Growth I Personalized Service I Technology · Growth I Personalized Service I Technology. Dear Members: ... threats by immediately reissuing compromised cards and adopting initiatives

Federally Insured by the NCUA

Changing to Fit your Needs

2013Annual Report

Growth I Personalized Service I Technology

Dear Members:

The PAHO/WHO Federal Credit Union continuously strives to operate at optimal levels while researching new ways to better serve our member-owners. The past year was filled with growth and development stemming from the contributions of a dedicated Board of Direc-tors, diligent staff and loyal members. We closed 2013 with 4,885 members and $200,700,419 in assets. Our historically well capitalized position has consistently given us the opportunity to “give back” to our mem-bers with a distribution of a year-end dividend bonus. At year-end 2013, we rewarded all eligible members with a 4% year-end bonus on interest paid on loans and 3% bonus on dividends earned on deposits. The total amount given back to member owners was $144,626. As you can see, the more you utilize our products and services, the bigger the bonus dividend you may re-ceive at the end of the year!

Globally, economic challenges were still present in 2013; however, we were strategically prepared to en-sure that your credit union remained financially strong and prospered during this economic cycle. Most impor-tantly, we were willing and able to assist you, our mem-bers, searching for ways to manage your financial issues. We understand the importance of living a debt-free life so we are consistently working with members on debt-reduction strategies that allow them to increase their personal savings by transferring higher rate loans from other institutions to the credit union and lowering their debt payments. As a member focused financial institu-tion we also proactively responded to various credit and debit card security breaches and other online security threats by immediately reissuing compromised cards and adopting initiatives that enhance the privacy of our member information. To further protect our members from credit card fraud we replaced 100% of our Master-Card credit cards with chip enhanced cards that provide greater fraud protection. We were pleased to be one of the first United States financial institutions to have introduced a chip based credit card program. We have stayed abreast of constantly changing regulatory issues

and we will continue to ensure that we perform in a safe and sound manner while protecting your valued assets.

In order to facilitate and enhance the way you do busi-ness with us, we invested in several new products and services. Our Online Banking upgrade allows you to set-up account notifications such as low balances, re-cent transactions, and loan payments. In April 2013, we launched our Mobile Banking App which is available for downloading on the Apple and Android devices. This application allows members to view account balances, make transfers and pay bills through a smart phone or tablet 24 hours a day. We also introduced both our desktop and mobile Remote Deposit service. Members can now easily make check deposits to their credit union accounts from desktop scanners or through their mobile devices.

As a member owned cooperative we are regularly evaluating opportunities which allow us to personally interact with our members. In support of this commit-ment we recently visited with our members and PAHO staff located at the Country Offices in Brasilia and Rio de Janeiro with the hopes of strengthening ties and bring-ing back suggestions on how we can improve the way we conduct business. We will continue planning visits to additional offices in the near future and look forward to getting to know our global member base. As you can see, we have made great efforts to maintain a competi-tive edge and prove to you, our member-owners that we will continue offering the most beneficial products and services in order to help you achieve sustainable financial stability.

Looking ahead, interest rates are anticipated to increase in late 2014 as economic growth improves and infla-tion picks up. As the world’s economic state continues to progress, we will undeniably focus on continuously researching innovative ways to improve technology, service distribution and support. In order to make our website more of a convenient online branch, we are working on a new design that will improve

YOUR FINANCIAL FAMILY FOR LIFE.SU FAMILIA FINANCIERA PARA TODA LA VIDA.

Management Report

2013 Annual Report - page 2 of 8

TEL: 202.974.3453www.PAHOfcu.org

CHANGING TO FIT YOUR NEEDS

Luis Proaño, Chairman Ricardo de la Torre , Treasurer Miguel Boluda, Jr., Board of Directors Board of Directors Chief Executive Officer

accessibility and usage. We will be conducting member focus groups so we can analyze your concerns regard-ing your relationship with us and how we can improve our ties and product offerings. We will also be regularly sponsoring educational seminars on topics such as first time homebuyers, credit reports, budgeting and other relevant financial topics. In a recent electronic satisfac-tion survey distribution, 74% of you that participated indicated that you would recommend us to a family member or co-worker. We thank you for your loyalty and we vow to continue improving and operating in a man-ner that demonstrates our dedication to you.

On behalf of the Board of Directors and Staff, we thank you for putting your trust in us. Our promise to you is that we will make every effort to serve you in the most efficient way possible while helping you achieve and maintain the financial freedom you deserve. Our friendly and dedicated staff will go above and beyond to assist you in a manner that most fits your needs. Please con-tinue to share the benefits of our products and services with your family and co-workers and encourage them to become member-owners too!

We look forward to serving you in the future.

Sincerely,

The Supervisory Committee is an independent body that monitors and evaluates the Credit Union’s finances and operations. All credit unions are required by law to have a supervisory committee. The Supervisory Committee is responsible for overseeing ongoing reviews and audits in order to safeguard the assets of the Credit Union and its members.

Supervisory Committee members are appointed by the Board of Directors from among the Credit Union membership. Like the Directors, Supervisory Committee members are volunteers who receive no payment for their services.

In order to fulfill its responsibility, the Supervisory Com-mittee of the PAHO/WHO Federal Credit Union relies on the professional services of certified public accountants. The CPA firm of Rowles & Co performs an annual exter-nal audit of the financial statements, and the CPA firm of Orth, Chakler, Murnane & Co performs internal audit reviews at intervals throughout the year.

It is my pleasure to report that Rowles & Co has returned an unqualified audit opinion on the PAHO/WHO Federal Credit Union’s financial statements for the year ended December 31, 2013. Please be reminded that in the con-text of an audit opinion the adjective unqualified should be read to mean free of restriction or modification. This is known as a clean audit opinion; it signifies that the auditors believe the financial statements to be fair and accurate in all material respects.

Another responsibility of the Supervisory Committee is addressing member concerns. Please feel free to contact the Supervisory Committee if you have a concern regard-ing your accounts or transactions, and it has not been resolved to your satisfaction by Credit Union staff and management. Our e-mail addresses are posted on the Credit Union’s website. Your input can provide a valuable contribution to our work.

Tyson KidderSupervisory Committee

Supervisory Committee Report





Management Report (continued)

DISTRIBUTION OFGROSS INCOME

OperationalExpenses$3,471,162

68%

InterestExpense$790,456

15.5%

Net Income$840,894

16.5%

Provision for Loan Losses$0 - 0%

Net Worth (in millions)

$20$15$10

$ 0$ 5

$25$30

2013 Financial Comparisons & Ratios

$35

FINANCIAL RATIOS

2013 2012

Total Net Loansto Total Shares 55.00% 49.35%

Measures the level at which welend out the member’s deposits

Total Net Loans to Total Assets 45.43% 40.26%

Measures the level of our lendingwithin our membership

Net Worth to Total Assets 17.67% 17.50%

Measures retained earnings asdetermined under GAAP

Return on Average Assets 0.42% 0.03%

Measures net income in relation to average assets

FINANCIAL PERFORMANCE COMPARISONS 2013 2012 CHANGE %

Assets $ 200,700,419 $ 197,840,900 1%

Shares $ 165,807,727 $ 161,402,837 3%

Loans, Net $ 91,186,450 $ 79,653,933 14%

Reserves $ 11,000,965 $ 11,000,965 0%

Undivided Earnings $ 24,464,148 $ 23,623,254 4%

Gross Income $ 5,102,512 $ 5,416,651 -6%

Operational Expenses $ 3,471,162 $ 3,729,238 -7%

Provision For Loan Losses Expense $ 0 $ 514,697 -100%

Interest Expense $ 790,456 $ 1,116,788 -29%

Net Income $ 840,894 $ 55,928 1,404%

ASSETS (in millions) SHARES (in millions)

$182.4$173.6$200

$50

$150

$100

$ 0

$197.8$200.7

$200

$50

$150

$100

$ 0





131211102009

$188.0

131211102009

$165.8$151.8 $161.4

$148.4$140.2

131211102009

$34.6$34.6$33.4$32.2

$35.5

Supervisory CommitteePAHO/WHO Federal Credit UnionWashington, D.C.

Report of Independent Auditors on Summary Financial Statements

The accompanying summary financial statements, which comprise the summary balance sheets as of December 31, 2013 and 2012, and the summary statements of income for the years then ended, are derived from the audited financial statements of PAHO/WHO Federal Credit Union as of and for the years ended December 31, 2013 and 2012. We expressed an unmodified audit opinion on those audited financial statements in our report dated April 23, 2014.

The summary financial statements do not contain the statements of comprehensive income, changes in members’ equity, cash flows, and all the disclosures required by accounting principles generally accepted in the United States of America. Reading the summary financial statements, therefore, is not a substitute for reading the audited financial statements of PAHO/WHO Federal Credit Union.

Management’s Responsibility for the Summary Financial Statements

Management is responsible for the preparation of the summary financial statements on the basisdescribed in Note 1 of PAHO/WHO Federal Credit Union’s audited financial statements.

Auditor’s Responsibility

Our responsibility is to express an opinion about whether the summary financial statements are consis-tent, in all material respects, with the audited financial statements based on our procedures, which were conducted in accordance with auditing standards generally accepted in the United States of America. The procedures consisted principally of comparing the summary financial statements with the related information in the audited financial statements from which the summary financial statements have been derived, and evaluating whether the summary financial statements are prepared in accordance with the basis described in Note 1. We did not perform any audit procedures regarding the audited financial statements after the date of our report on those financial statements.

Opinion

In our opinion, the summary financial statements of PAHO/WHO Federal Credit Union as of and for the years ended December 31, 2013 and 2012, referred to above are consistent, in all material respects, with the audited financial statements from which they have been derived, on the basis described in Note 1 of the audited financial statements.

Baltimore, MarylandApril 23, 2014

101 E. Chesapeake Avenue, Suite 300, Baltimore, Maryland 21286410-583-6990 FAX 410-583-7061

Website: www.Rowles.com

Report of Independent Auditors





December 31, 2013 and 2012

These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements, including the statements of comprehensive income, cash flows, and changes in members’ equity, and notes to the financial statements, are available at the Credit Union office during normal hours of operation.

Condensed Statements of Financial Condition





ASSETS 2013 2012

Cash and Cash Equivalents $ 29,660,216 $ 32,780,229

Loans to members, net 91,186,450 79,653,933

Certificates of deposit in other financial institutions 19,885,000 18,154,000

Investment securities available for sale 52,648,985 61,559,557

NCUSIF Deposit 1,333,408 1,288,168

Perpetual Contributed Capital 853,850 853,850

Property and equipment 996,540 1,105,764

Prepaid expenses and other assets 4,135,970 2,445,399

TOTAL Assets $ 200,700,419 $ 197,840,900

LIABILITIES AND MEMBERS’ EQUITY 2013 2012

LIABILITIES 2013 2012

Members’ Share Accounts $ 165,204,921 $ 161,402,837Accrued Expenses and Other Liabilities 602,806 993,877

TOTAL Liabilities 165,807,727 162,396,714

MEMBERS’ EQUITY

Regular Reserves 11,000,965 11,000,965

Undivided Earnings 24,464,148 23,623,254

Accumulated Other Comprehensive Income Unrealized gain on investments 155,216 1,476,907 Unrealized pension valuation (727,637) (656,940) TOTAL Members’ Equity 34,892,692 35,444,186

TOTAL Liabilities and Members’ Equity $ 200,700,419 $ 197,840,900

These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements, including the statements of comprehensive income, cash flows, and changes in members’ equity, and notes to the financial statements, are available at the Credit Union office during normal hours of operation.

Years Ended December 31, 2013 and 2012

Condensed Statements of Income





2013 2012

INTEREST INCOME

Interest on loans $ 3,240,405 $ 3,406,708 Interest on investments 1,287,655 1,535,783 TOTAL Interest Income 4,528,060 4,942,491INTEREST EXPENSE Dividends on members’ shares 790,456 1,116,788

Net Interest Income 3,737,604 3,825,703

PROVISION FOR LOAN LOSSES - 514,697

Net interest income after provision for loan losses 3,737,604 3,311,006

NON-INTEREST INCOME Card services 272,094 259,458 Other 302,358 214,702 TOTAL Non-Interest Income 574,452 474,160

NON-INTEREST EXPENSE Compensation and benefits 1,419,085 1,499,678 Office occupancy 206,861 203,879 Office operations 428,492 444,578 Loan servicing 188,903 227,205 Professional and outside services 867,714 876,910 NCUSIF stabilization expense 106,673 122,376 Other 253,434 354,612 TOTAL Non-Interest Expense 3,471,162 3,729,238

NET INCOME $ 840,994 $ 55,928

Free Checking • Dividend-earning Checking

Savings & Investments • Savings Accounts • Special Savings Accounts • Certificates of Deposit • Individual Retirement Accounts

Affordable Loans & Refinancing • Vehicle Loans & Refinancing • MasterCard Platinum Credit Cards • Higher Education Loans • Personal Loans • Mortgage Loans • Home Equity Lines of Credit • Recreational Vehicle Loans • Overdraft Protection Lines of Credit

24/7 Banking / Going Green • Online Banking • Mobile Banking • Remote Deposit • eStatements and ePay

Banking Convenience Where You Live, Work & Travel• Over 28,000 Free ATMs nationwide through CO-OP Network

• CU Service Centers Shared Branching with over 5,000 shared credit union branches nationwide

• 24/7 Telebanking - manage accounts anytime, anywhere

Additional Resources & Services • eLerts - free email notifications concerning fraud, security

& other money saving news • Insurance

• Financial Counseling and Education

• Visa Gift Cards • Money Orders

• Wire Transfers • Notary Public

Benefits of Banking with Us with PAHO/WHO Federal Credit Union

Board of Directors

Luis Proaño ChairpersonIsabel Vigil Vice ChairpersonRicardo de la Torre TreasurerAna Maria Falquez SecretaryAntonio Hernandez DirectorEduardo Kalivoda DirectorFederico Ortiz Director

Luis Velásquez Director

Supervisory Committee

Tyson Kidder ChairpersonDeanna Ner-Mardirossian MemberGloria Morales MemberChristina Marsigli MemberSylvia Schultz Member

Executive Staff

Miguel Boluda, Jr. Chief Executive OfficerShaun Ghaffouri Vice President of FinancePatricia V. Ilijic Executive Vice PresidentAraceli Iraheta Director of Compliance & Risk ManagementMarella Nardotti Director of Marketing & Administrative Services

Staff

Rafael Aneiva Yaribeth HartJairol Arias Gisella LanzoneEsteban Arze Alberto MenesesSoledad Casals Belinda VasquezZark Lucas Puh Wilbur Gil


Branch: Columbia Plaza, 506 23rd Street, NW 8am to 3pm; M, T, Th & F 8am to 1:30pm; WednesdayWebsite: www.PAHOfcu.org

E-Mail: [email protected]: 202-974-3453 1-866-724-6328 (toll-free/gratuito)Fax: 202-659-4513Tele-BANK: 202-659-4517Mailing Address: 2112 F Street, NW, Suite 201 Washington, DC 20037-2761




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Growth I Personalized Service I Technology · Growth I Personalized Service I Technology. Dear Members: ... threats by immediately reissuing compromised cards and adopting initiatives