Exceeding Expectations — 2019 Annual Report

Exceeding Expectations 2019 ANNUAL REPORT

OUR PURPOSE

Empowering members to achieve financial success

Respected Locally.

Accessed Globally.

Indianapolis, Indiana... the Crossroads of America and a vibrant corporate community where Elements Financial is headquartered.

Founded in 1930 as the employee credit union for Eli Lilly and Company, Elements now has 90 years of experience and currently serves nearly 150 partner organizations. We make a local impact and we have a global presence. This unique combination of traits has allowed us to build a reputation not only in the community our credit union calls home, but also in the 50 states and 50 foreign countries that our members call home.

Elements is especially proud of the strong community partnerships we have built. Throughout Indiana and nationwide, our credit union is well known in the realm of financial services. Many of our employees serve on boards and committees within our local business community and for national and regional industry-related organizations as well for their towns, schools, churches, youth sports and more.

In 2019, we focused on bolstering technology, a step that’s crucial for our growth. A stronger infrastructure allows us to protect our members and their accounts from fraud and identity theft while also improving the overall member experience through enhanced products, stronger service, and more reliable access. With an aligned focus on these process improvements, we continually get better at what we do.

Respect and Access - two ways we are “like a bank, only better.� Throughout this annual report, you will learn about many other characteristics that make our credit union unique among financial institutions and one of the Best Places to Work in Indiana (named to the list for the 9th time). As a result of doing things differently, we have experienced tremendous growth year over year.

We owe the greatest gratitude to our employees, our partner organizations, and our members for allowing Elements to exceed expectations last year!

Mark Saltsgaver Chairman of the Board

Lisa Schlehuber Chief Executive Officer

Better Rates.

Fewer Fees.

The Member Experience...it’s different for everyone.

At the core of the Elements Experience is value through our industry’s best products and services. We are known for higher deposit rates, lower loan rates, and fewer fees than our competitors. No matter what, our purpose is to empower members to achieve financial success. By doing so, our credit union business grows!

Mortgage Growth

1

#

New Purchase Lender among banks and credit unions in the Indianapolis Market

Record Production Year $350 million in Mortgage Loan Volume

Deposits Growth Dividends $17.7 million paid to members, a 45.5% increase over last year

Mobile Deposit Checks 115,000 checks deposited with our mobile app

Private Client Services $50 million in deposit balance growth through Private Client

Certificates Nearly $50 Million in Net Growth among certificate portfolios

Health Savings Accounts 1,500 new HSA’s opened this year

“The folks at Elements know us and our situation, and they successfully helped us prepare for owning a home. The banks we worked with before never put in effort to get to know us and our needs.�

- Brandon S. Elements Member

Watch Now!

Scan the QR Code to watch a video about how we offer better rates and fewer fees to our members. elements.org/AnnualReport

Growth at Elements Our growth in 2019 far exceeded

New Purchase our plans.

Lender

among banks and credit unions inDeposits the Indianapolis Market

125 Years of Collective Experience among the financial advisors

$800 Million in total assets under management 15.2% growth

149 New Clients for a total of 4,450

$111.4 Million 8.7% growth

Loans

$36.3 Million 3.0% growth

Assets

$5.4 Million

$151.7 Million

in gross dealer concessions, representing 7.52% growth

9.9% growth

Completed Acquisition

Net Income

of Pinnacle Wealth Management expanding our prescence in the Lafayette, IN market

$15.3 Million 41.8% growth

Trusted Advice.

Fresh Approach.

The workplace...many of us spend a tremendous number of our waking hours here.

And it’s where Elements delivers financial advice, expertise, and innovation daily to our partner organizations. Because we truly care about these relationships, we’ve built a unique and successful At Work Credit Union Model that’s growing year over year. We can attribute this success to our high ability to build trust and our customized approach to every company we serve.

WORKING WITH OUR

Partner Organizations

1,000+

Financial Wellness Events including on-site workshops and 1-on-1 credit reviews

30 Co-branded Online Hubs 140

Different Education Topics such as budgeting, fraud, student loans, and mortgage

for each of our partner organizations

NEW PARTNER ORGANIZATIONS Central Indiana Corporate Partnership Elanco Animal Health Indiana Bioscience Research Institute Meyer Najem Construction Republic Airways Roche Diagnostics Zylo, Inc.

“It’s like going to your favorite food joint, getting your regular table and getting to interact with the friendliest staff as you get to enjoy the outstanding service and products that they provide.”

- Luc R.

Elements Member

TAKING CARE OF OUR

Members

Improving Member Experience A more efficient Home Equity Program Application introduced through online/mobile platform

Staying Innovative Lilly Corporate Center branch remodel completed including high-end interactive teller machines

5,433 New Members Welcomed 5.2% growth in overall membership

132,000

Calls taken by our External Contact Center with a resolution average of 85.29%

500,000+

Member Interactions handled by Internal Contact Center Live Chat, emails, and escalated calls

Watch Now!

Scan the QR Code to watch a video about how we offer trusted advice and a fresh approach. elements.org/AnnualReport

High Tech.

Human Touch.

People and Culture...these are the elements that make a company special and unlike any other!

Our employee culture is tech and data driven, resulting in efficiencies, analytics, and remote work options. We invest in every employee with a focus on professional development. And nothing tells the story of our culture better than our corporate values, known as The Elements of Success.

The Elements of our Success

Accountability Collaboration Community Trust Integrity Leadership

TECHNOLOGY PROJECTS IT security enhancement project Branch security system update Data backup and recovery update

New Talent + Seasoned Experience UNDER 5 YEARS

88 Employees

Cloud-based financial data warehouse Infrastructure modernization program Mobile banking enhancements Additional financial tools for members

5 - 10 YEARS

54 Employees 10 - 30 YEARS

41 Employees

“Elements Financial is like a bank only better because…the technology is outstanding from your Live Chat support, to person to person money transfer, to Apple Pay.”

- Brandi N. Elements Member

Corporate Wellness Awards Best Places to Work in Indiana for the 9th Time!

Achieve Well 5 Star Designation from the Indiana Chamber

Healthiest Employer Honorable Mention

American Heart Association Bronze Level

Watch Now!

Scan the QR Code to watch a video about the culture that we have crafted in our workplace. elements.org/AnnualReport

Community Involvement

Increased Brand Recognition

Our 3rd Annual Purpose Day

Increased Presence on Instagram

as a result of our first ever billboard campaign

successfully served six community partners at their locations

led to more than 800 followers, quadrupling audience in 6 months

Community Relations

Brand Awareness

Half a million dollars in continued community support

Strong Online Ratings

through corporate contributions, grants, employee matching gift program, and corporate sponsorships

Maintained Google rating of 4.2

Deposit Rate Recognizations Named “Top 10 Checking Rate in the Nation” and Grade ‘A’ Health Rating from DepositAccounts.com

Partnership with the Indianapolis Indians In 2019, we introduced a new level of involvement with the Indianapolis Indians.

Elements Financial Club The announcement of our sponsorship resulted in broad media coverage, including Fox 59, Ballpark Digest, Inside Indiana Business, Indy Star, and the Indianapolis Business Journal.

Offical Credit Union of the Indians We became the Offical Credit Union of the Indians and plan to launch the all-new Indianapolis Indians branded debit and credit cards in Spring 2020.

Financial Statements

Consolidated Statement of Financial Condition SELECTED DATA IN MILLIONS (UNAUDITED)

Assets Cash and Investments Loans to Members Allowance for loan losses Other Assets Total Assets

2019

2018

$380.0 1,260.2 (9.6) 57.1 $1,687.7

$268.4 1,223.8 (10.0) 53.8 $1,536.0

$1,391.4 145.1 151.2 $1,687.7

$1,280.0 124.8 131.2 $1,536.0

Liabilities and Members’ Equity Share Savings, Drafts and Certificates Other Liabilities Members’ Equity Total Liabilities and Members’ Equity Net Worth Ratio

8.85%

8.83%

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).

Consolidated Statement of Income SELECTED DATA IN MILLIONS (UNAUDITED)

2019

2018

$60.4

$53.0

(20.0)

(14.3)

(2.9) 37.5 18.5

(2.8) 35.9 16.5

Operating Expense Non-Operating Income Net Income

(42.4) 1.5 $15.3

(41.9) 0.3 $10.8

Return on Average Assets

0.94%

0.71%

Interest Income from Loans and Investments Interest Expense for Member Accounts and Borrowed Funds Loan Loss Provision Net Interest Income Other Income

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.

Thank you to those who served Elements in 2019!

BOARD OF DIRECTORS

Mark Saltsgaver Chair of the Board

Nathan Lewis Vice Chair

Donald Zakrowski Secretary

John Huesing Treasurer

Alice Morical Mark Andersen Jeremy Fitch Julie Dunlap Michael Johnson SUPERVISORY COMMITTEE

Andrew Laux Committee Chair

Erin Burkhart Daryl Soughan Jordan Smith Elizabeth Goines

like a bank, only better.

78,000+

24/7

5,000+

surcharge-free ATMs globally

Online and Mobile Banking

Shared Branches nationwide

Federally Insured by NCUA

Elements Financial Federal Credit Union is not a registered broker/dealer and is not affiliated with LPL Financial. Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

elements.org 225 South East Street; Suite 300 Indianapolis, IN 46202 (800) 621-2105 customerservice@elements.org