2 0 1 0
A N N U A L
R E P O R T
COMMITTED TO
MEMBERS,
COMMUNITY,
SAFETY
&
SOUNDNESS
CHIEF EXECUTIVE OFFICER’S REPORT
Telco’s commitment to excellent service, sound lending
policies and conservative investments has again given us
great results in 2010. Of the 222 credit unions in Louisiana,
we are the eleventh largest.
Darryl K. Long
Location & Contact
Information
Airline Office
13404 Airline Highway
Baton Rouge, LA 70817
(225) 924-8900
Fax (225) 756-8553
(800) 634-3044
Wooddale Office
2226 Wooddale Blvd.
Baton Rouge, LA 70806
(225) 924-8900
Fax (225) 923-3136
(800) 634-3044
Hammond Office
1115 W. University Ave.
Hammond, LA 70401
(985) 542-8086
Fax (985) 542-4482
(800) 634-3044
www.brtelco.org
While we have enjoyed remarkable growth, it is not our focus. Our primary goals are
returning value to our members and remaining strong.
Telco was able to meet both of these goals in 2010, despite a couple of challenges. The
first was loan delinquency and charge-offs. They were high for Telco, but substantially
lower than other credit unions, and they have improved drastically in recent months.
The second was that a corporate credit union that Telco utilizes, SouthWest Corporate,
was placed in conservatorship by the National Credit Union Administration (NCUA).
This credit union provided wholesale services to Telco and other credit unions throughout the nation. The financial losses of this corporate credit union were paid for by federally insured credit unions including Telco.
No taxpayer dollars were used. Telco’s expense to cover the losses of our capital at this
corporate credit union along with other assessments this year from the NCUA was over
one million dollars. Despite this, Telco remains one of the safest financial institutions
with more than $18 million in reserves at year-end 2010 and we have many reasons to be
optimistic about the future.
Our federal regulator considers 6% capital to be adequate and 7% to be well capitalized. Telco is very well capitalized with more than 10% set aside for reserves.
While we see other institutions offering complicated credit card offers “for a sixmonth introductory period” or special deposit products for “new money only”, Telco does
not conduct business that way. We believe this kind of strategy only hurts member loyalty in the long run. We pay consistently high yields on our deposit products while charging very competitive loan rates and minimal fees.
Many credit unions spend large amounts of their members’ money advertising on TV
and other media to attract new members. This hasn’t been necessary for Telco. Our strategy has been to instead keep rates so attractive that members talk to their relatives, friends
and co-workers about the value they receive at Telco. This has worked. We have lower
expenses and our members receive the benefit.
Regarding the future for Telco, we have broken ground for a new building in Watson.
It will be our 4th office. This is fewer locations than most credit unions our size. While
we are excited about giving a new location to our members in Livingston Parish, the other
purpose is to give office space to support our existing and future operations. By limiting
our number of offices, we again limit our expenses to allow us to return more to members with better rates and lower fees.
October, 2011 will mark our 75th anniversary. Our growth has been extraordinary. But
more importantly, we have balanced this growth with our firm commitment to our original mission, to provide value to our members. No matter how much we grow, we will
always be devoted to you, our member-owners. Thank you for your loyalty and for placing your trust in us.
Darryl K. Long, CEO
CHAIRMAN’S REPORT
B aton Rouge Telco Federal Credit Union maintained
a strong financial position in 2010 and experienced an
average membership growth of over 100 new members
per month to reach 22,503, an increase of 5.9 percent
over the previous year.
At year’s end, Total Assets had exceeded $183 million. By offering competitive rates,
Loans grew $11 million to reach $151 million. In fact, Total Loans were 92.77 percent of
Total Shares, much better than any of our peers. Also, loan quality improved somewhat
with a delinquency rate of 0.99 percent of existing loans and a “Charge Off” rate of 0.78
percent on Average Loans, which is less than the 0.83 percent rate of a year ago.
Diligent management kept Net Operating Expenses low, which allowed a Return on
Average Assets of 0.61 percent – well over our peer group.
Additional analysis of operations can be found in other sections of this Annual
Report and will be reviewed by others. Ground has been broken on our property in the
Watson area for the new branch office in Livingston Parish. Construction is now underway and should be completed later this year. This will allow Telco to better serve members in this fast growing part of our service area.
On behalf of the Board of Directors, it has been a pleasure to serve you, the members,
of this outstanding Credit Union.
Win Landry
W. T. Landry, Chairman
Board of Directors
Pictured
(L-R):
Floyd Eskine, Director
Win Landry, Chairman
Dell Oliver, Director
Marianne Merritt, Secretary
A. P. (Art) Landry, Vice-Chairman
Andrew Eames, Director
Darrell Goudeau, Treasurer
Assets
Number of Members
25,000
22,500
20,000
17.500
15,000
12,500
10,000
7,500
5,000
2,500
0
16,677
17,751
19,803
21,249
22,503
(1936
-
2010)
200
M
2010
$183,757,076
175
M
150
M
125
M
100
M
2006
2007 2008
2009
2010
75
M
1940
$15,211
50
M
Member Shares & Loans
In Millions
180
160
140
120
100
80
60
40
20
0
158.4
108.5
116.0
165.0
0
1930
1940
1960
$822,123
1950
$115,682
1950
1990
$26,510,318
1970
$1,974,434
1980
$7,063,779
1960
1970
1980
2007
Shares
1990
2000
2010
Consolidated Statement of Financial Condition
127.1
As of December 31, 2010 (unaudited)
ASSETS
2006
2008
2009
2010
Loans
5 – Year Certificate
3.00%
25
M
1938
$1,687
1936
0
2000
$56,957,392
2.85%
2.50%
2010
2009
Loans to Members
$151,769,998
Cash & Cash Equivalents
3,490,058
Investments
22,830,303
CU SIP Senior Guaranteed Term Obligation (Note 1)
0
Premises & Equipment
3,566,156
Other Assets
2,100,561
TOTAL ASSETS
$183,757,076
$140,442,318
8,949,219
21,271,449
20,000,000
3,511,747
1,995,914
$196,170,647
LIABILITIES, SHARES & EQUITY
Notes Payable - CU SIP (Note 1)
Accounts Payable & Other Liabilities
Total Shares
Unrealized Gain (Loss) on Investments
Equity
TOTAL LIABILITIES, SHARES & EQUITY
0
164,856
165,045,549
80,384
18,466,287
$183,757,076
20,000,000
445,900
158,413,325
6,144
17,305,278
$196,170,647
1.84%
2.00%
Consolidated Statement of Income
1.50%
As of December 31, 2010 (unaudited)
1.00%
INCOME
0.50%
0.00%
Telco
Area
Banks’
Source:
Data
Trac:
APY
(Annual
Percentage
Yield)
reported
on
December
27,
2010
over
$10,000
balance
on
5-Year
Telco
Share
Certificate
or
bank
Certificate
of
Deposit.
2010
2009
$9,249,626
402,928
3,208,001
$12,860,555
$8,383,471
722,188
3,260,822
$12,366,481
OPERATING EXPENSES
Gain (Loss) on Investments (Note 2)
$7,318,802
(606,660)
$6,515,359
(393,340)
INCOME BEFORE DIVIDENDS
Dividend Paid to Members
NET INCOME
$4,935,093
3,774,085
$1,161,008
$5,457,782
4,023,044
$1,434,738
Interest on Member Loans
Income from Investments
Other Operating Income
GROSS INCOME
Footnotes:
1) Credit Union System Investment Program (CU SIP) sponsored by NCUA to enhance system liquidity.
2) All of 2010 and 2009 investment loss relates to membership capital investment in a corporate credit union.