Banking for Everyone
SM
Annual Report
2013
Message From the
Chairman and President
Dear Valued Members:
Mobile Banking is a popular aspect of the eServices available to
We are happy to report 2013 was an excellent year for
our members. A total of 32,576 Schools members now access
Schools Financial Credit Union. Not only did we enjoy a year of
their Credit Union accounts via their smartphone or other
strong financial performance, we also made significant
mobile device — that’s almost 1/3 of our membership. During
enhancements to our product and service offerings.
2013, we made several enhancements to our Mobile Banking
One of our favorite mottos here at Schools is “Banking for
Everyone.SM” Anyone who lives, works, worships or attends
school in Sacramento County or its nine surrounding counties is
eligible to join our Credit Union. Membership is also available to
most educators in California and to relatives of current members.
Banking for Everyone represents more than just our field of
apps to increase convenience and ease of use. Clearly, our most
popular mobile feature was MobileCheck.SM Introduced in late
2012, MobileCheck enables members to deposit checks using
their Android or Apple* device. By year-end, members had used
MobileCheck to deposit 64,867 checks totaling $30,752,586 into
their Schools accounts.
membership; it is both a challenge to our organization and a
Staying focused on Banking for Everyone, we know our
pledge to our members. At Schools, we understand that each
branches and ATMs are also important to our members. In 2013,
member is a unique individual with a personal approach to
we completed installation of an entire fleet of new-generation
managing their finances. This means we need to always strive to
ATMs. Our new machines no longer require envelopes for
provide a variety of quality products and services that are both
deposits. Members can set preferences for language and “fast
convenient and affordable. We also know we must keep pace
cash” amounts. ATM receipts now include images of deposited
with changes in our industry, our society and our community.
checks and bill count by denomination. In our branches, we
In modern times, enhancements to member service are often
achieved through emerging technology. Our website, our online
banking system and our mobile apps are all services we refer to
as eServices. This is an important area of focus as we make every
effort to meet growing member demand. Last year the
Credit Union made a major leap forward by introducing
SchoolsOnline,SM our state-of-the-art online banking system.
SchoolsOnline enables our members to access their Schools
accounts 24 hours a day from almost anywhere. From a personal
computer, smartphone or other mobile device, members can
view all of their accounts and transactions, transfer funds in
multiple ways, pay bills, create budgets, set up email or text
message eAlerts for their accounts and more. Member-oriented
continue to make upgrades to enhance the member experience.
In 2013, we renovated our popular Laguna Branch, and more
branch renovations are planned for 2014. But just as important,
we pay close attention to the interactions between members
and Schools staff. We conduct ongoing surveys to measure
member satisfaction. The surveys ask members to grade us on a
scale of one to five, with five being excellent. In 2013, the
average member score was 4.71, which shows our members
think our service is outstanding. We also measure service
through an independent “mystery shopper” agency. During 2013,
the Credit Union averaged a very high 95% member satisfaction
rating. Our average rating was higher than the average for our
Sacramento peers.
videos and FAQs explaining SchoolsOnline system features are
Banking for Everyone also means providing a variety of
easily accessible on our website. By the end of 2013, over 65% of
competitive products. We believe it is important to listen to our
our members had used our eServices in some capacity.
members and to develop products and product features our
Our
Mission To provide members with better value and outstanding service.
SM
Our
Vision To be California’s Premier Credit Union.
Core
Values
Member Focused Every interaction should be conducted with the
intent to delight the member being served. Anticipate, listen and
follow through.
Excellence Strive to be the best in everything we do. Take personal
responsibility and fulfill commitments with a sense of urgency.
Integrity Earn the trust of others by maintaining the highest
standard of honesty, fairness and professionalism.
Teamwork Share one vision. Achieve greater results by working
together. Bring out the best in each other. Support one another.
Continuous Improvement Be flexible. Seek new and better ideas.
Respond quickly to opportunities.
Respect Value the individual. Treat each person with dignity.
members want most. During 2013, Schools members benefited
promotes local community programs and events. Staff is also
from low-interest-rate loans for autos, homes and more.
active in the California Credit Union League’s Partners in
Throughout that time, Schools Financial Credit Union stood out
Education Program, providing financial literacy to high school
in the market as the low-cost leader. In July 2013, we introduced
students. Schools Financial Credit Union continues to co-sponsor
Platinum Rewards Visa.® Members can earn rewards points on
the News10/Esquire IMAX Teacher of the Year and Teacher of the
every Visa Credit Card purchase. Our Rewards Visa complements
Month awards. In addition, the Credit Union sponsors and
our credit card product line, which includes our already-popular
promotes the annual Run to Feed the Hungry, Children’s Miracle
Platinum Visa and Platinum Rebate Visa. Members can now
Network, student scholarships and other worthwhile causes
choose for themselves whether to receive the lowest rate
within our community.
possible (Platinum), cash back on their purchases (Rebate) or
Perhaps most important, Banking for Everyone means service to
reward points on purchases (Rewards). All of our credit card
our members. We never forget that our members are the reason
products offer competitively low interest rates.
Schools is a successful, thriving Credit Union. Without our loyal
Growth and financial success are two key indicators that our
and dedicated members, we would not exist. We extend a hearty
Banking for Everyone approach is working for the organization.
“thank you” to all our members.
Growth tells us we are providing attractive and competitive
In closing, we would also like to extend our appreciation to our
products and services. In 2013, total membership grew to
Board of Directors, the members of our Supervisory Committee,
113,098, Total Assets grew to $1,443,836,974 and Total Loans
our other volunteers and our staff. Together, we will continue to
Outstanding grew to $650,931,539. The financial success of the
provide our members with Banking for Everyone.
Credit Union indicates that we are managing our assets in a
manner that is both prudent and efficient. Growth of our
Sincerely,
organization can only be achieved through consistent financial
success. We are pleased to report 2013 ended with a Return on
Assets (ROA) of 1.04%, while our Net Worth grew to
$141,334,787.
Another requirement for Banking for Everyone is participation
within our community. Our branch staff regularly sponsors and
Eugene J. Houghton, Jr.
Chairman
Jim Jordan
President and CEO
*MobileCheck supports all Apple devices except iPad 1 and iPad 2.
Eugene J. Houghton, Jr.
Chairman
Ronald E. Kramnic
Vice Chairman
Board
of Directors
Marie B. Smith
Gloria L. Ross
Dolores Bleekman
Emilio Martinez
Treasurer
Director
Secretary
Director
Theresa Matista
Director
Supervisory
Report
Your Supervisory Committee is an oversight committee that works
directly with the Credit Union’s Internal Audit and Security
Department to ensure compliance with policies, procedures, rules
and regulations.
The Committee oversees the evaluation of Credit Union records for
thoroughness and accuracy through routine audits, monitors the
compliance of internal procedures and verifies security controls
are being followed. The Committee members also participate in
the monthly Board of Directors’ meetings, the semiannual strategic
planning sessions and various other committees.
Supervisory
Committee
Gregory A. Smith, CCUV
Chairman
For an independent opinion, the Committee annually engages a
certified public accounting firm to conduct an external audit.
Based on our review of internal operations and the independent
audit, we are pleased to report that your Board of Directors and
staff continue to conduct business in a judicious manner and that
your Credit Union remains financially strong.
George Bleekman
Member
Diana Wyman
Secretary
Foundation
in Education
Our Credit Union was established by a group of teachers who
embedded the importance of education into our foundation.
Schools annually presents $6,000 to local colleges for the
purpose of awarding financial assistance to students in our
community. The following institutions of higher learning award
scholarships on behalf of Schools Financial Credit Union:
American River College
Cosumnes River College
Folsom Lake College
Lake Tahoe Community College
National University
Sacramento City College
Sacramento State University
Sierra College
Yuba College
Recognizing
Outstanding Teachers
Together with News10 and Sacramento State University,
Schools continues its support of the teaching profession
through News10’s Teacher of the Month program. The
program recognizes outstanding teachers monthly with a
classroom presentation, a feature on a News10 broadcast
and a $1,000 check from Schools. One stand-out recipient
is selected as News10/Esquire IMAX Teacher of the Year
and receives $5,000 from the Credit Union.
Elzira
Saffold
2013 News10/Esquire IMAX Teacher of the Year
Senior
Management
Tim Marriott
EVP/CFO
Lisa Mackay
VP Human Resources and
Compliance
Sandy Phares
VP Real Estate
Cheryl Harris
SVP Member Services
Joni Scott
VP Planning and
Corporate Development
Eric Lindstrom
SVP Information Services/CIO
Rochelle Smith
VP Audit and Security
Tom Kuang
VP Technology/CTO
Roy Worley
VP Marketing
Celebrating
25 Years With Schools
It is with great pride that the Credit Union’s Board of Directors and Senior
Management recognize 19 employees who each have the distinction of
serving Schools members for 25 years or more. The contribution made by
these individuals is invaluable to our organization.
(L-R) Linda Patterson, serving members since 1988 • Sandi Artesi, serving members since 1980 • Patricia Ortiz, serving members since 1977 • Connie Campas, serving members since 1979 • Sabina Hovermale,
serving members since 1979 • Michael Price, serving members since 1987 • Cathie Brower, serving members since 1985 • Brenda Gipson, serving members since 1988 • Melia Peters, serving members since 1987
• Pam Hansen, serving members since 1976 • Andrea Eberly, serving members since 1988 • Greg Cosmos, serving members since 1988 • Holly Brown, serving members since 1984 • Rochelle Smith, serving
members since 1978 • Howard Duck, serving members since 1984 • Sue Roedell, serving members since 1978 • Yolanda Sosa, serving members since 1985 • (Not pictured) Andrea Alonso, serving members since
1978 • Kathy Barth, serving members since 1983
Community
Giving
Banking for EveryoneSM doesn’t stop at checking and
savings — it extends to public service activities to
benefit those in the greatest need of affordable financial
services. Schools members and staff generously assisted
these organizations:
Making Strides Against Breast Cancer
Run to Feed the Hungry
We Welcomed Our 100th
American Heart Association
Army of Angels
California Black Expo
CBS Radio Academic Rewards Program
Children’s Miracle Network
Children’s Receiving Home
Credit Union Partners in Education
Filipino Fiesta
Greater Sacramento Urban League
Honor a Hero, Hire a Vet
Jessie Baker Special Olympics
Kids Helping Kids
Local Food Banks
Making Strides Against Breast Cancer
News10/Esquire IMAX Teacher of the Year
News10 Teacher of the Month
Run to Feed the Hungry
Sacramento Cultural Hub
Sacramento Pride Festival
Sojourner Truth Multicultural Art Museum
Spirit of Giving
St. Hope Annual Fundraiser
St. Paul Health and Informational Fair
State Financial Literacy Fair
Volunteer Income Tax Assistance Program (VITA)
Baby in the Workplace
Schools Financial Credit Union has a program unique
to fewer than 200 companies* in the United States. In
2001, the Credit Union’s Board of Directors
implemented Babies in the Workplace, allowing new
mothers and fathers to bring their infants to work until
the child is six months old or crawling. The program
has been an exceptional success for parents and the
Credit Union. A milestone of 100 babies was
celebrated in 2013!
*According to Parenting in the Workplace Institute (PIWI).
Random order: Vanesa Babic and Mia, Renee Barragan and Lilly Hope, Andrew Carey and Nicholas, Lea Caudle with Blake and Cameron, Melinda Conejo-Fingerlos and Gabriella, Angela Edmiston with Sophia and
Enzo, Theresa Estorga and Emilio, Jenny Fulton and Olivia, Dara Gibbs with Tayah and Trey, Christal Guo and Royce, Sharlon Harris and Skyler, Chay Her and Jonathon, Eric and Kristine Hernandez with Ethan,
Sherman Ignacio and Serena, Angelina Jacobo and Leo, Linda Khang and Grace, Karla Lindsey with Maya and Alana, Janet McColley with Madison and Morgan, Kristy Montero with Ryan and Kristian, Shelli
Murray and Liam, Benjamin Oneto and Tyler, Heather Paul and Katie, Angela Salgado and Scarlet, Hailee Shannon and Christopher, Eula Shedrick and Joshua, Erik Sordahl with Kade and Payton, Amber Steeves
with Aubrey and Brock, Otis Sutton and Otis Jr., Cheryl Toon and Lilliana, Mandy Uppal and Tarun, Jason Wohlwend and Rhys, Keri Wong and Savanna, Tina Xiong and Jayson, Randy Miller and Aaron
Treasurer’s
Report
Ongoing financial success is key in Schools Financial
Credit Union’s ability to provide Banking for Everyone.SM There
are many benefits to financial success. It enables the
Credit Union to sustain and enhance our quality products and
services, to provide outstanding member service through a
properly trained staff, and to maintain our market position as a
low-cost leader within our community. Financial success gives
our members confidence in the Credit Union knowing their
assets are well-managed. It gives the Board of Directors the
resources to make necessary capital improvements and to
embrace emerging technologies.
I am pleased to report another year of excellent financial
performance for Schools Financial Credit Union. Financial
success for an organization such as ours can be measured in
many ways, including growth, revenue, expense control,
quality assets and adequate reserves. In 2013, Schools
achieved success in all of these key financial areas.
Return on Assets (ROA) is an important measurement for all
financial institutions. In many ways, it is an indicator of how
well the Credit Union manages member assets. Within the
credit union industry, a 1.00% ROA is the benchmark for
defining financial excellence. Schools Financial exceeded that
mark in 2013 by achieving a 1.04% ROA, an improvement over
the 1.02% ROA the Credit Union attained in 2012. Good
financial results provide credit unions with greater
opportunities to enhance services and increase Reserves. In
2013, the Board of Directors also chose to increase Reserves;
Net Worth grew by 11.6%, from $126,595,154 in 2012 to
$141,334,787 in 2013. Continued growth in Net Worth helps
ensure the Credit Union will be able to weather financial ups
and downs — like the recent recession — without having to
reduce the services available to our members.
Schools Financial Credit Union also benefited from healthy
growth in other key areas. Membership grew to 113,098, Total
Assets increased to $1,443,836,974 and Total Loans
Outstanding grew 4.53% to $650,931,539. Growth in key
financial areas is an indication the Credit Union has the market
presence and resources to continue to achieve solid financial
results. Calendar year 2013 was marked by a recovering, yet
cautious, economy. Schools Financial Credit Union
experienced increases in most loan types, with outstanding
vehicle loan growth of 9.69%. While the Credit Union was
successful in meeting new market demand for loans, members
enjoyed another year of very low interest rates on loans.
The challenge of a low-interest-rate environment is that it puts
downward pressure on income from loans and investments.
Schools Financial Credit Union overcame this challenge in
2013 through well-managed expense control. Total Expenses
decreased from $42,102,944 in 2012 to $38,568,624 in 2013.
Non-Interest Expenses as a percentage of Average Assets
declined from 2.63% in 2012 to 2.58% in 2013. These results
are even more impressive when compared to the National
Credit Union Administration’s Industry Peer Group expense
ratio of 3.19%. The bulk of this decline in expenses was a result
of our high-quality loan portfolio. In 2013, Loan Delinquency
dropped to 0.44% and the net Loan Charge-off ratio fell to
0.53%. Members can feel secure knowing their Credit Union's
assets are used to fund high-quality loans, which perform very
well even in tough economies. The continued financial success
of our organization can also be seen in the new products and
services introduced in 2013. These include SchoolsOnline,SM
our new online banking system; MobileCheck,SM the service
that enables members to deposit checks using a mobile
device; our introduction of the Rewards Visa® Credit Card; and
much more. These new services will contribute to increased
member convenience. In closing, I thank our members whose
sustained loyalty is the primary reason for our success. I
commend our Board of Directors, Supervisory Committee and
staff for the excellent management and leadership they have
provided our organization.
Sincerely,
Marie B. Smith, Treasurer
Year-to-Year
Comparison
Description
Number of Members
Total Assets
Total Loans Outstanding
Vehicle Loans
Real Estate Loans
Unsecured Loans
Miscellaneous Loans
Total Deposits
Shares
Share Drafts
Super$hares/Premier Money Market
Share Certificates
IRAs
Deferred Compensation
2013
2012
Percentage Increase/(Decrease)
113,098
$1,443,836,974
650,931,539
293,427,758
270,797,265
84,439,750
2,266,766
1,291,399,503
347,710,447
219,607,298
512,477,939
116,213,596
89,400,287
5,989,936
111,515
$1,405,847,219
622,693,931
267,509,449
269,441,234
83,546,494
2,196,754
1,261,009,852
297,446,969
199,178,046
537,812,807
126,857,091
93,264,973
6,449,966
1.42%
2.70%
4.53%
9.69%
.50%
1.07%
3.19%
2.41%
16.90%
10.26%
(4.71%)
(8.39%)
(4.14%)
(7.13%)
December 31, 2013
Balance Sheet
Assets:
Loans (net)
Cash and Investments
Accrued Interest Receivable
Prepaid Expenses, NCUSIF and
Other Assets
Fixed Assets (net)
Total Assets
33,977,760
22,461,366
$1,443,836,974
Liabilities:
Member Shares
Accounts Payable
Notes Payable
Dividends Payable
Accrued Liabilities
Total Liabilities
$1,291,399,503
4,797,087
0
553,094
5,416,004
$1,302,165,688
Equity:
Unrealized Gains on
Available-for-Sale Investments
Reserves
Total Equity
Total Liabilities and Equity
$336,499
141,334,787
$141,671,286
$1,443,836,974
$646,876,124
736,330,638
4,191,086
Income Statement
Income:
Interest on Loans
Interest From Investments
Non-Interest Income
Total Income From Operations:
Expenses:
Dividends and Interest Paid
Operating Expenses:
Salaries and Benefits
Insurance
Data Processing
Educational Expenses
Occupancy Expenses
Supplies
League, State and Audit Fees
Outside Servicers
Communications
Other Operating Expenses
TOTAL OPERATING EXPENSES
Provision for Loan Loss
Miscellaneous Interest Expense
TOTAL EXPENSES
Net Income From Operations
Non-Operating Gain/(Loss)
NET INCOME
$29,302,057
9,683,705
15,337,392
$54,323,154
% of Gross
Income
53.94%
17.83%
28.23%
100%
$3,052,187
5.62%
$20,855,071
367,213
3,217,080
624,981
3,099,331
1,404,918
302,740
5,275,955
506,003
1,063,145
$36,716,437
($1,200,000)
0
$38,568,624
$15,754,530
($1,014,897)
$14,739,633
38.39%
.68%
5.92%
1.15%
5.71%
2.59%
.56%
9.71%
.93%
1.95%
67.59%
(2.21%)
0.00%
71.00%
29.00%
(1.87%)
27.13%
Krysty and
Nyack Emery
Members since 2007
Products/
Checking Products
CO-OP Network of ATMs
CO-OP Shared Branching
Credit Union Direct Lending®
Dental Benefits MaxTM
Domestic Wire Transfers
Loan by Phone
Home equity loans and lines of credit
Line of Credit
Platinum Visa® Credit Cards
Share and certificate secured loans
Signature loan
Banking for Everyone CheckingSM account
Interest Checking account
Premier Money Market Checking account
Savings & Investment Products
Banking for EveryoneSM Savings account
Banking for YouthSM account
Deferred Compensation certificates and share accounts
Holiday Savings Club account
Individual Retirement Accounts (IRAs) and certificates
Opt-Up and Add-On Premium Rate Certificates
Premier Money Market account
Premium Rate Certificates
Summer Reserve account
Super$hare account
Custom Packages
Banking for EveryoneSM Savings account package
Educator RewardsSM
Senior Saver ClubSM
Teen Package
Loan Products
Auto and other vehicle loans
Computer loan
Educator loans
First mortgage loans
Online & Automated Services
Services
Schools Financial Services Corporation
Android app
Apple app
Audio Teller
Automatic transfer
BillPay
Defer-A-Pay
Direct deposit
eAlerts
eStatements
Mobile Banking and Mobile BillPay
MobileCheckSM
Payroll deduction
SchoolsOnlineSM
Virtual receptionist
Visa® Check Card
Visa® eStatements
Investment and insurance services
Securities offered through LPL Financial, Member
FINRA/SIPC. Insurance products offered through LPL
Financial or its licensed affiliates. The investment
products sold through LPL Financial are not insured
Schools Financial Credit Union deposits and are not
NCUA insured. These products are not obligations of
Schools Financial Credit Union and are not endorsed,
recommended or guaranteed by Schools Financial
Credit Union or any government agency. The value of
the investment may fluctuate, the return on the
investment is not guaranteed, and loss of principal is
possible.
Schools Financial Credit Union and Schools Financial
Services Corporation are not registered broker/dealers
and are not affiliated with LPL Financial.
Other Services
American Express® Travelers Cheques
BALANCESM Financial Fitness
Branch Locations
and More
Calvine Pointe Branch
Fruitridge/Freeport Branch
Natomas Branch
8848 Calvine Road, Suite 110
Sacramento, CA 95828
1631 Claudia Drive
Sacramento, CA 95822
2051 Natomas Crossing Drive
Sacramento, CA 95834
College Greens Branch
Laguna Branch
Orangevale Branch
8725 Folsom Boulevard
Sacramento, CA 95826
8255 Laguna Boulevard, Suite 180
Elk Grove, CA 95758
6000 Main Avenue
Orangevale, CA 95662
Folsom Branch
Madison Branch
Placerville Branch
1010 Riley Street, Suite 5
Folsom, CA 95630
5210 Madison Avenue
Sacramento, CA 95841
4278 Golden Center Drive, Suite 100
Placerville, CA 95667
Roseville Branch
1601 Douglas Boulevard
Roseville, CA 95661
Yuba City
1055 Gray Avenue
Yuba City, CA 95991
Member Contact Center, Loan by Phone and Audio Teller
SchoolsOnline and Mobile Banking
Administrative Offices*
916-569-5400 (Sacramento area) • 800-962-0990
schools.org
1485 Response Road, Suite 126
Sacramento, CA 95815
*No ATM or transactions performed.
Connect with us
Your savings federally insured to at least $250,000 and backed by
the full faith and credit of the United States Government. National
Credit Union Administration, a U.S. Government Agency.
Cover: (Top L-R) Krysty and Nyack Emery, members since 2007 • Brent, Stephanie, Meyer and Emery Lathe, members since 2003 • Deana and Fitzgerald Williams, members since 2002
(Bottom L-R) BJ, Jessica and Jameson Crone, members since 2000 • Bryce Vernon, member since 1970 • Brian, Darla, Emily and Jane Fishback, members since 2004
PRSRT STD
U.S. POSTAGE
PAID
SACRAMENTO, CA
PERMIT NO. 837
Banking for EveryoneSM
Schools’ Annual Meeting
Sunday, March 16, 2014
2:00 p.m. to 4:00 p.m.
Schools Orangevale Branch
6000 Main Avenue
Orangevale, CA 95662
Join the Board of Directors,
Supervisory Committee and
Management for an informative
presentation before a catered
lunch is served. Please RSVP to
916-569-2001 or 800-962-0990,
ext. 2001 by March 10, 2014.
Brent, Stephanie, Meyer
and Emery Lathe
Members since 2003