2009 Annual Report - Space Coast Credit Union

Working Together for a
stronger future.
2009 A N N U A L REPORT
Chairman’s and President’s Report
2009 was a very challenging, yet very important year for
Space Coast Credit Union. During 2009, the credit union,
its members, and its employees continued to contend
with some of the most difficult economic conditions of
our lifetimes.
Julie O. Robbins
Chairman
Due to high unemployment throughout our operating
areas, we have been experiencing very high levels of loan
delinquency and loss. During 2009, SCCU experienced
$84.2 million in loan losses. Aside from these expenses,
the credit union was able to support thousands of members
who have been struggling with lost or reduced incomes by
working out terms that brought temporary relief to their
respective circumstances.
Despite these economic challenges, we achieved significant
and important accomplishments in 2009. Even though many
of our employees have also suffered economic hardships
Douglas R. Samuels through spouses and family members losing their jobs, they
President / CEO
have provided incredible levels of service in an effective
and efficient manner. Our employees have looked past their
own problems and challenges in order to provide service to our members with
great assurance and integrity.
Because of our operating efficiency, we have been able to retain our employees
in 2009 amidst mass layoffs and staffing reductions all around us. We know that
if we continue to strive for service excellence and operational efficiency, we will
continue to flourish despite economic uncertainty.
In fact, through the tenacious efforts of our employees and the strong participation
of our members, in 2009 we were able to deliver just under $264 million in
vehicle loans, attain a high market share position as a first mortgage provider,
and increase our member satisfaction ratings.
Of great strategic importance to the credit union and its members was our decision
to merge the operations of Eastern Financial Florida Credit Union (EFFCU) into
Space Coast Credit Union. This was a difficult decision, but it was made with the
long-term benefit of our members in mind.
The Board and Management looked at the merger opportunity from the standpoint
of what it would cost our members versus what it would gain for our members.
From the cost standpoint, we understood that there were significant challenges in
this undertaking, due to the size and financial condition of that organization.
We knew that the merger would bring down our net worth ratio and increase our
loan delinquency and loss ratios, which are the key health measures considered
by the agencies that rate financial institutions. Further challenges existed in
turning the EFFCU operation around and getting it back in shape in order for it
Credit Manager’s Report
In 2009, despite the challenges of the current economy, Space Coast Credit
Union made every attempt to stay true to our commitment of improving
our members’ lives by providing convenient, well-priced, and reputable
loan products.
We originated just under $264 million in automobile loans in 2009, compared
to $241 million in 2008. While there were fewer vehicle sales in our market
area, members continued to take advantage of the excellent rates available
from the credit union, resulting in significantly increased market share in
SCCU’s historical market area of Brevard, Volusia, Flagler, and Indian River
counties.
We continued to build strong relationships with our participating vehicle
dealers throughout the year. After the merger in June, we began the process
of introducing our indirect lending program to the EFFCU area. By the end
of 2009, we had established relationships with 78 dealers in Southeastern
Florida and were prepared for entry into the Tampa market.
to contribute its full potential to deliver a return to members. The consolidation of the
systems and delivery structures would be a significant challenge as well.
However, as we weighed the challenges against the strategic or long-term value
opportunity this merger presented, we determined that it was an opportunity
worth considering.
By joining with EFFCU, we would be able to reduce our reliance on a single county.
Even though Brevard County has diversified its economy since the days of the early
Space Program, we have had concerns about the concentration of our business in one
area. Even though we have been investing since the early 1990s in the geographic
and economic diversification in Volusia and Flagler counties, this growth has been
steady but expensive. When we were approached with the EFFCU opportunity,
we recognized the opportunity to assume the operations of a well-established and
historically strong credit union that had developed a solid presence in Southeastern
Florida. This merger has given us the diversification we had desired but could have
never afforded.
The merger also presented a compelling opportunity to create greater efficiencies
within our operation. Operating efficiencies have been one of our most concentrated
strategic efforts for almost 10 years. We believe that operating efficiencies are the
best way to give back to our members. We are a member-owned cooperative, where
all excess earnings are given back to the member-owners. The more efficient our
operation becomes, the less of our members’ money we spend to provide service,
resulting in more to give back to the member-owners. With the consolidation, we are
now able to apply our operating efficiencies across a larger organization and achieve
an entirely new level of efficiency that would not otherwise be possible.
The work required in completing this consolidation has been extensive, and stressful
to our employees, but they have risen to the challenges placed before them and have
accomplished incredible things in a short period of time. The EFFCU employees have
responded to the new direction positively and constructively, and have expressed
appreciation for the clarity and purpose of our efforts.
Although we would earnestly wish for an economic recovery in 2010, we are
expecting this to be another difficult year for our local economies and our members
who live and work within them. Our focus is to do everything we can to assure our
strength and stability through these continuing economic difficulties, while working
towards solidifying our future for the decades beyond these current challenges.
2009 was an extremely important foundational year upon which we will build in
order to reach our long-term objective of being a stable and strong provider of trusted
financial services to our member-owners.
Julie O. Robbins
Chairman
Douglas R. Samuels
President / CEO
As in previous years, many of our members were also able to improve their
financial situation by refinancing vehicle loans with SCCU that originated
elsewhere. Our efficient lending processes allowed us to continue to provide
our membership with fast loan decisions and competitive rates.
Space Coast Credit Union funded over $181 million in first mortgage loans in
2009, and currently services $1.8 billion in first mortgage loans.
Space Coast Credit Union is committed to providing competitive loan products
to the small and medium-sized businesses in the communities we serve. We
funded $11.8 million in business loans for our members in 2009.
In 2010, we will continue to improve our operational efficiencies so we can
provide our members with convenient, fast, and low-cost loan products.
Thomas J. Farmer
V.P. of Lending
Audit Committee Report
The Audit Committee is appointed by the Board
of Directors of Space Coast Credit Union (SCCU).
The Audit Committee operates under the rules and
regulations of the Florida Office of Financial Regulation,
Division of Financial Institutions, and the National
Credit Union Administration (NCUA), and is charged
with the responsibility of determining that the financial
condition of SCCU is accurately and fairly presented in
the financial statements, and that management practices
are in place to safeguard members’ assets.
Condensed Financial Information*
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
As of December 31,
ASSETS:
Cash
Available-for-sale
144,871,032
Held-to-maturity
9,772,621
Other
The primary functions of the Audit Committee are (1)
to direct the Internal Audit Department, which monitors
credit union operations through the implementation of
an Audit Plan; scheduling and conducting a continuing
program of internal control reviews of credit union
processes and procedures, and (2) to contract for an
independent, external audit of the financial statements.
The combined skills of the Certified Public Accounting
firm of Clifton Gunderson LLP with that of our inhouse Internal Audit staff has proved to be effective
in maintaining an efficient and effective internal audit
function for the credit union. The audit department
adjusted their audit plan to include the additional audit
work required as a result of the June merger with Eastern
Financial Florida Credit Union. All audits on the 2009
Audit Plan were successfully completed by the end of
the calendar year.
TOTAL ASSETS
The Certified Public Accounting firm of Hutto & Carver,
P.A., was retained for the purpose of conducting the annual
external audit of financial condition. In February, 2009,
Hutto & Carver’s audit of the 2008 Financial Statements
for SCCU rendered an “unqualified opinion,” which,
in layman’s terms, means everything went well and no
irregularities were discovered. The Audit Committee
reports the results of these internal and external audits to
the Board of Directors.
Based on the results of the above referenced activities and
related reports, it is the opinion of the Audit Committee
that the records and affairs of Space Coast Credit Union
are in order. The Audit Committee would like to thank
the Board of Directors, Management, and the entire staff
for their support and cooperation during this past year.
Total liabilities
The Audit Committee
$18,210,923
Investments
Loans held for sale
Respectfully submitted by,
2009
642,210,038
Loans to members - net of allowance for loan losses
2,198,043,395
Accrued interest receivable
10,075,654
Prepaid and other assets
29,867,778
Property and equipment - net of accumulated depreciation
89,833,594
Other real estate owned
17,146,104
National Credit Union Share Insurance Fund deposit
28,953,658
$3,188,984,797
LIABILITIES AND MEMBERS’ EQUITY
As of December 31,
2009
LIABILITIES:
Members’ shares and savings accounts
$2,908,699,756
Borrowed funds
40,000,000
Accounts payable
6,678,385
Other accrued liabilities
32,688,592
2,988,066,733
MEMBERS’ EQUITY
TOTAL LIABILITIES AND MEMBERS’ EQUITY
200,918,064
$3,188,984,797
CONSOLIDATED STATEMENTS OF INCOME
For the year ended December 31,
2009
INTEREST INCOME:
Loans
Investments
Total interest income
$102,975,903
14,647,612
117,623,515
INTEREST EXPENSE:
Members’ shares and savings accounts
Notes payable
33,593,655
1,899,428
Total interest expense
35,493,083
Net interest income
82,130,432
PROVISION FOR LOAN LOSSES
57,613,963
Net interest income after provision for loan losses
24,516,469
NON-INTEREST INCOME:
Dale B. Neubert, Chairman
Audit Committee Members
Fernando Dominicis
Herbert A. Fisher
William H. Paine
William G. Thoms
Fees and service charges
39,819,778
Other
13,499,139
Total non-interest income
53,318,917
NON-INTEREST EXPENSE:
Office operating costs
32,636,962
Compensation and employee benefits
37,597,808
Other
2,464,470
Total non-interest expense
72,699,239
NET INCOME
$5,136,147
*Unaudited
NOTE: Eastern Financial Florida Credit Union was merged into Space Coast Credit Union effective
June 30, 2009. Prior to the merger, total assets were approximately $1.76 billion and $1.55 billion
for Space Coast Credit Union and Eastern Financial Florida Credit Union, respectively.
ANNUAL REPORT 2009
Board of Directors
Management Team
Audit Committee
Branch Locations
*Julie O. Robbins
Chairman
Douglas R. Samuels
President/CEO
*Dr. Karen Palladino
Vice Chairman
Thomas R. Baldwin
Executive Vice President, CFO
Dale B. Neubert, Chairman
Fernando Dominicis
Herbert A. Fisher
William H. Paine, Sr.
William G. Thoms
*Charles H. Renfro
Treasurer
Timothy M. Antonition
Executive Vice President,
Retail Operations
Brevard County (18)
Broward County (9)
Duval County (2)
Flagler County (2)
Hillsborough County (3)
Indian River County (3)
Miami Dade County (10)
Palm Beach County (1)
Pinellas County (3)
Volusia County (9)
*Dr. William “Jack” Sidoran
Secretary
Board Members
Martha E. Frasier
Willie Howard, Jr.
John G. Oertel
William H. Paine, Sr.
William G. Thoms
*Executive Committee
Tanya R. Boggs
Senior V.P. Mortgage and
Business Services
Meredith A. Gibson
Senior V.P. Marketing
Dottie M. Bourlier
V.P. Finance and Accounting
Thomas G. Decker
V.P. Investment Services
Tom Farmer
V.P. Lending
Deborah Foley
V.P. Call Center Operations
Heather E. Hickman
V.P. Retail Branch Admin
Suzanne Kirk
V.P. Operations
S. Steve Koniecki
V.P. Information Systems
Karen M. Sack
V.P. Human Resources
General Information
Headquarters Address
8045 N. Wickham Road
Melbourne, FL 32940-3011
Web Address
www.sccu.com
E-mail
info@sccu.com