2006 ornl fcu annual report
DESCRIPTION
Annual Report to the members of ORNL Federal Credit Union.TRANSCRIPT
ANDERSON COUNTY
Oak Ridge Main Office221 S. Rutgers Avenue
Oak Ridge Wal-Mart 373 S. Illinois Avenue
Clinton 1117 N. Charles Seivers Blvd
KNOX COUNTY
North Knoxville 808 Victor Drive
West Knoxville 8721 Kingston Pike
Middlebrook Food City 9565 Middlebrook Pike
East Knoxville 2321 East Magnolia
South Knoxville7325 Chapman Highway
Farragut 11405 Municipal Center Drive
Fountain CityNorthgate Plaza Shopping Center4330 N. Broadway
Karns7228 Oak Ridge Highway
Halls 4510 Emory Road
Powell Kroger6702 Clinton Highway
Millertown Pike5409 Millertown Pike
ROANE COUNTY
Kingston 1204 N. Kentucky Street
Oak Ridge National Lab P.O. Box 365
Rockwood Wal-Mart1102 N. Gateway Avenue
LOUDON COUNTY
Lenoir City 895 Highway 321 North
BLOUNT COUNTY
Alcoa 103 Hamilton Crossing Drive
Maryville 1743 West Broadway
Maryville Wal-Mart2401 US Hwy. 411 South
MONROE COUNTY
Madisonville 111 Kefauver Lane423-442-6061
HAMBLEN COUNTY
Morristown 1730 West Andrew Johnson Hwy.423-581-9800
SEVIER COUNTY
Sevierville 502 Dolly Parton Parkway
NCUANational Credit Union Administration,
a U.S. Government Agency.
Your savings insured to 100,000
EQUAL HOUSINGOPPORTUNITY
Telephone: 865-688-9555Or toll-free: 1-800-676-5328
*All locations except Madisonville and Morristown
CyberBranchTM
http://www.ornlfcu.com
Printed on recyclable paper.
ooking back on your credit union’s
performance throughout 2006, I am proud to
report another prosperous year. Perhaps
the best way to describe the past year is
one of consistent growth. New branches
were opened, many were remodeled
to increase the level of service they
provide, and plans were set in place for
additional branches in 2007.
Already, many of your friends and neighbors
have taken advantage of the convenience a growing
branch network affords them. This is reflected
in the numbers of new members we attracted in
2006. During the year, membership increased
by 10.58%, or 11,627 members. Total membership at
year-end was 121,478.
Loan and deposit growth was also strong during
2006. Although the nation experienced slower
economic growth, including a slowdown in the
housing market and a decrease in consumer spending,
ORNL Federal Credit Union loans outstanding
grew $55.4 million, or 7.91%, to finish the year at
$759.0 million. Deposits grew by $98.6 million,
or 13.49%. At year-end, our deposits totaled
$829.1 million. Total assets for the
credit union grew by $102 million,
or 11.60%, to a year-end total of
$980.9 million.
ORNL FCU was once again voted
Best Credit Union in 2006 by both
the Knoxville News-Sentinel and the
Oak Ridger’s readers’ polls. This continued confidence
and satisfaction with your credit union is largely due to
our staff’s ongoing efforts to provide superior service
and convenience to you and all of our members.
As part of our effort to provide the greatest level
of service and convenience possible, four new branches
were opened in 2006. Early in the year, we expanded
to the Sevierville area and, soon after, celebrated the
L
...the best way to describe the past year is one
of consistent growth.
— continued on page 2 —
opening of an in-store branch located within the Kroger
store in the Powell community. Later in the year, to
better serve members in the Harriman and Rockwood
area, a new office was opened within the Rockwood
Wal-Mart. And, in November, a new
East Knoxville branch was opened at
5409 Millertown Pike. Our Oak Ridge
Wal-Mart location was also given a
new look in 2006 to help provide
members visiting the branch even greater convenience.
Also, during 2006, we expanded Saturday hours at our
Farragut, Clinton, and Oak Ridge branches to better
accommodate those members taking advantage of our
convenient weekend hours.
As we look forward to the new year, many
plans are in place for new branch locations.
Ground was broken in October for a new branch in
Alcoa, with plans for a tentative opening date of
March 2007. Another Blount County branch is set to
open within the Maryville Wal-Mart in March. A month
later, our Fountain City Branch is set to relocate to
Fountain City’s new Shoppes at Fountain View. And in
May, our East Knoxville office will be able to provide
greater access to members in the East Knoxville area by
relocating to a larger, stand-alone, full-service facility.
Many product and service enhancements were
introduced during 2006. In July, we began offering
Health Savings Accounts (HSAs), designed
to help individuals and families with high
deductible health plans.
Many members have
already taken advantage
of the convenient, tax-free distributions
these accounts provide. Months later,
we introduced our BALANCE Financial
Fitness Program in an effort to assist
members in realizing their financial
goals by reducing debt, saving for higher
education, or planning for retirement.
Over 250 members have already looked to
the BALANCE Program’s unbiased money
management information and assistance for guidance.
Late in the year, we rolled out a new web site
design that provided members easier navigation
and more online tools than ever before. For
example, our new HomeValueBot service provides
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...we rolled out a new web site design
that provided members easier
navigation...
— continued from page 1 —
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site visitors instant, free estimates
of their home values. Users can even
enter an e-mail address to have
updated home valuations sent to them
quarterly. Through our partnership with
Credit Union Direct Lending (CUDL), our
new CUDL AutoSMART program provides
members with tools to research a vehicle,
locate a dealer, have dealers compete
for their business, and find information
about credit union financing.
As part of our ongoing financial
education effort, podcasts were also
added to our new web site design. With
the ability to listen online or download,
our podcasts provide financial education
to help members make informed financial
decisions. Web site visitors can even
subscribe to and receive ORNL FCU podcasts automatically
as they are posted each month.
After two years of success with our Credit Union
Service Organization (CUSO), Affinity Title Company, your
credit union created CU Community Insurance, LLC, in
the summer of 2006. CU Community
Insurance, LLC, was established to offer
members a convenient, low-cost choice
for homeowners, renters, and auto
insurance. The success of our Affinity
Title Company and the startup of
CU Community Insurance, LLC, has prompted us to
continue to look into other related areas of business
for further expansion of our CUSO.
As part of the credit union’s overall community
involvement efforts, we are pleased to be moving
into our fourth year as presenting sponsor of the
Dogwood Arts Festival. We continue to be proud of
this event’s accomplishments in relation to youth arts
education and support of other local organizations.
The year 2006 was also our 15th year
offering the B.A. Candler/ORNL Federal
Credit Union Scholarship to the University of
Tennessee. Each year, one deserving student
receives $1,000 toward school related expenses.
And, of course, we continue our involvement in the
Partners-In-Education and Junior Achievement programs
throughout our 16-county community.
...we are pleased tobe moving into
our fourth year as presenting sponsor
of the DogwoodArts Festival.
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On February 1, 2006, Knoxville city officials,
credit union staff and Knox County school leaders were
delighted to open the area’s first in-school, student-
run credit union. Located within the Austin-East Magnet
High School, the branch is staffed by students, under
the coordination of school and ORNL FCU staff. It serves
the students and faculty
of Austin-East. The goals
of this program are to
provide real-world, hands-
on experience to the
student staffers and to
provide savings programs
and incentives for students
to learn how to save
regularly. The student-run
credit union plays a major
role in the new Academy of Business
and Finance curriculum adopted by
the school.
Since establishing a partnership with the Tennessee
Conference for Community Development, in May 2005,
your credit union continues to work, in collaboration
with the City of Knoxville, Federal Home Loan Bank,
Fannie Mae and the Knox Housing Partnership, to
assist low to moderate income families with first-time
home purchases.
As we look back on our growth and success in 2006, we
look forward to 2007 and
the opportunity the year
brings for us to expand in
reaching even more of your
friends and neighbors. Be
assured, that although we
have grown tremendously
since obtaining our
community charter in
2002, we will never lose
sight of what has brought
us to where we are today — you,
our member-owners. On behalf of
the credit union staff and officials,
thank you for trusting ORNL Federal Credit Union as your
financial service provider and financial partner.
...we will never lose sight of what has brought us to where we are
today — you, our member-owners.
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Statement of Financial Condition Assets 2006 2005 Cash and cash equivalents $63,006,196 $49,767,191Investments $114,443,186 $91,195,359 Loans to members, net of the $740,452,887 $686,301,797 allowance for loan losses Loans held for sale $15,922,578 $14,639,894 Accrued interest receivable $3,588,498 $3,026,641 Property and equipment $25,830,249 $19,607,410 National Credit Union Share $7,239,491 $6,295,053 Insurance Fund deposit Other assets $10,485,174 $8,179,062 TOTAL ASSETS $980,968,259 $879,012,407
Liabilities &Members' Equity Liabilities Members’ shares $829,148,393 $730,578,920 Accrued expenses and $16,372,105 $13,735,573 other liabilities Federal Home Loan Bank $33,997,470 $41,381,526 advances Total Liabilities $879,517,968 $785,696,019 Members' Equity
Retained Earnings $101,450,291 $93,316,388 TOTAL LIABILITIES & EQUITY $980,968,259 $879,012,407
Statement of Income and Expense Income 2006 2005
Interest Income
Interest on loans to members $44,006,431 $36,910,973Interest on investments $5,227,059 $3,499,168 and cash equivalents Total Interest Income $49,233,490 $40,410,141 Interest Expense
Dividends on members’ shares $20,027,428 $13,604,194Interest paid on borrowed funds $1,546,913 $1,646,706Total Interest Expense $21,574,341 $15,250,900
Net Interest Income $27,659,149 $25,159,241
Provision for Loan Losses $1,450,885 $2,692,580
Net Interest Income After Provision for Loan Losses $26,208,264 $22,466,661
Non-Interest Income $14,864,853 $14,056,442
Income Before General and Administrative Expenses $41,073,117 $36,523,103 General and Administrative Expenses Salaries and benefits $18,030,534 $15,651,224Operations $11,154,137 $9,066,375Occupancy $2,465,236 $1,994,584Other $2,065,362 $1,983,416 TOTAL EXPENSES $33,715,269 $28,695,599
NET INCOME $7,357,848 $7,827,504
NOTES TO FINANCIAL STATEMENTS 1. Cash and Cash Equivalents - Cash and cash equivalents consist of cash on hand, demand deposits, money market funds and non-term share deposits in Volunteer Corporate Credit Union. 2. Investments - Investments consist primarily of government agency securities, mortgage-backed securities and term deposits at other insured financial institutions. 3. Loans to Members 12/31/06 12/31/05
First Mortgage Real Estate $269,084,654 $259,829,475 Other Real Estate $116,300,405 $84,118,744 Member Business $62,096,064 $46,981,291 Automobile $264,196,257 $263,210,123 Unsecured $18,532,416 $20,038,691 Other Loans $28,796,430 $29,736,861 $759,006,226 $703,915,185 Allowance for Loan Losses $(2,630,761) $(2,973,494) $756,375,465 $700,941,691
4. Loan Servicing - Mortgage loans sold to FNMA are not included in the accompanying statements of financial condition. The unpaid principal balances as of December 31, 2006, and 2005, were $157,960,488 and $133,758,433 respectively.
5. National Credit Union Share Insurance Fund (NCUSIF) Deposit - The deposit in the NCUSIF is in accordance with the National Credit Union Administration regulations, which requires a deposit by each federally insured credit union in an amount equal to 1% of its insured members’ shares.
6. Federal Home Loan Bank Advances - FHLB advances are payable in monthly installments of principal and interest. The average cost in 2006 was 4.12%. Interest paid is included in interest expense on the Statement of Income. Advances are used to fund members’ fixed rate first mortgage loans.
7. Consolidated Statements - The credit union wholly owns CU Community, LLC, a credit union service organization. The credit union’s financial statements are consolidated as required by generally accepted accounting principles.
8. Members’ Shares 12/31/06 12/31/05
Regular Share Accounts $152,628,858 $152,856,499 Share Draft Accounts $113,768,141 $105,709,178 Money Market Accounts $114,441,550 $130,927,912 IRAs $75,611,291 $63,937,729 Certificates $372,698,553 $277,147,602
$829,148,393 $730,578,920
YEAR ENDING DECEMBER 31, 2006
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20032002 2004 2005 2006
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
980.9
20032002 2004 2005 2006
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
829.1
(in millions)
(in millions)
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20032002 2004 2005 2006
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
759.0
20032002 2004 2005 2006
120
110
100
90
80
70
60
50
40
121,478
(in thousands)
(in millions)
he Supervisory Committee, which is
appointed by the Board of Directors of
ORNL FCU, is responsible for ensuring that
the credit union’s financial records are in order and that
internal controls are in place to protect the assets of the
credit union for its members. The Supervisory Committee
does this by conducting financial audits and by regular
testing of internal controls.
To assist us in carrying out these responsibilities
this past year, the committee engaged the firm
of McGladrey and Pullen, CPAs, to perform
an independent audit and to provide an opinion
on the financial condition of your credit union
for the period ending 12/31/2006. The goals
of this audit are to determine the reliability
and integrity of the financial and operating
information and to determine compliance
with generally accepted accounting
principles (GAAP). Independent audit findings
are helpful in our oversight of credit union
activities. The committee also engaged
CastleGarde to perform an internal vulnerability
T
he Nominating Committee reviewed the qualifications of members who submitted their names for consideration as candidates for the
Board of Directors. The three positions are to be filled by online voting from February 13 through February 22, prior to our credit union’s 59th Annual Meeting. We hereby nominate the following four individuals who we believe will serve the credit union in the best interests of the members. The order in which their names appear was determined by a random drawing.
Respecfully submitted,ORNL FCU Nominating CommitteeHerb Debban, ChairmanJoseph A. Setaro and Crystal Schrof
T Samuel P. McKenzie
James E. Payne
Marcella C. Catron
Karla J. Gaither
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assessment. CastleGarde was also responsible for
performing quarterly intrusion testing.
An Internal Audit Program, under the
direction of the Supervisory Committee,
provides an ongoing review of compliance
with policies and procedures. This program
includes an annual inspection of internal
controls, cash, member loans, and other
assets of your credit union. The audit program
for the year 2006 was completed as planned
with no unresolved issues.
The Supervisory Committee followed and
offered guidance to our internal auditing function
during the year. It approved the annual internal
audit plan, participated in training programs, and
met with credit union officers to discuss detailed
operational information.
The committee is pleased to report your credit union
continues a tradition of excellent financial management
and compliance.
1/ CALL TO ORDER a. Welcome b. Quorum determination
2/ MINUTES OF 58TH ANNUAL MEETING
3/ REPORTS a. Chairman b. Treasurer c. Supervisory Committee
4/ ANNOUNCEMENT OF ELECTION RESULTS Introduction of newly elected Board Members
5/ OLD BUSINESS
6/ NEW BUSINESS
7/ ADJOURNMENT
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Call to Order
a. WELCOME. The 58th Annual Meeting of the ORNL Federal Credit Union (operating under NCUA Charter No. 5797) was called to order at 7:30PM by Mason Oakes, Chair of the Board of Directors. Members of the Veterans United Honor Guard under the direction of Ralph Hendrix presented colors and led the pledge of allegiance. Director Katie Wolfe Zahn led members of the Sound Company Children’s Performing Choir of Oak Ridge in singing the national anthem and other selections.
Mason Oakes introduced President and Chief Executive Officer, John D. McKittrick; current board members, and members of the Supervisory Committee. He thanked members of other committees and volunteers as listed in the printed report. He stated that the purposes of the meeting were to elect board members, report to the membership, and award prizes.
b. QUORUM DETERMINATION. There were 387 members present, more than enough to constitute a quorum.
Minutes of the 57th Annual Meeting
A motion was made, seconded, and passed to approve the minutes as written.
Election
a. REPORT OF THE NOMINATING COMMITTEE. Members of the committee were Ben Smith, Chairman; Mary Beth Blair; and J. Grant Stradley. Smith referred to the Committee’s report as published in the 2005 Annual Report. He stated that the committee received seven candidate applications, with all applicants being highly qualified, and selected five. Nominees were Randy Gorman, Bill Grimmell, Jama B. Hill, Samuel P. McKenzie, and Leigha Stewart.
b. ANNOUNCEMENT OF ELECTION RESULTS. Cindy Spence, member of the Supervisory Committee, stated that 2,747 members voted, and she announced the following results of electronic/paper voting prior to the meeting:
Jama B. Hill 804 Leigha Stewart 659 Randy Gorman 564
Samuel P. McKenzie 531 Bill Grimmell 189
Oakes congratulated Jama Hill, Leigha Stewart, and Randy Gorman on their election.
Reports
A 12-minute audio-visual presentation on the credit union’s activities during 2005 was shown. Oakes thanked Larry Jones and members of the Marketing Department for producing the audio-visual report.
a. CHAIR. Mason Oakes referred to the printed report and to the audiovisual presentation. He said that staff members have worked really hard, and that we had a very good year. He called for questions, but there were none.
March 9, 2006
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b. TREASURER. Marcella Catron agreed with Oakes that this has been a good year for the credit union. She referred to the printed Treasurer’s report, and called for questions, but there were none.
c. SUPERVISORY COMMITTEE. Chair Randy Gorman referred to the Committee’s printed report and stated that he had one thing to add. He stated that the external auditors, McGladrey and Pullen, were here this week. The committee met with them this afternoon and received a full report. ORNL-FCU received an excellent report, with no findings.
Old Business
PRESENTATIONS. Oakes presented framed Dogwood Arts prints to Bettie Kurtz and Joe Setaro who chose to retire from the board this year. He expressed appreciation to them for their many years of service to ORNL Federal Credit Union.
New Business
Member Lewis Emerson asked why the credit union has stopped its past service of providing assistance to members who were purchasing new vehicles. John McKittrick stated that a library of car facts is no longer kept since so much information is now available on-line, but staff members are trained to assist when requested. Member John Clarke requested that ORNL FCU keep recognizing Mrs. Davis, its first employee and manager.
Drawing of Door Prizes.
Marcy Catron conducted the drawing, assisted by Herb Debban and Mason Oakes. Twenty-nine cash prizes totaling $1,500 were awarded by drawing names of attending members from a barrel. Also awarded was a $1,500 Travel Gift Certificate from American Express World Travel in Knoxville.
Catron read the rules, which state that members must be present to win. Names were drawn from the barrel by Jamie Antrican, daughter of employee Melanie Antrican. The winners were:
$100 Peggy Mitchell $50 Alvin L. Sharp $100 Paul S. Rohwer $50 Wendy Packan $100 Teresa Fancher $25 Helen Brown $100 Kyle R. Spence $25 Ashley Bryant $100 Jon A. Loftis $25 Kathy Wilson $100 Delores Doff $25 Daniel Claus $100 Doyle H. Cole $25 Diane Maddox $50 Joan Leffew $25 Donald Wright $50 Joel Pearman $25 Faye Wallace $50 Rosa Trivette $25 J. C. White $50 Martha Drewry $25 Ernest Shepherd $50 Mason Oakes $25 John Steward $50 Donna Beeco $25 B. G. Graham $50 Anne Belland $25 Denise Metcalf $50 Linda Morris
All names were then returned to the barrel before the
drawing for the grand prize, which was a $1,500 travel gift certificate from American Express World Travel of Knoxville. Mary Brooks was the winner of the grand prize.
Adjournment.
The meeting was adjourned at 8:20PM, after which a reception, catered by Judy Dodd, was held for members in the High School Cafeteria.
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BOARD OF DIRECTORSMason Oakes, ChairmanHerb Debban, Vice-ChairmanMarcella Catron, TreasurerWanda McCrosky, SecretaryRandy GormanJ. Robert Hightower, Jr.Jama HillBen B. SmithLeigha Stewart
Mary Helen Rose, Recording Secretary
SUPERVISORY COMMITTEECindy Spence, ChairmanDavid A. Watkins, SecretaryJeff AultJames McKinleyJoel E. Pearman
NOMINATING & ELECTION COMMITTEEHerb Debban, ChairmanCrystal SchrofJoseph A. Setaro
POLICY & GOVERNANCE COMMITTEEWanda McCrosky, ChairmanRandy GormanJ. Robert Hightower, Jr.Jama HillBen B. SmithLeigha Stewart
PENSION PLANNING COMMITTEEMason Oakes, Chairman and TrusteeSally Jaunsen Freels, TrusteeJ. Robert Hightower, Jr.Ben B. SmithMary Yoder
LEGISLATIVE AND GOVERNMENTAL AFFAIRS COMMITTEEBen B. Smith, ChairmanJ. Robert Hightower, Jr.Leigha Stewart
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John D. McKittrick, President
Dennis Bowker, Senior Vice-President, Finance
Chris Johnson, Senior Vice-President
Larry A. Jones, Senior Vice-President
R. Taylor Scott, Senior Vice-President
Maxine W. Allen, Vice-President, Mortgage Lending
Dawn Brummett, Vice-President, Member Services
David Farmer, Vice-President, New Branch Development
Clay Kearley, Vice-President, Consumer Lending
Michael McKnight, Vice-President, Chief Technology Officer
Brenda Owensby, Vice-President, Human Resources
C. Ed Samsel, Vice-President, Member Business Services
Janita Clausell, Assistant Vice-President, Member Services
Stacey Foster, Assistant Vice-President,
Fraud & Forgery, Security
Andrea Griffitts, Assistant Vice-President, Audit Services
Lori Ihle, Assistant Vice-President, Member Services
Vickie Kitts, Assistant Vice-President, Loan Servicing,
Collections
Melissa McMahan, Assistant Vice-President,
Remote Service Delivery
Lisa Taylor, Assistant Vice-President, Controller
Tom Wright, Assistant Vice-President,
Marketing and Community Relations
Jean Eiler, Security Officer
Vicki Cox, Manager, Consumer Loan Quality
Tod Elam, Manager, Collections
Chris Fox, Manager, Information Technology
Emily Gibson, Manager, Indirect Lending
Karen Lawrence, Manager, Sales
Janet Martin, Manager, Contact Center
Brian Mullins, Manager, MEMBERS Financial Services
Renee Pemberton, Manager, eServices
Rochelle Pettus, Manager, Operating/
Deposit Servicing
Trish Seiber, Manager, Mortgage Servicing
Tim Sirman, Manager, Facilities
Melanie Walsh, Manager, Staffing
Joy Wilson, Manager, Technical Training, Oak Ridge
Anne Belland, Branch Manager, Powell Kroger
Ryan Bennett, Branch Manager, Oak Ridge National Lab
Debra Brown, Branch Manager, Clinton
Amy Chesney, Branch Manager, Fountain City
Michael Dennis, Branch Manager, Sevierville
Barbie Evans, Branch Manager, Morristown
Linda Evans, Branch Manager, Maryville
Tommy G’Fellers, Branch Manager, South Knoxville
Debbie Hankins, Branch Manager, Oak Ridge Wal-Mart
John Hassell, Branch Manager, Madisonville
Vickie Hill, Branch Manager, Millertown Pike
Susie Jones, Branch Manager, Floater
Michelle Leach, Branch Manager, North Knoxville
Amanda Mahan, Branch Manager,
Middlebrook Food City
Gale Pace, Branch Manager, Farragut
Cissi Reagan, Branch Manager, Halls
Angel Scott, Branch Manager, West Knoxville
LaTanya Terrell, Branch Manager, East Knoxville
Don Thaler, Branch Manager, Lenoir City
Harriet Walker, Branch Manager, Kingston, Rockwood
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