A Record Year of Service

2017 Annual Report

Doing the Right Thing

We’re motivated by you. For 69 years, your family, your community, and your financial well being have come first. And our dedication continues—to further the financial well being of members, free from traditional, profit-motivated banking.

Download 2017 Annual Report

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The Alaska USA Story

In 1948, fifteen civil service personnel gathered in Anchorage’s Alaska Air Depot, pooled their savings, and their conviction in one another, to form a member-owned credit union.

At the heart of that decision was a simple truth—local financial institutions simply could not or would not support the credit needs of the personnel who had been recently transferred to Alaska. Accordingly, the credit union was founded and members began extending credit to one another while volunteering their time to operate the credit union.

Today, Alaska USA still builds upon the strength of members—bringing its not-for-profit, financial service cooperative model to new families and businesses across Alaska, Arizona, California, and Washington.


The Board of Directors' and President's Report


We are very pleased to present this 2017 Annual Report as it summarizes an outstanding year in Alaska USA’s history in terms of service, membership growth, lending and financial performance. It also celebrates Alaska USA’s 69 years of serving members.

Since chartered in 1948, the credit union’s mission has been to provide financial services to members, affordably, conveniently and professionally. In 2017, the credit union set new records for membership, deposits, loans, regulatory net worth, and assets, while reporting net income of $26.5 million. At year end, assets totaled $7.2 billion with regulatory net worth of $667.5 million, and the credit union membership totaled 642,751.

Throughout the credit union’s 69 years of operations, it has remained true to its purpose as a reliable partner to its members by providing them a safe place to save and earn highly competitive rates on savings and, at the same time, an available source of low-cost credit.

Better than Banking

In terms of financial performance, 2017 was one of the most successful years in the credit union’s history, as stated in the enclosed Treasurer’s Report. At the same time, the credit union expanded and enhanced services and processed a record 338 million transactions and 118,297 new loans totaling over $4.5 billion. The majority of this loan volume was consumer loans as the credit union continued to expand its market presence and members were in a position to benefit from Alaska USA’s historically low loan interest rates.

As a member-owned cooperative, Alaska USA transfers value to members by providing services more cost effectively than other financial organizations. To measure the credit union’s success in this regard, the value transferred is rigorously calculated based on the dollar benefit Alaska USA members receive from higher rates on deposits, lower loan rates, and lower fees compared to those of competing banking institutions. We are pleased to report that the value transfer to members in 2017 was a record $133 million, an increase of $3.5 million over 2016. That is an approximate return of $207 per member.

People Helping People

In addition to returning profits back to the members, Alaska USA is committed to serving the communities in which members live, work and attend school. Through corporate giving and community support programs, Alaska USA contributed more than $600,000 to non-profit organizations in more than 50 distinct communities and employees separately donated over $50,000 to the United Way in 2017. Charitable contributions weren’t limited to the credit union and its employees; credit union members donated over $80,400 to local food banks in the annual “Cash for Cans” food drive and an additional $99,000 to the Alaska USA Foundation, an organization that directly funds needs-based services to children, veterans, and active duty members of the armed services. While financial support of non-profit organizations is incredibly important to the co-operative mission of the credit union, Alaska USA employees in Alaska, Arizona, California, and Washington also volunteered more than 620 hours supporting organizations they are passionate about.

As financial security is a cornerstone of a strong society, we focused on providing financial literacy courses to over 2,100 school-aged children, and nearly 3,000 high school students participated in financial reality fairs presented by credit union staff. Lastly, we hosted numerous retirement, Social Security, and Medicare seminars ensuring members are financially prepared for major life events.

Right Where You Belong

In terms of service, numerous enhancements were made during the year to make the credit union more convenient for members. Full-service financial centers were opened in Tacoma, Washington and Glendale, Arizona; and a new retail branch was opened in Scottsdale, Arizona. Planning was also completed for a new financial center that will open in Renton, Washington in 2018. At year end, the credit union operated 87 branches, which includes nine financial centers in four states. Also, a total of seven new branded ATMs were added in remote communities that had little to no other physical account access. Finally, several enhancements were made that improved electronic and mobile account navigation, and the mobile app authentication process was streamlined with the introduction of biometric login on equipped mobile devices.

Another way the credit union measures its success in serving members is to conduct regular surveys asking members their opinion about the level of service the credit union provides. This member service survey has been conducted each month for the last 19 years. In 2017, the survey responses revealed the highest levels of member service satisfaction ever recorded. In addition, the credit union was again selected by consumers as the favorite financial institution in ten separate communities, including the four largest market areas in Alaska. Also, mortgage operations received several first place awards as the best mortgage company and the credit union business and commercial lending program was honored once again by receiving an award recognizing it for providing the largest number of small business loans in Alaska.

Strength in Members ®

Alaska USA has a 69-year history and proud record of serving members and helping them during both good and bad economic times. Alaska USA is uniquely positioned to do so because of its very strong balance sheet, membership diversification by geography and industry, experienced management and staff, significant earnings capacity, broad range of services, and diversified business activities. In addition to the credit union’s traditional savings and lending services, business activities include Alaska USA Insurance Brokers and Alaska USA Mortgage Company, both wholly owned subsidiaries of the credit union.

We are confident that Alaska USA’s experience, sound business philosophies and practices, and strong financial foundation position the credit union well to meet the many challenges and opportunities that lie ahead. We are certain that Alaska USA’s 70th year of operation will be another year of success in serving members’ financial needs.

We want to thank the membership for their nearly seven decades of support and participation in the credit union. We also want to congratulate and thank the volunteer officials and all the employees for their service to members and contributions to Alaska USA in 2017.


Bobby W. Alexander, Chairman

Ken D. Campbell, 1st Vice Chairman

Ronald E. Lee, 2nd Vice Chairman

Gary L. Sholly, Secretary-Treasurer

Kent B. Berthiaume, Director

Lorran J. Skinner, Director

Geri M. Wacker, Director

Geoff Lundfelt, President and CEO

Better than Banking

When you join Alaska USA, you become a part of something bigger—a not-for-profit financial services cooperative that provides for life’s financial needs in a way that banks don’t.

MEMBERSHIP


39,144 / 6.49%

Increase of members prior year end - Dec 31, 2017

ASSETS TOTALED

$
B


$570.91 / 8.57%

Increase in millions prior year end - Dec 31, 2017

LOANS TOTALED

$
B


11.03%

Increase over prior year end balances - Dec 31, 2017

VALUE TRANSFERRED

$
M


$207

Record amount paid per member

Investing in Members

"The best investment we can make is a loan to a member. It’s the reason the credit union was founded, and it will be what carries us into the future"

Wayne Bailey - Chief Lending Officer


Alaska USA thrives on the investments we make in members. Their financial well being is our well being, and that of other members too. Following through on this investment requires more than a comprehensive portfolio of products and services. It relies on thoughtful, skilled, and well-trained professionals who guide members toward the best possible outcomes.

Along with the investments we make in members, we make investments in Alaska USA’s employees as well. Alaska USA prides itself on a knowledgeable employee workforce built in part through the Alaska USA University, which trains employees, expands their skill sets, and encourages them to pursue increased responsibilities within the organization, all of which benefit members in turn.

Across the organization we have accredited financial advisors and insurance brokers who are experts in all facets of the coverage they research for members, experienced mortgage loan originators with Certified Military Housing certification, and a dynamic executive staff with years of experience in working face-to-face with members. The common thread is this: a complete commitment to the credit union philosophy, where every interaction is treated with the member’s best interest in mind and with the highest level of expertise.

Alaska USA recently financed my “new” car. It was touch and go at the dealership until Alaska USA stepped up to the plate. Like so many, I have good credit, little debt, but limited income. Alaska USA believes in me and I will be forever grateful.

Jack S. - California

I joined Alaska USA in 1994 through my job at the Salvation Army. I was a bank customer at the time, but closed my bank account because the fees were higher and the bank rejected my loan to buy a home. I haven’t used a bank since.

Gail S. - Washington

I still can’t believe we were able to get our mortgage processed so quickly – and painlessly! I have since used Alaska USA for an ATV loan and we’ll be using them for anything we need in the future.

Randi M. - Alaska

We Are Where You Are

The benefits of Alaska USA membership follow wherever you go.


SHARED BRANCHES

5000+

NATIONWIDE SURCHARGE-FREE ATMs

55,000+


11

NEW BRANCHES HAVE OPENED SINCE 2016

With two flagship financial centers opened in 2017


24/7

MEMBER CALL SUPPORT

With real people and not machines

Commitment to Community

Alaska USA’s commitment extends beyond members and into the communities we serve. Through financial donations and volunteerism, Alaska USA supports numerous organizations and non-profits—because healthy communities benefit everyone. Below are a few examples of the organizations the credit union supported in 2017:


$140,902

Given to charitable organizations


$80,400

Given to food banks and shelters


$1.7 Million

In charitable donations since 2003

Armed Services YMCA

Alaska USA’s history is deeply connected to the U.S. military and the credit union is honored to be able to contribute to organizations that help military families. The Armed Services YMCA provides specialized programs and services focused on building resilient military families that can thrive under the immense challenges faced while their loved ones preserve the security of our nation.

Kids Day

Alaska USA is the primary sponsor of Kids Day, a yearly event focused on family fun and celebrating youth—through 80 youth-serving organizations that provide programs and a day of fun activities, including free access to the Alaska Zoo courtesy of Alaska USA.

Tacoma Rainiers Baseball

For over five decades, Cheney Stadium has served as a vibrant community hub for the Tacoma area, and now operates as home to the Tacoma Rainiers—Triple-A affiliate of Major League Baseball’s Seattle Mariners. More than 375,000 people attend games and events every year.

In 2017, Alaska USA partnered with the Tacoma Rainiers to host the Alaska USA Federal Credit Union Triple-A Home Run Derby—a Cheney Stadium first. The partnership also provides free tickets and special attendance nights for Alaska USA members and professional partners.

United Way

Alaska USA employees stepped up in a big way in 2017 and raised more than $50,000 to benefit the United Way. The employee donations help United Way’s missions to empower families to be financially stable, prepare kids for future success in life and work, and connect families to affordable healthcare options.

Financial Education

Financial well being starts with a strong foundation in personal finance and budgeting. Alaska USA Financial Education programs and the credit union community’s Get Real Financial Reality Fairs show youth how short-term financial choices can have long-term implications. In 2017, Alaska USA employees spent 636 volunteer hours coaching nearly 800 high school seniors through real life scenarios and events and the impact financial choices they make can have on their future.

Children’s Miracle Network

More than 10 million children a year, 1 in 10 children in North America, are treated by Children’s Miracle Network Hospitals. Those 10 million children make for 32 million total hospital visits each year, and not all of the costs of those visits are covered by Medicaid or other insurance programs. Contributions from Alaska USA help fill the gap in funding and help ensure that sick and injured kids get the best care possible.


Lending Report

The credit union continued to experience positive performance from its portfolio of loans in 2017.

Total funding of new loans by the credit union and its subsidiary mortgage company during 2017 was $4.46 billion. A total of 118,297 consumer, real estate and business loans were approved and closed by the credit union and its mortgage subsidiary during the year. Loans outstanding at December 31, 2017, totaled 437,513, for $5.99 billion, an increase of 6,591 loans and $595 million over year-end 2016. During the credit union’s 69-year history, over 2.8 million loans totaling over $49 billion have been granted to members by Alaska USA.

Total outstanding consumer loan and credit card balances increased $489.2 million, or more than 11.08% during the year, to over $4.90 billion.

Member business loans outstanding grew 22.47% in 2017, with $311.2 million in new business loans during the year. Business loans in portfolio at year end totaled 1,320 for $704.8 million.

The credit union and its mortgage subsidiary granted over $1.01 billion in mortgage and real estate loans during 2017. Most of the mortgage loans were sold to secondary market investors or pooled into mortgage-backed securities and sold in the financial markets. By taking this approach, the credit union is able to offer members a wide variety of mortgage programs and, at the same time, significantly reduce the credit and interest rate risks associated with portfolio real estate lending. The credit union retains the servicing rights on many of those sold loans, thereby providing borrowers with quality servicing from a trusted source. At year end, the credit union’s mortgage loan servicing portfolio included 26,778 loans totaling $5.1 billion.

Real estate loans held in portfolio and held for sale decreased $17.6 million in 2017 to a total of $393.3 million.

The quality of underwriting and soundness of the overall loan portfolio are reflected in the 1.05% delinquent loan ratio at year end, which is down from 1.20% in 2016. Net loan charge offs in 2017 were $35.3 million, up from $29.2 million in 2016.

The credit union remains committed to ensuring that all members receive comprehensive consumer, real estate, mortgage and business loan services, and a fair and timely review of their loan requests. Given the challenges presented by the economy, the credit union continues to take appropriate action to ensure the loan portfolio continues to grow and remains strong in the years ahead. These actions ensure the credit union maintains its 69-year tradition of being a trusted and reliable source of credit for members.

Wayne Bailey, Chief Lending Officer

Loans
in billions
2013
2014
2015
2016
2017
Loans Granted
2013
2014
2015
2016
2017

Treasurer's Report

Alaska USA’s 2017 consolidated financial results continue to reflect a growing, profitable, and well-capitalized financial institution.

The credit union experienced growth in most key areas during 2017. Membership totaled 642,751 at December 31, 2017, an increase of 39,144 members, or 6.49% over prior year end. Member deposits and member loans both experienced significant growth in 2017, with deposits increasing 8.60% and loans increasing 11.03% over prior year-end balances. Assets totaled $7.23 billion at December 31, 2017, an increase of $570.91 million, or 8.57% over prior year end.

Net income totaled $26.54 million in 2017, a reduction of $25.27 million from 2016 net income. This decrease primarily reflected the impact of a one-time gain of $17.06 million that was realized in 2016 on the sale of Alaska USA Insurance Brokers’ commercial lines of business. The remaining variance in net income was mainly comprised of the net impact of increases in net interest income, provision for loan losses, and noninterest expense.

Alaska USA’s regulatory net worth at December 31, 2017, totaled $667.48 million, an increase of 4.14% over the prior year-end regulatory net worth. The credit union’s regulatory net worth to asset ratio was 9.23% at December 31, 2017, far exceeding the 7% threshold that is required to be considered “well capitalized” by the National Credit Union Administration, the credit union’s federal regulatory agency.

Alaska USA’s financial strength and stability demonstrate that the credit union is well positioned for continued success in serving the financial needs of its members.

Gary L. Sholly, Secretary-Treasurer
John Cassidy, Chief Financial Officer

Deposits
in billions
2013
2014
2015
2016
2017
Regulatory Net Worth
in millions
2013
2014
2015
2016
2017

Supervisory Committee Report


The credit union’s Supervisory Committee is comprised of five volunteer members who function as the credit union’s audit committee. It is the Committee’s responsibility to ensure that internal controls are effectively maintained; accounting records and reports are promptly prepared and accurately reflect the results of operations; the operation of the credit union is in accordance with the policies and procedures established by the Board of Directors; and member account inquiries are promptly and fairly considered. Your Supervisory Committee has fulfilled these responsibilities during the past year as follows:

  • Retained Crowe Horwath, a certified public accounting firm, to conduct the credit union’s annual audit;

  • Worked with the credit union’s Internal Audit department to ensure that internal controls were maintained;

  • Responded directly to members with account inquiries;

  • Completed a random sample verification of member account balances and of closed accounts through direct correspondence; and

  • Met regularly, and as required, to consider matters that were within the Supervisory Committee’s area of responsibility.

It is our opinion that the enclosed financial statements fairly and accurately reflect the financial condition of Alaska USA Federal Credit Union on December 31, 2017, and that the credit union operates and is managed on a sound basis, in accordance with current federal regulations.


Richard F. Hawley, Chairman

RaeDene K. Turner, Secretary

Will Lacy, Member

Jack E. Short, Member

Craig S. Wood, Member


Consolidated Statements
of Financial Condition

ALASKA USA FEDERAL CREDIT UNION AND SUBSIDIARIES
December 31, 2017 and 2016
(Dollars in thousands)
2017 2016
ASSETS
Cash and due from financial institutions $265,542 $225,908
Interest bearing deposits in other financial institutions 1,780 1,768
Securities purchased under agreement to resell 212,608 311,818
Total cash and cash equivalents 479,930 539,494
Investment securities available for sale 332,942 317,129
Member Loans
Loans to members, net of allowance of $47,755 and $38,595
as of December 31, 2017 and 2016 5,873,872 5,254,030
Real estate loans held for sale 120,225 144,382
5,994,097 5,398,412
Deposit in National Credit Union Share Insurance Fund 57,034 53,718
Federal Home Loan Bank stock, at cost 7,978 7,380
Accrued interest receivable 14,909 12,892
Other receivables 12,292 9,111
Premises and equipment, net 183,466 165,561
Assets acquired in liquidation of loans, net 6,220 6,209
Goodwill 5,295 5,295
Intangible assets, net 1,669 2,223
Mortgage servicing rights 40,724 39,441
Net pension asset 79,215 87,032
Other assets 15,126 16,093
Total assets $7,230,897 $6,659,990
LIABILITIES AND MEMBERS’ EQUITY
Liabilities
Members’ share accounts $6,564,364 $6,044,351
Accrued expenses and accounts payable 136,428 124,742
Total liabilities 6,700,792 6,169,093
Members’ equity
Statutory reserves 42,658 42,658
Undivided earnings 624,823 598,279
Accumulated other comprehensive loss (137,376) (150,040)
Total members’ equity 530,105 490,897
Total liabilities and members’ equity $7,230,897 $6,659,990

Consolidated Statements of Income

ALASKA USA FEDERAL CREDIT UNION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2017 and 2016
(Dollars in thousands)
2017 2016
Interest income
Interest and fees on member loans $219,727 $195,113
Interest on investment securities 12,049 9,581
Other interest income 4,346 2,535
236,122 207,229
Interest expense
Dividends on members’ shares 28,729 24,821
Borrowings 3,793 680
32,522 25,501
Net interest income 203,600 181,728
Provision for loan losses 44,517 33,387
Net interest income after provision for loan losses 159,083 148,341
Noninterest income
Service fees and charges 36,719 45,514
Interchange fees 38,169 35,668
Net gain on sale of loans 28,569 26,325
Net gain on sale of investment securities - 582
Net gain on sale of AUIB commercial lines of business - 17,062
Other 33,770 34,759
Total noninterest income 137,227 159,910
Noninterest expense
Compensation and benefits 166,113 163,007
Occupancy and equipment 52,829 43,448
Other 50,824 49,978
Total noninterest expense 269,766 256,433
Net income $26,544 $51,818

2017 Officials


Board of Directors

Bobby W. Alexander, Chairman

Ken D. Campbell, 1st Vice Chairman

Ronald E. Lee, 2nd Vice Chairman

Gary L. Sholly, Secretary-Treasurer

Kent B. Berthiaume, Director

Lorran J. Skinner, Director

Geri M. Wacker, Director

Supervisory Committee

Richard F. Hawley, Chairman

RaeDene K. Turner, Secretary

Will Lacy, Member

Jack E. Short, Member

Craig S. Wood, Member

2017 Executive Staff

Geoff Lundfelt, President and CEO

Wayne Bailey, Chief Lending Officer

Tom Newins, Chief Operations Officer

John Cassidy, Chief Financial Officer

Mike Brady, Chief Information Officer

Cory Schwab, Chief Risk Officer

Dave Hamilton, Executive Director, Business & Commercial Services

Scott Hansen, Executive Director, Consumer Lending

Steve Larson, Executive Director, Mortgage & Real Estate Lending

Chad Meadows, Executive Director, Retail Financial Services

Julia Niziolek, Executive Director, Insurance & Investment Services

Chris Brown, Senior Vice President, Special Credits

Shawn Brume, Senior Vice President, IM Governance

Jessica Graham, Senior Vice President, General Counsel

Kay Huebner, Senior Vice President, Member Service Center

Mike Longlet, Senior Vice President, IM Applications

Nelson Lowe, Senior Vice President, Treasury

Rochelle Marshall, Senior Vice President, Marketing

Dan McCue, Senior Vice President, Corporate Administration

Phenie Miller, Senior Vice President, Member Service Center

Tod Miller, Senior Vice President, Indirect Consumer Lending

Rachel Norman, Senior Vice President, Human Resources

Troy Shelden, Senior Vice President, Accounting

Joel Swanson, Senior Vice President, Branch Administration

Brian Spink, Senior Vice President, Internal Audit

Bob Thompson, Senior Vice President, Corporate Properties & Supply

Marci Aguayo, Vice President, Branch Administration, SW Region

Vilma Chavez, Vice President, Commercial Services Administration

Scott Chertkow, Vice President, IM Operations

John Collins, Vice President, Mortgage Operations

Joe Crosson, Vice President, Direct Consumer Lending

Mendy Daugherty, Vice President, Operations Center

Holli Frenchik, Vice President, Consumer Loan Administration

Cindy Fry, Vice President, Branch Administration, PNW Region

Robert McNaughton, Vice President, Business & Commercial Lending

Julie Moore, Vice President, Mortgage Administration & Compliance

Elizabeth Pavlas, Vice President, Electronic Services

Jayson Schmett, Vice President, Secondary Marketing

David Vanzant, Vice President, Enterprise Security

Sonya Watkins, Vice President, Branch Administration, AK Region

Chris Wilder, Vice President, Operations

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