the ceo/treasurer Moving Forward to Serve You Better

2013 Annual Report
Moving Forward
to serve you better.
79th Annual Meeting
Federally insured by NCUA
The
TheAtlantic
AtlanticFederal
FederalCredit
CreditUnion
Union
2013
2013Annual
AnnualReport
Report || 79th
79thAnnual
AnnualMeeting
Meeting
Vision Statement
To be our Members’ primary long-term financial institution of choice by
providing the highest level of personalized service along with offering
continual and up-to-date quality products.
Mission Statement
Provide and promote a variety of quality services...which feature benefits and
advantages over those from other sources... with the specific intent of helping
Members improve their personal financial status.
The Atlantic Federal Credit Union
2013 Annual Report | 79th Annual Meeting
New in 2013
Our sensational new VISA® CREDIT CARD program includes Platinum, Gold and Classic cards at very competitive rates with no
balance transfer fees. An added bonus for Platinum and Gold Rewards cardholders are the complimentary points on purchases that are
redeemable for travel, merchandise and gift cards.
The hassles and high cost of refinancing a mortgage are eliminated with our FIRST LIEN HOME EQUITY LOAN. With no points or
closing costs and a low fixed interest rate, members are mortgage-free years sooner.
For the lowest possible monthly home equity payment, our INTEREST-ONLY HOME EQUITY LINE OF CREDIT gives members
increased cash flow resulting in greater control of their household budget.
Paying bills on-the-go is a little easier now that our MOBILE BANKING APP is available on all Apple and Android products.
ONLINE BANKING SECURITY is upgraded as members establish stronger user IDs and passwords.
Make Sure You & Your Entire Family
Are Using the Atlantic Federal Credit Union
LOANS:
• Visa® Credit Cards
• 1st Mortgages
• Home Equity Line of Credit
• 1st Lien Home Equity Loans
• Interest-Only Home Equity Line of Credit
• New & Used Vehicle Loans
• Personal Loans
• Share Secured Loans
• Share Certificate Loans
• Overdraft Line of Credit
• Private Student Loans
SAVINGS:
SERVICES:
• Savings Accounts
• Certificates of Deposit
• Money Market Accounts
• Checking Accounts
• IRAs-Traditional & Roth
• Coverdell Education Savings Accounts
• Holiday & Vacation Club Accounts
• Custodial Accounts
• @nytime Financial Center
• @nytime Fast-pay
• @nytime Teller
• Online Check Images
• E-Statements
• VISA Debit/ATM Cards
• Direct Deposit
• VISA Gift Cards
• Free Notary Service
• Shared Branch Network
• Signature Guarantee
• Money Orders
• Wire Transfers
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The Atlantic Federal Credit Union
2013 Annual Report | 79th Annual Meeting
A Message from the Chairman of the Board & the CEO/Treasurer
Moving Forward to Serve You Better
The past year marked
the fourth year of
recovery from the Great
Recession and while
there are signs that it is
picking up momentum,
a full economic
recovery appears
well off. National
Donald J. Olsen
economic data indicates
Chairman of the Board of Directors
improvement in such
areas as unemployment and home values, while inflation remains
subdued. Locally, New Jersey has shown better than expected gains
in unemployment as the reported rate finished the year at slightly
more than 7%, down from over 9.5% in 2012. Home values in the
state have rebounded and actual home sales outpaced the rest of
the country during 2013. The Fed has maintained a low interest
rate environment over the past several years as part of its stimulus
program. Financial institutions and individuals alike have been
challenged to obtain decent returns on investments and savings
accounts during this period which in turn has negatively impacted
our ability to grow as indicated in our financial results.
Assets experienced a 5.2% decline for 2013, finishing the year at
$259.1 million. Approximately half of the decline was attributable
to a reduction in member deposits. This reflects the modest returns
previously mentioned as many sought the double digit returns
realized in the stock market during 2013. For the remaining deposits
on hand, we did return 78 cents of every dollar of available income
for the year in the form of dividends. By way of comparison, our New
Jersey peer group’s average return to their members was
59 cents.
Last year we originated $16.7 million in loans, which was offset by
$14.0 million in member loan payments and refinancing activities.
The net result was an increase in outstanding loan balances in 2013
of $2.7 million or 2.4%. This was an improvement over the $2.2
million or 1.9% loan portfolio decline in 2012.
During 2013, net income came in at $397,650, a decrease from the
$696,200 reported in 2012. A number of factors contributed to the
lower number. The aforementioned low interest rate environment
prompted significant mortgage loan refinancing within our loan
portfolio, resulting in lower interest income than 2012. Another
factor was the increased funding for loan loss estimates over 2012
levels. Specifically, we saw a significant spike in mortgage loan
delinquencies that led to several home foreclosures. As of the end
3
of 2013, we had five active first mortgage loans in various stages
of foreclosures that represented $950,000 in outstanding loan
balances. Because of the significant decline in home values over
the past several years, we had to set aside approximately $225,000
in loss estimates to adjust the loan balances of these in-process
foreclosures to reflect recent market values. Finally, the extraordinary
charge line item reflects the National Credit Union Administration’s
(NCUA) annual special stabilization assessment of $177,400 paid
in 2013. The assessment was necessary to repay monies borrowed
from the Treasury in 2009, to cover the market value declines in the
investment portfolios of U.S. Central and corporate credit unions.
Despite the reduced net income and asset decline, we remain
financially sound as regulatory net worth ended the year at 15.3%,
which amounted to a 1% increase over the prior year. This was more
than twice the level required by our regulator and remains among
the highest in the credit union industry.
The sluggish economic recovery did not prevent us from continuing
our efforts to deliver quality service and competitive products
and services to you, our members. In last year’s annual report, we
announced that the NCUA approved our application for conversion
to a community charter. The conversion provided us with an
opportunity to expand our membership to anyone who lives, works,
worships, attends school or regularly does business in Union or
Essex County.
Since that time your Board of Directors and senior management
team have spent numerous hours laying the foundation to ensure
a seamless transition into this new environment while maintaining
the partnerships with our existing sponsor groups and legacy
members. After months of collaborating, the resulting strategic
initiatives will serve as a blueprint to ensure our future financial
viability and improve your overall service experience. These initiatives
were formalized into a Membership Development Plan (MDP). The
MDP considered improvements in the various areas of operations
that would improve our
delivery systems, expand
our line of products and
services, and enhance
our response times.
Some of those initiatives
began during 2013,
while others are planned
for 2014, and beyond.
During the latter part of
Michael Fanelli
Treasurer / Chief Executive Officer
The Atlantic Federal Credit Union
the year we began renovating the Kenilworth lobby. The renovation
included a revamped and expanded teller line, additional offices and
the future installation of a second ATM that will have the ability
to accept check deposits. We also began a project to redesign our
website. Once completed, the new site will be easier to navigate and
facilitate access to our online banking and bill payment service. We
also introduced a new credit card program in the spring that features
a generous reward program and competitive interest rates.
We will continue to build on these initiatives in 2014. Some of the
initiatives planned for 2014, include: expanding the functionality of
our website; reorganizing our staff to better serve your needs; and
update existing or introduce new products and services that will
further our financial relationship with you.
A key element in the strategic plan is to upgrade our delivery
systems to improve the already high level of service you now receive.
Enhancing our website’s functionality is one way we will accomplish
this. We are adopting technology that will make the entire loan
experience extremely user friendly. You will be able to submit a loan
application online and receive a response back almost immediately.
Loan documents and signatures will be executed through a secure
site and retained electronically. Another feature of the website will
give you the ability to expand your account relationship with us
online. You will soon be able to open up any of our deposit account
products online such as a checking account, money market account,
IRA or certificate of deposit. Additionally, prospective members will
2013 Annual Report | 79th Annual Meeting
be able to establish their membership online as well.
We are, and have always been, committed to providing you with
the best possible service experience. To that end, we will be looking
to realign our staff in ways that’ll ensure timely response to your
specific needs from providing account resolution to offering solutions
to improve your financial health.
We are continually looking at our product and service line to ensure
that our offerings are relevant to your needs and competitively
priced. During 2014, we will look to complement our existing
insurance offerings and add business services to name just two.
While the uncertainty of the economic recovery will be with us for some
time, one thing you can count on is our commitment to move forward
to serve you better...to retain your trust and earn you future business.
On behalf of the Board of Directors, the volunteers serving on the
Supervisory Committee, management team and entire staff, we want to
thank you for your many years of loyal membership and business.
Respectfully submitted,
Donald J. Olsen
Chairman of the Board of Directors
Michael Fanelli
Treasurer / Chief Executive Officer
2013 Board of Directors and
Supervisory Committee
Front L-R: Robert Janish, Michael Fanelli ,
Catherine Flint, Joseph Spina. Rear L-R: Robert
Wilder, Robert Lear, Frank Cirone, Martin Purcell,
Donald Olsen, Richard McCauley.
Missing from photo: Frederick Beckman, Amato
DiLauro and William Kennedy.
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The Atlantic Federal Credit Union
2013 Annual Report | 79th Annual Meeting
Minutes of the 78th Annual Meeting of the
Atlantic Federal Credit Union
Sunday, May 5, 2013
8. Mr. Spina summarized the minutes of the 2012 Annual Meeting.
Mr. Spina then asked for a motion to approve the minutes of the
last Annual Meeting held on May 6, 2012. Mrs. Carole Kennedy
moved that they be accepted as presented in the Annual Report.
Directors Present
Mrs. Joan Cirone seconded the motion and the minutes were
F. T. Cirone
R. M. Lear
approved as printed.
M. Fanelli
D. J. Olsen
C. Flint
J. P. Spina
9. Mr. Richard McCauley, Chairman of the Supervisory Committee,
R. A. Janish
R. D. Wilder
presented the committee’s report as included in the Annual Report.
He noted that the committee serves as a watchdog for members
Supervisory Committee Present
and provides oversight of external and internal controls for the
R. McCauley
safety and soundness of members’ assets.
W. J. Kennedy
Loan Committee Present
M. Purcell
1. The meeting was held at the Pines Manor, Edison, New Jersey.
Mr. Robert Janish, Chairman, called the meeting to order at 1:05 p.m.
2. Mr. Janish welcomed everyone to the Credit Union’s 78th Annual
Meeting. He called for a moment of silence to remember those affected
by the Newtown, Connecticut and Boston Marathon tragedies.
3. Mr. Janish introduced the members of the Board of Directors
present: Frank Cirone, Michael Fanelli, Catherine Flint, Robert Lear,
Donald Olsen, Joseph Spina and Robert Wilder. He noted that
Frederick Beckman was recuperating from an illness and was not
present. He also introduced Richard McCauley, Chairman of the
Supervisory Committee, Martin Purcell, Chairman of the Loan
Committee, and Anthony Sciarrillo, the Credit Union’s attorney.
4. Pastor Sadie Bridges offered an invocation and led the group in the
Pledge of Allegiance.
5. Pastor Bridges sang God Bless America.
6. Mr. Janish called members’ attention to the 2012 Annual Report
that they received upon their arrival at the meeting and noted that
the report contained the complete text of the minutes of the 2012
Annual Meeting, the Credit Union’s financial statement and reports
from the Chairman, the CEO/Treasurer, the Supervisory Committee
and the Loan Committee.
7. The By-Laws of the Credit Union require a quorum of 15 members
at Annual Meetings. Mr. Spina, Assistant Board Secretary, verified
that a quorum was present.
5
10. M
r. McCauley said that the Supervisory Committee retained
the services of The Curchin Group LLC, a CPA firm, to perform
a comprehensive yearly audit of the financial statements. He
reported that Atlantic Federal Credit Union received favorable
reports resulting from this audit as well as the examination
performed by the National Credit Union Administration. He
reported that the Credit Union continued to operate in a safe and
sound manner during 2012.
11. M
r. Purcell, Chairman of the Loan Committee, presented the
committee’s report as included in the Annual Report. He noted
that during the past year, 1,389 loans were disbursed by the
Credit Union, an increase of 201 loans or 16.9% over the previous
year. The total amount of loans granted was $16.1 million. At
the end of 2012, there were 4,170 loans outstanding, totaling
$113.5 million. Of this amount, $532.2 thousand was reserved for
potential loan losses.
12. Mr. Fanelli presented an overview of his Treasurer’s Report as
printed in the 2012 Annual Report. He noted that the economic
challenges of the past several years have taken its toll on many
financial institutions, but that Atlantic Federal Credit Union
continues to be financially sound.
13. He reported that at the end of 2012, government regulators
approved Atlantic Federal’s conversion to a community charter.
Now anyone who lives, works, worships, attends school or regularly
does business in Union or Essex County may open accounts.
14. Mr. Fanelli noted that the Credit Union’s strength comes from
an ever growing membership who actively use its products and
services. He said that a community charter gives the Credit Union
an opportunity to serve more people in the geographic areas
where it already has branches.
The Atlantic Federal Credit Union
15. Mr. Fanelli reported that $696,000 of net income was added to
capital during the year. Atlantic Federal finished the year with a
regulatory net worth ratio of 14.4%, more than twice the level
required by our regulator and among the highest in the industry.
16. This strong net worth ratio ensures that Atlantic Federal can
continue to invest in select technologies, programs and services
as well as competitively price its products in a way that gives
the best opportunity to retain existing members and attract
new members. Several projects are near completion, he said, and
members were urged to read the Credit Union’s newsletter and
visit its website and Facebook pages to stay updated.
17. On the operational side, Mr. Fanelli reported that the Credit Union
relocated its Newark branch to a more convenient location on
Broad Street in downtown Newark to better serve members.
18. Following Super Storm Sandy, he noted that a special loan
program was introduced to help members cover the cost of home
repairs and replace personal property that was damaged in the
storm and not covered by insurance.
19. Mr. Fanelli thanked the members for their years of loyal support
and said he looks forward to building on that relationship going
forward. He said that the Credit Union’s singular focus will
continue to be to “do what’s in the best interest of members.”
20. Mr. Janish presented highlights from his Annual Report message.
He said that the slow economic recovery continued to negatively
impact many Americans.
2013 Annual Report | 79th Annual Meeting
a member, he said. In addition, family members continue to
be eligible to open accounts and use all of the Credit Union’s
services, regardless of where they live or work.
24. Mr. Janish said that the Credit Union remains focused on
continuing to provide members with the highest level of
customer service and offering the products and services that
meet their needs.
25. He acknowledged the volunteer Board of Directors that gives so
freely of its time in setting the strategic direction for the Credit
Union. He recognized the Credit Union staff for its hard work and
dedication during the year.
26. On behalf of the Board of Directors, the staff and the many
volunteers who have donated their time to the greater good of
the Credit Union, he thanked the attendees for their support and
continued patronage.
27. Mr. Robert Lear, Chairman of the Nominating Committee,
introduced the members of the Nominating Committee: Ms.
Antoinette Bujega, Ms. Dorothy Kruza and Ms. Ann MacArthur.
They submitted the following candidates for vacancies on the
Board of Directors all for three year terms: Frank Cirone, Robert
Janish and Joseph Spina.
28. Since no other names had been filed with the Secretary prior to
the Annual Meeting, Mr. Lear asked Mr. Olsen to cast one ballot
for the slate, which was done. The motion was passed and the
nominees were elected.
21. In New Jersey, he said that the financial uncertainty was
compounded with the destruction caused by Super Storm Sandy
which struck in October. The Credit Union was confronted with an
enormous problem of sustaining member service resulting from
the loss of electricity in Kenilworth and the surrounding area.
Through the efforts of the technical staff and outside resources,
power was restored using auxiliary energy sources with minor
disruption to operations and service to members.
29. There being no further business to conduct, Mr. Michael Garrett
motioned to adjourn the meeting. This was seconded by Ms.
Dorothy Kruza and was passed.
22. In spite of the economic climate, Mr. Janish said the Credit Union
enjoyed a successful year, upholding its tradition of financial security
and soundness and fostering a commitment to member service.
Catherine Flint,
Secretary
30. The Annual Meeting adjourned at 1:38 p.m.
Respectfully Submitted,
23. Mr. Janish said that the Board of Directors was in full support
of the conversion to a community charter and emphasized that
it has no effect on existing members. Once a member, always
6
The Atlantic Federal Credit Union
2013 Annual Report | 79th Annual Meeting
Board of Directors
Executive
Committee
Donald Olsen
Chairman
Robert Wilder
Vice Chairman
Mike Fanelli
Treasurer/CEO
Catherine Flint
Secretary
Fred Beckman
Frank Cirone
Robert Janish
Robert Lear
Board
Members
Supervisory Committee
Amato DiLauro
7
William Kennedy
Martin Purcell
Joseph Spina
The Atlantic Federal Credit Union
2013 Annual Report | 79th Annual Meeting
Supervisory Committee Report
Your Supervisory Committee, an independent body of volunteers,
is mandated by the Federal Credit Union Act and serves as a
watchdog for the members of the Atlantic Federal Credit Union.
The Committee provides oversight of external and internal
controls for the safety and soundness of members’ assets and
must insure that the Credit Union’s policies and procedures
reflect sound judgment and common sense.
The Committee is appointed by the Board of Directors from
among members of the Credit Union. The Committee provides
for an annual certified audit of the Credit Union’s financial
statements and has a continuing responsibility to ensure that the
Credit Union’s financial records and operations are in order.
In order to meet its responsibilities, the Supervisory Committee,
with the approval of the Credit Union’s Board of Director’s, has
retained the services of The Curchin Group LLC, a CPA firm,
to perform a comprehensive yearly audit of Atlantic Federal’s
financial statements. The results of this audit and the periodic
examination of your Credit Union by the National Credit Union
Administration together with other supplemental internal
audits and reviews conducted by the Supervisory Committee
are reported to the Credit Union’s Board of Directors as they are
completed.
Your Supervisory Committee is pleased to report that these audits
and examinations have confirmed the fiscal soundness of the
Credit Union, which continues to operate in a safe and sound
manner.
The assets of the Credit Union are properly safeguarded, and
the books and records are an accurate accounting of the assets,
liabilities and capital of the Atlantic Federal Credit Union.
Respectfully Submitted,
Martin Purcell,
Chairman
Board Members
L-R: Joseph Spina, Catherine Flint,
Frank Cirone, Donald Olsen and
Robert Wilder at a monthly meeting.
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The Atlantic Federal Credit Union
BALANCE SHEET
December 31, 2013 and 2012
2013 Annual Report | 79th Annual Meeting
20132012
Assets
Loans to members, less allowance for loan losses............................................................ $ 115,574,803 $ 112,945,380
Investments....................................................................................................................................... 129,657,434 133,186,814
Cash and cash equivalents......................................................................................................... 7,593,620 22,247,079
Share insurance fund....................................................................................................................
2,217,899 2,281,364
Furniture and equipment less depreciation.........................................................................
829,212 727,278
Other assets......................................................................................................................................
3,227,841 1,848,227
Total Assets..................................................................................................................................... $ 259,100,809 $273,236,142
Liabilities & Equity
Accounts payable and accrued expenses............................................................................. $
769,833 $
925,014
Shares and other member deposits........................................................................................ 227,018,096 233,939,261
Retained earnings, substantially restricted..........................................................................
31,312,880 38,371,867
Total Liabilities & Equity......................................................................................................... $ 259,100,809 $273,236,142
INCOME STATEMENT
Years Ended December 31, 2013 and 2012
20132012
Operating Income
Income from loans......................................................................................................................... $
5,075,014 $ 5,440,356
Investment income........................................................................................................................
3,403,541 3,362,921
Other income....................................................................................................................................
1,406,388 1,647,599
Total Income................................................................................................................................... $ 9,884,943 $ 10,450,876
Operating Expenses
Compensation and employee benefits.................................................................................. $
4,077,620 $ 3,999,785
Office operations............................................................................................................................
1,096,381 1,007,204
Professional and outside services............................................................................................
1,001,334 1,030,193
Provision for loan losses..............................................................................................................
377,650 387,261
Other....................................................................................................................................................
1,385,761 1,276,648
Total Expenses Before Dividends........................................................................................ $ 7,938,746 $ 7,701,091
Income from operations before dividends........................................................................... $
1,946,197 $ 2,749,785
Dividends paid.................................................................................................................................
1,371,172 1,836,811
Net Income From Operations................................................................................................ $
575,025 $
912,974
Extraordinary Charges Special stabilization fund assessment...................................................................................$ (177,432)
$ (216,730)
Net Income...................................................................................................................................... $
397,593 $
696,244
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The Atlantic Federal Credit Union
2013 Annual Report | 79th Annual Meeting
Leading the Way in Serving Our Community
Right: In addition to being the
financial sponsor of the Newark
Ironbound Community Corp.’s outdoor
movie night in Riverfront Park, our
staff was at the event with balloons
and Frisbees for the kids. Left to right
are the Credit Union’s Chief Operating
Officer Daniel Czerniawski, his wife
Magdalena and Karina Pinheiro,
Newark Branch Manager.
Above: Our staff worked the concession stand at
the 19th Annual Basketball Classic for the Elizabeth
Coalition to House the Homeless. Left to right are
Sabrina Kilgore from the Kenilworth Loan Department,
Patricia Vogler, Elizabeth Coalition board member and
Jessica Pereira from the Elizabeth branch.
Above: An Atlantic Federal team was on hand at the summer Cranford street
fair. Community residents enjoyed spinning the Credit Union prize wheel and
the kids thought it cool to sport Atlantic Federal tattoos. Left to right are
Kenilworth’s Yvana Ellison, Renee Lopes and Nara Graichen.
Above: Participating in the Breast Cancer Awareness
Walk in Newark’s Lincoln Park were Ashley Meredith,
Karina Pinheiro and Rosa Fajardo, all from the Credit
Union’s Newark Branch.
Right: The Credit Union donated 45 Thanksgiving
dinners to needy families served by area organizations
including the Community Food Bank in Hillside where
Yvana Ellison of the Marketing Department (left)
made the delivery to the Food Bank’s Gleny Herlihy.
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Phone: (908)245-1750 • Fax: (908)245-0680
www.atlfedcu.com • e-mail: info@atlfedcu.com
Main Office: 37 Market Street, Kenilworth, NJ 07033
Branches: Newark • Elizabeth
Atlantic Federal supplements the federal NCUA
insurance with an additional $250,000 coverage
from ESI, the nation’s leading private insurer.