Annual Report 2022-Digital

This is Frontwave Credit Union's Member Newsletter for First Quarter 2019

Banking Lending Savings Planning

70 years of dreaming big

100% Commitment. Zero excuses. In 2022, we deepened our roots and provided more support than ever to our Members and our community.





Received Department of Navy’s Distinguished Credit Union Award

Voted San Diego’s Best Credit Union, Best Mortgage Company & Best Bank in Morongo!


Chairman’s Report

Frontwave Credit Union was founded as Camp Pendleton Federal Credit Union on October 28, 1952 by eight civil servants who pooled $40 to help Marines with low cost loans. From these humble beginnings, the credit union has grown to nearly $1.4 billion in assets serving 122,555 Members who live in all 50 states of our union as well as numerous countries abroad.

continues to grow. The alignment of our cultures and commitment to our communities led to our decision to secure the naming rights to the state-of-the-art arena and future home of the San Diego Sockers, being built in beautiful Oceanside – Frontwave Arena! It’s incredibly exciting and we cannot wait for the arena to open in early 2024! We continue to be recognized by being great at what we do and who we do it for. We were honored to be recognized as the Department of the Navy’s Distinguished Credit Union of the Year for the sixth time in the past eight years, the San Diego Reader’s Best Credit Union for the second consecutive year, the San Diego Reader’s Best Mortgage Lender for the second time in the past three years and the Hi-Desert Reader’s Best Bank in the Morongo Basin for the second consecutive year. Our commitment to our Dream Makers is as strong as our commitment to our Members, as proven by receiving the Peter Barron Stark Award for Workplace Excellence in 2022 for the tenth time. As you will read in the Treasurer’s Report below, Frontwave Credit Union grew over $305 million in loans in 2022. To put this into perspective, this represents more growth in a single year than we had in the previous nine years and almost as much as we did in our first six decades of existence! Thank you for your confidence in us and participation in our not-for-profit financial cooperative! Over the past seven decades, we have faced innumerable challenges – and, with your support, we are stronger today and making more financial dreams come true than ever before. We will tackle the challenges before us from these turbulent economic, legislative and regulatory environments, as we have in the past – with a steadfast commitment of service to our Membership. YOU! We will help YOU make financial dreams come true. We will provide YOU with the products, services and access you need to manage your financial lives. Keep dreaming BIG! We got you! Brian Sutton Chairman of the Board

We also celebrated our 70th anniversary throughout 2022! The yearlong celebration was highlighted by our efforts to give back to our communities through random acts of kindness. We pumped gas for Marines on Camp Pendleton, paid pet adoption fees in Escondido and Oceanside, donated gowns to the Armed Services YMCA, served tacos to health care workers at Tri-City Hospital, and a whole lot of other stuff to say, THANK YOU for 70 amazing years.

Our Goodie 2 Crew pumping gas for Marines on Camp Pendleton.

Consistent with our mission to make financial dreams come true, we increased our commitment to financial wellness through the provision of free financial workshops, over 40,000 hours of personal financial classes and hundreds of one-on- one financial counseling sessions with our Members. This array of educational offerings covered topics ranging from how to maintain your checking account, to writing a budget, to buying a car and your first home, to preparing for retirement and making wise decisions when it comes to Social Security, Medicare and estate planning. Given the geographical diversity of our Membership, we committed ourselves to a digital-first strategy to render a Member’s location irrelevant. No matter where you are in this big, wonderful world, we want you to be able to tend to your financial affairs – be it sending money to your friends and loved ones, making a deposit, opening a share certificate or applying for a loan – instantly and seamlessly. To this end, in 2022, we created a Digital Experience Team to drive continuous innovation and optimize our digital platforms. The strength of our relationship with the San Diego Sockers

Treasurer’s Report

While the third year of the pandemic continued to offer some challenges to staffing and our work structure, the biggest impacts to the credit union were from shifts in our economic environment that we had not experienced for a very long time – inflation, rising interest rates and pent-up consumer demand. Inflation exacerbated our expenses, rising interest rates suppressed the market value of our investment and mortgage portfolios and the release of that pent-up demand significantly elevated loan demand. Led by automobile lending, the loan portfolio grew by a record breaking $305 million or 47.99% in 2022. As mentioned in our Chairman’s report above, that’s more growth in loans than we had in the previous nine years combined. That growth however, did place stress on our liquidity posture. Since we couldn’t sell investments or mortgage loans without taking a loss to raise liquidity, we chose to borrow from the Federal Home Loan Bank to bring in the liquidity we needed to continue lending to our Membership. That borrowing of $163 million, coupled

with deposit growth of $45.8 million increased Total Assets by $183.2 million (15.58%) to $1.4 billion. Net Income was outpaced by growth in Total Assets and our Net Worth ratio fell to 9.62% - still well above the regulatory threshold of 7.00% to be considered Well Capitalized. Total Income in 2022 increased by 13.59% over 2021 however, Total Expenses – led primarily by Dividend Expense, Provision for Loan Loss Expense, and Mark to Market Expense – grew by 21.50%. As total Income grew at a slower pace than Total Expenses, our Return on Average Assets fell from 0.75% in 2021 to 0.45% in 2022. Other key ratios fared well in comparison to budgeted forecasts. The Loan to Share ratio grew from 62.79% to 73.62%, the Net Interest Margin ratio increased from 2.51% to 2.65% and the Efficiency Ratio improved significantly from 81.23% to 75.68%. Kelley L. Mayer, CPA Treasurer

Financial Highlights

Assets (in millions) 2019 $877

Members 2019














Shares (in millions)

Loans (in millions)

















Capital (in millions)

Net Income (in millions)











$131 $125





Condensed Statement of Financial Condition Assets Cash, prepaids, receivables & other assets $ Regular loans to members Visa ® loans to members Purchased loans Less allowances for loan losses Investments NCUA Share Insurance Fund Fixed assets (net) Total Assets $

12/31/22 78,794,560 839,616,680 53,160,249 48,524,842 (4,948,674) 306,094,155 10,370,279 27,353,918 1,358,956,009 1,085,709,370 52,047,137 78,656,815 (44,946,540) 187,489,227 1,358,956,009 31,947,052 6,289,950 27,539,452 65,776,454 (23,544,658) (26,578,472) (2,864,747) (1,576,845) 11,211,730 (5,635,942) 5,575,788

12/31/21 137,773,226 559,391,057 41,275,168 35,404,884 (4,109,779) 368,057,009 9,855,352 28,084,940 1,175,731,855 1,039,910,616 52,047,755 73,081,027 (3,551,076) 14,243,532 1,175,731,855 26,233,353 5,489,868 26,185,008 57,908,229 (23,118,454) (20,171,174) (3,089,048) 487,172

Liabilities and Equity Shares of members


Reserves Undivided earnings Unrealized gain/(loss) on AFS Investments Other liabilities Total Liabilities & Equity


Profit and Loss Analysis Interest from loans Interest from investments Other income Total Income



Compensation & benefit expenses Office operating costs Education and promotion Other non-operating income (expense) Available for dividends Less dividends paid Net Income


12,016,725 (3,655,871) 8,360,854


Total Membership

Total Assets

Total Loans

Total Income

+4.5% +15.6% +47.9% +13.6%

The Supervisory Committee is responsible for ensuring that the assets of Frontwave Credit Union are safeguarded, an independent audit is performed annually, and appropriate controls exist to ensure compliance with management’s objectives and regulatory requirements. The Supervisory Committee is made up of volunteer members who independently evaluate the strength, safety, and soundness of the credit union’s operations and activities. As an independent and objective body, the Supervisory Committee engages in regular monitoring of financial reporting, verification of membership account balances, compliance with legal and regulatory requirements, and oversight of independent auditors and internal controls. In 2022, the Supervisory Committee contracted with the Certified Public Accountant (CPA) firm of SingerLewak LLP to perform an independent opinion audit of the credit union’s financial statements. In their opinion, the financial statements were presented fairly, in all material respects, the financial position of Frontwave as of December 31, 2022, and the results of operations and cash flows for the year ended in accordance with the Generally Accepted Accounting Principles (GAAP). Supervisory Committee Report

The financial statements in this Annual Report are unaudited, since they reflect January through December 2022. The Supervisory Committee is satisfied the records reflect Frontwave Credit Union’s financial condition and that it continues to operate with strong internal controls in accordance with board policies and the credit union procedures. The Supervisory Committee wishes to thank the Board of Directors, Executives, Management and employees for their diligence, support, and dedication to the wellbeing of our membership and of Frontwave Credit Union. The Supervisory Committee wishes to thank our members for your continued confidence and trust in Frontwave Credit Union. Robert Ross Chairman, Supervisory Committee


Brian Sutton Chairman

Gary Greving Secretary

Joseph Mitilieri Vice Chairman

Michael Brigagliano Director

Kelley Mayer Treasurer

Richard Rothwell Director

Amanda Cook Director

Sally Arnett Director

Bill Birnie President/CEO

Gerald Polyascko Director



San Diego - MCRD San Marcos Temecula - Winchester Twentynine Palms Wildomar Yucca Valley

Barstow Camp Pendleton - Mainside Camp Pendleton - Pacific Plaza Camp Pendleton - SOI Escondido Oceanside - Fire Mountain Oceanside - Rancho Del Oro

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6

Made with FlippingBook - professional solution for displaying marketing and sales documents online