Annual Report 2014 Federally Insured by NCUA
2 Museum of Man, Balboa Park
FEEL THE TEAL MISSION STATEMENT Provide sound financial services to our members any where, any way, any time. S an Diego County Credit Union lived its Feel the Teal philosophy this year. Feel the Teal is our sense of pride and passion for our brand, our work and the community. It is a guiding principle to encourage doing what s best for the credit union and our members each and every day. Feeling the Teal can be as simple as greeting a member with a smile to going the extra mile to ensure a member s special request is taken care of right away. We extend our Feel the Teal philosophy beyond the walls of our offices and branches and outward into the community by engaging in activities that enhance the lives and financial health of all individuals to help them live better.
4 The Hotel Del Coronado
2014 ANNUAL REPORT Introduction 3 Table of Contents 5 Board of Directors 6 Chair s Report 7 President s Report 9 Treasurer s Report 10 Supervisory Committee s Report 11 Financials 12 2014 In Review 14 Feel the Teal in 2015 17 In the Community 18 Member Services 21 Branch Locations 23
2014 BOARD OF DIRECTORS Teresa Halleck President & CEO Steven Reuel Chair Patricia Honeycutt Vice Chair Laurie Levenson Secretary/Treasurer Ilan Awerbuch Director Richard Collins Director Shirley Jackson Director Christopher Hart Director 6
CHAIR S REPORT In 2014, SDCCU was again recognized by readers of U-T San Diego as the BEST Credit Union. This marks a significant milestone for our organization the 15th straight year SDCCU has received this honor. SDCCU was also voted BEST Auto Loan Provider, BEST Mortgage Provider, BEST Financial Planning and BEST Place to Work. It was also another year of growth, expansion and positive results for SDCCU. We opened new branches in North Park, San Ysidro, the Balboa/ Genesee area and La Costa to provide greater accessibility of our award-winning products and services to new and existing members in diverse areas. Steven Reuel SDCCU fortified member security and conveniences with a number of new products and services. Notably, SDCCU launched EMV chip-enhanced Visa credit cards. The new EMV chip cards provide cardholders with additional security and protection against card fraud. As more retailers make the move to EMV chip card readers, our members will be ready. Additionally, online loan applications were streamlined to offer instant loan approval and remote digital signing of loan documents. The credit union also formed an exclusive partnership with Mogl to offer members up to 25 percent cash back with SDCCU Dining Deals. By easily enrolling their SDCCU credit and/or debit cards, members get cash back deposited into their SDCCU account just by dining at participating merchants. In addition to unique cash back programs, SDCCU continued to find new ways to save our members money. Through a new partnership with TrueCar, SDCCU members can receive guaranteed savings on their next vehicle purchase. This convenient selfservice car buying option is a great addition to our existing concierge auto buying service. 2015 is poised to be another successful year for San Diego County Credit Union. I look forward to seeing continued growth and success as the team at SDCCU delivers new products and services to help make our members lives easier and help additional members realize their financial goals. 7
8 San Diego Skyline
PRESIDENT S REPORT Teresa Halleck Feeling the Teal means going beyond traditional banking to offer SDCCU members more. During 2014, SDCCU was among the first institutions in San Diego to offer EMV chip-enhanced credit cards for increased card security. To give members more peace of mind, SDCCU implemented optional fraud text alerts to communicate possible card fraud to enrolled members. The popular SDCCU Live Chat service was made available within Internet Branch online banking to give members easier access to SDCCU representatives while looking at their current account information. These are just a few of the many convenient products and services SDCCU added in 2014. SDCCU s additional offerings combined with a focus on delivering WOW service led the credit union through another year of recognized success. In addition to being voted BEST Credit Union for the 15th year in a row in the U-T San Diego Readers Poll, the San Diego Business Journal recognized SDCCU as a 2014 Cybersecurity Awards finalist and a San Diego s Healthiest Companies Awards 2014 finalist. SDX, San Diego s premiere marketing association, honored SDCCU as the 2014 Brand of the Year and the Society for Human Resource Management presented SDCCU with a 2014 Workplace Excellence Award. It s clear that Southern California responded positively to SDCCU s ongoing enhancements, which is most evident in the 2014 numbers. SDCCU s membership number increased to 279,813 and assets grew to $6.7 billion. As real estate values rose and the economic outlook improved, SDCCU was able to decrease our allowance for loan losses and invest more in new offerings. In 2015, SDCCU remains committed to embracing its Feel the Teal spirit to bring forth innovative ideas to develop new products and services that add convenience and security to our members financial lives. We value each member and look forward to being a financial partner for years to come. 9
TREASURER S REPORT It is with great pleasure that I report another successful year for SDCCU. Total membership increased by 8.44 percent to 279,813 members and assets grew 6.04 percent to $6.7 billion. SDCCU achieved a strong 1.46 percent Return on Assets. The SDCCU Board of Directors and management team maintained prudent practices to ensure that SDCCU remains a healthy and well-capitalized credit union. The net worth to asset ratio as of December 31, 2014 was 13.45 percent; well above the 7 percent minimum capital level for well capitalized credit unions established by the National Credit Union Administration. Laurie Levenson The Board of Directors is committed to ensuring that SDCCU continues to show positive numbers and remain San Diego s BEST Credit Union for years to come. SDCCU will continue to invest time in ensuring that we offer the best in financial services. I look forward to another successful year in 2015. 10
SUPERVISORY COMMITTEE S REPORT Christopher Hart It was my pleasure to serve as the Supervisory Committee Chairman for most of 2014. The SDCCU Supervisory Committee is comprised of volunteer members who independently evaluate the strength and soundness of SDCCU s operations and activities. The Committee s primary focuses are to ensure that an independent audit is performed annually, the account balances of the membership are verified, adequate policies and procedures exist to protect the credit union s resources, governing regulations and policies and procedures are properly followed and that the financial statements reflect SDCCU s results of operation. The Supervisory Committee collaborates with internal auditors, the Board of Directors, the President and CEO and employees of SDCCU to ensure that the credit union s assets are safeguarded by upholding policies, procedures and regulatory requirements. The Supervisory Committee retained the services of national CPA firm, McGladrey & Pullen LLP, to perform an audit of SDCCU s financial statements. McGladrey & Pullen LLP s annual audit of SDCCU s financial statements ensures that they represent fairly, in all material respects, the financial position and results of operations of SDCCU in conformity with U.S. Generally Accepted Accounting Principles. The Supervisory Committee has again determined that SDCCU is a strong financial institution. We thank the Board of Directors, management and staff for their cooperation and commitment to sound financial practices. 11
2014 FINANCIALS Distribution of Deposit Portfolio 40 35 30 25 20 15 10 5 0 Number of Branches 21 2004 21 2004 27 2009 27 2009 36 2014 36 2014 Non-Member Deposits 4% Certificates 23% Checking 17% Vehicle Loans 19% Business Real Estate Loans 8% Distribution of Loan Portfolio Consumer Real Estate Variable 38% Savings 11% Money Market Shares 37% IRAs 8% Credit Cards 3% Consumer Real Estate Fixed 32% Deposits (in billions) $5.76 $4.23 $2.45 2004 2009 2014 Gross Loans (in billions) $4.12 $3.58 $1.83 2004 2009 2014 Assets (in billions) $6.73 $4.86 $2.79 12 2004 2009 2014
Consolidated Statement of Financial Condition December 31, 2014 (unaudited) Assets Cash and cash equivalents $316,469,140 Assets in process of liquidation $314,802 Accounts receivable $121,353,865 Investments Available-for-sale $182,038 Held-to-maturity $1,858,347,739 Non-SFAS 115 $48,175,000 Loans and leases to members, net $4,077,214,695 Accrued interest receivable $12,731,062 Property and equipment $53,482,280 NCU Share Insurance Fund deposit $50,431,378 Other assets $193,014,806 Total Assets $6,731,716,805 Liabilities and Members Equity Liabilities Members shares $5,459,976,336 Non-member deposits $300,000,000 Borrowed funds $25,000,000 Accrued expenses and other liabilities $41,020,351 Total Liabilities $5,825,996,687 Members Equity Retained earnings, substantially restricted Accumulated other comprehensive income $905,714,505 $5,613 Total Members Equity $905,720,118 Consolidated Statement of Income and Comprehensive Income December 31, 2014 (unaudited) Interest Income Interest on loans and leases to members Interest on investments and cash equivalents $144,166,526 $20,422,595 Total Interest Income $164,589,121 Interest Expense Dividends on members shares $26,403,168 Interest on borrowed funds $1,249,921 Total Interest Expense $27,653,089 Net Interest Income $136,936,032 Provision for Loan and Lease Losses ($12,430,000) Net Interest Income After Provision for Loan and Lease Losses Non-Interest Income $149,366,032 Fees and other income $59,810,149 General and Administrative Expenses $209,176,181 Salaries and benefits $47,803,776 Other general and administrative expenses $2,526,079 Professional and outside services $15,920,398 Occupancy $28,598,524 Marketing, promotional and dues $8,880,192 Loan processing/servicing $9,971,407 Total General and Administrative Expenses $113,700,376 Total Liabilities and Members Equity $6,731,716,805 Net Income $95,475,805 13
2014 IN REVIEW Primary Members 161,268 2004 64,010 279,813 207,491 2009 111,967 2014 Internet Branch Users 173,562 In addition to providing superior member service, Feel the Teal means ensuring that SDCCU members have convenient access to the best in financial services. As a result, SDCCU opened four new branches this year in North Park, San Ysidro, the Balboa/Genesee area and La Costa. The Escondido Branch moved to a more convenient location and the Pacific Beach Branch moved into a temporary location to continue to be available for members during the year-long remodel of its permanent location s shopping center. This expansion brought SDCCU to 36 total branch locations. To complement its physical growth and convenience, SDCCU expanded its online banking services. SDCCU s secure live chat service was added within Internet Branch online banking to give members access to real-time assistance for account-specific questions. Pending transactions were added to the account screens to give members a more complete picture of transactions that will be coming out of their account balance. A new form was added to simplify the process for members to notify SDCCU about their upcoming travel plans, allowing SDCCU to better monitor their account for fraudulent charges. Fraud text alerts were also made available, allowing members to respond to real-time text messages regarding possible card fraud. 14 2004 2009 2014 Bill Payer Plus Users 115,490 36,987 16,211 2004 2009 2014 SDCCU was the only area financial institution to partner with Mogl to provide members up to 25 percent cash back on their dining purchases at participating restaurants through SDCCU Dining Deals. The cash back is deposited hassle-free into the member s designated SDCCU account. SDCCU expanded the popular SDCCU Mobile Deposit service to business members, giving them a more convenient way to deposit checks. SDCCU also launched a new business bill pay tool that gives business members greater control over their bill payment process. Business accounts can now create unique logins, delegate tasks and create custom audit reports. To help business accounts process payments, SDCCU began offering Square, Clover and Pogo> terminals.
SDCCU enhanced its card services to make member transactions more secure. This included offering the updated Visa Checkout service, allowing members to enter in their shipping and credit card information once and just enter their Visa Checkout login at participating online merchants going forward. SDCCU was among the first area financial institutions to offer EMV chip-enhanced credit cards. The new chip-enhanced cards allow cardholders to pay at select U.S. merchants and international merchants, where chip cards are the standard. Plus, the chip provides strong security and protection against fraud. The process of applying online for an auto loan, personal loan or credit card was streamlined to easily collect the applicant s information, provide instant loan decisions and allow for remote signing of loan documents. Even with all of these convenient online services, many members prefer to visit a physical branch. We made this even easier with online appointments. Members can now select one of our more than 35 branch locations, pick a preferred time and a SDCCU financial services representative will be ready to assist. SDCCU s convenient FREE auto buying service was enhanced to provide members guaranteed savings online through a partnership with TrueCar. This service provides members with up-front dealer pricing for new and used vehicles. The online tool will provide members with a Guaranteed Savings Certificate before heading out to the dealer. SDCCU expanded the popular 5/5 ARM to create the 5/5 Power Purchase Loan. This loan offers members a low rate with very little out of pocket. With as little as 10 percent down, the loan offers no closings costs and SDCCU pays the mortgage insurance. Beneficial loan programs like these made SDCCU the second largest mortgage producing credit union in the Western region, according to Credit Union Times. SDCCU proudly supported over 75 non-profit organizations and over 180 community events and activities. SDCCU events raised over $33,500 for the Make-A-Wish Foundation of San Diego, over $20,000 for the San Diego Humane Society and SPCA and more than $11,000 each for Rady Children s Hospital and the National MS Society, Pacific South Coast Chapter. To help protect the sensitive information of members and the community, SDCCU held three shred days in 2014. The largest event, the SDCCU Super Shred Event, earned SDCCU a second Guinness World Record for the most paper collected in a 24-hour period. To help make San Diego a safer, healthier and thriving community, SDCCU became a Live Well San Diego Partner. SDCCU is proud to be the first financial institution to receive this designation! In 2014, SDCCU was recognized for our service, security and workplace accomplishments. These awards included being voted BEST Credit Union in the U-T San Diego Readers Poll for the 15th straight year. SDCCU was also voted BEST Auto Loan Provider for the inaugural year in this category and for the 5th year straight, BEST Mortgage Provider, BEST Financial Planning and BEST Place to Work. San Diego CityBeat and Gay San Diego also recognized SDCCU as the BEST Credit Union. SDX honored SDCCU as the 2014 Brand of the Year in the Brand Diego Awards. SDCCU earned three honors from the San Diego Business Journal, including a 2014 Cybersecurity Awards finalist, San Diego s Healthiest Companies Awards 2014 finalist and Ashlee Micale won CFO of the Year. Rounding out the honors, SDCCU earned a 2014 Workplace Excellence Award from the Society for Human Resource Management. 2014 was another great year for SDCCU as the Board of Directors, employees and partners brought the Feel the Teal philosophy to life to improve convenience and deliver sound financial services to help all members live better. 15
16 USS Midway, San Diego Bay
FEEL THE TEAL IN 2015 2015 is expected to be an abundant year of growth and enhanced products and services. SDCCU will continue to Feel the Teal by expanding into new areas including Hillcrest and National City. Internet Branch online banking and SDCCUdirect will be updated to demonstrate that they ve been touched by the Feel the Teal spirit. FICO Scores will be available for members with a current loan to view within Internet Branch, helping members stay aware of their financial health. Business accounts will be offered My Virtual Strong Box, which will enable them to exchange documents with SDCCU securely through online banking. New features will also be added to SDCCU s mobile banking app. An app for Android tablets will be added and members will have the option to view a quick balance snapshot. SDCCU will be offering multiple mobile payment options which include Apple Pay and a custom solution. SDCCU will offer EMV chip-enhanced debit cards in addition to the currently available EMV chip-enhanced credit cards. This will ensure SDCCU members are ready to pay securely as additional U.S. retailers move to chip card readers. 17
IN THE COMMUNITY Supporting the community is a key component of SDCCU s Feel the Teal philosophy. SDCCU continues to support over 75 non-profits each year. This includes title sponsorships like the San Diego County Credit Union Walk MS, San Diego County Credit Union Festival of Arts in North Park, San Diego County Credit Union Poinsettia Bowl in addition to the over 180 community events and/or activities SDCCU participated in this year. The result of SDCCU s support is a huge impact on the areas we serve. 75 non-profits supported 100 branch events 180 events SDCCU is focused on supporting community events and activities 15,000 meals donated to Feeding America, San Diego, courtesy of SDCCU Dining Deals $3,285 donated to SDCCU s Giving Tree, which helped 9 SDCCU families comprised of 35 people, including 21 children SDCCU belongs to over 30 Chambers of Commerce and community business associations Each of SDCCU s branches participated in one or more community events in 2014 18 $4,269 donated by employees to the annual United Way campaign
First financial institution to be designated a Live Well San Diego Partner, helping to make San Diego a safer, healthier and thriving community. SDCCU works to create a safer San Diego by helping the community properly dispose of sensitive information. That s why we held 3 shred events this year that collected, shredded, and recycled 531,802 pounds of paper. So much paper was collected that we won our 2nd Guinness World Record for the most paper collected in a 24-hour period. We re thrilled to have saved the community $58,015. 2,464,044 million television viewers and 33,077 attendees watched the Navy Midshipmen take on the SDSU Aztecs. This event raised $33,500 for Make-A-Wish Foundation of San Diego and helped to solidify SDCCU as a pillar in the San Diego community. During the course of our 15-year partnership, SDCCU has raised more than $1 million, including $11,637 raised at this year s event. Team SDCCU represented the credit union with 208 walkers. SDCCU is proud to have raised more than $1.5 million over the course of our 8-year partnership, including $11,888 raised at this year s Rady Children s Walk at SeaWorld by nearly 100 walkers, Kids NewsDay, and SACTOWN10 events. Children s Miracle Network graciously matched $10,388 in donations. SDCCU also donated 6 ipads and collected 1,019 toys. SDCCU raised over $22,045 for the San Diego Humane Society and SPCA in 2014. 19
20 La Jolla Cove
MEMBER SERVICES ACCOUNTS Certificates Checking IRAs: Traditional, Roth and Coverdell Money Market Savings teenfirst ACCOUNT SERVICES Courtesy Clearing Debit Card Overdraft Service Direct Deposit Fly Miles Plus Reward Program Overdraft Protection SDCCU Cash Rewards Visa Visa Debit Cards BUSINESS SERVICES ADP Payroll Services Certificates Checking Commercial Real Estate Loans Equipment Loans First Data Merchant Card Services Mobile Banking Money Market Savings SBA 504 Loans SDCCU Mobile Deposit Sweep Savings Vehicle Loans and Leases Visa Credit and Debit Cards Square, Clover and Pogo> 2015 San Diego County Credit Union Equal Housing Opportunity Federally insured by NCUA Apple Pay is a registered trademark of Apple, Inc. 1 Auto sale and brokerage services provided by SD Auto Sales/Leasing. VEHICLE LOANS AND LEASES Auto Leases Auto Loans Motorcycle Loans Recreational Sports Vehicle Loans RV/Boat Loans Summer Saver Auto Loan HOME AND PERSONAL LOANS Home Equity Loans Home Equity Lines Home Loans Signature Loans Visa Credit Cards Share or Certificate Secured Loans eservices enotices, etax Forms and ereceipts estatements Email and Text Alerts External Transfers Internet Branch Online Banking Live Chat Loan Applications Mobile Banking Mobile Live Chat MoneyTracker New Account Applications Online Bill Pay - Bill Payer Plus Personal Finance Manager Popmoney Person-to-Person Payments SDCCU Dining Deals SDCCU Mobile Deposit SDCCU Paybacks Telephone Banking INSURANCE Accidental Death and Dismemberment Insurance Mechanical Breakdown Insurance PAYMENT AND PRODUCT PROTECTION Credit Life Protection Credit Disability Protection Disability Payment Protection Guaranteed Asset Protection Life Payment Protection LoJack Unemployment Payment Protection ADDITIONAL PRODUCTS AND SERVICES Auto Buying Service 1 Educational Seminars Financial Counseling Member Discount Program Real Estate Services Safe Deposit Boxes SDCCU Cash Card Prepaid SDCCU Investment Services 2 TrueCar TurboTax Online sm Visa Checkout Visa Gift Cards ACCESS 24/7 Online and Mobile Banking 36 Full-Service Branch Locations Convenient Weekday Hours, with most branches open Saturdays from 9 a.m. to 4 p.m. 30,000 Surcharge-FREE CO-OP ATMs 2 Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. Insurance products offered through LPL Financial or its affiliates. San Diego County Credit Union and SDCCU Investment Services are not registered broker/dealers and are not affiliated with LPL Financial. Not NCUA Insured No Credit Union Guarantee May Lose Value 21
22 San Diego Coastline
BRANCH LOCATIONS SAN DIEGO COUNTY BALBOA/GENESEE 5407 Balboa Avenue Suite 420 San Diego, CA 92111 CARLSBAD 2530 El Camino Real Carlsbad, CA 92008 CARMEL MOUNTAIN 12330 Carmel Mountain Road Suite C-1 San Diego, CA 92128 CHULA VISTA 303-1 H Street Chula Vista, CA 91910 DEL MAR 12980 Carmel Country Road Suite C-100 San Diego, CA 92130 EASTLAKE 2280 Otay Lakes Road Chula Vista, CA 91915 EL CAJON 312 West Main Street El Cajon, CA 92020 ENCINITAS 501 North El Camino Real Encinitas, CA 92024 ESCONDIDO 1875 Centre City Parkway Suite F Escondido, CA 92025 ESCONDIDO CIVIC CENTER 150 East Valley Parkway Escondido, CA 92025 HILLCREST COMING SOON 502 University Avenue Suite 500 San Diego, CA 92103 KEARNY MESA 5500 Overland Avenue Suite 190 San Diego, CA 92123 LA COSTA 7630 Via Campanile Suite 138 Carlsbad, CA 92009 LA JOLLA/TORREY PINES 3366 N. Torrey Pines Court Suite 100 La Jolla, CA 92037 LA MESA 8555 Fletcher Parkway Suite 101 La Mesa, CA 91942 MIRA MESA 6705 Mira Mesa Boulevard San Diego, CA 92121 MISSION VALLEY 2245 Fenton Parkway Suite 107 San Diego, CA 92108 NATIONAL CITY COMING SOON 2525 East Plaza Boulevard National City, CA 91950 NORTH PARK 3180 University Avenue Suite 100 San Diego, CA 92104 OCEANSIDE 625 College Boulevard Oceanside, CA 92057 PACIFIC BEACH 1664 Garnet Avenue San Diego, CA 92109 POINT LOMA 1004 Rosecrans Street San Diego, CA 92106 POWAY 14099 Stowe Drive Poway, CA 92064 RANCHO BERNARDO 11965 Bernardo Plaza Drive Suite 169 San Diego, CA 92128 RANCHO PENASQUITOS 13179 Black Mountain Road Suite 3 San Diego, CA 92129 SAN DIEGO 5555 Mildred Street San Diego, CA 92110 SAN MARCOS 790 West San Marcos Boulevard San Marcos, CA 92078 SAN YSIDRO 2036 Dairy Mart Road Suite 130 San Ysidro, CA 92173 SANTEE 286 Town Center Parkway Santee, CA 92071 SOLANA BEACH 665 San Rodolfo Drive Suite 110 Solana Beach, CA 92075 SORRENTO VALLEY 10715 Sorrento Valley Road San Diego, CA 92121 SPORTS ARENA 3455 Sports Arena Boulevard Suite 120 San Diego, CA 92110 UTC REGENTS 7708 Regents Road San Diego, CA 92122 VISTA 1475 West Vista Way Vista, CA 92083 RIVERSIDE COUNTY MURRIETA 25165 Madison Avenue Murrieta, CA 92562 TEMECULA 31693 Temecula Parkway Temecula, CA 92592 TEMECULA NORTH 29097 Overland Drive Temecula, CA 92591 ORANGE COUNTY LAGUNA NIGUEL 32341 Golden Lantern Suite A Laguna Niguel, CA 92677 23
Equal Housing Opportunity Federally Insured by NCUA