2018-11-14T12:07:06-06:00 2017-12-31 910189318 MOSS ADAMS LLP 2707 COLBY AVENUE SUITE 801 EVERETT WA 98201 990 2017-01-01 910659059 HARBORSTONE CREDIT UNION HARB 2535842260 PO BOX 4207 TACOMA WA 984380207 LAURIE LENO CFO 2535842260 2018-11-13 1 COLLEEN RAMIRES P01251320 4252597227 2018-11-13 12.129.7.100 2018-11-13 14:53:04 PS P DA39A3EE5E6B4B0D3255BFEF95601890AFD80709 92E4E1887166A1A95AEA2354EF277E907B8DEB06 2017 2019-02-21 02:37:17Z LAURIE LENO PO BOX 4207 TACOMA WA 984380207 95171505 0 X WWW.HARBORSTONE.COM X 1955 WA HARBORSTONE CREDIT UNION EXISTS TO BE AN ANCHOR OF TRUST. 10 10 287 10 702761 -401669 0 0 47427664 48980860 5337980 5154005 -154223 -111504 52611421 54023361 53000 71500 0 0 18875936 18847099 0 0 0 26256772 27838572 45185708 46757171 7425713 7266190 1199334729 1245867310 1060367049 1099559494 138967680 146307816 THE CREDIT UNION IS A MEMBER OWNED, NOT FOR PROFIT, COOPERATIVE, OPERATED FOR THE PURPOSE OF CREATING A MEANS WHEREBY MEMBERS CAN PROVIDE EACH OTHER WITH NEEDED FINANCIAL SERVICE. 0 0 PROVIDING CONSUMER AND MORTGAGE LOANS FOR 31,308 MEMBERS TOTALING $686,014,582. PROVIDING BUSINESS LOANS TO 319 MEMBERS TOTALING $241,279,412. MAINTAINING DEPOSITS ON 78,691 MEMBER AND BUSINESS ACCOUNTS TOTALING $1,025,225,057. 0 0 0 0 0 0 0 0 0 1 1 0 0 1 1 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 1 22296 0 1 287 1 1 1 0 0 0 0 0 X 10 10 0 0 1 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 1 1 X HARBORSTONE CREDIT UNION 2535842260 9611 GRAVELLY LAKE DRIVE SW LAKEWOOD WA 984992761 ANN ANDERSON CHAIR 2.00 X X 0 0 377 JIM BUCK VICE CHAIR 2.00 X X 0 0 377 LINDA CRANE NELSEN SECRETARY 2.00 X X 0 0 377 IVAN BARRON BOARD MEMBER 2.00 X 0 0 377 TOM DEMPSEY BOARD MEMBER 2.00 X 0 0 377 RICHARD EVANS BOARD MEMBER 2.00 X 0 0 377 MICHAEL GEDEON BOARD MEMBER 2.00 X 0 0 377 BONNIE KERN BOARD MEMBER 2.00 X 0 0 377 RICK STEVENS BOARD MEMBER 2.00 X 0 0 377 SHELLIE WILLIS BOARD MEMBER 2.00 X 0 0 377 PHIL JONES PRESIDENT/CEO 40.00 X 557598 0 274704 LAURIE LENO SR VP CFO 40.00 X 413901 0 85738 TOM GRAVES EXECUTIVE VICE PRESIDENT (8/17) 40.00 X 220559 0 35504 STEVE CROSBY SR VP COO 40.00 X 204277 0 94837 MICHAEL DECIUS SR VP CIO 40.00 X 343777 0 54735 MICHAEL POWELL SR VP CLO 40.00 X 180734 0 55547 JEFF IVEY SR VP STRATEGIC OPERATION (11/17) 40.00 X 164445 0 27239 FOREST HAYES VP CHIEF RISK OFFICER 40.00 X 166556 0 35673 DOUG RICHARDSON VP TRAINING/ADMINISTRATION 40.00 X 152475 0 61697 RALPH KOWAL FINANCIAL ADVISOR 40.00 X 137236 0 26508 FRANK MARZANO VP BUSINESS BANKING 40.00 X 128255 0 28014 STEPHANIE NICKLAUS VP CREDIT ADMINISTRATOR 40.00 X 124260 0 26751 2794073 0 810717 11 0 1 0 DIGITAL INSIGHT CORPORATION PO BOX 515306 LOS ANGELES CA 90051 ONLINE BANKING PROVIDER 1282350 THE ELEMENT GROUP INC 125 BREWERY LANE STE 9 PORTHSMOUTH NH 03801 BUILDING CONTRACTOR 1055756 FISERV CNS PO BOX 5037 263 PORTLAND OR 97208 ATM/NETWORK PROCESSOR 1042512 FIDELITY INFORMATION SERVICES INC PO BOX 4535 CAROL STREAM IL 60197 CORE PROCESSOR, CHECK PROCESSING 610944 COOK SECURITY GROUP 8214 S 192ND ST KENT WA 98032 SECURITY 243704 28 INTEREST FROM LOANS 522100 36074670 36074670 SERVICE CHARGES & FEE INCOME 522100 5506570 5506570 INTERCHANGE INCOME 522100 4487502 4487502 OTHER NON-INTEREST INCOME 522100 1380629 805469 575160 REVENUE SHARING INCOME 522100 1158743 1158743 372746 244475 128271 48980860 4885662 4885662 233264 300176 -66912 -66912 -66912 40326311 790000 40027776 820192 298535 -30192 268343 268343 INCOME FROM JOINT VENTURES 522100 -44592 -43922 -670 -44592 54023361 48233507 702761 5087093 71500 2717366 11731704 1123680 2107098 1167251 41875 144445 2068008 1433302 1370106 1490322 1798952 185757 3405946 2659990 252025 PROVISIONS FOR LOAN LOS 6006316 PROCESSING FEES 3203703 LOAN SERVICES 1724870 DUES & MEMBERSHIPS 237447 1815508 46757171 6581955 8700427 69151662 43789841 3464231 1794174 814037538 921257787 1904383 1982126 52953170 25148990 28795369 27804180 258627155 223805314 3592999 2992957 13179437 13740504 1199334729 1245867310 9233715 12057149 2969600 816698 1048163734 1086685647 1060367049 1099559494 X 0 0 0 0 138967680 146307816 138967680 146307816 1199334729 1245867310 X 7266190 -361932 435878 X 0 1 X 1 0 6756699 6756699 23378621 9256391 14122230 6556979 2216565 4340414 15868317 13676034 2192283 392554 392554 27804180 2248249 F AVAILABLE FOR SALE SECURITIES 202164256 F 457(F) DEFERRED COMPENSATION PLAN INVESTMENTS 17662809 F CERTIFICATE OF DEPOSIT 1730000 F 223805314 MEMBER'S SHARES 1086685647 1086685647 X PART X, LINE 2: FASB ASC 740-10-65, INCOME TAXES, PROVIDES GUIDANCE FOR HOW UNCERTAIN TAX POSITIONS SHOULD BE RECOGNIZED, MEASURED, DISCLOSED, AND PRESENTED IN THE CONSOLIDATED FINANCIAL STATEMENTS. THIS REQUIRES THE EVALUATION OF TAX POSITIONS TAKEN OR EXPECTED TO BE TAKEN IN THE COURSE OF PREPARING THE CREDIT UNION'S TAX RETURNS TO DETERMINE WHETHER THE TAX POSITIONS ARE "MORE LIKELY THAN NOT" TO BE SUSTAINED "WHEN CHALLENGED OR "WHEN EXAMINED" BY THE APPLICABLE TAX AUTHORITY. TAX POSITIONS DEEMED TO NOT MEET THE MORE-LIKELY-THAN-NOT THRESHOLD WOULD BE RECORDED AS A TAX EXPENSE AND LIABILITY IN THE CURRENT YEAR. THE CREDIT UNION ADOPTED THE PROVISIONS OUTLINED IN THIS GUIDANCE ON JANUARY 1, 2009. THE CREDIT UNION HAD NO UNRECOGNIZED TAX POSITIONS THAT REQUIRED ADJUSTMENT TO THE JANUARY 1, 2009, BEGINNING BALANCE OF UNDIVIDED EARNINGS. FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016, MANAGEMENT HAS DETERMINED THAT THERE ARE NO MATERIAL UNCERTAIN TAX POSITIONS. THE CREDIT UNION FILES EXEMPT ORGANIZATION RETURNS WITH THE FEDERAL JURISDICTION AND A SALES AND A USE TAX RETURN WITH THE STATE OF WASHINGTON. 1 PIERCE MILITARY AND BUSINESS ALLIANCE (PMBA) PO BOX 1082 TACOMA WA 98401 383675245 501(C)(3) 15000 SUPPORT FOR MORALE, WELFARE, AND READINESS AND RETENTION EFFORTS OF THE MILITARY. NORTHWEST CREDIT UNION FOUNDATION 18000 INTERNATIONAL BLVD SUITE 350 SEATAC WA 98188 911649328 501(C)(3) 11000 SUPPORT AND PROMOTE CREDIT UNION DEVELOPMENT AND THE COMMITMENT TO SOCIAL RESPONSIBILITY. SOUND OUTREACH PO BOX 5947 TACOMA WA 98415 911741624 501(C)(3) 25000 TO SUPPORT A PARTNERSHIP TO PROMOTE FINANCIAL EDUCATION WITHIN LOW INCOME COMMUNITIES. AMERICAN CANCER SOCIETY 1313 BROADWAY SUITE 100 TACOMA WA 98402 131788491 501(C)(3) 10500 SUPPORT CANCER RESEARCH, EDUCATION, ADVOCACY AND SERVICE. SUSAN G KOMEN FOUNDATION 112 FIFTH AVE N SEATTLE WA 98109 751835298 501(C)(3) 10000 SUPPORT CANCER RESEARCH, EDUCATION, ADVOCACY AND SERVICE. 5 0 PART I, LINE 2: REQUESTS FOR GRANTS ARE EVALUATED BY THE CREDIT UNION QUARTERLY. ORGANIZATIONS REQUESTING OR RECEIVING GRANTS UNDER $2,500 MUST PROVIDE THEIR IRS EXEMPTION LETTER STATING THEY ARE 501(C)(3), A CORPORATE GIVING APPLICATION PRODUCED BY THE CREDIT UNION, A COMPLETED BUDGET FOR THE EVENT OR PROJECT AND EXPLAIN THE SOURCES OF REVENUE AND SUPPORTING DOCUMENTATION FOR USE OF FUNDS. THE CORPORATE GIVING APPLICATION REQUESTS THE GRANT'S PURPOSE, HOW THE FUNDS WILL BE USED AND HOW THE FUNDS WILL IMPACT THE LOCAL COMMUNITY. X X X 1 1 X X X X 0 1 0 PHIL JONES PRESIDENT/CEO 455824 0 101774 0 0 0 255239 0 19465 0 832302 0 0 0 LAURIE LENO SR VP CFO 199941 0 11565 0 202395 0 75362 0 10376 0 499639 0 75294 0 TOM GRAVES EXECUTIVE VICE PRESIDENT (8/17) 201789 0 18770 0 0 0 17645 0 17859 0 256063 0 0 0 STEVE CROSBY SR VP COO 194206 0 10071 0 0 0 80265 0 14572 0 299114 0 0 0 MICHAEL DECIUS SR VP CIO 170996 0 11680 0 161101 0 44446 0 10289 0 398512 0 82465 0 MICHAEL POWELL SR VP CLO 179887 0 847 0 0 0 41911 0 13636 0 236281 0 0 0 JEFF IVEY SR VP STRATEGIC OPERATION (11/17) 156045 0 8400 0 0 0 11288 0 15951 0 191684 0 0 0 FOREST HAYES VP CHIEF RISK OFFICER 152341 0 14215 0 0 0 19703 0 15970 0 202229 0 0 0 DOUG RICHARDSON VP TRAINING/ADMINISTRATION 138614 0 13861 0 0 0 47588 0 14109 0 214172 0 0 0 RALPH KOWAL FINANCIAL ADVISOR 133318 0 3918 0 0 0 16475 0 10033 0 163744 0 0 0 FRANK MARZANO VP BUSINESS BANKING 117873 0 10382 0 0 0 14996 0 13018 0 156269 0 0 0 STEPHANIE NICKLAUS VP CREDIT ADMINISTRATOR 113236 0 11024 0 0 0 14903 0 11848 0 151011 0 0 0 PART I, LINE 1A FIRST-CLASS OR CHARTER TRAVEL: FIRST-CLASS TRAVEL ON LONG-DISTANT FLIGHTS IS PROVIDED TO THE BOARD CHAIR DUE TO A CHRONIC MEDICAL CONDITION. TRAVEL FOR COMPANIONS: SPOUSES/COMPANIONS ARE ALLOWED TO TRAVEL WITH EXECUTIVE MANAGEMENT AND BOARD MEMBERS AND IS LIMITED TO $600. DISCRETIONARY SPENDING ACCOUNT: THE DISCRETIONARY SPENDING ACCOUNT IS ONLY AVAILABLE TO THE CEO AND IS FOR AN AMOUNT UP TO $150/MONTH TO BE USED FOR REIMBURSEMENT OF OUT OF POCKET EXPENSES PRIMARILY RELATED TO CHARITABLE DONATIONS. PART I, LINE 4B THE CREDIT UNION HAS DEFERRED COMPENSATION AGREEMENTS WITH MEMBERS OF THE EXECUTIVE MANAGEMENT TEAM THAT PROVIDE BENEFITS PAYABLE TO THESE EMPLOYEES IF THEY REMAIN EMPLOYED BY THE CREDIT UNION UNTIL A SPECIFIC DATE. IF THESE EMPLOYEES BECOME FULLY DISABLED OR UPON DEATH, A PORTION OF THE BENEFIT WILL BE DISBURSED AS DEFINED IN THE AGREEMENTS. THE BENEFITS ARE SUBJECT TO FORFEITURE IF EMPLOYMENT IS TERMINATED FOR CAUSE OR IF THE EMPLOYEE IS NO LONGER EMPLOYED BY THE CREDIT UNION ON THE PAYMENT DATE AS DEFINED. THE ESTIMATED LIABILITY UNDER THE AGREEMENTS IS BEING ACCRUED OVER THE REMAINING TERM OF EACH AGREEMENT. THE CREDIT UNION HAS ACCRUED APPROXIMATELY $1,892,000 UNDER THESE AGREEMENTS AT DECEMBER 31, 2017 INCLUDED IN ACCRUED EXPENSES AND OTHER LIABILITIES. THE PLAN PARTICIPANTS ARE PHILIP JONES, LAURIE LENO, STEVE CROSBY, DOUG RICHARDSON, MICHAEL DECIUS, TOM GRAVES, AND MICHAEL POWELL. FORM 990, PART VI, SECTION A, LINE 4 THE BYLAWS WERE AMENDED DURING THE YEAR TO ADD AN ADDITIONAL QUALIFIED ASSOCIATED GROUP TO ITS MEMBERSHIP. FORM 990, PART VI, SECTION A, LINE 6 THE CREDIT UNION'S MEMBERS HAVE RIGHTS TO ELECT MEMBERS OF THE GOVERNING BODY. THE CREDIT UNION'S MEMBERS ALSO RECEIVE A SHARE OF THE ORGANIZATION'S PROFITS IN THE FORM OF CASH DIVIDENDS. FORM 990, PART VI, SECTION A, LINE 7A MEMBERS OF THE CREDIT UNION HAVE THE RIGHT TO ELECT ONE OR MORE MEMBERS OF THE ORGANIZATION'S GOVERNING BODY, WHETHER PERIODICALLY, AS VACANCIES ARISE, OR OTHERWISE. FORM 990, PART VI, SECTION A, LINE 7B MEMBERS OF THE CREDIT UNION HAVE THE RIGHT TO APPROVE THE GOVERNING BODY'S ELECTION AND REMOVAL OF MEMBERS OF THE GOVERNING BODY, AS WELL AS OTHER MATTERS THAT ARE SUBJECT TO THE APPROVAL OF MEMBERS OF THE CREDIT UNION AS THEY OCCUR. FORM 990, PART VI, SECTION B, LINE 11B BOTH THE VP OF ACCOUNTING SERVICES AND CFO REVIEW THE FORM 990 PRIOR TO FILING. A COPY OF FORM 990 WILL ALSO BE PROVIDED TO THE BOARD OF DIRECTORS PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 12C ON AN ANNUAL BASIS, ALL EMPLOYEES & VOLUNTEERS ARE REQUIRED TO REVIEW THE CONFLICT OF INTEREST POLICY. SIGNATURES ARE OBTAINED VERIFYING THAT THEY ATTEST TO HAVING READ THE POLICY. ADDITIONALLY, EACH NEW EMPLOYEE HIRED BY THE CREDIT UNION REVIEWS THE CONFLICT OF INTEREST POLICY ON THEIR FIRST DAY OF EMPLOYMENT. IF A SITUATION ARISES INVOLVING A CONFLICT OF INTEREST, IT SHALL BE REPORTED TO THE PRESIDENT/CEO OR TO THE CHAIR OF THE BOARD OF DIRECTORS, AS APPLICABLE, IN ORDER TO PERMIT CONSIDERATION OF THE CIRCUMSTANCES AND THEREBY TO RELIEVE THE INDIVIDUAL(S) REPORTING SUCH A CONFLICT FROM LIABILITY. EACH INSTANCE OF A CONFLICT OF INTEREST SHALL BE ADDRESSED DURING THE NEXT BOARD MEETING FOLLOWING ITS SUBMISSION. ANY DISCUSSION CONCERNING THE CONFLICT OF INTEREST SHALL BE NOTED IN THE MINUTES OF THE MEETING. A MEMBER OF THE BOARD OF DIRECTORS SHALL NOT VOTE ON ANY CONFLICT OF INTEREST ITEM CONCERNING HIM/HERSELF. FORM 990, PART VI, SECTION B, LINE 15 WE UTILIZE VARIOUS REPUTABLE, THIRD-PARTY MARKET DATA SOURCES (MILLIMAN, CUES, ETC.) TO AID IN SETTING THE COMPENSATION OF OUR OFFICERS AND KEY EMPLOYEES. GENERALLY, FINAL COMPENSATION DECISIONS ARE MADE BY THE SENIOR VICE PRESIDENT/CHIEF OPERATIONS OFFICER. COMPENSATION DECISIONS FOR THE EXECUTIVE VICE PRESIDENT AND ALL OTHER SENIOR VICE PRESIDENT POSITIONS ARE MADE BY THE PRESIDENT/CEO. COMPENSATION DECISIONS FOR THE PRESIDENT/CEO ARE MADE BY THE BOARD OF DIRECTORS. COMPENSATION IS REVIEWED ANNUALLY AND AS SUCH WAS REVIEWED IN 2017. FORM 990, PART VI, SECTION C, LINE 19 THE GOVERNING DOCUMENTS AND FINANCIAL STATEMENTS ARE MADE AVAILABLE TO THE PUBLIC IN THE ANNUAL REPORT AND ANNUAL MEETING, WHICH IS HELD IN MARCH OF EACH YEAR. THE CONFLICTS OF INTEREST POLICY IS NOT MADE PUBLIC. FORM 990, PART XI, LINE 9: CHANGE IN CASH SURRENDER VALUE OF LIFE INSURANCE 435,878. CU SERVICES GROUP LLC 9611 GRAVELLY LAKE DR SW LAKEWOOD WA 98499 262064794 BUSINESS LENDING WA 513467 12090332 HARBORSTONE CREDIT UNION BUSINESS LENDING GROUP LLC 6019 LAKE GROVE ST SW LAKEWOOD WA 98499 451149959 BUSINESS LOAN DEVELOPMENT WA HARBORSTONE CREDIT UNION UNRELATED 1902 9176 0 1 0.40480 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 0 0 0 0