January 2025
Yakima Federal Savings and Loan Association held its Annual Meeting virtually on January 15th, 2025. The President, as the managing officer of the Association, provides a full report on the financial condition of the Association, its progress for the preceding year and outlines a program for the succeeding year. Here are highlights from our President’s Annual Meeting report.
2024 was a year marked by a flat yield curve and higher mortgage rates relative to the low rates seen during the pandemic. The economy was resilient, with good GDP growth, a strong labor market, and inflation starting to moderate. Despite higher mortgage rates, Yakima Federal originated over $149 million in first mortgage loans, an increase of $47 million from 2023. We also originated $15.7 million in second mortgages. Overall, the mortgage portfolio increased by 8.5%.
For 2024, total assets declined by $56 million or 2.2%, with the majority of that decline due to the repayment of $50 million in borrowed money. Cash on hand and in banks was over $128 million, continuing Yakima Federal’s commitment to maintaining high liquidity. On the liability side, total deposits stood at $1.43 billion, which was a slight decrease of $11 million from 2023. The Certificate of Deposit portfolio had a net increase of 3.5% as depositors shifted funds to CDs. Yakima Federal continues to be a deposit market share leader in Yakima, and for our overall market, we rank second among all FDIC-insured institutions.
In 2024, net income was $12.1 million. This was about $1 million better than our 2024 budget but was a decrease of $4.8 million from 2023. Lower income was expected due to the flat rate environment. Net revenue of $75.6 million was an increase of $10.5 million from the prior year, as we booked new mortgages at higher interest rates than in recent years. The higher rate environment was a benefit to our depositors as well, as we paid over $32 million in interest, the highest level of interest distributions since 2008. We added a net $10.8 million to capital, taking our net worth to just over $523 million. Our capital-to-asset ratio was 25.7%.
Yakima Federal also continued its efforts to provide a great digital user experience. In August, we completed a major enhancement to our online and mobile banking applications. This was the culmination of a months-long project, with the upgrade allowing for a consistent user interface between web and mobile access channels and featuring a more responsive design. The new upgrades included improvements to both internal and external transfer systems, giving customers more options and better ability to manage transfers. The new platforms also provide users with more self-service options, including the ability to recover passwords, a change our customers have been requesting. In 2024, we also rolled out eStatements for mortgage loans, and our borrowers will be able to access year-end mortgage statements digitally.
I am also happy to announce that the bank made over $500,000 in charitable contributions in our local communities. This included $166,500 in scholarships to local high school graduates and college students, plus over $288,000 to local non-profits and service organizations. Yakima Federal participated in an FHLB grant program that added another $262,500 in donations to ten local organizations. The bank also made a $90,000 contribution to the State Department of Commerce’s equitable access to credit program, which provides support to small businesses in the state.
Two new Directors were appointed in July. Lori Mattson, the CEO of the Tri-Cities Chamber of Commerce, will represent the Tri-Cities market. Manuel Pedrosa, the Chief Information Officer of Yakima Neighborhood Health, was appointed to represent the Yakima area. Both Lori and Manuel are strong additions to the Board.
As we welcome these new Directors, Management would like to recognize the retirements of two long-serving board members. Dave Miller, former owner and manager of EFCOM in Yakima, retired after 38 years of service. Rich Strain, who represented the Sunnyside area for many years, completed his final emeritus term after serving as a Director for 43 years, with 25 years spent as Vice Chairman. We thank both of them for their commitment to the bank, excellent counsel, and leadership.
In July, two employees received promotions. Kyle Harrington, Vice President and Accounting Manager, was promoted to Chief Financial Officer, Senior Vice President, and Treasurer. Heather Staudinger was promoted to Branch Manager of our Kennewick Clearwater location and made an Assistant Secretary. Three other promotions were announced in December. Cristy Rogers, our Accounting Manager, was promoted to Assistant Vice President. Clark Streby, Assistant Manager of our Yakima Orchard Park location, was promoted to Branch Manager and Assistant Secretary. Clark will succeed Lottie Biehl, who is retiring later this month after 34 years of service to the bank. Heather Staudinger received a second promotion to Assistant Vice President. Congratulations to these employees on these well-deserved promotions.
As we turn to 2025, this year will mark our 120th anniversary. We were founded in 1905 by a group of businessmen who recognized the need for a financial institution that would meet the growing demand for mortgage financing, which was not being met by the local commercial banks. 120 years later, this is still the core focus of our business. We have always operated with a mutual ownership model, meaning the bank is owned by its depositors and borrowers, who are all members of the institution. As a Mutual, we have no stockholders to answer to and look to the long-term success of the bank, rather than on short-term profits. Today, we operate as a State-chartered Mutual Savings Bank.
In 2025, we anticipate an interest rate climate similar to 2024, with a modest drop in CD rates but with mortgage rates staying similar to current levels at between 6.5% to 7.5%. This will lead to continued improvement in our net interest margin, or the spread between the yield on interest-earning assets less our cost of funds. A better spread will lead to net income improving by approximately 16% over 2024. We are planning on modest asset growth of 2% and anticipate first mortgage originations of around $130 million, as higher mortgage rates continue to temper demand. It will be another strong year for second mortgages. As a portfolio lender, whose pricing is not dictated by the secondary market, Yakima Federal will continue to offer very competitive mortgage rates. On the deposit side, we anticipate small net growth of just under 2%. We will also look to improve our market share in the Tri-Cities with enhanced marketing and community involvement.
As Yakima Federal stays true to our mission, we also recognize the need to improve our technology and product offerings to keep up with the rapid pace of change in our industry. Yakima Federal will continue to add real-time payment services for our members, adding real-time payments to account-to-account transfers and bill pay, as well as making additional enhancements to our digital product offerings.
At the start of the year, Yakima Federal will be introducing a Customer Care Team dedicated to servicing customer inquiries via phone or online chat. These staff members have the training and product knowledge to improve customer engagements and provide quick and efficient resolution to customer inquiries. With the customer care team taking the majority of calls, our Branch Bankers will have more time to focus on customers who come in to our branch offices to conduct their banking.
In 2025, Yakima Federal will also be making building improvements at our Main Office and at our Prosser location to improve the day-to-day environment for both staff and customers. Both branches will remain open while the work is being done.
Finally, I would like to acknowledge the contributions of Leanne Antonio, who is retiring in February after a 44-plus-year career. Leanne started as a teller, quickly moving to a role as a Savings Supervisor. In 1992, she became Savings Administrator and served in that role until 2012 when she was promoted to Executive Vice President. She became Yakima Federal’s first female President and CEO in 2016. Your leadership, integrity, and dedication have not only strengthened the bank but have also had a lasting impact on the community. Leanne will not entirely be leaving Yakima Federal as she will continue to serve as Board Chair, but her everyday leadership will be missed.
I would like to conclude by thanking all of our customers for their continued relationship with Yakima Federal. Yakima Federal began as a Savings and Loan committed to providing banking services to the community and the benefit of home ownership to local citizens. 120 years later, we are still committed to this mission. We will continue to enhance our product offerings and service channels to meet the changing demands of our members. We are here to serve our members however they wish to bank, whether that be in person, by phone, internet, or by mobile device. Thank you also to the Board of Directors, the Management team, and the dedicated staff of Yakima Federal, who are so integral to our success.
Dan Gaulke
President/CEO
