“We, the undersigned, have reviewed these financial statements and, basedon our knowledge, certify they fairly represent, in all material respects,Point Loma Credit Union’s financial condition and results of operations.”
Theodore H. Dennis, President / Chief Executive Officer
STATEMENT OF INCOME(Year Ending December 31, 2014)
INTEREST INCOMEInterest from Loans $11,595,029Investment Income 1,131,523Total Interest Income $12,726,552
INTEREST EXPENSEDividends on Members' Shares $593,059Interest on Borrowed Money 8,925Total Interest Expenses $601,984
Net Interest Income $12,124,568Provision for Loan Losses $(298,971)Net Interest Income after Loan Loss Provision $12,423,539Other Income $4,951,699Net Income before Operating Expenses $17,375,238
STATEMENT OF RETAINED EARNINGSBalance December 31, 2013 $31,230,564Net Income 2014 2,298,907Balance December 31, 2014 $33,529,471
Federally insuredby NCUA
Treasurer’s Report –2014In 2014, Point Loma Credit Union recorded positive net income of slightly over$1.7 million during the year after having earned just under $1.0 million in 2013.The credit union retained its classification of “well-capitalized”. Demand for loans inmany sectors of our market remained relatively strong, which kept the recovery forPLCU at a modest pace and on an upward trajectory throughout the year. Net loanbalances, including the allowance for loan losses, grew by $51.8 million during theyear — an increase of 24%. Despite the strong growth in loan balances, the timingof the growth and the generally declining yields caused loan interest income to stayrelatively flat — actually declining by about $0.1 million during the year. The effectwas further exacerbated by continued low market yields on investments, althoughgreater investment balances caused investment income to grow by $0.5 millioncompared to 2013. With a decline in the total cost of funds of $0.4 million during2014, the overall result was an increase in net interest income of $0.4 millioncompared to last year. Last year’s trend of declining consumer loan loss ratioscontinued strongly throughout 2014, and aggregate business loan impairments alsodeclined dramatically. As a result, total 2014 provision for loan loss expense declinedby nearly $1.7 million compared to 2013. Operating expenses remained relatively flat,increasing by just over $0.1 million during the year.The increase in the loan portfolio during 2014 was due mostly to a reinvigoration inreal estate lending. Real estate loan totals — including home equity lines of creditand loan pools purchased from other participating credit unions — increased bymore than $44 million. The consumer loan category grew by $3.5 million in 2014,which was the second consecutive year of growth in that sector. Share totalsdecreased by nearly $0.8 million in 2014, which is a 0.2% decline, and ended theyear at a total of $398.6 million. Like share balances, total assets changed by lessthan half a percent during the year, ending the year up by less than $0.2 million over2013. Core deposit balances in regular share and checking accounts grew stronglyduring the year and term deposits declined. This is the seventh consecutive year forstrong core deposit growth, which indicates that a growing number of memberscontinue to use PLCU as their primary financial institution. This remains a healthy,recurring sign of growing member usage of the credit union’s services.The net income figure for 2014 was just under $2.3 million, which is a return onaverage assets ratio of 0.53%. The positive earnings, coupled with only nominalgrowth in assets caused our net worth ratio to grow to 7.67% at the end of 2014from 7.15% at the end of 2013. This net worth ratio classifies PLCU as a well-capitalized credit union.With the more severe challenges of the past seven years now seemingly behind us,PLCU is steadily growing its capital reserves and implementing revitalized operatingplans in order to persevere. We will continue to offer competitive rates to bothborrowers and savers, and we will provide first-rate products and services to ourentire membership. The Board of Directors, staff, and I look forward to helping PLCUcontinue to grow and prosper for many years to come.
Thomas A. KnightTreasurer
The nation’s economy continues to grow stronger, and consumers areregaining trust in it once again. Our members have the confidence to carryout plans they may have delayed during the recession. As they moveforward, they have a solid financial partner by their side: Point LomaCredit Union.
Since 1948, we have been committed to helping our members reach theirgoals. The employees at San Diego’s Navy Electronics Laboratory Centerwho formed this credit union wanted to ensure that each member wouldalso be an owner, with a say in how the operation was managed.Most important, they placed greater importance on value and servicethan making profits. In short, the cornerstone of the credit union was“people helping people,” and that principle remains as strong today.
A more robust economy
You don’t have to look far to see signs of an improving economy. Thenational and local economies are improving, as shown by a variety ofmeasurements. A report from the Labor Department said job openingsnationally rose 2.9% to 4.97 million in November 2014, the most sinceJanuary 2001. Employers are filling many of the jobs lost during therecession, leading to increased consumer confidence in their job securityand the overall economy.
The local job outlook is bright, with 22% of San Diego businesses sayingthey plan to hire more workers, compared to only 3% who anticipatelayoffs. That has helped reduce the county’s unemployment by 1.6%, downto a rate of 5.8%, the lowest since 2008.
Investment in new construction also bolsters employment and confidence.Rider Levett Bucknall, a leading consultant, forecasts that construction willincrease by 10% in 2015, almost double the rate in 2014. And home pricesrose 5.5% last November compared to the same month in 2013, givinghomeowners more equity and indicating increased interest in home buyingand building.
Equally important, our local economy is becoming more diversified.Our military and manufacturing employment bases remain stable, withgrowth also occurring in the technology, service, biotech, healthcare andtourism segments.
Dramatic visual indicators of growth can be seen downtown, asconstruction cranes dot the skyline. They demonstrate that constructionprojects that had been put on hold during the recession are nowproceeding.
What this means for Point Loma Credit Union
As the saying goes, a rising tide lifts all boats. The return of prosperityshould lead to increased demand for loans, as members decide to buyhomes, pay off high-cost debt and replace aging vehicles, as well asincreased use of deposit products.
One way we helped members was with low-cost loans for installing solarsystems in their homes. Demand for solar power increased by 30% lastyear, reaching record levels. We encouraged members to lower their powerbills by positioning our home equity loans and Green Living Loans aspractical ways to install these energy-efficient systems.
In the same way, our Green Auto Loans give members an incentive to buyhybrids or other fuel-efficient vehicles.
Our members have responded well to going green. Last year, we funded$2.2 million in Green Living Loans and $4.3 million in Green Auto Loans.
As a thank you for going green, since 2008, each Green Living or GreenAuto Loan borrower had a tree planted in his or her name in an area beingreforested.
We’ve seen an increasing number of moving trucks and “Sold” signs athomes around our branches. Members feel the time is right to move up,leave an empty nest or buy a first home. Through our First-Time HomeBuyers program, we help members purchase homes by offering them a ratebreak during the critical first few years.
With the improved local economy, members feel confident enough to starta business or grow their current ones with our Business Services products.Our commercial loans for investment properties enable members to boosttheir income while investing in the community.
Membership growing too
As a business, we count on our members to help us grow. We had twosuccessful membership referral campaigns, adding 591 new members.
One of the reasons people join PLCU is to take advantage of our UltraRewards checking account. It pays dividends and rebates ATM fees, makingit a welcome change from fee-laden bank checking accounts. We havemore free ATMs nationwide than any bank, as well as 24-hour accessservices including online and mobile banking.
Guiding youth to a stronger future
Some of our younger members have had PLCU accounts for several years,but they’re new when it comes to handling money. Our youth programshelp young members establish good money management skills throughgraduated financial lessons and age-appropriate services. In addition,we provide free financial podcasts, and access to brass magazine, anaward-winning, peer-produced online publication about money.
We also sponsor Money Smart Week in conjunction with the San DiegoPublic Library, and Career Fairs at local colleges, giving us an opportunityto interact with students one-on-one and guide them to soundfinancial choices.
Speaking of colleges, since 1998, we have awarded scholarships totaling$222,500 in value to 51 college-bound young members. Our winnerscombine academic excellence with a commitment to their communities. Forexample, Preetam Soundararajan, one of 2014’s winners, says he wants touphold a tradition learned from his Indian immigrant parents of leaving alegacy. His legacy will be in the medical application of nanotechnology, forwhich he is studying at Harvard. Catherine Wu is also at Harvard, and willfollow her parents and older brother into the sciences, while ChandlerRogers is majoring in engineering at the University of San Diego.
Chairman and President’s Report Supervisory Committee ReportOur community roots run deep
Students are only one part of our community. You’ll find us at more than200 local events each year, including art exhibits, fundraisers for healthcareprograms, and home improvement shows. We actively support women’snetworking groups, veterans organizations, and cultural events.
One of our important community outreach initiatives is bilingual financialeducation. We provide bilingual seminars on important topics such asbudgeting, understanding credit reports, and buying a home.
Looking ahead
In addition to helping our members learn, we always strive to learnwhat our members want. We continually evaluate products and servicesto determine which would benefit our members by increasingconvenience, offering greater security, and providing easier access to theirPLCU accounts.
As part of our commitment to enhancing remote delivery, we’re introducinga new, streamlined website which will include a live chat capability and beoptimized for all the devices you use.
We will launch EMV chip cards for our Visa Platinum Card. EMV cards havea computer chip embedded on the front which serves as a deterrent tocounterfeiting and gives your cards greater acceptance internationally.
And as if your smartphone wasn’t already indispensible, with the upcomingRemote Image Capture, you’ll be able to deposit checks by sending uspictures of them.
We are also excited about offering Apple Pay. Not only will it enable you topay for purchases using your iPhone, it offers greater security as its TouchID feature uses your fingerprint to verify your identity and speed yourtransaction.
PLCU embraces innovations, sets new standards, and offers superiorproducts, quality service and untiring community support. On behalf of theBoard of Directors, Supervisory Committee, management and staff, thankyou for being part of Point Loma Credit Union.
Respectfully submitted,
Jeffrey M. GoeckeChairman, Board of Directors
Theodore H. DennisPresident /Chief Executive Officer
The Supervisory Committee currently comprises six volunteers who areelected by the membership of Point Loma Credit Union (PLCU). TheSupervisory Committee represents the membership’s interests by ensuring:
• Assets are properly safeguarded;
• Policies and procedures are in place;
• Internal controls are effective;
• Applicable laws and regulations are followed; and
• The credit union’s financial condition is fairly presented inaccordance with generally accepted accounting principles.
The Supervisory Committee engaged the certified public accounting firm ofOrth, Chakler, Murnane and Co., CPAs, to conduct a routine verification of asample of member accounts as of December 31, 2014, and to perform anindependent audit of PLCU’s December 31, 2014, financial statements.
Additionally, the Supervisory Committee engages Ms. Karen Olason (PLCU’sDirector, Internal Audit and Compliance) to assist with its ongoing oversightresponsibilities. Internal audit duties involve daily monitoring of PLCU’sinternal control environment and compliance activities, as well asperforming periodic audits of the credit union’s operations. Ms. Olasonmeets with the Supervisory Committee regularly to report observations andrecommendations.
Based upon the audits conducted, the Supervisory Committee is pleased toreport that the financial statements presented are a fair and accurateassessment of PLCU’s financial position as of December 31, 2014. Not onlyis PLCU financially sound, but it operates within a strong internal controlenvironment that also ensures compliance with applicable laws andregulations.
The Supervisory Committee extends its gratitude to the members, staff, andelected officials of PLCU. As PLCU continues to provide members with asafe and sound financial environment, we look forward to serving youthroughout 2015.
