cooperative federal annual meeting 2013.03 presentation

2013 Annual Membership Meeting

Welcome!

Cooperative Federal Annual Meeting

2

Agenda Call to Order ___________________________________ Minutes ________________________________________ 2012 Community Impact Report _____________________ 2012 Treasurer’s Report ___________________________ Elections _______________________________________ Unfinished Business _______________________________ New Business: Celebration Year, The Economy, and New

Services______ Q&A _________________________________________ Election Results __________________________________ Meeting Evaluation _______________________________ Adjournment & Dinner _____________________________

3/17/2013

3:103:193:203:303:453:553:554:154:504:555:00

• Board of Directors’ Report - Full Version

• Credit Committee Report

• Supervisory Committee Report (Inside the Annual Report – p. 25)

Governance Reports

Please see the Welcome Table for copies of the following:

Christina Sauve, Assistant Treasurer

Community Impacts


5

Loan Impact Summary

3/17/2013

Loans Origi-nated 201 ($)

New loans opened (approved loan

amount and LOC limits)

Homeownership $2.0 M Personal $1.4 MSmall Business $380K

Loan funds disbursed (LOC draws and term

loan disbursements)

Homeownership $2.2 M Personal $4.1 MSmall Business $1.0 M

Aggregate loan and LOC balancesat 12/31/12

Homeownership $8.9 M Personal $3.4 MSmall Business $3.5 M

Loans Outstanding $15.9M

Loans Granted$7.3M

Loans Opened$3.8M


6

Homeownership

2012 Mortgage Lending• Residential Purchase, Refinance, Improvement &

Repair

3/17/2013

Strengthening neighborhoods. Building family assets.

Home Loans Originated:

45 $2.0 million

Loans Opened 2012 ($)


7

Homeownership

2012 Mortgage Lending• Residential Purchase, Refinance, Improvement

& Repair• Housing Loans Originated: 45, $2.0 million

3/17/2013

Purchase Loans: 15

$861 K



8

Homeownership

2012 Mortgage Lending• Residential Purchase, Refinance,

Improvement & Repair• Housing Loans Originated: 45, $2.0 million

– Purchase Loans: 15, $861 Ko 80% to First Time Homebuyers

• Home Equity LOC Disbursements: $239 K

3/17/2013


9

Homeownership

2012 Mortgage Lending• Residential Purchase, Refinance, Improvement

& Repair• Housing Loans Originated: 45, $2.0 million

– Purchase Loans: 15, $861 K

3/17/2013

80% to First Time

Homebuyers



10

“Home Base”• HUD-approved housing, credit, and

financial counseling• Open to members and nonmembers• 229 clients served in 2012

–Credit, Budgeting, & Financial Mgt: 159–Pre-Homeownership: 40–Foreclosure Prevention: 30

3/17/2013

Homeownership


11

Homebuyer Matched Savings• Open to low and moderate-income first

time buyers• Participants get at least $7,500 in

matching grants • 7 members received $52,500 in

downpayment assistance matching grants in 2012

• 31 members enrolled as of 12/31/12

3/17/2013

Homeownership


12

Finding a New Home3/17/2013

Mary Mayom, a housekeeper at St. Joe’s and a New American from the Sudan, got $8,500 in matching grants to purchase her house on the Northside – and established a great credit score in the process. Her mortgage is actually a little less than her former rent!


Personal Services

2012 Consumer Lending• New/used auto, debt consolidation, credit

builder, credit cards, lines of credit, and other personal uses

3/17/2013 13

Fair access to affordable credit.

Personal Loans Originated:

376 $1.4 million



14

Personal Services



• Personal Loans Originated: 376, $1.4 million

3/17/2013

Anti-Predatory:

189 $479 K



15

Personal Services



• Personal Loans Originated: 376, $1.4 million– Anti-Predatory Loans: 189, $479 K

• LOC Disbursements: $3.0 million

3/17/2013


163/17/2013

Personal Services

Education & Auto Matched Savings• Open to members with modest means saving

for higher education expenses, or to purchase a vehicle necessary for school or work

• Participants get $1 - $2 for every $1 saved, for up to $2,000 in matches

• 3 members received $3,000 in matches in 2012

• 7 members enrolled as of 12/31/12


17

Financial Education• Workshops and courses on budgeting, credit, money

management, homeownership, car buying … and more!

• English, Spanish and ESL• 455 adults and youth attended our classes in

2012

• Service contracts with partnering nonprofits and credit unions help us reach out and sustain our development services.

• Credit Consultations at Free Tax Prep Sites help us spread the word about asset-building opportunities

3/17/2013

Personal Services


183/17/2013

Jennifer Burton learned about our financial counseling program during a credit presentation at her GED class, and started working to improve her credit score through our office hours at CNY Works. Less than a year later, she’s paid off past-due debts and raised her score by 120 points!

“That’s the main word. Care. Other places wouldn’t take the time out to care.” - Jennifer


19

Small Business Development

2012 Small Business Lending• Microloans, working capital, equipment,

commercial real estate and responsible, local landlords

3/17/2013

Building an independent, local economy.

Business Loans Originated:

23 $380 K

Loans Originated 2010 ($)



20




• Business Loans Originated: 23, $380 K

3/17/2013

32% to businesses

owned by women or people of color

(61% of loan #)



21


3/17/2013



• Business Loans Originated: 23, $380 K– 32% to M/WBEs– Average non-RE loan size: $12,632

• Revolving Credit Disbursements: $746 K


22

Small Business Development Education & Advising• Workshops and one-on-one assistance with

planning, credit, business finance and more

• 52 workshop participants• 39 one-on-one clients in 2012, supporting

81 local jobs (FTEs)– includes 25 M/WBEs with 51 FTEs

3/17/2013


23

Small Business Development Matched Savings• Gifford Foundation/Start Up NY partnership• Participants get $1-$2 for every $1 saved,

for up to $2,000 in matches• 7 businesses received $16,000 in

matches in 2012• 19 small businesses enrolled at 12/31/12

3/17/2013


243/17/2013

Abigail Hensen, owner of LoFo, launched her life-long dream with help from a Matched Savings Account and a microloan from Cooperative Federal. Now you can visit LoFo in Armory Square, and get a meal that is wholesome and locally sourced – whether you crave bacon and eggs or kale miso soup.


25

Youth Credit Union

2012 Initiatives:• Student Saving Days every Friday at Ed

Smith, now run by PTSO volunteers• Falcons’ Trust student-run branch at Fowler • Organizing groups at Henninger and

Nottingham• Youth Life Skills Video Project• Job Experience Internships at CU branches

Youth Credit Union accounts: 2193/17/2013

Hands-on learning in under-served communities.


263/17/2013

Natalie Mooney and Emily Carlson point out the future home of Nottingham Federal. Their team just participated in the regional DECA competition, presenting a plan to open a youth-run branch and bring financial education to their peers.

Ron Ehrenreich, Treasurer/CEO

Financial Report

*Please see the Welcome table for copies of our Financial Statement, Ratio Analysis and FPR Guide


28

Key Financial Ratios

Earnings Capital Adequacy Asset Quality

About Peer Ratios• Average for CUs with $10 - $50 million in

assets• Only 2.9% of all CUs are CDFIs

3/17/2013


29

Earnings

3/17/2013

12/08 12/09 12/10 12/11 12/12

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5 0.21

-2.24

-1.33

-0.26

0.24Return On Average Assets

Net Income / Average Assets (annualized)


30

Turning the Corner Modest surplus after 3 unprecedented years Impact of the financial crash & recession Low interest rates = lost income

• -$382 K for 2012 (vs 2007 rates)

• -$1.3 million for 2008-2012 (vs 2007 rates)

Bailout Expenses• $17.7 K in 2012 (NCUSIF assessments & accruals)• $243.2 K since 2009

Grant and Contract Income– From 2008: $579,000 (35% gross income) – Bottomed out in 2011: $201,000 (14% gross income)– In 2012, increased to $282,517 (19% gross income)

Business plan to adapt to hard times3/17/2013


31

Re-Aligning Income & Expenses Building on changes made in 2009-

11 More back-office automation New Courtesy Overdraft Pay option Converted LOCs to risk-based pricing 41% growth in grant & contract

income Efficiency through Self Service

options• Web Teller Upgrade + Online Bill

Pay Staff can focus on solving

problems and helping those with the greatest needs.

3/17/2013


323/17/2013

2005 2006 2007 2008 2009 2010 2011 2012$0

$250,000

$500,000

$750,000

$1,000,000

$1,250,000

$1,500,000

$1,750,000

$2,000,000Income vs. Expenses

Total Income Total Expenses

Re-Aligning Income & Expenses

8.2% Avg Loan Yield

at 9/31


333/17/2013

2005 2006 2007 2008 2009 2010 2011 2012$0

$250,000

$500,000

$750,000

$1,000,000

$1,250,000

$1,500,000

$1,750,000




6.9% Avg Loan Yield at 12/31


343/17/2013

2005 2006 2007 2008 2009 2010 2011 2012$0

$250,000

$500,000

$750,000

$1,000,000

$1,250,000

$1,500,000

$1,750,000




5.9% Avg Loan Yield at 12/31


35

2009 to 2010: + $124,863 2010 to 2011: + $169,824 2011 to 2012: + $95,194 5 consecutive profitable Qs at

12/31/12 Working for continued progress in

2013

3/17/2013

Bottom Line


36

12/08 12/09 12/10 12/11 12/1202468

10121416

10.18

7.80 6.296.51

7.56

Net Worth To Average Assets

Net Worth / Avg Assets Peer

Capital Adequacy

3/17/2013


37

Capital Adequacy

Returned to being “Well Capitalized” Raised Secondary Capital • $ 565,641 total at 12/31/12

Controlled spontaneous growth Decrease in 2009-2011 mirrors the

trend across peer CUs• Reflects negative earnings and rapid

growth• Reserves since 1982 provided a “cushion”

3/17/2013


38

Asset Quality

3/17/2013

Delinquency Rates vs. Peer

12/08 12/09 12/10 12/11 12/120

2

4

6

8

10

6.317.33

5.10

8.26 8.61

Delinquency & Net Charge-Offs

Delinquent loans / loansNet Charge-offs / Averge AssetsPeer Delinquency


39

Asset Quality

3/17/2013

Charge-Off Rates vs. Peer

12/08 12/09 12/10 12/11 12/120

2

4

6

8

10

0.71 0.69 0.74 0.34 0.50

Delinquency & Net Charge-Offs

Delinquent loans / loansNet Charge-offs / Averge AssetsPeer Delinquency


40

Asset Quality Hands-on approach to delinquency• History of successfully managing above peer DQ

ratio• Working with members to prevent losses• Other CDFIs: 15% “minimum prudent standard” • Risk Based rates pays for active DQ management

Recession fears in 2010 decreased DQ DQ increased in Q4 2011 - 2012 due to small

number of large, past-due mortgages• Potential losses mitigate by 1st liens on good

collateral Losses near or below peer for past 20+ years

3/17/2013


41

From the Filene Institute:

“The lending experience of Community Development Credit Unions (CDCUS)… indicates that delinquency rates run higher in CDCUS than in other credit unions, but the charge-off rates are consistent with overall credit union rates.”

– Albert E Burger & Mary Zellmer, in Strategic Opportunities in Serving Low to Moderate Income Members

3/17/2013


42

CDFIs are also evaluated based on• Growth in members, shares, loan, assets

– Meeting community needs – Achieving a sustainable scale

• Deployment of shares & assets in the form of loans– Using our resources to improve

communities– Local and socially responsible

3/17/2013

Impact


43

Growth Where we are at 12/31/12:• $20.1 million in Assets• $15.7 million in Loans• $17.8 million in Shares & Deposits• 3,764 member households and

organizations Word-of-mouth fueled growth during

recession Slowed loan & share growth in 2012 • Strengthen net worth ratio• Make operations more sustainable

3/17/2013

Graphic by Eddie Colla


44

Growth

3/17/2013

12/08 12/09 12/10 12/11 12/12-2

0

2

4

6

8

10

12

14

16 Loan, Share & Asset Growth

Loan Growth Share Growth Asset GrowthPeer Loan Peer Share Peer Asset


45

Growth But - member growth accelerated Patterns:• Smaller average loan sizes

– Credit Cards– Step Up Loans– Hybrid Helper ARMs to First Time Buyers– Personal Credit to the Under-Banked

• Mission-driven “switches” with no loans

3/17/2013

Graphic by Eddie Colla


46

Growth

3/17/2013

Coop Fed growth in 2011: 13.4%Peer Group growth in 2011: >0.1%

200720082009201020112012

0 1,000 2,000 3,000 4,000

2,592

2,874

3,016

3,308

3,320

3,764

Member Growth


473/17/2013

Growth


48

Deployment

3/17/2013

12/08 12/09 12/10 12/11 12/120

102030405060708090

77.80 79.57 82.73 78.02 78.26

58.2854.63 52.11 49.58 48.01

Loans To Assets

Loans / Assets Peer


49

Deployment

3/17/2013

2009 Deposits

2009 Loans

2010 Deposits

2010 Loans

2011Deposits

2011 Loans

2012 Deposits

2012 Loans

$0 $5,000,000 $10,000,000 $15,000,000 $20,000,000

Members $11,519,037

Members $12,525,245

Members $13,517,984

Members $14,714,925

Nonmembers $2,344,768




Loans $12,599,695

Loans $14,065,263

Loans $15,087,867

Loans $15,720,791

Loans to Deposits


50

Deployment for Maximum Impact

3/17/2013

Assets concentrated in loans to members – not stock market investments, Euro funds, or gold

More than 100% of member shares are kept working in the local economy• 12/31/12: 107% loans to member

deposits • ’09 -’11 avg: 111% loans to member

deposits Mission-based nonmember deposits

increase our lending capacity


51

Looking forward: 2013

3/17/2013

Continue to raise Net Worth• Increased earnings• +$100,000 in Secondary Capital

Room to grow in loans and members• Add some marketing• Serve more members where banks have closed• Expand Small Business Services• Range of competitive mortgage products• Loan Growth can boost income and

reserves “Game changing” proposal submitted to CDFI

Fund

Elections

Unfinished Business

New Business

A Year of CelebrationThe EconomyNew Services

A Year of Celebration

Part One


563/17/2013

Founding Vision: Divestment from the racist Apartheid regime in South Africa; fair services for low-wage workers, people of color, single women, the LGBT community, activists and part-time or nontraditional workers; a non-profit financial cooperative operated by the people, for the people.

1982: The credit union opens with $100,000 in deposit pledges and donated space on the food coop’s back porch.

Today: City-wide credit union serving over 3,700 members in neighborhoods the banks have abandoned – showing that a cooperative economy is possible.

Over $100 million invested in Syracuse.

Thirty Years of Finance for the People


573/17/2013

CU at the ZooOur 30th Anniversary Gala

September 22, 2012 at the Rosamond Gifford Zoo


583/17/2013Sold-Out Event with 150+ members and allies.


593/17/2013

Raised over $6,000 for Financial Educationthrough sponsorships, ticket sales, and Silent

Auction.


603/17/2013Recognized 11 partners in 8 Award Categories.


633/17/2013

Awesome entertainment by the DREAM Freedom Revival,

then DJ, dancing, and video guestbook.


643/17/2013

Awesome entertainment by the DREAM Freedom Revival,

then DJ, dancing, and video guestbook.


653/17/2013

… At last!

Larger, more welcoming lobby

Better visibility

Private office for loan interviews and financial counseling

Conference room for mortgage closing and financial education

More and better service for the neighborhood.

A Bigger, Better Southwest Office


663/17/2013

50% Home Loans

30% Business Loans

22% M/WBs, 8% other

20% Personal Loans

66% no credit or limited credit (<650)

84% very low income (<60% AMI)

$8.1 million invested – and counting


673/17/2013Before


683/17/2013Before


693/17/2013After


703/17/2013After


713/17/2013After


723/17/2013After


733/17/2013

Grand Re-Opening CelebrationNov. 28, 2012


743/17/2013

Grand Re-Opening CelebrationNov. 28, 2012

The EconomyPart Two


763/17/2013

Hard times for workers as corporate profits grow• Jobs exported• Wages held down• Productivity turned into profit not wages• Regressive tax policy

Jobless Recovery• Stock market has recovered• Job growth is very slow to stalled

Low interest rates (forever?)

The Economy


77

The Economy and Cooperative Federal

Low interest rates mean low earnings on loans

Many operating expenses are fixed Efficiency gains to keep expenses down• Automation enables us to grow• Local outsourcing• Member Self Service• Careful pricing of each product for break-even• Volunteer power enables growth

Working with members during hard times• Minimize loan losses and hard collections

3/17/2013

New ServicesPart Two


793/17/2013

Web Teller Upgrades Online Check Reorder Online Personal Loan Application Financial Management tool

Bill Pay

New Services: 2012


80

Web Teller - Financial Management

3/17/2013


81

New Services: 2013

Online Loan Application, outside of Web Teller

Merchant Card Services Online Business Loan Application Business Credit Reporting

3/17/2013

Elections Results

Meeting Evaluation

Adjournment

Door Prizes, Turn in Common Cents Ballots…. and Join us for Dinner!

cooperative federal annual meeting 2013.03 presentation

Documents

commercial

dream freedom

aligning income

personal loans

improvement

working capital

expenses income

shares amp