2017 ANNUAL REPORT Pride Audit Committee Consultant Honest Innovative Stephen J. Bailey Transparent Chairman Genuine elpful Efficient Team H Listening Donna M. Banta Follow Through Friendly Dr. Patricia Fontan Consultant Honest People. Dr. Karen O. Palladino Caring Loyal Julie O. Robbins Friendly y Innovative Trusted Products. Positive Honest Engaged General Information egrit Time Valued. Accuracy Headquarters Address Loyal 8045 N. Wickham Road Team Int Fun Collaborative Melbourne, FL 32940-7920 Trustworthy Phone: Supportive 321.752.2222 Members First Honest Individual Needs ent Engaged E-mail t [email protected] Friendly Caring Reviews Fun Web Address am Honest www.SCCU.com Te Pride onsis C Branch Locations Brevard County (18) Broward County (12) Flagler County (1) Indian River County (4) Miami Dade County (13) Palm Beach County (1) DELIVERING ON OUR PROMISE Volusia County (9) HONEST PEOPLE. TRUSTED PRODUCTS. TIME VALUED. Your life. Your financial watchdog. Federally insured by NCUA Chairman’s and President’s Report We are pleased to report that in 2017 the credit union remained If these challenges were not enough, 2017 presented us another surprise. In September financially sound and operationally strong. We continued to make our entire market area was impacted by Hurricane Irma. All 58 branch locations, every operational improvements which drove down the cost to provide department, and all of our 825+ employees across all seven counties were impacted by this products and services to you, our members. This focus resulted in storm. We were forced to close our branches and call centers, but because of the technology strong earnings and improved the credit union’s net worth. 2017 we have deployed, we were able to do this in a rolling fashion and reduce the impact for was another banner year for auto loans, first mortgages, second members. We are pleased to report that 78 of our 104 ATMs remained online and in service mortgages, checking accounts, and credit cards. We produced during the storm, as did our online banking and mobile banking. All 58 branch locations Dale B. Neubert $1.2 billion in auto loans, $148 million in first mortgages, $129 million and our 2 operations facilities suffered only minor damage. in second mortgages, 39,785 checking accounts, and 10,163 credit Chairman After the storm passed, our amazing team of employees returned to work in large numbers cards. This means that 97,019 times, our members entrusted us with enabling us to serve our members very quickly. This was a proud moment when you their life events and the resulting financial needs. We also opened consider that this was a very large evacuation and many left the state of Florida. If a three new branch locations to better serve members located in our location did not open, it was due to power or damage and not due to lack of employee Southern markets. availability. We were able to help 9,813 members by providing loan extensions and quick In many ways, 2017 was a year of transition for the credit union. turnaround on requests. Where we could, we posted payroll into accounts early, and we Our long term CEO passed away suddenly in May, which accelerated worked behind the scenes to ensure credit union services were not disrupted for members a succession plan that was already underway. SCCU’s Board of during their evacuation. Timothy M. Antonition Directors appointed Timothy M. Antonition as President and CEO. ONE SCCU As a team, the Board of Directors and the Executive Management President, CEO Internally, we focused on working as ONE SCCU, coming together as a team, to ensure that Team came together and continued charging forward. Many of our better than ever before we work as ONE, to deliver service to you our members. There are executive leaders were placed into new or expanded roles and they all faced this challenge times when multiple people and departments must work together to fulfill a member’s well. We focused on continuing the mission of the credit union, to create value in cooperative request. We used our new system capabilities and realigned resources to ensure that you, ownership, and all this was done without a pause. the member, have no idea that multiple people are behind the scenes assisting. Whenever During the year, we laid groundwork to drive electronic service delivery since today’s possible, we fulfilled member requests at the first-point-of-contact, reducing the delays members want to do more and more remotely from the comfort of their home, office, or handoffs to multiple team members created. other location. We have no plans to unplug one service delivery method in favor of another, 2018 is already shaping up to be an exciting year at Space Coast Credit Union. We are but we are prepared to address members’ changing needs and expectations and we’re increasing our focus on our product offerings to ensure we are providing members with implementing plans to increase functionality across all electronic delivery channels. The the most competitive products and services. Watch for exciting new products and services goal is to provide you an easy way to seamlessly transition yourself to newer more current being launched throughout the year. ways of getting things done at the pace you desire. We intend to leverage our new systems more than ever before and take service delivery to We spent much of 2017 fine-tuning our service and working to reduce wait times for the next level. Through the use of technology enhancements, we will position the credit members when they call or come into a branch. We assembled a team of our best union to meet the evolving needs of our members. We are confident that you will like employees to identify problem areas that were still lingering from the November the results. 2016 member systems upgrade and we worked to correct system issues that were still unresolved. This effort led to a 60% improvement in the Member Service Center call hold time and a 98% improvement in the Express Sales Center call hold time. We still have some improvements to make, but we can assure you that service is our top priority and we will Dale B. Neubert Timothy M. Antonition not stop until we meet our targets. Chairman President and CEO Credit Manager’s Report 2017 has proven to be another strong year in lending for Space Coast Credit Union. As our Part of our mission is to provide products that our members can trust, and that are also members’ watchdog, we have continued to focus on delivering loan products that meet the convenient. This past year, we originated $922 million in vehicle loans purchased through needs of our membership. the dealership for our members. As a result of this product offering, dealer lending has brought in over 21,000 new members to Space Coast Credit Union. Home mortgage lending had a solid year in 2017. SCCU funded $277 million in first and second mortgages. We have seen that home values are stabilized and that many members Space Coast Credit Union is there for our members when they need us most. Many members are taking advantage of the equity in their homes to sell, buy or update their existing took advantage of special interim loan options developed to help them recover in the wake homes. of Hurricane Irma, evidencing our promise of doing the right thing for our members. We recently reintroduced FHA mortgage products to our first mortgage line up, which will open up a new avenue for those borrowers with a smaller down payment to achieve homeownership. We remain focused on ways to be even more competitive and current with our mortgage loan product offerings. Cheryl Hendricksen Director of Lending, Credit Manager We continue to assist our members in improving their financial position by refinancing vehicle loans originated elsewhere with SCCU. In 2017, SCCU refinanced over $167 million in automobile loans. We also saw an increase in loans originating through our online application channel with over $210 million loans closed through this convenient application option. Audit Committee Report Condensed Financial Information* The Audit Committee is appointed by the Space Coast Credit Union (SCCU) CONSOLIDATED STATEMENT OF FINANCIAL CONDITION Board of Directors. The Audit Committee operates under the rules and As of As of regulations of the Florida Office of Financial Regulation, Division of Financial December 31, 2017 December 31, 2016 Institutions, and the National Credit Union Administration (NCUA) and is ASSETS charged with the responsibility of determining that the financial condition of Cash $36,684,784 $39,773,821 SCCU is accurately and fairly presented in the financial statements, and that management practices are in place to safeguard members’ assets. Investments Available-for-sale 118,454,652 178,178,020 The primary functions of the Audit Committee are (1) to direct the Internal Other 404,867,247 407,835,532 Audit Department, which monitors credit union operations through the development of a risk-based audit plan; scheduling and conducting a Loans held for sale 7,371,100 9,508,600 continuing program of reviews of credit union processes and procedures, Loans to members - net of allowance for loan losses 3,199,545,228 2,907,527,830 and (2) contracting for an independent, external audit of the credit union’s Accrued interest receivable 9,455,031 7,583,849 financial statements. Prepaid and other assets 27,109,911 37,036,981 The combined skills of the Certified Public Accounting Firm of Property and equipment - net of accumulated depreciation 126,122,688 123,406,727 CliftonLarsonAllen LLP, with that of our in-house Internal Audit staff, has Other Real Estate Owned 5,665,459 11,898,285 proven to be effective in maintaining an efficient and effective internal audit Goodwill 64,592,669 64,592,669 function for the credit union.