Elements Financial 2020 Annual Report

Trust Knows No Distance 2020 Annual Report

During a year that no one could have predicted, Elements Financial was here for you in ways that we never expected.

Yet thanks to sound business planning, an emphasis on technology, and a forward-thinking approach to serving our members and our own employees, we came through 2020 as the healthy credit union our members expect us to be.

Our official purpose statement that drives us to do outstanding work is “Empowering members to achieve financial success.” In challenging times, stability is considered success to many people, and we were humbled to provide that to individuals, families, and small businesses who turned to us for support. At the same time, we served as a safe haven for members who wanted to save more in 2020 and as trusted experts for others who wanted to buy a new home, vehicle or other major purchase.

All the ways our members needed Elements led to another year of managed growth for our business, and we certainly never take that for granted, especially during times like these. We are grateful to share this brief report of highlights from the most unique year in the lifetime of Elements and likely yours, too.

Thank you for your confidence in your credit union.

Mark Saltsgaver Lisa Schlehuber Chair of the Board Chief Executive Officer

Highlights

Expertise A Collaborative Effort How our team worked in new ways

The majority of our staff adjusted quickly and seamlessly to a remote workforce in March 2020. At the same time, a group of employees continued working onsite at branch locations or Elements headquarters. Teams in these various scenarios worked effectively yet differently than even before for the benefit of our members. > Employees learned new roles through cross-training and gained greater levels of respect and understanding for other teams and their processes > 14 new employees hired during the year into both branch and remote roles > Diversity, Equity, and Inclusion efforts grew through a designated committee and the launch of formal training programs for all employees

750+ Educational Broadcasts with 7,000+ Registered Attendees

Innovations in Financial Wellness

How our experts found their way to you

Our members look to us for financial wellness education. With restricted onsite access to our partner organizations, we found that our members visited us more online than ever before through their employers’ personalized hubs at elements.org to learn about our offers, access their virtual events, and use online learning modules.

In the Spring of 2020, we shifted quickly to building a strategy, platform, and process for providing high-quality live broadcast capabilities to our partner organizations. > 39 new Advice Articles at elements.org/advice > 25 new Financial Wellness Workshops, which included converting an existing library of topics to our In 20 Minutes series, better suited for virtual delivery > 17 Elements Live financial wellness events on Facebook with 5,600+ total views covering popular topics such as Impact of Credit Score, Dealing with Debt, Surviving Market Swings, and Fraud Trends

Security & Prevention

How we prioritized your safety

We kept your money and personal information and identity safe, and we also limited fraud losses and the spread of COVID. > Nearly 20,000 Elements debit and credit cards now enrolled in Card Control, our fraud prevention tool that allows members to control when, where, and how their cards are used. > SavvyMoney is a new free credit score reporting and monitoring tool that we launched in September. Enrolled members show a high rate of usage proving it is a valuable tool for those who want credit-oriented information at their fingertips. > Every Elements location adhered to prudent health and hygiene guidelines. Most employees worked from home to mitigate chances of illness while maintaining integrity of service levels.

Highlights

Purpose Empathetic Service

How we delivered better banking From our frontlines to our asset recovery team to our commercial lending officers and many more in between, our employees provided nimble and helpful financial guidance to members as everyone worked through the challenges of 2020. > COVID loan payment relief provided to members on $80+ million of loans > Nearly $5.0 million in Paycheck Protection Program loans funded to small business clients > Paid 2% APY on balances up to $20,000 in the High Interest Checking Account — one of the industry’s best deposit rates 1

> Assisted record number of members with home purchases and refinances in a historic low-rate environment

Contributed $500,000+ in Community Support 2

Elements Cares

How we impacted your community Elements proudly gives of its time, talent, and treasure.

Our Pillars of Giving, refined in 2020, focused on three key areas of community need: > Healthy Lifestyles > Homelessness and Housing > Youth Development Our major community partnerships included Butler University, DREAM Alive, Indy Chamber, Indianapolis Indians, NeighborLink, Riley Children’s Foundation, and United Way of Central Indiana.

1) High Interest Checking Account Annual Percentage Yield (APY) effective as of February 1, 2021, is variable and may change after account is opened without notice. The APY is 2.00% on balance up to $20,000 and 0.10% on balance greater than $20,000 on account(s) with 15 qualifying transactions per statement cycle.

Only the following are qualifying transactions: Debit card purchases, checks, bill payments, ATM withdrawals and ACH withdrawals. No other transactions qualify. Dividends will be paid per statement cycle requirement. At least one account holder must be at least 18 years old. Accounts not meeting the qualifying transaction threshold will earn 0.05% APY. Fees may reduce earnings. See Truth in Savings Disclosures for details.

2) Through grants, employee giving and matching, and corporate sponsorships which often include an exchange of promotional benefits.

Highlights

Growth Digital Expansion

How we ensured your access

With health and safety guidelines in place, our daily habits shifted and electronic ways of life became essential. We saw this trend prove true at Elements through our digital banking tools in place to serve you at a distance. We also made significant upgrades to our online applications for loans and deposits, leading to a more efficient online experience.

Digital Traffic > Visits to elements.org increased 7% overall > Clicks to apply from website increased 23% > Live Chat increased 30%

Online Banking Activity > 7,129 new online banking users — 15% increase > 48,516 online banking users overall Remote Deposit Engagement > $135.0 million in remote deposits made — 40% increase > 164,168 checks deposited remotely — 13% increase

Continued Strength How we grew for you

Elements achieved growth in a New Normal. We were fortunate to be a financial institution that not only survived the year, but one that thrived for the benefit of our member cooperative.

Deposits — Members Saving More We established new records in this area as members trusted us with their savings at higher levels than ever before. > $339.9 million in deposit growth — 24% increase > $16.5 million paid in dividends to members

Elements is Indy’s #1 Financial Institution for Homebuyers 3

Loans — The Refinance Boom of 2020 It was also another record year for our mortgage business, thanks to low interest rates. > $583.0 million in mortgage fundings — 67% increase > $9.6 million in commercial loan growth — 31% increase Assets & Income — Healthy Year of Growth Total assets surpassed the milestone of $2.0 billion at year-end, ranking us among the largest credit unions nationally. Net income was $19.4 million for the year.

3) Based on total dollar conventional mortgage volume closed from January-December 2020 in the Indianapolis metropolitan statistical area. Information based on mortgage recordings provided by Mortgage Data Web. Conventional mortgage is a non-government mortgage. Ranking is among banks and credit unions and excludes mortgage companies.

Highlights: Growth

Wealth Management Growth Clients of Elements Wealth Management benefited from guidance during a tumultuous year for the market. > 96 New Clients — total of 4,546 clients served > $5.7 million in revenue — 7% growth Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Elements Financial Federal Credit Union and Elements Wealth Management are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using the name Elements Wealth Management and may also be employees of Elements Financial Federal Credit Union.

These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of Elements Financial Federal Credit Union or Elements Wealth Management. Securities and insurance offered through LPL or its affiliates are: Not Insured by NCUA or Any Other Government Agency

Not Credit Union Guaranteed

Not Credit Union Deposits or Obligations

May Lose Value

New Partner Organizations > Bosma Enterprises > Dream Alive > N achi America > N eighborlink Indianapolis > S cale Computing > Seven Corners, LLC > Soundspace, LLC Membership Growth > 116,004 Total Members > 7,715 New Members — 3% increase

These Are the Reasons Why We Are

Like a Bank, Only Better Better Rates, Fewer Fees Known for our fair pricing and fee structure.

Continually ranked among industry’s best for checking, credit card, and mortgage offers.

High Tech, Human Touch Offering e-platforms, digital wallet options, contactless payments, and apps to aid members in immediate fraud prevention and detection. Human voices and/or faces via a 24/7 Member Contact Center by phone, branch facilities, and Relationship Managers who frequent our employer partners, not always in-person, but still through live streaming, video recordings, and one-on-one virtual meetings.

Trusted Advice, Fresh Approach Trusted subject matter experts offer a full financial curriculum of workshops, financial advice articles and testimonials from members who have achieved financial success with our support.

Respected Locally, Accessed Globally Local decision-making and strong support of our community. Members in all 50 states and 50 foreign countries, thanks to digital conveniences, nationwide shared branching, and a massive global network of ATMs.

Visit elements.org/OnlyBetter to learn more.

Financial Statements Consolidated Statement of Financial Condition Selected Data in Millions (unaudited)

Assets

2020

2019

Cash and Investments

$747.2

$380.0

Loans to Members

1,226.5

1,260.2

Allowance for loan losses

(11.4)

(9.6)

Other Assets

62.8

57.1

$2,025.1

$1,687.7

$1,731.4

$1,391.4

Other Liabilities

111.8

145.1

Members’ Equity

181.9

151.2

$2,025.1

$1,687.7

Total Assets Liabilities and Members’ Equity Share Savings, Drafts, and Certificates

Total Liabilities and Members’ Equity Net Worth Ratio

8.58%

8.85%

In management’s opinion, the selected financial data presented herein is free of material error and accurately reflects the financial position and/ or results of operations of Elements Financial for the periods presented.

Members may request a complete copy of our audited financial statements by calling (800) 621-2105. A credit union must have a Net Worth to Assets ratio of at least 7.00% to be considered “Well Capitalized” by the National Credit Union Administration (NCUA).

Thank you to those who served Elements in 2020!

Board of Directors Mark Saltsgaver Board Chair

Julie Dunlap Vice Chair

Donald Zakrowski Board Secretary

John Huesing

Consolidated Statement of Income

Treasurer

Selected Data in Millions (unaudited)

2020

2019

Mark Anderson Jeremy Fitch Michael Johnson Alice Morical Jody Roudebush

Interest Income from Loans and Investments

$57.4

$60.4

Interest Expense on Member Accounts and Borrowed Funds

(19.0)

(20.0)

Loan Loss Provision

(3.1)

(2.9)

Net Interest Income

35.3

37.5

Other Income

22.8

18.5

Beth Goines

Operating Expense

(46.6)

(42.4)

Committee Chair and Secretary

7.9

1.6

Net Income

$19.4

$15.2

Return on Average Assets

1.01%

Non-Operating Income

0.94%

Supervisory Committee Erin Burkhart Ben Clark Luke Frient Andrew Laux Jordan Smith Daryl Soughan

On the Horizon for 2021 Hopeful Return to “At Work” Business Operations. As CDC guidelines and local conditions allow, our employees will gradually return to the office at our newly renovated headquarters in the Farm Bureau Building, Downtown Indianapolis. Only time will tell. Until then, we will continue to uphold the integrity of our service levels while working remote.

More Forward-Thinking and Digital Transformation. We expect continued upward usage in online and mobile banking and new users. We will sharpen these platforms and seek out further innovation in payments, applications, and other conveniences.

Emphasis on Financial Wellness as a Constant Goal. We will seek more ways to deliver our financial wellness programming to members, including new educational video content and more live broadcasting online, via Facebook, and from our state-of-art credit union studio.

225 South East Street; Suite 300 Indianapolis, IN 46202

Federally Insured by NCUA

(800) 621-2105 // elements.org