ANNUAL REPORT TO THE MEMBERS OF PIONEER FEDERAL SAVINGS AND LOAN ASSOCIATION
APRIL 20, 2021
Pioneer Federal must remain true to our core values as indicated by our Mission Statement. Pioneer Federal Savings and Loan Association is dedicated to providing quality services and products to its customers all the while remaining financially strong and adding value to the quality of life to the communities it serves. Pioneer Federal is known for commitment to our communities and our desire to help our communities grow. We are Montana’s only mutual thrift institution our commitment is to you- our customers- and the communities we serve. We do not face the dilemma that most banks do of trying to balance shareholders’ demand for returns with serving customers’ interests. As a mutual, our customers are our owners, our success is measured by your success. Mutual banking is community banking at its finest, where we know our customers because you are our neighbors.
The year 2020 provided one of the most trying years in our nation’s history and we are uncertain where the economic world will be when we come out the back end of this pandemic. As members you should be proud as well as comfortable with the decisions made by your Association over the years which prepared us to survive the unsettled economic times as well as prosper going forward. Locally, the economy surrounding our two locations saw a substantial uptick in real estate sales and prices in the year 2020 as will be evident when you see our loan production numbers.
2020 saw Pioneer Federal Savings and Loan have a substantial growth year:
12.31.19 Assets: $ 89,400,000 Deposits: $71,000,000 Loans: $64,100,000
12.31.20 Assets: $101,224,000 Deposits: $82,000,000 Loans: $70,000,000
The deposit increase mainly consisted of an increase in the “core” Non-Maturing Deposits- Savings, Money Market, Checking and Business Checking accounts. IRAs and Certificate of Deposits stayed at a flat level from 2019 to 2020. The bulk of Pioneer’s deposits continue to be the Non-Maturing deposits comprising $54,600,000 of the $82,000,000 on deposit; Certificates of Deposit make up $16,200,000 and IRAs $10,900,000. Depositors at Pioneer Federal Savings and Loan earned over $350,000 in interest in 2020. At year end 2020 we had 5,644 deposit accounts across our variety of deposit products.
The Association new loans two-year comparison:
| Association Loan |
|Assoc New Loans Total||159 Loans||138 Loans|
|New Loans Total Volume||$23,500,000.00||$13,900,000.00|
|Average Loan Size||$148,000.00||$100,500.00|
|Dillon Total Loans||88 Loans||78 Loans|
|Dillon Total Loan Volume||$14,700,000.00||$10,300,000.00|
|Dillon Average Loan Size||$167,000.00||$132,000.00|
|Deer Lodge Total Loans||71 Loans||60 Loans|
|Deer Lodge Total Loan Volume||$8,800,000.00||$3,600,000.00|
|Deer Lodge Average Loan Size||$124,300.00||$59,500.00
The 2020 new loans included:
98 Residential Real Estate loans: $20,730,000
53 Consumer loans: $718,000
4 non-residential RE loans: $620,000
4 commercial loans: $1,500,000
During the year 95 loans paid off for a variety of reasons with 30 of those loans being internally refinanced by Pioneer Federal.
Pioneer Federal Savings and Loan Association’s capital position remains one of the strongest in MT. Our Tier 1 capital ratio as of December 31, 2020 was 17.41% of assets with a capital level of $17,400,000 as well as the total risk-based capital ratio of 34.55%. Comparing these figures to the minimum required capital levels of 4.00% and 8.00% respectively, shows the Association’s strong capital level, which positions us to handle ongoing market uncertainties
The Association’s cost of funds at year end was .42%. Our number is higher than some of our competitors, as a mutual your Association continues to try to reward customers with very competitive deposit rates appropriate with the time, so we try to remain on the high end of scale regarding the interest paid to our depositors.
Asset quality continues to remain high with very few loan delinquencies and an investment portfolio consisting of highly rated investments. At year-end 2020, the Association had no Other Real Estate Owned (OREO) or foreclosed property on our books.
Pioneer Federal has been involved in quality loan participations with other MT financial institutions. These participations make up approximately 7% of our total loan balances and allow the Association to diversify our loan portfolio. Management continues to monitor the loan portfolio for weaknesses and the Association maintains a healthy provision for loan losses for any potential exposure we might have with respect to economic downturns or problem loans.
Pioneer Federal Savings and Loan Association and the Pioneer Federal Community Foundation, Inc. continue to financially support worthy projects and organizations located primarily in Powell and Beaverhead counties. In addition to supporting many local area events and organizations, during 2020 we continued to fund previous financial commitments made supporting UM-Western and hospitals in both communities, the SW MT Family YMCA in Dillon, the Rialto theater in Deer Lodge as well as the Jaycee Park Renovation project in Dillon and the Deer Lodge playground construction project. In the past 10 years alone, Pioneer Federal Savings and Loan and its Foundation have made cash contributions well over $1,000,000 within our local communities.
Personnel worked closely with bank regulators and independent auditors. The Office of the Comptroller of the Currency (OCC), which is the Association’s primary regulator, has the Association on an 18-month exam cycle so did not conduct a full scope examination in 2020. Our annual independent audit for year end 2020 was performed by Wipfli, as in years past the Association received a clean and unqualified audit. The auditors commended favorably on our efforts in building and maintaining a strong financial structure.
Usage of the Association’s electronic banking package continues to grow as more customers take advantage of mobile banking, including e-statements, along with our phone app, the on-line services and debit cards. The Association continues to provide financial education products for our customers on our website, as well as implementing online training to help prevent our customers avoid and/or recognize cyber hacking. CardValet and ID Theft protection programs were added in 2020 to help our customers avoid fraud on their debit cards by using CardValet and protection of their personal information with ID theft protection. In 2021 the Association will be adding an online loan application portal, MortgageBot, to further enhance our reach to areas outside of our local communities and provide an option to customers who do not need the face to face personalized service. The mobile and technology trend is something the Association needs to keep pace with our peers as this is the direction not only the banking industry is headed, but also where the world in general is moving.
The Dillon office again successfully hosted its annual community shred day. This continues to be very successful and is expected to continue. Deer Lodge also added the community shred day, which saw relatively good success, and will continue in the future.
The Deer Lodge office continued their long-standing participation in the zero percent interest rate annual Christmas Cash loan program in the community.
Our successes in the compliance and regulatory areas are made possible in no small part to Pioneer Federal’s commitment to strong compliance, audit and fiscal reporting programs coupled with an emphasis on continued staff, management, and Director training. Pioneer Federal Savings and Loan continued to get the most from our capable staff of 19 representing 18 FTEs. Many of years of service to Pioneer Federal are represented by our existing staff and Directors.
Pioneer Federal must remain true to the local communities in which we serve as well as we must work hard to retain and grow support of our local customer base. Despite our successes we understand we cannot become complacent. The way people bank and interact financially is changing more rapidly than ever before. In this regard, we are committed to continuing to invest in our employees and the technology needed to meet our customers’ financial needs and expectations. Also, we need to continue to expand our footprint in neighboring communities to allow us the opportunity for more growth. On top of the health crisis, which in turn created an economic crisis, regulation and the complexity of the industry we operate it has become more difficult each year to operate as a community oriented, mutual thrift, so we must be flexible and adapt to changes for long term sustainability. As a community financial institution, we are faced daily with operational, regulatory, economic, and most recently, health risks and how we deal with these on an ongoing basis will define our continued success.
To our many customers, I would like to personally thank you for your relationship and your trust in Pioneer Federal- you are truly our most valued asset. As members of Pioneer Federal Savings and Loan Association you should be very proud as we have a strong financial institution. We have well trained and qualified staff who are also involved in many organizations and projects within our communities.
I would like to express sincere appreciation to our staff, the officers and our Directors for their continued effort and support on behalf of the Association. Please let me know any questions you may have about Pioneer Federal Savings and Loan Association.
Phillip K Willett
April 20, 2021