VLFCU Annual Report

VacationLand Federal Credit Union achieved another year of strong financial growth in 2022 adding in excess of $2.5 million to the credit union's capital via net income. Fiscal year 2022, not unlike the last few years, was unique in its own way. The Federal Open Market Committee of the Federal Reserve Bank increased the Federal Funds rate 425 basis points in 2022 in an effort to combat inflation in the market. 2022 in Review Net Income for the year ending December 31, 2022 decreased by 34.70% to $2,514,762 in 2022, compared to 2021 net income of $3,851,304. Net income decreased primarily due to VLFCU receiving the Rapid Response Grant in 2021. Net Interest Income rose year over year due to higher loan balances in addition to a higher interest rate environment. Loan quality slightly improved again in 2022 with net charge-offs to average loans decreasing from 0.28% in 2021 to 0.18% in 2022. Delinquencies fell from 0.55% at 2021 year-end to 0.51% as of 2022 year-end. Return on Average Asset (ROAA) is a key measure of a credit union’s financial health. The 2022 ROAA fell 46 basis points from 2021 returning 0.83% on average assets compared with a 2021 ROAA of 1.29%. Net Interest Margin rose to 3.37% for 2022 compared with 3.03% for 2022 primarily from rising yields on loans and investments from the multiple rate increases to the Federal Funds rate. Revenues in 2022 decreased by $1,427,058 and totaled $14,199,407 compared with $15,626,465 in 2021. Revenue in 2021 was higher almost entirely due to the recognition of the Rapid Response grant that the credit union received. Interest income on both loans and investments were higher in 2022. Total Expenses were in line with the previous year, decreasing slightly year over year from $11,775,161 in 2021 to $11,684,645 in 2022. Operating expenses for the credit union were up year over year while we recognized cost savings related to the credit union's cost of funds. Total Assets fell by $18,762,587 or 6.0%, reaching $294,005,511 at December 31, 2022. The decline in the overall asset size was due to a decrease in deposits of $8,085,639 in addition to a decrease in FHLB borrowings of $4,937,132. Total Loans at December 31, 2022 rose by $12,006,906, the increase driven in large part due to a record setting year for our business-lending department coupled with an increase in our indirect auto-lending portfolio, which had a net increase in excess of $5.0 million in 2022. Investments decreased by $2,714,392 to $96,564,392 at year-end. Investment Income for 2022 rose 44.3%, to $2,623,762, from variable rate investments that repriced as the FOMC raised rates throughout 2022. Deposits fell by 3.2% ending the year at $247,471,521. The decrease in the deposit portfolio was primarily due to share certificate balances and was slightly offset by an increase in regular shares. In 2021 and 2020, the United States federal government issued stimulus checks boosting individual savings, thus our deposit base went up in those years. As inflation took hold of the economy, various Covid-19 related government stimulus ceased and households began drawing down on their savings. The Credit Union’s Equity position climbed to $34,863,878 at December 31, 2022. The Capital to Asset Ratio , another key indicator of the financial strength, rose to 11.86% at December 31, 2021 while a year ago ratio was 10.34%. Both ratios are well above the 7.00% ratio required to be categorized as “Well Capitalized” under National Credit Union Administration regulations for prompt corrective action. In 2020, VLFCU received a favorable report by the National Credit Union Administration, our federal regulatory agency, substantiating our sound financial management. Matthew D. Stahl CPA a message from Chief Financial Officer Thank you to my co-workers, Board, and Supervisory Committee members for their hard work and dedication to VacationLand. Most importantly, thank you, our members. VacationLand exists to serve its members as a not-for-profit financial cooperative in the north central Ohio area.