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2012 Annu a l R e p o r t
Dedicated to the memory of
Rob Guilford 1954-2012
Late in 2012, Wescom Credit Union lost one of its brightest stars,
Rob Guilford, Executive Vice President, Finance & Technology. Although
he began working at Wescom in 1997, he was a respected force in the
credit union industry for more than 30 years.
During his tenure with us, Rob helped build Wescom into a credit union
technology leader. In addition, in recent years, he helped shepherd
Wescom through difficult economic times to the position of restored
financial health we enjoy today.
While very few members had the privilege of knowing or meeting Rob,
every Wescom member has benefited from his leadership at Wescom. He
is, and will continue to be, dearly missed.
CONTINUED FINANCIAL STRENGTHAND STRONGER RELATIONSHIPS
Wescom Credit Union 2012 Annual Report
Wescom was founded to provide members with a safe place to save and invest
while providing them with thoughtful, personalized service. Strong financial
performance in 2012 enabled Wescom to remain true to these principles and to
focus on deepening relationships with our members.
We found ways to make doing business with us faster and easier, expanding
benefits and adding important services that enhance the Signature Member
Experience for those members who are most active in the Credit Union.
A significant part of this Signature Member Experience is continuing to provide a
full array of insurance options from Wescom Insurance Services and a range of
investment options from Wescom Financial Services. We have also modified our
branch network to offer our members a full spectrum of financial products in any
Wescom branch.
Likewise, we’ve increased our mobile technology options and introduced more
touch-screen ATMs. And, in addition to Facebook, members can now connect with
us through another social media channel with Twitter. We continue to tap
technology to foster stronger relationships with all members and provide the
convenience our members deserve.
1
2012 2011 Increase/Decrease
Assets $ 2,429,179 $ 2,440,427 -0.46%
Members’ Shares $ 2,068,076 $ 2,018,920 2.43%
Loans $ 1,257,606 $ 1,392,107 -9.66%
Financial Highlights(Dollars In Thousands)
2
We are happy to report that Wescom had another excellent year in
2012, building on our return to profitability and posting net earnings of
$24.82 million. This was due to a combination of initiatives, including a
continued emphasis on increasing efficiencies, reducing costs and several
non-recurring financial events. Our loan delinquency rate also continued to
decrease as a recovering economy enabled our members to better meet
their loan obligations.
As we strengthened our financial base, we also worked diligently on
developing stronger relationships with our members. We maximized our use
of technology, giving our members easy, convenient access to their
accounts, and continued to add more benefits to Signature Membership.
We are also taking steps to define the Signature Member Experience and
improve it. Our goal is to magnify what we do really well, and make every
experience with us stand out as positive, distinctive and memorable. That
means making sure that every time a member interacts with us, we add
value to the experience.
In 2012, members turned to us for help with more of their long-term
financial needs. We saw an increase in members who chose Wescom
Insurance Services to protect their homes, autos and more. Combined with
the full-range of investment services provided by Wescom Financial
Services, members can integrate all of their banking needs in one place
more easily and conveniently.
Delivering this full-service banking experience has led us to make a few
changes in how we deliver the complete spectrum of services to our
members. We’ve learned our members prefer to do business in branches
that provide more privacy and specialized staff who can discuss their needs
in investments, insurance, and mortgages. As a result, we made the decision
to consolidate six of our branches and enhance others. This will enable us
to deliver a higher level of service as we assist in making important financial
decisions. We’ll continue to maintain a strong Wescom branch network,
one of the largest among Southern California credit unions.
Making continual improvements in our products and services requires
feedback from our members on how we’re doing. An important measure of
our success is the number of members who would recommend Wescom to
their friends and family. Our survey this year showed that Wescom again
received high ratings from a significant majority of members who would
To Our Member-Owners
Members’SharesIn Billions
’11 ’12’10
$2.07$2.02$2.04
AssetsIn Billions
’11 ’12’10
$2.43$2.63
Wescom Credit Union 2012 Annual Report
LoansIn Billions
’11 ’12’10
$1.26$1.39
$1.62
$2.44
gladly refer someone they know to Wescom. For us, this is a key indicator of
the health and vitality of our continuing relationships with our members.
Our strong performance in 2012 was marred by a note of deep sadness.
Rob Guilford, our Executive Vice President of Finance & Technology, passed
away in November. Rob was at the forefront of technology development,
not only for Wescom, but also for the entire credit union industry. His financial
expertise helped steer Wescom through difficult economic times and back
to financial strength. Rob was a well-loved leader and colleague, and he is
greatly missed.
As we look ahead to 2013, we are confident Wescom has the tools and
sound financial footing needed to successfully navigate an ever-changing
economy and uncertain regulatory climate. We’ll continue to operate with core
values that have lasted since our founding 78 years ago – we will reach out to
our members in new ways, adding value to their membership and helping them
build a safe and solid financial future.
Virginia C. PanossianChairman
Darren WilliamsPresident/CEO
Wescom Credit Union 2012 Annual Report
3
As we look ahead to 2013, we areconfident Wescom has the tools and soundfinancial footing needed to successfullynavigate an ever-changing economy.
A NEW LEVEL OF SERVICE AND INNOVATION
Active MobileBanking Users
’12’10
13,075
’11
28,315
36,230
Members withWIS Policies
eBranchUsage
’11 ’12’10
51.5%
46.4%44.8%
’09
39.5%
’11 ’12’10
4,484
3,881
2,996
Net PromoterScoreBenchmarking
WescomNPS Average
Retail BanksNPSAverage*
73%
18%
Credit UnionNPS Average* 58%
*Samples provided by Filene Research Institute and Satmetrix.
Wescom Credit Union 2012 Annual Report
4
Building More Rewarding Relationships We recognized and rewarded our most active members by adding more benefits to our
Signature Member program, so they could get even better value for their membership. Inaddition to free temporary checks, Signature Members could also enjoy savings on closingcosts for new mortgages and discounts on auto loan rates. These new benefits came on topof the many rewards Signature Members already enjoy. Additionally, to enhance theSignature Member Experience, we extended a few select Platinum Signature Memberbenefits to new members during their new member period.Reaching out to our new members with these benefits really made a difference, and we
saw a greater number of new members become Signature Members, from 16% in 2011 to21% in 2012. Even more importantly, our efforts to enhance and deliver more convenientservices and products significantly boosted the percentage of members who wouldrecommend Wescom to their family and friends. This is reflected in our Net Promoter Score,which rose five points, from 68% to 73%, in 2012. This is a strong indicator of the valueour members place on their credit union membership and is an essential measure of ourefforts to improve the Credit Union experience.More Affordable Borrowing In the recovering economy of 2012, we continued our efforts to make borrowing easier
and more economical, an increasing number of members relied on us to help reach theirgoals, boosting an increase in lending for the year. Members took advantage of very competitive Wescom rates by responding to our
preapproval certificates for auto loans and also refinancing their auto loans from otherlenders with Wescom, enjoying a significant savings over the life of the loan. In addition, wecontinued to offer pre-approved Visa® credit cards to qualifying members and offered balancetransfers to existing cardholders, who were able to save with our lower interest rates.
Adding Services Through New Technologies Technology continued being a powerful tool in 2012, increasing the speed and ease of
doing business with the Credit Union. This year, we kept pace with the technology revolutionby continually rolling out new innovations. One of the most helpful was SnapDeposit, a newaddition to the Wescom iPhone App that enables members to easily deposit checks fromanywhere using the camera on their iPhone or iPad. Currently, SnapDeposit is available toSignature Members who use an iOS-based mobile device. Wescom is now developing aversion of SnapDeposit for the Android platform, slated for launch in 2013.Continuing to expand support services, we completed the rollout of Member Chat to all
members with eBranch accounts. With Member Chat, you can chat online with a MemberChat Service Representative located right here in Southern California. Members who visited a Wescom ATM enjoyed the new touch-screen ATMs hosted by
Elizabeth, our onscreen banking guide. Thirty-four additional touch-screen ATMs wereinstalled in 2012, eliminating the need for deposit slips and envelopes for more members. Elizabeth also became a presence on Twitter (@Liz_Wescom), joining Facebook
(www.facebook.com/WescomCreditUnion) to expand our social media outreach to membersand communities. Supporting Communities, Educating Members WeCare, our employee-run, charitable foundation, thoroughly evaluated and selected
charities in our service area to support, both financially and through volunteer hours donatedby Wescom employees.
Wescom Credit Union 2012 Annual Report
5
WeCare enthusiastically supported the Adopt-A-Family program to help needy familiesthrough the holiday season with gifts and essentials. Other community outreach efforts includednumerous walks, drives and events, including the MS Bike Tour, Walk to End Alzheimer’s, andAIDS Walk Los Angeles. In 2012, funding through employee payroll contributions and matchinggifts enabled WeCare to donate more than $120,000 plus thousands of volunteer hours tocharities in Southern California. In addition to regional charitable causes, when Hurricane Sandy devastated 16 states in the
Eastern U.S. the week of Oct. 29, Wescom members immediately pitched in, helping theAmerican Red Cross collect $33,361 to support disaster victims. International Credit Union Day October 18 provided another way for Wescom and its
members to help create miracles with a Wescom Check Card or Credit Card. Every time Wescommembers used their cards that day, Wescom donated 25 cents to Credit Unions for Kids, anational alliance of credit unions that support Children’s Miracle Network Hospitals. More than170 of these hospitals in the U.S. and Canada treat young people who most need care. Wescomand Xceed Financial Credit Union created this “swipe and save lives” initiative, which netted adonation of $22,000 from Wescom.Hospitalized kids also received an additional donation from Wescom employees, who donated
$5 for each Friday in September they wanted to wear jeans to work, and on Wednesday,September 12, Miracle Jeans Day.By the end of September, ourMiracle Jeans Days resulted in a$40,000 donation to Children’sMiracle Network, which wasdirected to two children’s hospitalsin Southern California. Educating members about
retirement and Social Security wasthe focus of complimentaryseminars and a special eventhosted by Wescom FinancialServices. Former Social SecurityAdministrator Jody Harris gavemembers the inside scoop and key
facts on Social Security at two different Wescom locations. Retirement income planning seminarsoffered at 13 Wescom branches gave members options on planning for a secure retirement in achallenging financial environment.Looking Toward a Bright FutureAs the economy continues to improve, we’ll continue to strengthen our financial position in
2013 and maximize technology to bring more convenience and easy access to our members,coupled with new products that meet the membership's growing needs. As always, our goal isto do all we can to help our members build better lives and achieve their financial goals.
6
Wescom Credit Union 2012 Annual Report
Virginia C. PanossianChairman
Norberta N. NogueraVice Chairman
Noel RossSecretary
Richard Myles JohnsonTreasurer
Addison CarterRon FischerGina A. FriedrichRobert Graham
Daniel KrausJavier MoralesVictor V. MoyBrad SelbyLiz Wood
BOARD OF DIRECTORS
BOARD OF DIRECTORS OF WESCOM HOLDINGS, LLC
Darren WilliamsPresidentChief Executive Officer
Jane WoodExecutive Vice PresidentChief Operating Officer
Keith PipesExecutive Vice President,Lending & Financial Services
Tim DolanSenior Vice President,Technology
Tom EwingSenior Vice President, FinanceChief Financial Officer
Susan McCreadySenior Vice President,Branch Administration
Kevin SarberSenior Vice President,Service Delivery
SENIOR EXECUTIVE TEAM
Thomas G. SuterChairman
Armando NodalSecretary
David AsemLawrence McCauleyTim Quintanilla
Tiffany Craft Vicki Donkin Judy Scurlock
SUPERVISORY COMMITTEE
COMMITTEE MEMBERS-AT-LARGE
WESCOM’S BOARD OFDIRECTORS AND EXECUTIVES
Victor V. MoyChairman
John YonaiVice Chairman
Mark DilbeckRobert GrahamJeff Luong
Quy "Q" NguyenLiz Wood
7
Wescom Credit Union 2012 Annual Report
DIRECTORS EMERITUSWill J. Brown
Financial Statements
Consolidated Statement of Financial Condition
(Dollars In Thousands) December 31, 2012 December 31, 2011
Assets
Cash and Cash Equivalents $ 61,443 $ 109,698
Loans to Members 1,257,606 1,392,107
Allowance for Loan Losses (44,771) (59,043)
Investments 1,003,322 848,248
Land and Building (Net) 48,879 51,248
Other Fixed Assets (Net) 19,051 16,507
National Credit Union Share Insurance Fund 20,578 19,935
Other Assets 63,070 61,727
TOTAL ASSETS $ 2,429,179 $ 2,440,427
Liabilities and Equity
Members’ Shares $ 2,068,076 $ 2,018,920
Other Borrowings 121,595 206,775
Accrued Expenses and Other Liabilities 62,385 65,416
Regular Reserves 74,528 69,497
Undivided Earnings 100,757 80,968
Unrealized Gain (Loss) on Investments 16,980 14,379
Other Comprehensive Income (15,141) (15,527)
TOTAL LIABILITIES AND EQUITY $ 2,429,179 $ 2,440,427
These numbers are unaudited.
Wescom Credit Union 2012 Annual Report
8
Consolidated Statement of Income
(Dollars In Thousands) December 31, 2012 December 31, 2011
Interest Income
Loans $ 68,755 $ 83,616
Investment Income 19,578 22,399
Total Interest Income 88,333 106,016
Interest Expense
Dividends 5,034 8,260
Borrowed Funds 10,524 17,617
Total Interest Expense 15,557 25,877
NET INTEREST INCOME 72,776 80,138
PROVISION FOR LOAN LOSSES 6,250 12,850
NET INTEREST INCOME AFTERPROVISION FOR LOAN LOSSES 66,526 67,288
NON-INTEREST INCOME 77,834 71,120
NON-INTEREST EXPENSE
Salaries & Benefits 63,407 56,717
Data Processing & Statements 14,145 12,861
Services & Supplies 10,678 11,456
Occupancy Expenses 13,997 15,254
Member Education & Promotion 930 779
Member Insurance 1,955 4,984
Other Operating Expenses 14,427 12,130
Total Non-Interest Expense 119,540 114,180
NET INCOME $ 24,820 $ 24,228
These numbers are unaudited.
Wescom Credit Union 2012 Annual Report
9
Administrative Offices123 S. Marengo Ave.Pasadena, CA 91101
Operations Center5601 E. La Palma Ave.Anaheim, CA 92807
1-888-4WESCOM(1-888-493-7266)
TTY 1-888-937-2661 Teletype number for the speech- and hearing-impaired
Web site: www.wescom.orgEmail: [email protected]
Branch Locations
Your savings federally insured to at least $250,000 by the NationalCredit Union Administration (NCUA), a U.S. Government Agency, andbacked by the full faith and credit of the United States Government.
© 2013 Wescom Credit Union. All rights reserved. Printed on Recycled Paper.
@Liz_Wescom
www.facebook.com/WescomCreditUnion
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