APPENDIX IV APPENDIX IV of total base salaries, divided between salaries up to the Social Security wage base and salaries in excess of the Social Security wage base, with a greater percentage being contributed for the latter. Total pension expense was $57,433 for the period ended December 31, 1981. At December 31, 1981, substantially no employees were vested in the plan. On December 31, 1981, the Bank had contributed to the retirement plan the costs related to past services of all eligible employees through September 30, 1981. The contributions for the period of October 1, 1981, through December 31, 1981, were made in February, 1982. (916091) Letter to Member-Shareholder Dear Member-Shareholder: The National Consumer Cooperative Bank made substantial progress during 1982. It was a year highlighted by examination, planning and positive change. Despite turbulent events in the financial community and a recessionary economy, the Bank's financial strength improved. Net income increased 79%. Loans outstanding increased by 38%. The 1982 return on average assets increased to 5.8% from 5.2% in 1981. Net income, which included $1.4 million in carry over appropriations to administrative operations totaled $12 million, up substantially from $6.7 million in 1981. Income on investments increased to $20 million from $8.9 million in 1981, an increase of 124%. This increase was due to the prevailing high interest rates and an increase in the availability of additional funds for investment. The increase in loans outstanding contributed to a 48.1% increase in interest income from loans. The Bank made its initial repayment of interest expense to the U.S. Treasury of $3.5 million. Total loans outstanding increased from $54.7 million in 1981 to $75.6 million. The year-end allowance for possible credit losses stood at $8.4 million. This allowance, which equals 11.1% of loans outstanding, is high in comparison to other financial institutions. In management's opinion it is prudent because of the higher risk attendant to the developmental nature of the Bank's loan portfolio. The higher risk was also aggravated by the economic uncertainty of the period. Net loan chargeoffs were $108,000 in 1982 compared with $51,000 in 1981. These levels represented 0.17% and 0.13% of average loans in the two years respectively. The Bank's current and future strategy is to be the lead bank for the consumer cooperative sector. We recognize that the Bank has a dual mission: making sound loans and encouraging the development of new and existing cooperative enterprises. The Bank must reconcile its need to meet acceptable loan portfolio standards with the greater risk necessary to serve cooperatives requiring special assistance. For this reason the Bank asked the Farm Credit Administration to review its loan portfolio and to make recommendations concerning the deficiencies of the portfolio. To correct these deficiencies and as part of our ongoing effort to improve operations, the Bank took a number of steps. The Bank instituted a new planning process that has increased productive use of the Bank's resources. |