annual report

ANNUAL REPORT
EXPANDING TO
MEET YOUR NEEDS
BOARD OF DIRECTORS
Manuel R.Ybarra . . . . . . . .Chairman of the Board
Gregory J. Watters . . . . . . . . . . . . . .Vice Chairman
Frank Garcia . . . . . . . . . . . . . . .Secretary/Treasurer
Harriet May . . . . . . . . . . . . . . . . . . . .President/CEO
John Fernandez
Annie Koch
Luis C. Mata
Robert C. Nagel
Jose I. Quiñonez, Jr.
ADVISORY MEMBERS
Yolanda M. Estrada
GECU is truly one of the great
American success stories. For
seventy-four years, hundreds of
thousands of El Pasoans have
been able to improve their lives
MANAGEMENT TEAM
Harriet May . . . . . . . . . . . . . . . . . . . .President/CEO
Fermin Acosta, Jr. . . . . . . . . .Senior Vice President
Administrative Services
Rudolf Kuehne . . . . . . . . . . . .Senior Vice President
Information Technology
Crystal Long . . . . . . . . . . . . . .Senior Vice President
Consumer Loan and Remote Services
Steven G. Lutz . . . . . . . . . . . . .Senior Vice President
Chief Financial Officer
Musette Bracher . . . . . . . . . . . . . . . . .Vice President
Marketing
Arturo Moreno . . . . . . . . . . . . . . . . . .Vice President
Business Services
Al Perez. . . . . . . . . . . . . . . . . . . . . . . .Vice President
Sales and Service Operations
Janie Shockley. . . . . . . . . . . . . . . . . . .Vice President
Human Resources
Barbara Franco . . . . . . . . . . . . . . . . . . . . . . .Director
Internal Audit
by participating in what started
out as, “the little credit union that
could” and grew to what is now
the largest locally-owned financial
institution in El Paso.
AUDIT COMMITTEE
Gregory J. Watters. . . . . . . . . . . . . . . . . . .Chairman
Frank Garcia
Luis C. Mata
CREDIT COMMITTEE
Fermin Acosta, Jr. . . . . . . . . . . . . . . . . . .Chairman
Harriet May
Crystal Long
Steven G. Lutz
3
Chairman’s Report
Back row (L-R): Robert C. Nagel, Jose I. Quiñonez, Jr., Luis C. Mata, Gregory J. Watters,
Front row (L-R): Frank Garcia, Yolanda M. Estrada, John Fernandez, Annie Koch,
Harriet May, Manuel R. Ybarra
With 2006 assets exceeding $1.17 billion,
I am pleased to report that GECU experienced
another excellent year in loan and deposit growth
and once again earned its position as El Paso’s largest
locally-owned financial institution. A remarkable
accomplishment for several reasons, the most important
of which is the confidence you have shown in your
GECU Board of Directors and management team. Since
1932, when 11 members with $55 in share deposits
founded GECU, your credit union has grown to 266,000
members and over $1.06 billion in deposits at the end
of 2006. That confidence is what drives each decision
we make and has allowed GECU to progress to provide
the services you need to meet your financial goals.
Convenience is one of the top priorities at GECU
and the reason why we seek new and more efficient
ways to serve our members. Two ways in which we’ve
expanded to meet the needs of a growing membership
are in the number of facilities we’ve built throughout
our community and the number of El Pasoans we
employ. For comparison sake, in 1932, 11 part-time
volunteers worked weekday evenings and Saturdays
in the basement of the United States Courthouse. In
2006, we employed more than 550 employees, working
at eight branches and seven drive-thru facilities.
In addition to the number of buildings we have
and people we employ, another high impact area
of service in 2006 was GECU’s improved financial
delivery systems. By year’s end, more than 37 million
electronic financial transactions were made by members
accessing their accounts through SmartBranch,
SmartLine, SmartCall, GECU’s ATM network and
MasterMoney debit cards. Transactions that allowed
you to make purchases, check account balances,
withdraw cash, transfer funds and pay bills from the
convenience of your home, office or automobile; a
necessity in today’s fast paced world of e-services.
After careful planning, and being ever mindful
of our duty to be good stewards of your money, I
am pleased to report that our Operations Center is
now under construction at Airway and Edgemere
Boulevards. This is a building in which all of El Paso
can take pride. Its unique architectural style will serve
as a landmark, reflecting the beauty of our region and
the confidence that our members have placed in GECU
and the future of El Paso. Your Board of Directors looks
forward to an exciting grand opening in late 2007.
It was an outstanding year for GECU. One in
which we can all celebrate. When all is said and done,
we will count 2006 as another year we can add to an
already strong and remarkable 74-year old foundation
known as GECU.
Manuel R. Ybarra
Chairman of the Board
GECU Operations Center
5
Assets – $1.17 billion
Membership – 266,000
President’s Report
Resler Branch
first SBA 504 and interim construction loans and with
good reason. The department, first introduced in 2003,
doubled its loan portfolio by year’s end.
This was also the year we broke ground on GECU’s
Operations Center. Our administrative offices in the
Viscount facility have served us well since 1968, when
our membership totaled 19,000. In 2006, with a record
266,000 members, we are bursting at the seams with no
more room for in-house expansion. The opening of
our new Operations Center will eliminate our cramped
quarters and bring all back-office support services,
including those housed in other GECU branches,
together under one roof allowing us to operate at an
even higher level of efficiency. We will also bring
MEMBERS Trust Company, as well as our Special
Services and Business Services Departments, over to
provide more space and more convenient access for
our members.
Let me end my report with a quote by former GECU
President, Adolfo Loera from the 1956 Annual Report:
❝
“The Board of Directors has, to the best of
its ability, endeavored to represent you and
safeguard your interests, always keeping in
mind that a credit union exists only to serve its
members. The difficulties of directing the affairs
of our large institution have been light with the
knowledge that the members give full support
to their elected officers.We are humbly grateful
and justly proud of the honor and privilege of
serving you.”
❝
The year 2006, was an ambitious one and
looking back over everything your credit union has
accomplished in 12 short months, it was an impressive
year, too. Ambitious and successful, thanks to a GECU
team of employees that collectively took a deep breath,
rolled up their shirt sleeves and hit the ground running,
eagerly embracing each goal they were given; tackling
each one with determination; and completing them
efficiently and on time. Their achievements throughout
2006 were significant and I am proud to share the
successes with you.
Considerable time is spent developing and refining
our annual project plan to help us keep pace with the
needs of a growing membership. After careful review and
consideration of the projects and budget in support of our
annual plan, the one question we always come back to
is, “will this be in the best interest of our members?” You,
our member-owners, are the driving force behind how
and where we need to expand.
The variety of services and products we offer are
based on what you’ve told us you want and need to
enjoy a comfortable financial quality of life. That’s the
bottom line – everything we do, from offering free
checking accounts, savings and retirement products to
the latest in electronic services and business loans is about
you. No doubt you’ve heard me say this numerous times,
but I am sincere when I say that serving our members is
the only reason we exist; nothing more, nothing less.
I’d like to share a few accomplishments with you,
the first of which is that your credit union ended the year
with $1.17 billion in assets, representing $68.4 million
or 6.2% growth from 2005. This means that we continued
to make loans to help more members buy reliable
transportation to get to and from work, purchase new
homes, make improvements on existing homes and
accept deposits into accounts that will help your money
grow and secure a comfortable retirement.
Operating under the philosophy that “what’s good
for business is good for El Paso,” GECU’s Business
Services Department celebrated the funding of their
On behalf of your GECU team, we remain grateful
and proud of the opportunity to serve you.
Harriet May
President/CEO
Ysleta Branch
7
Assets – $1.1 billion
Membership – 248,073
As El Paso’s west side continued to move closer to the
Texas/New Mexico state line, GECU increased its number
of full-service branches to eight and expanded its field of
membership to include residents in Doña Ana County,
New Mexico 25 miles from our 1500 N. Resler branch.
Assets – $527 million
Membership – 165,748
GECU’s 7th full-service branch was opened in
El Paso’s lower valley filling a financial services gap
in that area. During the first two months of business,
over 500 new memberships were welcomed.
Credit Committee Report
Before sitting down to write
this year’s Credit Committee Report,
I reviewed annual reports from years
past to see exactly how far GECU has
come since its founding in 1932. What
I learned is this: GECU is truly one
of the great American success stories.
For seventy-four years, hundreds
of thousands of El Pasoans have
been able to improve their lives by
participating in what started out as,
“the little credit union that could”
and grew to what is now the largest
locally-owned financial institution
in El Paso.
For example, in 1956, when
GECU opened the doors of its first
building on Missouri, low-cost loans
to repair members’ homes, pay for
dental and medical expenses and
purchase cars and trucks totaled $4.02
million. Compare that to 2006, when
loans for members to purchase a
variety of vehicles, buy or renovate
homes and to assist in starting or
expanding their businesses totaled
over $1.06 billion. One thing is clear,
GECU has grown and while the
need for financial services has
expanded throughout the years,
one thing remains constant – GECU
has withstood the test of time and
met the challenge of helping more
members achieve their financial goals.
Federal Building Branch
As you can see, 2006 was
another banner year for GECU in
the area of lending services. With
an increase of $82.1 million (8.4%)
in our loan portfolio over last year,
we ended 2006 with an average
THE FOLLOWING
CHART HIGHLIGHTS
SOME OF GECU’S
ACCOMPLISHMENTS
DURING THE
LAST 12 MONTHS:
◆ Indirect lending once again led
the way with nearly $229 million
in vehicle loans.
◆ SmartCall, GECU’s in-bound and
out-bound call center, funded over
$73 million in consumer loans.
◆ $61.6 million in home equity loans
and $46.5 million in first-lien
mortgages represent another solid
growth year for our Mortgage
Department.
◆ The Business Services Department
completed over $24.5 million in
business loans to 153 business
owners in 2006. The department
also funded its first SBA 504 and
interim construction loans.
◆ SmartBranch once again realized
an increase as an important lending
delivery channel with over $9.9
million in personal loans.
loan-to-deposit ratio of 96%,
meaning more members were
able to take advantage of lower
rates on their loans.
One of the most significant
achievements at GECU, however,
was the decline in bankruptcies
filed in 2006. Due to the Bankruptcy
Abuse Prevention and Consumer
Protection Act passed by Congress
in April 2005, bankruptcies decreased
from $14 million in 2005 to $6.3
million in 2006 (a decrease of 55%).
This would not have been possible
without the hard work and dedication
of United States Senators Kay Bailey
Hutchison and John Cornyn and U.S.
Congressman Silvestre Reyes. We
thank them for their commitment
to the credit union movement and
to the hardworking people who call
El Paso home.
Closing the books on 2006 and
another successful year at GECU, we
thank you for having the confidence
in your member-owned financial
cooperative.
Fermin Acosta, Jr.
Chairman
Harriet May
Crystal Long
Steven G. Lutz
Rojas Branch
9
Assets – $275 million
Membership – 110,807
With GECU’s roots having begun downtown, the credit
union had come full-circle with the opening of the Fed Branch,
serving members working in the new Federal Building, the
U.S. Court House and other downtown locations.
Assets – $275 million
Membership – 110,807
As the housing and business markets exploded in far
east El Paso, GECU’s new Rojas Branch represented the
ultimate in modern design, efficiency and beauty to
better meet the needs of our growing population.
Audit Committee
Report
As we enter our 75th year of providing service
to members, it is our pleasure to report your
credit union continues to be financially sound.
The Audit Committee, made up of three volunteer
member-owners, oversees the Internal Audit Department
which conducts comprehensive internal audits throughout
the year ensuring 1) accounting records and reports are
prepared promptly and accurately reflect operations and
results; 2) established internal controls are effectively
maintained and adequately protect the credit union, its
assets, members, management and employees; 3) each
area of the credit union is carrying out the plans, policies
and procedures for which it is responsible as directed by
the Board of Directors.
The Audit Committee also oversees the annual
comprehensive audit conducted by the independent
certified public accounting firm of Lauterbach, Borschow
& Company, P.C. Their examination was conducted in
accordance with generally accepted auditing standards
as issued by the American Institute of Certified Public
Accountants.
As a result of the internal and independent audits,
the Audit Committee believes the financial statements
included in the 2006 Annual Report fairly present the
financial condition and earnings of GECU for the year
ended December 31, 2006.
Gregory J. Watters, Chairman
Frank Garcia
Luis C. Mata
Mesa Branch
Vista del Sol Branch
Northeast Branch
A full copy of GECU’s 2006 financial statements may be obtained
by contacting the office of Harriet May, GECU President/CEO.
11
Assets – $183 million
Membership – 52,838
The success achieved by the opening of both the Mesa
and Vista del Sol Branches made GECU one of the
fastest growing financial institutions in El Paso.
Assets – $183 million
Membership – 52,838
GECU's presence in the community was firmly established
with the opening of the Vista del Sol Branch to address
the expanding needs of the city's east side.
Assets – $73 million
Membership – 34,337
When GECU, El Paso’s oldest and largest credit union,
opened its first branch on the city’s northeast side, current
and future members had access to two full-service branches.
Return to Members
Life Savings
$ 230,437
0.9%
3,102,204
11.8%
Interest - MMA
1,214,289
4.6%
Interest - Checking
1,017,064
3.9%
Interest - IRA
4,507,431
17.2%
Interest - CD
16,126,106
61.6%
Total Return
to Members
$ 26,197,531
100.0%
Return to Members $ 26,197,5 3 1
27.6%
Employee
Compensation
& Benefits
24,582,665
26.0%
Operating Expenses
31,674,429
33.5%
Reserves
12,183,560
12.9%
$ 94,638,185
100.0%
Dividends - Shares
Distribution of Earnings
Total Distribution
of Earnings
Viscount Branch
Missouri Branch
13
Assets – $26 million
Membership – 19,000
The opening of the Viscount facility brought to light the
economic impact and influence the credit union carried in
El Paso. The role of credit unions could no longer be ignored.
Assets – $2.6 million
Membership – 5,467
GECU’s first building was recognized as one of the finest
anywhere with facilities designed for efficient, convenient
and confidential service to its growing membership.
Statements of Financial Condition
Statements of Income
December 31, 2006 and 2005
Years Ended December 31, 2006 and 2005
ASSETS
2006
Cash and cash equivalents
Investments:
Securities available for sale
Securities held to maturity
Other investments
Loans held for sale
Loans receivable, net
Accrued interest receivable
Accounts receivable and other assets
Mortgage servicing rights
Property and equipment, net
NCUSIF deposit
Total assets
LIABILITIES AND MEMBERS’ EQUITY
Members’ share and savings accounts
Interest and dividends payable to members
FHLB advances
Accrued expenses and other liabilities
Total liabilities
$
38,543,880
2006
2005
$ 63,135,681
3,425,311
66,560,992
$ 54,477,401
1,761,270
56,238,671
25,967,094
93,556
26,060,650
19,764,990
156,551
19,921,541
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
40,500,342
5,537,347
34,962,995
36,317,130
6,315,106
30,002,024
Fees and other operating income
Service fees
Loan late charge fees
Net (loss) on securities held for sale
Net gain on sale of loans
Mortgage servicing
Other
22,531,689
1,254,964
–
692,899
68,705
3,516,792
18,154,292
857,811
(34,442)
731,456
66,068
1,973,877
28,065,049
21,749,062
24,582,665
17,881,166
2,668,528
2,798,090
2,926,179
50,856,628
24,181,413
14,396,721
2,446,028
2,283,765
2,391,300
45,699,227
12,171,416
6,051,859
12,144
–
4,323
1,096,484
$ 12,183,560
$ 7,152,666
2005
$
60,577,198
13,607,044
10,800,448
7,287,888
2,005,458
1,056,537,228
4,624,117
4,820,373
1,084,288
30,291,773
10,060,201
6,949,158
12,375,378
7,018,253
1,347,785
975,128,973
3,439,666
5,986,373
1,057,098
28,254,386
9,095,551
$ 1,179,662,698
$1,111,229,819
$ 1,066,762,864
1,654,905
2,267,112
5,304,569
$1,010,736,266
1,229,400
3,820,793
4,054,005
1,075,989,450
1,019,840,464
103,673,248
91,389,355
103,673,248
91,389,355
$ 1,179,662,698
$1,111,229,819
Interest income
Loans
Investments
Interest expense
Members’ share and savings accounts
Borrowed funds
Operating expenses
Compensation and benefits
Office operations
Occupancy
Education, promotions and conferences
Other, net
Members’ Equity
Retained earnings, partially restricted
Total members’ equity
Total liabilities and members’ equity
14
Income from operations
Non-operating income
Gain on sale of property and equipment
Gain on sale of other assets
Net income
15
SHARES AND DEPOSITS
◆ Share (savings) Accounts
◆ Christmas Club Accounts
◆ No Excuse Savers Club
◆ Certificates of Deposit
◆ Money Market Accounts
◆ Free Personal Checking
Accounts
◆ Individual Retirement Accounts
(IRAs)
◆ No Excuse IRA CD
◆ Business Checking Accounts
LOANS
◆ Personal Loans
◆ New and Used Auto Loans
◆ Home Mortgage Loans
◆ Home Equity Loans
◆ Home Improvement Loans
◆ MasterCard ® Credit Cards
◆ Lines of Credit
◆ Business Loans
Mailing Address
P.O. Box 20998
El Paso, TX 79998-0998
Telephone Numbers:
All Offices
915.778.9221
1.800.772.GECU (4328)
SmartLine
915.778.0009
1.800.772.0009
SmartCall
915.778.9221
1.800.772.GECU (4328)
Web Address – www.gecu-ep.org
SPECIAL SERVICES
◆ SmartBranch (online services)
www.gecu-ep.org
◆ SmartLine
(24-hour account information)
◆ SmartCall
(new accounts and loans
call center)
◆ ATMs
◆ MasterMoney ® Debit Card
◆ Direct Deposit
◆ Automatic Transfers
(between GECU accounts)
◆ Safe Deposit Boxes
◆ Night and Lobby Depositories
◆ IRnet International Remittance
Network (for international wire
transfers)
◆ Overdraft Privilege
Locations
Main Office
7227 Viscount Boulevard
Northeast Office
5625 Transmountain Road
West Offices
5670 North Mesa Street
1500 North Resler Drive
East Offices
10435 Vista Del Sol Drive
11987 Rojas Drive
3037 Trawood Drive
(Drive-thru facility)
Lower Valley Office
8936 Alameda Avenue
Downtown Office
700 East San Antonio Street
1st Floor, Federal Building