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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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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Homeownership
2012 Mortgage Lending• Residential Purchase, Refinance, Improvement &
Repair
3/17/2013
Strengthening neighborhoods. Building family assets.
Home Loans Originated:
45 $2.0 million
Loans Opened 2012 ($)
Cooperative Federal Annual Meeting
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Homeownership
2012 Mortgage Lending• Residential Purchase, Refinance, Improvement
& Repair• Housing Loans Originated: 45, $2.0 million
3/17/2013
Purchase Loans: 15
$861 K
Loans Opened 2012 ($)
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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Homeownership
2012 Mortgage Lending• Residential Purchase, Refinance, Improvement
& Repair• Housing Loans Originated: 45, $2.0 million
– Purchase Loans: 15, $861 K
3/17/2013
80% to First Time
Homebuyers
Loans Opened 2012 ($)
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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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!
Cooperative Federal Annual Meeting
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 $1.4 million
Loans Opened 2012 ($)
Cooperative Federal Annual Meeting
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Personal Services
2012 Consumer Lending• New/used auto, debt consolidation, credit
builder, credit cards, lines of credit, and other personal uses
• Personal Loans Originated: 376, $1.4 million
3/17/2013
Anti-Predatory:
189 $479 K
Loans Opened 2012 ($)
Cooperative Federal Annual Meeting
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Personal Services
2011 Consumer Lending• New/used auto, debt consolidation, credit
builder, credit cards, lines of credit, and other personal uses
• Personal Loans Originated: 376, $1.4 million– Anti-Predatory Loans: 189, $479 K
• LOC Disbursements: $3.0 million
3/17/2013
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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
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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 $380 K
Loans Originated 2010 ($)
Loans Opened 2012 ($)
Cooperative Federal Annual Meeting
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Small Business Development
2012 Small Business Lending• Microloans, working capital, equipment,
commercial real estate and responsible, local landlords
• Business Loans Originated: 23, $380 K
3/17/2013
32% to businesses
owned by women or people of color
(61% of loan #)
Loans Opened 2012 ($)
Cooperative Federal Annual Meeting
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Small Business Development
3/17/2013
2012 Small Business Lending• Microloans, working capital, equipment,
commercial real estate and responsible, local landlords
• Business Loans Originated: 23, $380 K– 32% to M/WBEs– Average non-RE loan size: $12,632
• Revolving Credit Disbursements: $746 K
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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.
Cooperative Federal Annual Meeting
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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.
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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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
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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)
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
$2,000,000Income vs. Expenses
Total Income Total Expenses
Re-Aligning Income & Expenses
6.9% Avg Loan Yield at 12/31
Cooperative Federal Annual Meeting
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
$2,000,000Income vs. Expenses
Total Income Total Expenses
Re-Aligning Income & Expenses
5.9% Avg Loan Yield at 12/31
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
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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
Cooperative Federal Annual Meeting
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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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
473/17/2013
Growth
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
Nonmembers $2,822,517
Nonmembers $3,833,399
Nonmembers $3,102,027
Loans $12,599,695
Loans $14,065,263
Loans $15,087,867
Loans $15,720,791
Loans to Deposits
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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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
573/17/2013
CU at the ZooOur 30th Anniversary Gala
September 22, 2012 at the Rosamond Gifford Zoo
Cooperative Federal Annual Meeting
583/17/2013Sold-Out Event with 150+ members and allies.
Cooperative Federal Annual Meeting
593/17/2013
Raised over $6,000 for Financial Educationthrough sponsorships, ticket sales, and Silent
Auction.
Cooperative Federal Annual Meeting
603/17/2013Recognized 11 partners in 8 Award Categories.
Cooperative Federal Annual Meeting
613/17/2013Recognized 11 partners in 8 Award Categories.
Cooperative Federal Annual Meeting
623/17/2013Recognized 11 partners in 8 Award Categories.
Cooperative Federal Annual Meeting
633/17/2013
Awesome entertainment by the DREAM Freedom Revival,
then DJ, dancing, and video guestbook.
Cooperative Federal Annual Meeting
643/17/2013
Awesome entertainment by the DREAM Freedom Revival,
then DJ, dancing, and video guestbook.
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
673/17/2013Before
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Grand Re-Opening CelebrationNov. 28, 2012
Cooperative Federal Annual Meeting
743/17/2013
Grand Re-Opening CelebrationNov. 28, 2012
The EconomyPart Two
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
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
Cooperative Federal Annual Meeting
793/17/2013
Web Teller Upgrades Online Check Reorder Online Personal Loan Application Financial Management tool
Bill Pay
New Services: 2012
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80
Web Teller - Financial Management
3/17/2013
Cooperative Federal Annual Meeting
81
New Services: 2013
Online Loan Application, outside of Web Teller
Merchant Card Services Online Business Loan Application Business Credit Reporting
3/17/2013
Q&A
Elections Results
Meeting Evaluation
Adjournment
Door Prizes, Turn in Common Cents Ballots…. and Join us for Dinner!