2022 Annual Meeting Report

2022 Annual Report

President/CEO and Board Chair Report

A Year of Transition

While the impact of COVID continued to be felt in 2022, society and businesses continued to return closer to the days before the pandemic. While serious health concerns remained and cases continued, pre-pandemic trends emerged with much of the U.S. returning to activities such as traveling, dining out, and returning in some level to their places of employment. According to industry data, travel in the U.S. grew by more than 40% from 2021 as travel restrictions abated and more people felt safer than in the first years of the pandemic. Restaurant traffic continued its trend from 2021, with patronage up almost 10% year-over-year.

Challenges in the supply chain brought on by the pandemic, continued to plague several industries. Due to tight inventories, sales of vehicles in the U.S. dropped to their lowest level since 2012. In addition, the impact of the conflict in Ukraine had a ripple effect on several industries from grain exports to oil supply and microchips. Ultimately these impacts resulted in inflation, which had not been seen in many years. From 2010 – 2021, the annual inflation rate averaged 1.88%. In 2022, inflation skyrocketed to 8% annually.

The Rise of Rates

While inflation is a normal part of all economic cycles, 2022 was a record-setting year in many regards. The Federal Reserve implemented a series of actions intended to ease and normalize the inflation rate. These actions prompted the Federal Reserve to raise interest rates by 4.25%, the most since 1980. As a result, the cost to finance any sizable purchase significantly rose in 2022. Despite the challenges and evolving conditions last year, Foothill Credit Union stayed strong, helping thousands of members earn more and save more in several ways.

Foothill’s Performance

Foothill remained focused on delivering distinct value and service to its members and communities. By focusing on ways to meet member loan demand in an affordable and convenient way, the Credit Union increased its consumer loan originations by 50%. Foothill’s membership growth returned to pre-pandemic levels reaching 4.14% for 2022. The team’s outreach efforts made a huge impact with more than 3,100 members attending the Credit Union’s workshops and educational seminars.

Our Return on Assets (ROA), a measure of efficiency in utilizing the Credit Union’s assets, reached 1.16% matching or surpassing most peer credit unions. Foothill remained safe and secure, ending the year with a Net Worth ratio of 11.31%. The NCUA considers credit unions with a 7% Net Worth to be well-capitalized, placing Foothill far above this regulatory classification. Lastly our members reaffirmed the service and value Foothill is delivers day after day through the various loyalty metrics tracked through our Net Promoter Score. In 2022, the Credit Union was in the top ten percent of all peer credit unions, highlighting the impressive number of members who would recommend Foothill to a friend or family member.

Our vision and mission remain as relevant today as they were from the beginning. For over 65 years, Foothill has been improving the financial health of its members while delivering an unmatched experience. Our team remains committed to the serving and supporting our members and communities we do business within.

With gratitude,

Mike Terzian, CEO Scott Petterson, Board Chair

Michael Terzian Chief Executive Officer

Scott Petterson Chair

Strategic Focus

Organizational Strength and Performance

Foothill had a record breaking year in 2022, which included four consecutive months of funding $10 million or more in consumer loans. In doing so, Foothill surpassed its monthly funding goal of $5 million, contributing to sustained loan growth throughout the year and averaging $8.4 million in fundings, monthly.

Foothill’s service continued to be best in class, ranking in the top ten of our credit union peers in the relationship Net Promotor Score. Foothill stood out among all peer credit unions in Q1 of 2022, ranking number one in the member relationship survey.

Infrastructure and Security

Criminals and bad actors continue to find ways to trick members into giving out confidential information including log-in credentials and multi-factor authentication codes. Foothill continues to promote security awareness, train members, and offer cutting edge solutions. We also provide information technology security awareness to local schools to educate our youth about the importance of online digital hygiene and safety.

In 2022, Foothill moved all critical business systems and servers out of California to a tier five data center. This offers the most reliable assurance to our members that safety and security of their assets is our number one priority.

We continue to enhance our digital operations and offerings to ensure that members always have access to their accounts. We are excited about many new technologies we’re planning to implement in the future.

Member Value Service and Delivery

From the pandemic to a rapidly rising interest rate environment, Foothill has been there every step of the way to provide our members with the loans and services they need. In 2022 our members deposited more than $142 million in high interest Certificates of Deposit (CDs) and Foothill funded over $101 million in consumer loans. Foothill was recognized by the Credit Union National Association for the Member Benefit Top Performance Award, delivering a direct benefit of $690 per member.

To assist our members with their financial needs, Foothill partnered with leading third-party leaders who help credit unions grow responsibly and ensure the soundness of loans provided. This led to faster approvals and weekend support to help our members

gain the approvals needed to obtain vehicles in a competitive market or to remodel the home of their dreams.

In 2022, Foothill sold the corporate office building on 1st Avenue and relocated the remaining back-office staff to 250 W. Colorado Avenue in Arcadia. In addition, Foothill secured the lease of the future location of our Arcadia branch with construction to be included in 2023.

Foothill also partnered with SWBC to obtain additional assistance with asset recovery. SWBC is a reliable resource that offers a host of additional services to Foothill’s members, such as Mechanical Protection, GAP coverage, debt cancellation and healthCAR protection.

Financial Education and Health

Foothill remained consistent in providing educational resources to members in 2022. As scams connected to Zelle and other online and mobile banking rose, so did Foothill’s efforts to warn and educate members about fraud warning signs.

In addition to educating members on fraud and scams, Foothill offered webinars on various financial topics, conducted school site Bites of Reality, classes on IT security, and maintained online learning resources through EverFi and It’s a Money Thing.

Team Member Retention and Development

2022 was a year dedicated to reassessing our team members' development needs and safety. We accomplished this by expanding and creating new team member development programs, increasing organizational effectiveness to serve our team members better, and implementing policies and practices safeguarding our team members’ health and safety during COVID-19. Thus, a new Human Resources Information System (HRIS) was introduced, Foothill University was established, and our efforts to minimize COVID-19 exposures were at the forefront of our priorities.

Foothill University is a comprehensive program that formalizes a sustainable, cost-effective management and leadership program that drives team member engagement resulting in a high-performance and inspired culture. Team members, leaders, and aspiring leaders will be able to expand their knowledge, acquire new skills, and have access to continuous learning. Our leaders will start the Leadership Academy in 2023.

We are building systems, policies, and initiatives to strengthen and embed our inclusive and welcoming principles. Utilizing our new HRIS system and training our management, we are improving our hiring practices to validate a fair and non-discriminatory process. As of 2022, Foothill’s workforce is made up of 32.7% male team members, and 67.3% female team members. We continue diversifying our recruitment effortsto achieve a more balanced representation between genders and ethnicities.

Talent development is and will always be part of our culture. In 2022, we created an Advancement Focus Group which is developing clear career paths to improve and develop steps for our team members to advance in their careers and/or professional development with Foothill.

Looking Ahead

In 2023 the Credit Union will implement several new projects to help improve organizational efficiencies and improve the way we serve members.

An enhancement to the chat bot that was rolled out in late 2022 will be added in 2023, providing a more robust artifical intelligence (AI) tool to members seeking answers to questions through our website or within online banking. The AI bot, named Tobi, will also help alleviate the call volume the Contact Center receives on a daily basis.

Executive Leadership Team

Strategic Focus

The Marketing area will also adopt several new tools to help provide more personalized service to members, by offering customized website content based on a member’s life journey and goals. A focus will continue to be on growing membership, which will be aided by Click Switch and Card Swap. This resource helps members switch their direct deposit and recurring payments/subscriptions to their Foothill accounts and Foothill credit or debit card.

A new tool will be implemented in branches to help speed up the member verification process, thereby reducing wait times and improving accuracy at the teller window. Tellergy also helps keep members’ information secure by making the validation process digital and eliminating the need for members to verbally provide their member number or personal information.

In 2023 Foothill is investing in technology and partners that will improve our lending experience. AI driven online lending that will allow members to get their loan approved and processed faster. In addition, Foothill will partner with local auto dealers that will enable our members to get a loan from Foothill at the auto dealership.

We look forward to a productive and fruitful 2023 as we continue to serve the needs of our members and communities.

Michael Terzian Chief Executive Officer

Chris Andersson Chief Experience Officer

Jonah LaFollette Chief Strategy Officer

Linnie Gooch Chief Technology Officer

Jackie So Chief Financial Officer

Judy Schaeffler Vice President of Lending

Silvia Miramontes Chief Human Resources Officer

Board of Directors

Foothill’s Board of Directors helps to oversee the Credit Union’s business operations and helps guide the growth and goals of the organization. The volunteer Board brings expertise from various professional backgrounds, many from the professional fields that Foothill serves, such as education and health care. The board also helps hold the CEO accountable for finances, budget, compliance, and financial policies and practices.

Scott Petterson Chair

David Jaynes Secretary

Marc Chaldu Director

Rafael Soriano Director

Tamara Murphy Director

Scott McCulley Vice Chair

Linda Dempsey Treasurer

Supervisory Committee Report

Foothill Federal Credit Union’s Supervisory Committee is an independent committee that has five committee members appointed by the Board of Directors that serve on behalf of the membership. The Supervisory Committee oversees accounting practices and ensures that the Board and Management are directing the Credit Union’s operations in compliance with applicable regulations and safeguarding member assets.

The committee’s responsibilities include:

• Selecting a CPA firm to perform the annual external audit

• Ensuring that internal audit work is performed in a thorough and timely manner

• Assessing the adequacy of the Credit Union’s internal controls and making sure they are followed

• Guarding against potential fraud and other losses that could adversely impact the membership

• Reviewing internal controls and making recommendations for improvements to the Board

On behalf of the Supervisory Committee, I want to thank the Board of Directors and team members of Foothill Credit Union for their dedication to protecting member assets and operating with integrity and sound business practices.

Kevin Hryciw Supervisory Committee Chair

Brandon Craig Member

Kevin Hryciw Chair

David Jaynes Board Liason

Ryan Chiechi Member

Ramiro Rubalcaba Member

Balance Sheet

Deposit Balances

Loan Balances

Community Relations

At Foothill we pride ourselves in being more than just a bank to our members and our community. Our team actively gets involved with the business partners we serve, and because of that, Foothill has become recognized as a go-to resource in the San Gabriel Valley. Below are some highlights of our commitment to the community and our members in the education, healthcare, and municipality fields.

Education Partners:

• Offering Classroom and Book Grants to various school partners

• Providing financial literacy resources for classroom, online, and in-person activities

• Supporting teachers and support staff during special recognition days

• Providing college scholarships to youth members

• Sponsoring & volunteering at school events, such as fun runs, fundraisers, and more

• Providing lunch and education for staff during staff development days

• Awarding Career Advancement scholarships to our educators to help further their education

Health Care Partners:

• Support and sponsorship of national days honoring doctors, nurses, and other medical

staff

• Sponsorship of the Daisy Award program at City of Hope

• Providing thank-you baskets to our hospital partners

• Sponsorship and volunteering at hospital foundation events and fundraisers

• Awarding Career Advancement scholarships to healthcare professionals to help further their education

• Donations for employee appreciation events

Community:

• Participate in community organized runs/relays

• Support literacy through Monrovia Reads Sponsorship

• Serve as board members on various chambers of commerce, service groups, and foundations

• Support and volunteer with local chambers of commerce and city events

• Co-host community blood drives for City of Hope

• Offer educational seminars for the community

About Foothill

Foothill Credit Union is a not-for-profit, member owned cooperative financial institution, serving education health care, and municipalities in the San Gabriel Valley. We offer many of the same traditional products and services offered by banks, but our earnings are returned to our members in the form of competitive loan rates and deposit rates, fewer fees, and personalized service. We consistently rank among the top of our peers in member service.

Products and Services Offered

Deposit Accounts

Manage your money today and save for future needs with secure deposit accounts:

• Protection Plus Checking

• Rewards Checking

• Regular Share Savings

• Summertime Savings

• Christmas Club Savings

• Rainy Day Savings

• Money Market Accounts

• Certificate Accounts

• IRAs & Education Savings

• Youth Accounts (ages 1-24)

Convenience Services

We make it easy to access your account anytime, anywhere with the following services:

• Debit MasterCard

• CO-OP ATM Network access with over 30,000 Fee-FREE locations nationwide

• Free online banking

• Free online bill pay

• Free mobile banking with mobile deposit

• FastTeller automated phone banking

Loan Accounts

Enjoy exceptional rates, low fees, and fast friendly service. Choose the loan that best meets your needs:

• Auto Loan

• Boat/RV Loan

• First Mortgage

• Home Equity Loan or Home Equity Line of Credit

• Personal Loan or Personal Line of Credit

• MasterCard- Platinum, Platinum Rewards, or Credit Builder

• Rainy Day Loan (tied to Rainy Day Savings)

• Student Loans (partnered with Sallie Mae)

Other Services

• AutoLand- auto buying service

• Foothill Investment Services

• Green Path Financial Wellness

• TruStage Insurance Products

• Direct Deposit/Payroll Deduction

• Cashier’s Checks

• Notary Service

• Coin Machine (free to members)

• Educational Seminars

Our Mission:

Foothill CU exists to improve members' financial health by providing an exceptional member experience and excellent financial products and services.

Core Values:

• Striving for service excellence

• Open and honest communication

• Passionate, motivated team members

• A fun, friendly team environment

• Integrity and mutual respect for others

• Long-term team member development

Branches:

Arcadia

30 S. First Ave.

Arcadia, CA 91006

Covina

928 N. Citrus Ave.

Covina, CA 91722

Glendora

645 S. Lone Hill Ave.

Glendora, CA 91740

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Our Vision:

To build lifelong member financial health through exceptional member relationships and community service.