About -Chairman’s Letter-
"Continuing its strong growth in business in recent years, PEFCO saw its loan commitments in 2011 reach a record $3.0 billion compared to $1.6 billion in 2010."
To: PEFCO Shareowners,
I am pleased to report an improvement in PEFCO's earnings and a significant record number of loan commitments in this past year, our 41st year of operations. Our results were achieved against a backdrop of continued high financial market volatility and global economic uncertainty. The value of PEFCO's model has stood the test of time as it continues to provide the supplemental liquidity that is needed to ensure the financing of U.S. goods and services in the export markets and, thereby, to help to create and sustain U.S. jobs.
Net income for our most recent 2011 fiscal year grew to $3.4 million, compared to $1.4 million in 2010. Our return on equity increased to 3.16% compared to 1.45% and our earnings per share was $226 compared to $94 in 2010. Continuing its strong growth in business in recent years, PEFCO saw its loan commitments in 2011 reach a record $3.0 billion compared to $1.6 billion in 2010. To put this in historical perspective, our loan commitment volume averaged close to $792 million per year for the 20 years prior to 2008. Despite the turmoil in the financial markets in 2008 and 2009, our loan commitments increased to almost $2 billion in each of those years. In addition to the significant increase in the volume of Ex-Im Bank loan commitments, this year's increase was also helped by global regulatory changes, as financial institutions adjusted for liquidity and balance sheet growth. We believe our increased demand for loan commitments will continue for the foreseeable future. As a result, we are continuing to focus on increasing our capital base to support this demand. We are actively pursuing both current shareowners and other financial institutions and exporters that actively use our balance sheet. While our capital base is at its highest level ever, we feel it still needs to be higher to support the level of growth that we anticipate. Mindful of our goal of capital preservation, our Board has accepted management's recommendation to forego a dividend payment for fiscal year 2011 and we intend to retain earnings, as in the past, to bolster our capital and support our growing activities.
Direct and Secondary Long-Term Programs totaled
close to $2.6 billion from twenty one transactions
through twelve sponsoring banks. Financing of
small business exports represented 12% of our total
loan commitments in 2011 for a total of $368 million
comprised of 163 loans. Our small business export
activity consists of both short-term and medium-term
loans. While medium-term loan growth has remained
about unchanged year-over-year, the short-term program
has shown significant growth these past few years.
During the past year, there were changes to the Board of Directors. Joseph C. Guyaux, President of PNC Financial Services Group and a director since 2003, and S. Todd Maclin, Executive Vice President, JPMorgan Chase and a director since 2007, retired from our Board. During Joe's tenure on the Board, he served on numerous committees, including the Audit Committee and the Compensation and Management Development Committee. Todd also served on the Audit Committee as well as, the Nominating and Governance Committee. We at PEFCO thank both Joe and Todd for their years of selfless service to PEFCO and for their contributions to the Board.
We note with great sadness the passing on December 22, 2010, of our friend and distinguished Board member, George J. Vojta, after a short illness. George served on our Board for 20 years and provided the Board and PEFCO management with valuable insight and wisdom. He will be greatly missed by us all.
We are pleased to report that we have two new Board members: Philip F. Bleser, CEO of Global Corporate Bank in North America for JPMorgan; and Robert D. Matthews, Jr, Vice Chairman of Royal Bank of Scotland Citizens Financial Group. Both of them bring a wealth of experience to our Board.
I want especially to note that our results this year could not have been achieved without the dedication and loyal support of our staff and the valuable assistance of all of the members of our Board. We also acknowledge, with appreciation, the constructive cooperation of Ex-Im Bank's Chairman, Fred Hochberg, and all of his colleagues at the Export-Import Bank. We wish to also acknowledge the valuable input from the members of our Advisory Board, our Exporters' Council and our Small Business Lender Council. We look forward to providing even more service and support in the promotion of U.S. exports and thank you, our shareowners, for your continued support.
"I want especially to note that our
results this year could not have been
achieved without the dedication
and loyal support of our staff and
the valuable assistance of all of the
members of our Board."
Sincerely yours,
Don B. Taggart
Chairman, President and CEO