Message from the CEO Regarding Card Compromises, Cyber Attacks and
Phishing Schemes
September 8, 2014

It seems that there are more and more reports in the news of data breaches, identity thefts, phishing schemes and cyber‐attacks. Just last week an unnamed nationwide merchant only heightened our awareness. Be assured that we take the necessary proactive precautions available to us, to ensure the integrity of our internal data operating system. At the same time, we work with our members who have experienced external compromises to minimize any inconvenience due to fraudulent activity.

It is important that we let our members know; it isn’t SeaComm, nor is it our own internal operating system, which has caused these recent issues. Retailers and payment system companies need to increase their own vigilance in protecting its customer’s vital debit and credit information by increasing their own data security standards. Unfortunately, the consumer and financial institutions like us are the ones who feel the direct effect of these types of compromises. We are the card issuer and therefore are ultimately the one who deals directly with our member to assist them in resolving these types of issues and concerns.

Members carrying our VISA logo debit and or credit card in conjunction with our zero‐liability policy enables them the peace of mind in knowing we will work with them to ensure any issue pertaining to fraud is resolved. It is important that when fraudulent charges appear to notify us immediately. We will then begin the dispute process and provide provisional credit for those charges.

As a best practice we ask that you monitor your accounts regularly for suspicious activity via NetTeller, Mobile, Smartline or by calling us to ensure all charges incurred are legitimate. And, never give out your financial information unless you are absolutely positive you are communicating with us directly. This due diligence is an important process in the partnership between us.

Once we know someone has had an issue, we can block their current card to ensure no additional fraudulent charges occur and immediately reissue a new debit card right in one of our retail branches. We understand how inconvenient it can be without a debit or credit card and we want to make it a top priority to ensure they are able to continue to conduct business as seamless as possible.

If you have any questions or need additional information, please do not hesitate to contact us at 1-800-764-0566, so we can work with you to immediately begin to resolve those issues.


Sincerely,

Scott A. Wilson
President & Chief Executive Officer

Planning for the Needs of our Members... Today and Tomorrow

It is our responsibility to ensure SeaComm continues to meet the ever-changing needs of our membership. We are very excited about the launch of our mobile deposit capture platform. In addition, our Board of Directors continue to ensure we will be viable well into the future through strategic planning by leveraging our property at 30 Stearns Street and expanding to formulate needed office space to meet the continually evolving technological advancements demanded by our members, as well as to ensure each of our buildings is being utilized as efficiently as possible.

As a result of good planning guided by our Board of Directors, solid management, talented staff and commitment of our membership, SeaComm has not only been able to withstand the economic instability we have experienced since 2008, but has grown during those years. Today, we serve 40,500 and are always looking to what's next to ensure we are not only meeting what our members want, but to stay in compliance with our regulator, the NCUA.

Expansion/Consolidation

Last fall, we announced a $5.1 million 51,870 sq. ft. expansion onto our headquarters in Massena, while at the same time consolidating our retail branches and Call Center operations. Why is it necessary? The fact is we have run out of space. Some of the staff is in less than what we would consider optimal space and we want to improve upon it. Combine that with our 20% membership growth over the past six years and it has become necessary to expand key areas in order to sustain our overall strategic plans outlined by the Board of Directors. So, over the next ten years we see a potential need to increase staffing levels in accounting, information systems, risk management, card services, human resources, internal audit, loan operations, marketing, mortgages, member business lending and sales and service. Taking the aforementioned into account, the number of transactions at our teller lines has decreased. We believe the overall reason is technology. Members have their payroll and other checks directly deposited and use other electronic channels like our NetTeller™, Mobile app and ATM's. That said, anytime you can save one place and be more efficient it frees up funds which can be put back into additional products and services at no cost to the membership. An example of that would be our mobile application. This service is provided at no cost as are many of our services.

The consolidation which will take place as soon as the construction is complete will have minimal impact on the service we deliver. We believe it will be fairly seamless other than members having to go to 30 Stearns Street. Our members will have access to some services they don't currently have at 79 Main Street, such as obtaining an instant issue debit card, SeaCoin or obtaining a mortgage. The benefits of this option will also enable all back office operations to be in one main locations assisting us with an increase in communication and decreased travel time between buildings which will allow us to grow internal staff more efficiently along with membership growth. And, more importantly no staff will lose their job. We are committed to ensuring that the current staff at the 79 Main Street Branch is fully integrated into operations at 30 Stearns Street, so members will enjoy the same services they have grown accustomed to over the years. Moreover, we are adding new positions to meet the ever-changing needs of the business based upon our growth.

Also part of our strategic plan, we continually evaluate our current retail branch operation system. The Malone Branch, which is located in the Price Chopper Plaza is a building leased by the Credit Union. This arrangement has worked for a long period of time; however, owning our own location adds long-term value to the organization. Therefore, the Board of Directors approved the purchase of a piece of property located on Route 11 near the Holiday Inn Express for the future construction of a new branch. We will begin to plan for the construction of this new branch in early 2015 with expected completion June 2016. This new venue will give us additional visibility in a high traffic location in an ever-expanding retail area. SeaComm is financially positioned with excellent earnings and a high level of capital, which too makes sense for us to do all of this today. To monitor the progress of our expansion, visit our website www.seacomm.org.

Financial Strength

Our financial position today continues to remain solid. Year-end assets were in excess of $460 million. At the same time, our net operating expenses YTD were at 1.76%, well below our goal of 2.75%. We finished the year with a net income of $5.3 million, garnering us more than $51 million in total equity to-date. Capital remains a key component to our financial health as it is necessary to maintain adequate reserves for loan losses as our assets continue to grow. It ensures that we are able to withstand any uncertainty like we encountered during the past few years as well as to be viable well into the future.

Best Company to Work For in New York

As I have said in many different forms, we have talented, smart, hard-working staff, which take great pride in their work of serving our members. We do have high expectations and are committed to maintaining that standard moreover, we are incredibly fortunate to have dedicated employees who live our mission of "people helping people". In mid-January, we received notification that we had been chosen for a fourth year in a row as one of the Best Companies to Work for in New York for 2014. We were in the top 10 in 2013. Our selection as one of those small to mid-sized companies was based upon a survey in which our employees were asked to participate, along with requested criteria we had to provide. A few of the focus areas included: leadership and planning, corporate culture and communication, role satisfaction, work environment and relationship with supervisor. We are extremely proud to be included within this privileged group.

Cybersecurity Threats

Daily there are ongoing threats to acquire data, steal identities and crash financial systems. Be assured we take the necessary proactive precautions available to us to ensure the integrity of our operation system. At the same time, we work with our members who have experienced compromises through retailers such as Target and Neiman Marcus.

Governmental Affairs

In order to ensure favorable legislation for Credit Unions, it is necessary to travel to Washington, D.C., to speak with our elected officials. As a Federal Credit Union, we are exempt from paying federal and state income taxes. However, we still must pay school and property tax, which supports the local schools and municipalities in the markets in which we do business. This exemption also enables us to ensure those in our field of membership (St. Lawrence & northern Franklin Counties) have access to affordable credit. In addition, we are able to support countless not-for-profit organizations, like hospitals, schools, etc. with significant financial support. What else makes us different? We are governed by a volunteer Board of Directors and the profits we earn on an annual basis are returned in the form of better than average deposit and loan rates, or relatively low or no fees for services, such as instant issue debit cards, mobile platform, bill pay and mobile deposit capture.

Today, we are continuing to be affected by legislation as a result of the 2008 economic downturn caused by the catastrophic failures of Wall Street banks like Lehman Brothers and Bear Stearns. Those failures were the direct result of sub-prime mortgage products, which adversely affected the housing market and in turn the national economy. This financial crisis was the worst since the great depression. Those changes have also been driven by legislations such as Dodd-Frank and the newly formed Consumer Financial Protection Bureau. Although, we didn't have any sub-prime exposure, we of course were not completely immune to broad economic pressures as a result of the downturn. Therefore, we had to be proactive in managing the balance between loan demand and share deposits and must continue to implement required changes to current processes such as mortgages to maintain compliance. More regulatory burden comes at a cost. So it has been even more important to ensure legislation is favorable to our mission of serving our membership.

Pictured: SeaComm VP of Retail Operations Sherry White, Board of Director Patricia Dodge, Senator Chuck Schumer and SeaComm President and CEO Scott A. Wilson in Washington, D.C.

Member Access

Since becoming CEO in 2007, I have committed myself to being accessible to our members. They can call, e-mail or stop by my office at 30 Stearns Street in Massena. And, each quarter I make myself available in the branches to make it easier to speak with me. I am also on Twitter. You can hear directly from me by following me at twitter.com/@SeaCommCEO. This is a great way to hear from me in real time.

We look forward to continuing to differentiate ourselves in the way our members are served; through the product and delivery channels offered and by continuing to be a good "neighbor" in the communities in which we do business. It's a focused strategy; one which we take serious by continuing to ensure we fulfill our mission of "people helping people".

Respectfully submitted,

Scott A. Wilson
President & Chief Executive Officer

Fifty years and counting:  We are still committed to our roots!

On June 6, 2013, we will be commencing with the celebration of our 50th anniversary.  It is very humbling to be leading SeaComm during this momentous occasion.  This milestone is a concrete way for us to look back and appreciate all of the hard work and dedication that has been accomplished since those very early days.

The story goes like this…It all started with a tool box (which is iconic for us today and can be seen in the lobbies of our branches), $50 and a shared vision of then ten Chevrolet Foundry workers, who each wanted to improve the financial lives of not only themselves, but those who they worked with.  That vision is no less important today than it was back on June 6, 1963.

Earl Jackson, one of the original 10 as I like to call them, is still an active member of the Credit Union today.  He reminds me when we speak about those early days, how SeaComm has become so very much more than they had ever dreamed.   That is a great testament to all those who have built upon that very foundation which he and those other men believed in.

As Arthur Ashe, Jr., once said, “Success is journey and not a destination.” Today, we celebrate our 50 years of shared success.  That journey is continual, as we work each and every day to improve the financial lives of our members and the communities in which we do business.

In 2010, we opened our sixth retail branch in Ogdensburg, NY, and I had remarked at that grand opening that it was the first time that a SeaComm branch was being opened without a presence of a GM plant in operation.  Even though, we no longer have that physical reminder, it is no less important.

We have made a commitment through our continued actions to those who believed in the cooperative model and started this fine institution, by holding an annual Charter Day every year on the very day we were founded.  This helps to solidify for us what we know is the key to our success; never forgetting our roots by continuing to fulfill our unwavering mission of taking care of our members, by doing the right thing for them every single day.

Operating a credit union is a bit more complicated than it was back in 1963.  Processes were done manually and much of it based upon the honor system.

Since those humble beginnings, there have been significant changes that have emerged in how financial institutions operate, most of it due more recently to the 2008 economic downturn caused by the catastrophic failures of Wall Street banks like Lehman Brothers and Bear Stearns. Those failures were the direct result of sub-prime mortgage products, which adversely affected the housing market and in turn the national economy.  This financial crisis was the worst since the great depression.  Those changes have also been driven by legislation such as Dodd-Frank and the newly formed Consumer Financial Protection Bureau. Although, we didn’t have any sub-prime exposure, we of course were not completely immune to broad economic pressures as a result of the downturn.  Therefore, we had to be proactive in managing the balance between loan demand and share deposits and have considered it fiscally prudent to adjust our rates to keep in line with the economy. 

As a result of good planning guided by our Board of Directors, solid management, talented staff and commitment of our membership, SeaComm has not only been able to withstand the economic instability, but grow during those years.

Our financial position today remains solid.  Year-end assets climbed in excess of $460 million, an annual growth of more than 7% from year-end December 31, 2011.  At the same time, our net operating expenses YTD were at 1.44%, well below our goal of 2.95%.  We finished the year with a net income of $7.5 million, garnering us more than $56 million in total equity to-date.  Capital remains a key component to our financial health as it is necessary to maintain regulatory capital ratio and adequate reserves for loan losses as our assets continue to grow.  It ensures that we are able to withstand any uncertainty like we encountered during that time and be viable well into the future.

Over the past few years, we have not only been growing our membership at three percent on average, but have been recognized repeatedly for outstanding financial performance, employee engagement, as well as fulfilling our mission as a federally chartered Credit Union as honored by NAFCU in 2012. 

  • This past fall we were honored for a third year in a row with the distinction of being given the Crystal Performance Award for Excellence by Raddon Financial Group.  In a letter to us, Raddon said, “Despite challenging economic conditions, SeaComm Federal Credit Union was able to perform at the highest levels.”  He added, “Outstanding performance.  Congratulations to the team!” This award is based on certain performance indexes, including a balanced scorecard measurement of growth, income, efficiency and margin management.   More than 500 credit unions across the country were measured for this award.
  • In mid-January, we received notification that we had been chosen for a third year in a row as one of the Best Companies to Work for in New York for 2013.  We were in the top 10 in 2012. Our selection as one of those small to mid-sized companies was based upon a survey in which our employees were asked to participate, along with requested criteria we had to provide. A few of the focus areas included: leadership and planning, corporate culture and communication, role satisfaction, work environment and relationship with supervisor. We are extremely proud to be included within this privileged group.

Even with all that has been said about all of the successes we have enjoyed; nothing compares to what we as a credit union do for our thousands of north country members in providing a safe harbor for their savings and giving them a place to borrow when they have a need. 

Therefore, we will continue to stay the course and focus on the following key priorities:

1. Growing membership;
2. Increasing satisfaction of not only our members, but employees as well;
3. Continuing to strategically grow our retained earnings so that our capital keeps pace with our asset size;
4. Balancing our ever increasing regulatory compliance with that of service to our members; and
5. Making available more products and services which will improve the financial lives of our members
   

As we recognize our 50th anniversary and our continued mission of “people helping people” it is an incredible privilege and responsibility that our Board of Directors, management and dedicated staff  has to carry on with such a rich history of continuing the journey that was started by those 10 men a half of a century later.

We are grateful to our members who have put their trust in us and we will continue to work diligently to remain strong in order to be able to serve well into the future.  On behalf of the Board of Directors, management and staff, I would like to thank everyone who has made SeaComm what it is today and for allowing us to continue to serve your financial needs.  We look forward to working together in 2013.

Scott A. Wilson
President & Chief Executive Officer

What another exceptional year this has been for SeaComm. We have been given a top rating by Weiss Ratings and designated as one of the strongest credit unions in the country; selected as one of the Best Small to Medium Companies to Work for in NY; given the Raddon Crystal Performance award; and honored with the designation of Federal Credit Union of the Year by the National Association of Federal Credit Unions.

All of that doesn’t happen on its own. There is a very specific strategy that is followed, and it is simply, we are very attentive to detail; whether it is member service, employee engagement, product and delivery channel enhancement or prudent financial management.

Being honored as Credit Union of the Year is nothing to take lightly. There was a myriad of criteria that had to be met in order for us to be distinct enough to rise above the hundreds of other entries.

1. We had to show unusual growth, success, and were able to successfully handle an adverse situation;
2. Show we had an impact on our membership or the community;
3. Adherence to principles of sound financial management; and
4. A commitment to consumer education, the community, and/or service to low- and moderate-income individuals.

What made us stand out? I think what I shared with those in attendance at the awards breakfast says it all, “never forgetting our roots by continuing to fulfill our unwavering mission of taking care of our members, by doing the right thing for them every single day.” We believe that to be true, live by it every day and obviously the awards committee at NAFCU agreed with our assessment.

Our financial strength continues to be recognized as well. Weiss Ratings, the nation’s leading independent provider of ratings and analyses of more than 19,000 financial institutions, including, banks, credit unions, life and annuity insurers and property and casualty insurers gave us an “A” rating, up from A- the previous quarter. A ranking of A is considered excellent, meaning SeaComm offers excellent financial security. In a letter dated July 11, 2012, Weiss congratulated us for achieving their rating of “A” or “Excellent”. Weiss states its ratings’ proprietary model uses more rigorous standards than other rating agencies, placing a greater emphasis on a company’s future financial solvency and its ability to withstand severe economic adversity. For that reason, a company receiving their highest financial strength rating truly demonstrates itself to be among the industry’s elite. In addition, they wrote, This is an excellent rating that is not easy to earn. SeaComm is among the top 5% of the 7,186 credit unions nationwide to receive this designation.

For a third consecutive year, SeaComm has also been chosen to receive the prestigious Raddon Crystal Performance Award for achieving a top ten ranking based on the RFG Performance Index, a balanced scorecard measurement of growth, income, efficiency and margin management. We are very proud of this accolade as well.

As we are well into the third quarter, SeaComm continues to exceed its own expectations set forth in the 2012 operating budget. The net assets at the end of June were in excess of $458 million. That’s a growth of more than $32 million from the previous year. At the same time, net operating expenses YTD were 1.66% well within the 2.95% target goal set by the credit union’s budget. We remain well-capitalized. In fact, the NCUA requires a minimum 7% to be classified as well-capitalized. We are substantially higher at 10.29% without realized gains in our investment portfolio. We have maintained a solid dividend to our membership on deposit products. Our balance sheet continues to be strong, giving support to the Weiss rating and therefore further confidence to serve our members well into the future.

Another essential asset to SeaComm is our employees, who work with our members on a daily basis to ensure that they are getting the very best in products and service that they deserve. We have made employee engagement a priority. In April, our selection as one of the top 10 small to mid-sized companies in New York was based upon a survey in which our employees were asked to participate, along with requested criteria we had to provide. A few of the focus areas included role satisfaction, work environment and relationship with supervisor. It’s important to know that we went up 17 spots in designation. We are extremely proud to be included within this privileged group.

Even with all of the above mentioned, nothing is more important than our intended mission of ensuring we are helping to improve the financial lives of our members and that being our number one priority. Recently, we were able to assist a member who had some difficulties and looked to the credit union for help. We did just that. I could write about the experience, but better yet, let the member who wrote a letter to myself and the Board of Directors tell it in their own words.

“Thank you for the guidance and help that was given during a time of needed financial planning of my life. You answered the call and addressed my request to get through a stressful situation. Your #1 answer was, we at SeaComm care for every member and will help and direct them to a better life of success and prosperity.”

“It makes me feel proud to be a SeaComm Federal Credit Union member.”

Looking ahead, we are very excited about our new state-of-the-art Home Branch platform which will be rolling out in September. This will be enhanced from our current one, by offering check images online, upgraded electronic statements, as well as a single sign-on to our already enhanced bill pay platform called Ipay. All of these enhancements are put into place to meet the member’s ever-changing needs and make doing business with us more convenient.

On behalf of the Board of Directors, management and staff, I would like to thank everyone who has made SeaComm what it is today and for allowing us to continue to serve your financial needs.

Respectfully submitted,

Scott A. Wilson
President & Chief Executive Officer