2020 FirstLight Annual Report

2019

ANNUAL REPORT FIRSTLIGHT FEDERAL CREDIT UNION… YOUR BETTER CREDIT UNION

Today we are the better credit union in El Paso and Las Cruces.

Tomorrow we will be even better.

ANNUAL REPORT 2019

Senior Management Team Karl T. Murphy President/CEO Judy DeHaro Chief Lending Officer

Board of Directors Jaime Barceleau | Board Chairman Carlos Guzman | Board Vice Chairman Sylvia Pacheco Duarte | Treasurer Gilbert Tijerina | Secretary Donald King | Board Member Miguel Cheng-Guajardo | Board Member Joshua Orozco | Board Member Ralph Adame | Advisory Associate Ruben Garcia | Advisory Associate Kaleb Warnock | Advisory Associate

Margie Salazar Chief Financial Officer Aaron Beldner Chief Information Officer Jim Huff Chief Retail Officer Grace Munoz Senior Vice President of Talent Management

Scott Heck Vice President of Business Services William Kishton Vice President of Consumer Lending Andy Atkinson Vice President of Electronic Services Tim Morse Vice President of Information Technology Addy Reeves Vice President of Mortgages

Rick Divina Vice President of Accounting

Carmen Sanchez Vice President of Retail

Joe Arvizu Vice President of Administration

Michael Mehring Vice President of Risk Management

TABLE OF CONTENTS Today we are the better credit union in El Paso and Las Cruces. Tomorrow we will be even better.

Committee Chairman’s & President’s Report Karl T. Murphy.

President/CEO

Supervisory Committee Chairman’s Report Dr. Lonny Wright Supervisory Committee Chairman

Minutes of the 64TH Annual Meeting Grace Gardens, El Paso TX, Saturday, May 11, 2019.

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FirstLight Community Foundation Scholarship Opportunities Financial Literacy & Education

2019 Financials Highlights

2019 Community Events Giving back to the communities we serve

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COMMITTEE CHAIRMAN’S/ PRESIDENT’S REPORT At FirstLight, we take pride in improving product and service delivery for our members, and 2019 was not the exception. We strive to provide our members with the best experience, whether it is being welcomed with a warm greeting at one of our branches, answering questions through Live Chat, or having one of our video tellers help find solutions for our members’ financial needs.

In 2019, we were thrilled to provide our members with technologically enhanced products and services advancing the convenience of home banking. FirstLight debit and credit cards now have chip and contactless technology, so that you can easily tap to pay. Members and non-members can now conveniently open an account online as well as chat with us, so that we can provide answers in real-time in a quick and convenient way. Mortgage loan pre-approvals are now quickly processed online from anywhere that is convenient to our members, along with having a Mortgage Resource Center online to educate our members on the home buying process.

As we enter into 2020, we have all been submerged into an unprecedented period of challenges. FirstLight has not skipped a beat in working to help our members during a difficult time by remaining available to address all your banking needs, while balancing the welfare of staff and the stability of the credit union itself. For members that have been impacted by business shutdowns, loss of work hours, layoffs or sickness our team is working hard with them to create plans that fit their needs. Payments for loans and credit cards may be deferred and arrangements for

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Mortgage payments can be made. Business members are being provided with Small Business Administration (SBA) Payroll Protection Program loans to help with their immediate needs. Financial literacy continues to be important and we continue to provide online webinars and interactive videos on our website. As we get past these trying times, we will continue to focus on enhancing our digital products and services. FirstLight will be providing new Video Banking, for those members who cannot visit a branch because of work, illness or any other reason. Our Video Banking Representatives will help our members with account opening, applying for a loan, signing forms and many other services, directly from a mobile device or desktop. A new kids’ app called FLight will also launch this year, to help educate FirstLight kids and teens on the importance of money and how to save and budget. Furthermore, we will launch a rewards program to benefit you, our loyal members, for choosing to do business with FirstLight.

As you can tell, we are focused on making your life more convenient. We thank you for the continued support in all that we do. As your financial institution of choice, we will continue doing what is best to ensure our members have a better banking experience at FirstLight.

Today we are the better credit union in El Paso and Las Cruces. Tomorrow we will be even better.

Best Regards,

Karl T. Murphy President/CEO

Jaime Barceleau Board Chairman

SUPERVISORY COMMITTEE CHAIRMAN’S REPORT The FirstLight Federal Credit Union Supervisory Committee oversees the protection of members’ funds and ensures policies and procedures safeguard assets. The Committee also oversees the accuracy of financial records, in accordance with laws and regulation. With fraud so prevalent during these trying times, there is a heightened awareness to be watchful and proactive to protect the welfare of the Credit Union, its members, employees, and officials. We encourage members to join in this effort by ensuring their account information is secure at all times and credit union staff is available to help you in that endeavor.

Your Supervisory Committee is composed of five volunteer members appointed by the Board of Directors. The Committee oversees the internal audit function which conducts internal audits and carries out its work in an independent manner, subject to the Credit Union By-Laws and the Internal Audit Charter. Our audit plan emphasizes testing internal controls and assuring compliance with applicable laws, rules, and accounting practices. We also oversee inquiries to address any issues raised by members and prepare reports, as appropriate.

During the year, the Supervisory Committee engaged the accounting firm of CliftonLarsonAllen, LLP for the 12-month period ending June 30, 2019. All of the audits, reviews, and examinations conducted during the period conclude that your Credit Union remains financially sound, is well-managed, and operates in compliance with federal laws, regulations, and policies.

It is the opinion of your Supervisory Committee that the Credit Union’s policies and procedures, as well as Management’s practices, are sound. Such opinion is based upon Supervisory Committee internal audits, the independent external audit, and the NCUA examination report.

The Supervisory Committee members are all volunteers and serve without compensation.

Committee members are: Dr. Lonny Wright, Chairman Gilbert Andujo Billy Lewis Michael McQueen Jaime Medina

I express my appreciation to the members of the Supervisory Committee who volunteer their time, bringing their broad skills and knowledge to the Committee. Also, my appreciation goes to the Internal Audit Department, Board of Directors, management, and staff for their continued cooperation and assistance.

Dr. Lonny Wright Supervisory Committee Chairman

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MINUTES OF THE 64TH ANNUAL MEETING OF THE FIRSTLIGHT FEDERAL CREDIT UNION PLACE: DATE: TIME:

Grace Gardens, El Paso TX Saturday, May 11, 2019 1:00 p.m.

I. WELCOME AND CALL TO ORDER The meeting was called to order and the members were welcomed by Mr. Donald King, Chairman of the Board of Directors at 1:00 p.m.

Mr. Karl Murphy, President/CEO presented the invocation.

II. APPOINTMENTS The meeting was conducted in adherence with Robert’s Rules of Order. Ms. Pat Aguilera was appointed as recording secretary.

III. INTRODUCTIONS Mr. King introduced the current members of the Board of Directors and the Supervisory Committee, thanking them for their service to FirstLight Federal Credit Union as volunteers.

BOARD PRESENT: Mr. Donald E. King, Mr. Carlos Guzman, Mr. Jaime Barceleau, Ms. Renee Jimenez, Ms. Sylvia Duarte, and Mr. Gilbert Tijerina. Absent: Mr. Miguel Cheng-Guajardo SUPERVISORY COMMITTEE PRESENT: Mr. Mike McQueen and Mr. Joshua Orozco Absent: Dr. Lonny Wright, Mr. Gilbert Andujo, and Mr. Jaime Medina.

Mr. Murphy thanked the Board and Supervisory Committee volunteers for their service to the credit union and introduced the Executive Officers of the credit union. He also asked the managers and staff of the credit union to stand and be recognized.

IV. QUORUM Ms. Sylvia Duarte, Treasurer of the Board of Directors, confirmed 113 members present, constituting a quorum.

V. PRESENTATION OF OFFICIAL REPORTS Minutes The minutes of the 63rd Annual Meeting were presented.

Motion to approve and accept the minutes of May 2, 2018 as written was made by Norma Barceleau and seconded

by Gilbert Tijerina. Motion carried. None opposed.

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Official Reports and Financials Mr. King noted the official reports presented in the 2018 annual report including the chairman and president’s report, the supervisory committee’s report, and the financial statements.

Mr. Murphy thanked the members for their valued membership and support of the credit union and shared a testimonial video of some of the members of the credit union.

A motion was made by Norma Barceleau and seconded by Joey Jimenez to accept all reports as written.

Motion carried. None opposed.

VI. NEW OR UNFINISHED BUSINESS Chairman King asked if there was any new or unfinished business. There was none.

VII. ELECTION RESULTS Mr. Carlos Guzman, Nominating Committee Chairperson, provided the report for the Nominating Committee. The Nominating Committee selected the two incumbents for the two open board positions, there having been no other applications or nominations by the membership. The membership congratulated the re-elected board members, Miguel Cheng-Guajardo and Gilbert Tijerina on their reappointment to the Board of Directors for a three-year term.

VIII. LEO E. ZIEGLER EMPLOYEE OF THE YEAR AWARD Mr. King congratulated the two employees selected from the member contact and support areas for the 2018 employee(s) of the year. The two employees recognized were Alma Cabral and Eli Bustos.

IX. TICKETS DRAWN FOR DOOR PRIZES AND GRAND PRIZE 1: Echo Show ($180.00 value) - Alberto Alvarez 2: $100 Mastercard - Heinz Kaludzinski 3: Fandango Dinner & Movie Gift card - $50.00 Michele Derouen 4: Echo Dot (value $30.00) - Loretta Smith 5: Echo Dot (value $30.00) - Jerome H. Sigholz

X. ADJOURNMENT Mr. King announced the conclusion of the 64th Annual Meeting of the FirstLight Federal Credit Union.

Motion to accept adjournment of the meeting was made by Joey Jimenez and seconded by Gilbert Tijerina.

Motion carried. None opposed.

There being no further business, the meeting adjourned at 1:26 p.m.

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FIRSTLIGHT COMMUNITY FOUNDATION The FirstLight Community Foundation is a 501(c)(3) charitable foundation that was founded in 2015, when our Board of Directors and Management team at FirstLight wanted to do more for and give back to our underserved communities. Through strategic analysis, the decision was made to incorporate financial literacy and scholarships as a focus for our foundation, in order to help the youth and families achieve financial independence.

Scholarship Opportunities

Financial Literacy & Education:

Receiving a college education is an essential piece to help our youth in their quest to become resourceful and productive members of our community.

As part of its central focus, the FirstLight Community Foundation offers a Scholarship Program that aims to provide college scholarship opportunities for graduating seniors.

The FirstLight Community Foundation believes that it has a social responsibility to play a vital role in the overall financial capability of the communities in which it serves. The reasons for focusing on Financial Literacy, and especially to underserved populations, include:

In 2019, the Community Foundation and FirstLight, were able to award over $10,000 in scholarships via its joint Scholarship Program. These scholarships are given to deserving recipients that will be entering a university, community college or trade school all over the country. The highest scoring applicants excel in their academic performance, extracurricular activities, community involvement and overall represent a well-rounded student.

To incorporate social change in what we do.

To find new ways to get vulnerable people access to capital.

To be a part of the framework and the driving force behind our community financial literacy efforts.

For information on how you can help, visit FirstLightFCU.org/Community-Foundation.

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FirstLight Federal Credit Union

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FINANCIALS 2019

Consolidated Statement of Financial Condition As of December 31, 2019

2019

2018

73,896450 73,999,705 715,734 902,805,405 41,517,834 44,040,102

80,993,316 58,108,477 2,059,096 876,301,465 36,305,163 41,955,441

Total Assets

1,136,975,229

1,095,722,958

Liabilities and Members' Equity Liabilities Members' share accounts Non member deposits Accrued interest payable Borrowed funds Accrued expenses and other liabilities

1,021,060,762 744,000 266,601

984,985,298 5,032,000 251,060

10,152,270

9,500,837

Total Liabilities

1,032,223,633

999,769,195

5,996,720 29,089 98,725,787 104,751,596

5,996,720 -415,743 90,372,785 95,953,762

1,136,975,229

1,095,722,958

Cash and cash equivalents Investments Loans held-for-sale Loans to members, net of allowance for loan losses Premises and equipment, net of depreciation Other assets

Members' Equity Regular reserve Unrealized G/L on investments Undivided earnings Total Members' Equity Total Liabilities and Members' Equity

This ďŹ nancial data presented in this Annual Report as of December 31, 2019 is unaudited, however, the CPA ďŹ rm of CliftonLarsonAllen conducted an audit at the credit union as of June 30, 2019.

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Consolidated Statement of Operations As of December 31, 2019

2019

2018

Interest Income: Interest on loans to members Interest on investments and cash equivalents

46,598,755 4,277,059

44,975,976 4,292,738

Total Interest Income

50,875,814

49,268,714

8,769,610 1,142,203

7,305,116 2,164,520

9,911,813 40,964,002

9,469,636 39,799,078

6,738,928

8,393,049

34,225,074

31,406,029

9,311,638 11,051,649

8,866,902 10,693,421

20,363,287

19,560,323

Non-Interest Expense: Compensation and beneďŹ ts Other expense

24,515,574 21,719,615

22,858,219 20,912,328

Total Non-Interest Expense

46,235,189

43,770,547

8,353,003

7,195,805

Interest Expense: Dividends on Members' share accounts Interest on borrowed funds Total Interest Expense Total Net Interest Income Provision for Loan Losses Net interest income after provision for loan losses Non-interest Income: Fees and charges Other operating/non-operating income Total Non-Interest Income

Net Income

Regular Reserve

Undivided Earnings

Balance - December 31, 2018 Net Income Change in unrealized G/L on investments

5,996,721

89,957,041 8,353,003 444,831

95,953,762 8,353,003 444,831

Balance - December 31, 2019

5,996,721

98,754,875

104,751,596

Consolidated Statements of Members' Equity As of December 31, 2019

Total

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HIGHLIGHTS 2019

108,763

FirstLight Members

Accounts Opened Online

84,868

1,335

Contactless Debit Cards Issued – Tap to Pay

Members with a New Auto

4,718

FirstLight Business Members 9

242

370

Members with New Homes

COMMUNITY EVENTS 2019

We are committed to giving back to the communities we serve At FirstLight, we are committed to giving back to the communities we serve by supporting our local schools, and other non-profit organizations through educational programs, financial contributions, and sponsorship of many events.

We proudly serve our communities at local events and participate in over 60 local non-profit organization boards. Our dedicated employees also share their expertise and knowledge to help educate our members on important financial decisions with financial seminars.

Members also have access to online financial literacy programs that help teach our community about saving, buying a home, and everything in between.

For a list of events, visit FirstLightFCU.org/Community.

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Mailing Address P. O. Box 24901 El Paso, TX 79914-9001

Member Contact Center

Website ďŹ rstlightfcu.org

Mon - Fri: 8 am - 6 pm Sat: 9 am - 1 pm (Mountain Standard Time)

Routing Number 312080941

1 (800) 351-1670

Today we are the better credit union in El Paso and Las Cruces.

Tomorrow we will be even better.