Del-One FCU 2022 Annual Report

Annual Meeting Agenda

Nominating Committee Report

The members of the Nominating Committee for 2023 are Nancy J. Shevock, Chairperson, William Hufnal, and Ronald Baron.

For three open positions of three-year terms on the Board of Directors, the Nominating Committee unanimously approved the following applicants as nominees to be placed on the ballot for Del-One Federal Credit Union’s Board of Directors: William Pfaffenhauser, Gerard M. McNesby, and Diana Farrell.

Respectfully submitted,

Nancy J. Shevock, Chairperson of the Nominating Committee

Steve Smith Chairman

Gerard McNesby Treasurer

Lisa Strusowski Director

Adam Gerber

Associate Director

Volunteer Board of Directors

Trey Wallace Vice Chairman

Robert Baldwin Director

Diana Farrell Director

William Pfaffenhauser Secretary

Kevin Mitten Director

Courtney Stewart Director

Volunteer Supervisory Committee

Wesley T. Stefanick Chairman

William Hufnal Member

Senior Management

Ronald Baron

President / Chief Executive Officer

Daniel McCarthy

Chief Administrative Officer

Brian Kaye

Director of Consumer Lending

Shallon Poulson

Director of Compliance

Justin Smith

Director of Information Technology

Lisa Connors

Executive Office Manager

John Chartrand

Chief Lending Officer

Kellie Rychwalski

Chief Financial Officer

Carrie Green

Director of Accounting and Ops Support

Amy Resh

Director of Marketing

Todd Smith

Director of Mortgage Lending

Lisa Strusowski Member

Marc Kidwell

Chief Information Officer

Amy Draper

Director of Enterprise Solutions

Edward Mason

Director of Internal Audit

Donna Robinson

Director of Branch Operations

Lori Savage

Legal Counsel

On behalf of the Board of Directors and Teammates of Del-One Federal Credit Union, we are pleased to report that 2022 was a year of continued progress for the Credit Union in many ways. Technological innovation, a continued focus on a frictionless member experience, and financial literacy for school districts and members were just a few of the achievements. The highlights that we are reporting for 2022 will confirm the Credit Union’s strong financial position.

Del-One improved the member experience in 2022 in several ways. A new technologically advanced online banking and mobile banking system migration occurred in the second quarter of 2022. The innovation brings the same functionality to your mobile banking app as you have with the online banking experience. A greater level of service is now available with chat and co-browsing features. In July, we celebrated the grand opening of the Fox Run Branch in Bear, DE. This location brings us much closer to where our members are. In November, the Credit Union relocated the Wilmington center-city Branch to Germay Drive. The new location is owned by the Credit Union and offers a large parking area, a drive thru lane and many other conveniences to serve our members, again closer to where they live and work.

Other services that were initiated in 2022 include: early payday option, branches with Certified Credit Counselors available to work with members, the FUEL Program, and the Express Auto Loan. The FUEL (Financial Understanding at Every Level) Program serves all our members. Del-One is partnering with Delaware school districts to offer the FUEL K12 Program which provides grade appropriate financial literacy training for students. This is a fully developed curriculum offering that is fully paid for by Del-One. You are never too young to learn good financial behaviors. Our Express Auto Loan program allows you to apply and be approved online, and walk into the dealership with a blank check to buy your next vehicle! This is a program that has become wildly successful and gives members bargaining power at the dealerships.

Del-One’s membership increased by 4.64% to 76,993

members. The Credit Union is proud to hold the “Low-Income Credit Union” designation from the National Credit Union Administration, Del-One’s Federal Regulator. The NCUA determines this designation based upon the Credit Union’s membership composition. Del-One is proud of its continuing commitment to all Delawareans, including those of low-to-moderate means. Del-One is truly a reflection of the cooperative credit union motto of “People Helping People”. Del-One continues to be the largest Credit Union in Delaware with over $657 million in total assets.

The Credit Union’s member equity (exclusive of an accounting adjustment for the market value of the bond portfolio) increased 7.4% to $55.6 million at December 31, 2022, as compared to $51.8 million at December 31, 2021. Strong earnings and a slight decline in Total Assets resulted in a net worth ratio, at year-end, of 8.66%, which is an increase from 7.96% at December 31, 2021. The decline in total assets of 1.4% was attributed mainly to a 1.6% decline in Share balances from the previous year. As a result of higher inflation during 2022, members were forced to use their savings to pay for basic living expenses. To be considered “well capitalized,” a credit union needs to have a net worth ratio above 7%, which Del-One exceeds very easily.

Return on assets ratio is a measure of the Credit Union’s earnings, and this ratio was 0.58% for 2022, which is greater than the 0.38% for 2021. The Credit Union’s earnings are used to build member equity, maintain favorable rates on deposits and loans, keep the fee structure low and to invest in the future growth of Del-One. Your Credit Union made incredible strides in lending to our members in 2022. Loan balances grew a net of $84.7 million in 2022, bringing total outstanding loans at December 31, 2022 to $441.1 million; an increase of 24% from December 31, 2021. Strong asset quality, expressed as a combination of loan delinquency and net charge-offs, continues to trend well for Del-One. At year-end 2022, the combined ratio was 0.73%, which compares favorably to the 0.87% ratio reported for 2021.

The Del-One Foundation raised and donated a record

$58,000 to local charities throughout Delaware in 2022! The Foundation is a nonprofit corporation that raises funds for charitable purposes to benefit the residents of Delaware. Funds are raised through Foundation dues, jeans day donations, vending and candy sales, and fundraisers including the golf tournament which raised over $20,000 in 2022! Some of the local charities the Del-One Foundation benefited last year include: Central Delaware Habitat for Humanity, Autism Delaware, the Delaware Breast Cancer Coalition, the Delaware Center for Homeless Veterans, Redemption City, Sunday Breakfast Mission, and many more.

A new event was added in 2022 called Community Service Day. Teammates were assigned to work at one of 15 non-profit organizations throughout Delaware. The Community Service Day was held on the Columbus Day holiday. In various ways, our Teammates’ actions prove that Del-One Federal Credit Union is truly a community-focused credit union, and we give back to our communities and our members!

The Supervisory Committee is appointed by the Board of Directors and communicates its findings to the Board from audits and examinations. The Committee volunteers and the Director of Internal Audit work with management on the resolution of any findings. Del-One enjoys the benefits of having an Internal Audit Department staffed with experienced individuals, to allow for more frequent and thorough reviews to ensure the Credit Union maintains strong internal controls. Yount, Hyde & Barbour, P.C. is the Credit Union’s independent CPA firm. The firm rendered a clean opinion audit on the Del-One financial statements for 2022, which are included in this Annual Report.

It is an honor to serve the member-owners of Del-One Federal Credit Union and a privilege to be a part of the communities in which we serve. Thank you for being a member-owner of the Credit Union and illustrating the powerful impact that a financial cooperative can have in the lives of so many.

Respectfully,

Steve Smith, Board Chair

Ronald Baron, President & CEO

Gerard McNesby, Treasurer

Wesley T. Stefanick, Supervisory Committee Chair

Minutes of the 2021 Annual Meeting

Modern Maturity Center & Virtual

Tuesday, May 17, 2022 at 5:30 PM

Board Chairman Steve Smith welcomed member-owners to the 2021 Annual Meeting. Chairman Smith took the opportunity to individually recognize the Board of Directors, Supervisory Committee and Insurance Committee members. Chairman Smith elaborated Del-One is very fortunate to have these amazing group of individuals that volunteer their time and consistently work hard on behalf of the member–owners of Del-One. Lastly, Chairman Smith recognized CEO Ronald Baron, management team and all employees for an outstanding job serving our member–owners.

With a quorum being present the meeting was called to order by Board Chairman Smith at 5:30pm.

Motion made by Kellie Rychwalski and second by Marc Kidwell to dispense with the reading of the minutes from the 2020 Annual Meeting. Motion carried.

Chairman Smith then introduced President and CEO, Ronald Baron.

CEO Baron welcomed member-owners to the 61st Annual Meeting of Del-One Federal Credit Union. CEO Baron commented similar to last year, the meeting is being held at the Modern Maturity Center and also live streamed through the Credit Union’s website. CEO Baron expressed his gratitude to everyone attending the meeting.

CEO Baron noted it’s been well over two years since the world has changed due to the emergence of the Covid-19 Pandemic. None have been more impacted by this virus than those who have lost loved ones due to Covid-19. On Christmas Day, 2021, Kamel Armstrong, a Teammate in the Collections Department passed away of COVID-19 at the age of 31. He leaves behind a wife and four young children. CEO Baron asked for a moment of silence for Kamel and everyone we know that has passed due to the pandemic.

CEO Baron also recognized all the healthcare workers and first responders who endured a tremendous personal sacrifice and risks to their health in an effort to aid persons afflicted with Covid-19. CEO Baron asked all healthcare workers and first responders to please stand and be recognized.

CEO Baron then proceeded to present the Credit Unions Annual Report. CEO Baron mentioned 2021 was the 61st year of operation for Del-One Federal Credit Union and highlighted it was a remarkable year. Membership numbers continue to grow and earnings were modest and the Credit Union’s asset quality remained strong.

CEO Baron elaborated Del-One experienced a core systems conversion at the end of April and stressed core systems conversions are no small endeavor. It took 18 months of preparation and hard work to prepare for the conversion that included long work days and attention to detail to ensure a conversion with minimal complications. CEO Baron noted throughout his career he has experienced several systems conversions and this one without a doubt was the most successful thus far.

For over sixty years our member – owners have entrusted Del-One to help them with financial services and guidance through their path of life. CEO Baron commented on behalf of Del-One teammates, expressed our depth of gratitude for allowing us to be of service to you for all these years.

CEO Baron highlighted the Credit Union’s financial condition for 2021. Del-One’s membership increased by .6% to 73,577 member-owners. The Credit Union’s net worth ratio at year-end was 7.96%, which is a decline from 8.40% at December 31, 2020. CEO Baron elaborated what affected the net worth ratio was the growth in Share balances. In 2020, the Credit Union experienced a share balance growth of over 25%. In 2021, that growth was still above average at 11.4%. CEO Baron shared recent history of annual share growth was between 3 and 5%. That said, the numbers reflected for the last few years have

generated unprecedented share balance growth. Even with the decline in the net worth ratio, the Credit Union remains well capitalized according to NCUA regulatory capital requirements. CEO Baron assured member-owners that the Credit Union is well positioned to weather adverse economic conditions and remain financially strong.

Among the major impact to earnings were lower loan interest income from faster principle paydowns, lower fee income as a result of people not spending at the same levels as they typically did and costs associated with the core system conversion. For the year, the return on assets was 0.38%, which is greater than the 0.28% for 2020. However, there was some movement in the economy during 2021 and loan volumes increased in the last quarter of the year. Overall, the reality is Del-One still had positive earnings and earnings continue to build up the Credit Union’s capital or net worth. Del-One’s asset quality remains strong. Asset quality is important since poorly performing loans reduce the Credit Union’s earnings.

The pandemic disruptions created a lot of concerns with members since they didn’t want to fall behind with their loan payments. As we did in the previous year, Del-One assisted members in adjusting payment schedules during those months when members experienced financial distress.

Loan delinquency and loan losses, as a combined ratio was 0.87% at year-end 2021, this is down considerably from the 1.30% ratio reported for 2020. Meaning members were back to making timely scheduled payments.

Del-One realized another goal in 2021. The Credit Union continued to see growth in the WINcentive program. WINcentive is designed to encourage and reward members for saving money. As of December 2021, there were 1,675 accounts with over $1.1 million in deposits, for an average balance of $699. To date, this is the highest level of deposits since the programs was introduced.

CEO Baron spoke about the Del-One Charitable Foundation. The Foundation is the way the Credit Union continues to its commitment to the communities we serve. The Del-One Foundation continued its diligent work to help local charities. Through fundraising events the Foundation was able to donate $40,000 to local organizations in 2021. Additionally, a 5K event was held with Tri-Sports Events in March 2021 to benefits Kay’s Kamp, an oncology camp for children who are fighting cancer and those in remission. The Foundation also held a golf tournament in September, with eighteen teams and various sponsorships and donations to raise additional funds to give back to the community. Among those charities that benefitted from these fund raising efforts included Delaware Autism, Delaware Breast Cancer Coalition, Central Delaware Habitat for Humanity, the Lupus Foundation of Delaware, Code Purple and the Brain Injury Association of Delaware.

CEO Baron fast forwarded to 2022 and informed members that Del-One has been focused on bringing members the best technology possible, with the goal of making member experiences as frictionless as possible. Del-One provides multiple avenues for transactions to be conducted via mobile, online or in-person. With the core system conversion behind us, the Credit Union recently launched the new online banking and mobile banking application. The new applications give you the opportunity to link all your external accounts into Del-One. You will only have to open your online banking or mobile application to view your complete financial picture at a glance.

CEO Baron elaborated innovation and being nimble are cornerstones of how Del-One management team works. Del-One is committed to providing you with the best in products and services while using today’s top technology to deliver this to you wherever and whenever you want it.

CEO Baron commented that everyone here this evening or listening on live streaming knows

the benefits of belonging to a credit union. We are all member–owners and through combined efforts and those of the Del-One staff, we can help everyone achieve a strong financial future.

The Credit Union National Association estimated that Del-One provided over $7.2 million in direct financial benefits to its members in 2021. This is an average of $206 per member household.

For the last couple of years, CEO Baron has challenged members to be Del-One advocates. This year the challenge is for each member to invite at least two people over the rest of the year to explore what membership in the Credit Union could do for them.

CEO Baron noted this concludes the 2022 Report of Credit Union Condition.

CEO Baron presented the Nominating Committee Report.

The members of the 2022 Nominating Committee are Chairman Nancy Shevock, Member Bill Hufnal and Member Ron Baron. There were three positions for 3 year terms on the Board of Directors. The Committee unanimously approved the following as nominees to be placed on the ballot for Del-One Federal Credit Union’s Board of Directors: D. Steven Smith, Robert S. Baldwin and Kevin Mitten.

With there being no old business or new business for the annual meeting, CEO Baron requested a motion to adjourn.

Motion by Dan McCarthy and second by Kellie Rychwalski to adjourn the 2021 Annual Meeting. Meeting adjourned at 5:57pm.

Chairman Smith expressed his gratitude to Legal Counsel, Lori Savage for serving as Parliamentarian for the evening.

Director Emeritus Nancy Shevock thanked CEO Baron, Board of Directors, Committee members and teammates for an outstanding job navigating the uncertainty post pandemic while serving our member-owners.

Ms. Shevock commented the “R. Bryce “Breezy” Brown Credit Union Service Award” was established June 2020. Ms. Shevock mentioned the recipient of the award will be given a $2,500 check to donate to a non-profit charity of their choice.

CEO Baron was pleased to present the 2nd annual “R. Bryce Breezy Brown Service Award” to Board Treasurer Gerard McNesby. Mr. McNesby served on the Supervisory Committee and long-time Board member. Mr. McNesby recently retired as the Vice President of Finance at Delaware Technical Community College and was instrumental in assisting Del-One in securing the “Naming Rights” for the Del-One Conference Center located at Del Tech Community College, Terry Campus in Dover.

Following the meeting and food service, Scholarship awards and the staff recognitions were announced along with viewing a pre-recorded slideshow.

2021 Branch of the Year Middletown

2021 Department of the Year Consumer Lending

2021 Teammate of the Year

Bree Waltz, West Dover Assistant Branch Manager

• Scholarship Award recipients – Emma Crowe and Grayson Parsell

• 5 Year Service Award – Krystle Cubbage, Marsha Medford, Bree Waltz, Christina Warren, Christian Proctor, Lori Savage, Vonnie Stewart, Stacey Wilkins and Malacci Robertson

• 10 Year Service Award – Christina Reilly

• 15 Year Service Award – Marc Kidwell, Rhonda

Hurd and Amy Durham

CEO Baron announced the retirement of Kathy Decker. Ms. Decker retired October 2021 after 35 years of employment. CEO Baron elaborated she worked at Seaford FCU in Operations and after the merger with Del-One in 2013 worked as a Senior Financial Analyst in the Accounting department. CEO Baron wished Kathy Decker a “Happy Retirement”.

CEO Baron also announced the recent retirement of Cynthia Evans. Ms. Evans was employed with Del-One as the Director of Compliance since 2014. During that time, she was able to reform the department with her considerable skill and knowledge. CEO Baron wished Cynthia Evans a “Happy Retirement” as well.

Bill Pfaffenhauser, Board Secretary

Lisa Connors, Executive Office Manager

Steve Smith, Board Chair

Condensed Statement of Financial Condition

Condensed Statement of Members’ Equity

Condensed Statement of Income

These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements, including the statements of cash flows and notes to the financial statements, are available at at the Credit Union’s Corporate Office at 270 Beiser Blvd, Dover DE during normal hours of operation.

Branch of the Year

Georgetown

Department of the Year

Marketing

Teammate of the Year

Jason Coulter, Systems Administrator

Presidents Award

Brian Kaye, Director of Consumer Lending