Chairman’s Report
With great pleasure I am writing the first annual Chairman’s Report for our newly named credit union. In 2018, after many months of intense planning and painstaking preparation, we officially became Frontwave Credit Union. The change is intended to identify better with potential new members who, we learned, incorrectly perceived that military affiliation is a prerequisite for membership. We want everyone who lives, works, or worships in San Diego, Riverside, and San Bernardino Counties to know that Frontwave is here to help them achieve their financial goals. At the same time I want to assure our current members that we are the same caring, professional credit union that has served you for many years. Frontwave continued to grow in 2018. We opened three new branches: one at Pacific Plaza on Camp Pendleton, a second in Wildomar, and the third in Escondido. For the growing number of members who manage their finances on the go, we launched new mobile and online banking platforms. Through personal contact with a friendly representative in a branch, or our call center, or through our mobile and online platforms, Frontwave is here for you. Your credit union continued to grow financially as well. Compared to 2017, total income increased 9.8% to $50.7 million. During the same period, total assets increased 1.6% to $819 million, while loans increased 4.8% to $556 million. On the expense side, tuition reimbursements were $44,858, not a large amount considering that our assets are $819 million, but it is 263% higher than the previous year. Frontwave encourages our employees to seek advanced education by taking advantage of our tuition reimbursement benefit. We hope that more highly educated Frontwave Credit Union’s assets increased $12.6 million, a 1.56% increase from 2017, ending the year at $818.8 million. Gross loans increased by $25.3 million, a 4.77% increase over 2017, and ended the year at $556.1 million. The majority of this growth was in indirect auto loans, with an $18.6 million increase (47.82% over 2017), used auto loans with a $15.7 million increase (35.37% over 2017) and commercial real estate loan participations, with a $13.4 million increase (114.25% over 2017). Total shares grew by $17.7 million (up 2.61% from 2017) to $696.5 million. The majority of this growth was in share draft accounts, with an $11.1 million increase or 10.33%, regular shares with a $9.7 million increase or 6.83%, and dividend share drafts, which increased $2.4 million or 2.75%. With loan growth outpacing share growth during 2018, the ratio between the two saw upward movement from 78.20% at the end of 2017, to 79.84% at the end of 2018. The credit union’s ratio of net worth to total assets, which measures the financial strength of the credit union, ended the year at 14.12% up from 13.85% at the end of 2017 2 . The average for the U.S. Credit Union Industry was 11.30% at the end of 2017, with the NCUA considering anything above 7.00% to be “well capitalized.” A high net worth provides the credit union with protection from uncertainties in the economic environment. This protection enables the credit union to offer competitive rates, open additional branches, and improve and expand services to its members. Throughout 2018, the Federal Reserve Bank (FRB) made four 0.25%, rate increases 1 . These increases helped to amplify credit union earnings during the year. The credit union ended 2018 with a net
employees will lead to more capable employees, but our goal is that they become more capable members of our communities. Despite the expenses associated with branding and new branches, we remained an exceptionally sound institution with a capital ratio of 14.12%. Frontwave takes care of its members, particularly when times are tough. During the 2018 government partial shutdown, we provided 16 no-interest loans amounting to $33,423, approved 21 free Skip-a-Pay requests, and granted 3 loan payment requests. Frontwave is off and running with a new name and brand. Underneath, however, we are the same helpful credit union that has served our members for over 66 years. Stay on board; it promises to be a rewarding ride. We are your financial partners. Rain or shine, we are with you… Dream big. We got you. Richard Rothwell Chairman of the Board
Treasurer’s Report
income of $4.0 million, up $1.3 million or 49.41% from 2017. The return on average assets (ROAA) for the year was 0.49%, up from the 2017 ROAA of 0.34%. Interest income from loans improved by $1.7 million or 7.82%, due to a combination of loan growth and an increased average loan yield from 4.33% during 2017, to 4.46% in 2018. Share dividend expense increased by $250.7 thousand in 2018, or 10.88% from 2017. This increase in dividend expense was primarily due to increasing share certificate rates, combined with the growth of lower yielding share, share draft, and money market accounts. This resulted in an increase in average cost of funds from 0.35% in 2017, to 0.37% in 2018. Investment income increased $849.9 thousand or 19.40% from 2017. This was primarily due to rising rates paid on cash at the Federal Reserve, and maturing bank and credit union certificates reinvested into higher paying bonds, resulting in an average yield of 2.74%, increasing 57 basis points from 2017’s yield of 2.17%. Non-interest income increased $1.9 million or 9.95% over 2017. Total operating expenses increased by $3.0 million or 7.18% during 2018, with the biggest increases in salary and benefit expenses ($1.5 million), an 8.26% increase over 2017, and data processing expenses $925.1 thousand or 50.06% increase over 2017. Gary Greving Treasurer
Need more info? Check out frontwavecu.com . Source: 1. https://www.federalreserve.gov/newsevents/pressreleases/monetary20180221a.htm 2. https://www.creditunions.com/videos/videocontent/4q18-trendwatch/
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