on Investments 925,400 950,364
TOTAL INTEREST INCOME 2,300,685 2,413,461
INTEREST EXPENSE
Dividends on Members’ Share Accounts 364,597 460,616
NET INTEREST INCOME 1,936,088 1,952,845
   
PROVISION FOR (recovery of) LOAN LOSSES 1,759,790 60,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 176,298 1,892,845
FEE AND OTHER OPERATING INCOME 397,329 398,929
NON-INTEREST EXPENSE
Compensation and Benefits 985,234 935,799
Office Occupancy and Operations 874,137 842,123
Professional Fees 97,578 94,208
Travel and Conference 48,343 62,217
Publicity and Promotion 38,770 38,985
Loan Servicing 11,085 14,825
Other 58,858 57,602
TOTAL NON-INTEREST EXPENSE 2,114,005 2,045,759
OTHER  INCOME (EXPENSE) 66,032 0
NET INCOME(LOSS) ($1,474,346) $246,015

Statements Of Financial Condition
Years Ended December 31, 2015 and 2014

2015

2014
ASSETS
Cash and cash equivalents $6,708,944 $7,214,446
Certificates of Deposit 23,710,711 19,650,796
Investment Securities – held to maturity 21,305,406 28,348,704
Investment Securities -available for sale 3,981,572 1,753,665
Investments in Credit Union Service Organizations 235,893 221,552
Loans Receivable, net 29,920,724 33,547,345
Accrued Interest Receivable 270,056 275,876
Furniture and Equipment, net $20,423 $36,514
NCUSIF Deposit 686,565 708,558
Member Capital Share Deposit 80,594 80,594
Prepaid Expenses and Other Assets 330,714 146,740
TOTAL ASSETS $87,251,602 $91,984,790
LIABILITIES AND MEMBER’S EQUITY
 
LIABILITIES
Members’ Shares $76,113,391 $79,566,741
Accrued Expenses and Other Liabilities 1,101,749 599,977
TOTAL LIABILITIES 77,215,140 80,166,718
Members’ Equity, Substantially Restricted 10,036,462 11,818,072
TOTAL LIABILITIES AND MEMBERS EQUITY $87,251,602 $91,984,790

 

TOP

Chairman’s Report 2015

This year two very experienced Directors have retired from the Board.  Vinnie D’Agostino is our Treasurer and has been a Director since 1999, and a volunteer committee member before that.  He has held nearly every leadership position on the Board.  Retired from IBM for several years, he has moved to warmer climes and will retire from the Metro Board at the end of his term, which ends at the 2016 Annual Meeting.

Vinnie has dedicated over 20 years to Greater Metro Federal Credit Union and will continue to be a valued member of Metro’s leadership.  I want to thank Vinnie for his hard work, good counsel, and friendship over the years.

Another Director is also retiring, again.  Tom Amato was first elected to the Board of Directors in 1986 and was a long-time Director when he retired to move to California.   When he moved back to New York a couple of years later he was elected to the Board again in 2012 when another Director retired.

Tom is now back in California, apparently permanently this time.  He retired again effective January 31, 2016.  He is one of our longest serving Directors and has remained active and involved for 30 years.

Metro benefits from the service of retired Directors through our Director Emeritus program.  Retired Directors that continue to contribute at meetings and on Credit Union committees may be appointed Director Emeritus and afforded several privileges of Directors, but may not vote.  Both Tom and Vinnie will continue to serve Metro as Director Emeritus.

These two gentlemen represent over 50 years of combined volunteer service to Greater Metro Credit Union and our members.  We owe them our sincere thanks for their time, dedication and an important job well done.

Taking their places on the Board are Mark Schwefringhaus and Monica Duffy.  Both have been attending meetings at the Board’s invitation for a couple of years and are well qualified.  We are excited to have them aboard.  Congratulations to both of them.

On the financial front we took a serious accounting action in 2015 to reserve, for the first time, against potential losses to our Taxi Medallion loan portfolio.  We participate in several such loans offered by Credit Unions dedicated to the taxi industry. Taxi Medallion loans have been the gold standard for years, and until now, none has ever defaulted.  The industry has changed dramatically and quickly and with our Accountant’s advice we decided to take the charge for any potential bad loan.  This is a cost of doing business, as are loss reserves for every other type of loan we make.  Metro remains profitable on an ongoing basis and this will not affect our financial health in any significant way.  Please see our Treasure’s Report and Audited financials for more information.

Once again I want to thank Vinnie D’Agostino and Tom Amato for their dedicated service to Metro, and also to all the volunteers and staff that make your Credit Union work for you.

Sincerely,

 

Robert G. Morrison

Chairman

TOP

Treasurer’s Report 2015

The economic recovery is still stumbling along for consumers and for consumer friendly financial institutions-Credit Unions. We at Greater Metro strive to bring as many competitive products and services to our membership while maintaining strict cost oversight. After all, our bottom-line is your bottom-line.

As Treasurer and Chairman of the Asset Liability Committee (ALCO) it is my responsibility to oversee the financial reporting of the Credit Union and to develop the most risk-free revenue producing strategies in concert with Management. Finding the highest yielding investment products allowable by regulation continues to be a challenge in this seemingly never ending low rate market. Safety and Soundness are the main focus of our annual regulatory exams conducted by the NCUA. Following Generally Accepted Accounting Principles (GAAP) is the main focus of our annual opinion audit conducted by the independent accounting firm Wojeski & Co. On both fronts, we pass with flying colors.

Included in this Annual Report is a Statement of Financial Condition (a Balance Sheet) and an Income Statement for the year 2015 compared to 2014. A complete report may be obtained by written request to the Credit Union. Investment in Taxi Medallions has been a profitable stable product for many years for many institutions. There was never a delinquent loan, never a foreclosure, never a problem with support from city government and never any real competition. As we all found out in 2008, Never Say Never. As many of you know, the Taxi Industry has been embattled over the last year on several fronts causing a severe drop in market values. The difficulties in the industry have passed along to those investing in it. Even though we were able to reduce our holdings in half over the last few years, we still hold a position and as we do with other impaired loans, it was necessary to be prudent and pro-active to set aside amounts for possible losses in this portfolio. Therefore, a reserve for loan losses was increased by $1.6 million resulting in an overall loss for 2015 of $1.5 million. Even with this expense, our Net Worth Ratio (a barometer for Safety and Soundness) stands at 12.7% which is considered well-capitalized by the NCUA.

If you have questions regarding this report, you may contact me at vdagostino@greatermetrofcu.org.

As noted in the Chairman’s Report, I will be stepping aside from an official position with Greater Metro at the end of our Annual Meeting. It has been a pleasure and honor to serve the membership as a volunteer since 1985 and to be a member since 1973. Once again, we greatly appreciate your loyalty and support over the years. I am extremely confident that those who will continue to serve the membership, will do so with professionalism while providing quality products and services to you.

Respectfully Submitted:

 

Vincent D’Agostino

TOP

Report of the Supervisory Committee

The Credit Union Supervisory Committee consists of volunteer members appointed by the Board of Directors. The Supervisory Committee acts as a link between the board, management, and the membership. Any member who feels that their concerns are not being appropriately addressed, may escalate them to the Committee. In 2015 the volunteers were Chairperson Thomas McCarthy, Steven Goldberger, Andrea Nelson, John Forster and Monica Duffy.

Once appointed by the Board of Directors, this Committee acts independently of the Board and carries out its oversight duties on behalf of the membership. In addition to providing a link to the members, the Supervisory Committee engages the public accounting firm of Wojeski & Co.to conduct an annual opinion audit of the Credit Union’s financials. In the course of this audit they are able to assess whether Management is effectively carrying out the plans and policies established by the Board. It’s worthwhile noting that Credit Unions are not required to have this financial opinion audit until they reach $500 million in assets. Your Volunteers and Management have always believed that this more extensive review is a way of further safeguarding the assets of the Credit Union.

The complete version of Wojeski’s Audited Report of the 2015 Financial Results may be obtained by requesting them from the Credit Union in writing.

In addition to the Annual Audit, the Supervisory Committee also engages Wojeski & Co. to perform monthly on-site internal audits to review specific aspects of the Credit Union’s operations.

The Supervisory Committee is established to serve all members, and to respond to any concerns or questions that may arise. The Committee may be independently contacted at:

Supervisory Committee
Greater Metro Federal Credit Union
31-10 37th Avenue, Suite 403
Long Island City, New York 11101

An email address is also available for members to contact the Supervisory Committee to voice any concerns or complaints. The address is: supervisorycommittee@greatermetrofcu.org

 

Thomas McCarthy

Chairperson

TOP

President’s Report – 2015

Well, the Federal Reserve finally raised rates in December, probably because they backed themselves into a corner and just had to. It had no positive impact and in fact, market rates have dropped further. The next increase(s) seem poised to go into place later into 2016 (or 2017). Even with choosing the highest yielding investment vehicles, promoting our low yielding loan products and staying on top of expenses, our Net Income dropped from $248k in 2014 to $109k in 2015. Our Net Worth Ratio did go up from 13.68% to 14.29%. All of this before we had to take a hard look on how to address the upheaval in the Taxi Industry and the related Taxi Medallion loan product.

Over many years, this product has contributed millions of dollars to our bottom-line. In many years, it was our most profitable line item but unfortunately, all good things appear to come to an end. The Taxi Industry is down to its knees for a number of reasons but also trying to regroup.  We, as all of the institutional investors involved, hope they do. But in the meantime, it was necessary to take a pro-active position and write-down this asset. The reserve that was set up amounted to $1.6 million. This reduced the above noted pre-write down bottom-line to a $1.5million loss. Our Net Worth Ratio was reduced to 12.7% which is still considered being well-capitalized by the NCUA, our regulator.

Operationally, we continued to bring newer products and services to our membership, and aside from the write-down, in a profitable manner. In 2015, we redesigned our website, introduced our Mobile App and Remote Deposit Capture feature and finally distributed newly designed ATM and EMV Chip Credit Cards. (The EMV Chip Debit Cards were released in February 2016).

In 2016 we plan to enhance more features in our On-line Banking Product and a take a long overdue look into fees. We have to make it easier to join, to borrow and to navigate electronically. We also have to incentivize inactive infrequent usage of our services or purge the accounts that drain the membership’s potential revenue.

The most important undertaking in 2016 will be to focus on Membership Growth. We plan to reach out to our existing Employer Groups as well as inviting new participants. Our loyal longtime members have done their part to support the financial success of the Credit Union but we need to inject new blood with borrowing needs into our mix for continued success.

 

Peter Nalaskowski

President & CEO

TOP