2017 GECU Annual Report

M O C

ING FU LL C IR

CLE 2 017

A

N

N

UA

L REPORT Federally insured by NCUA.

YOU KEEP OUR STORY MOVING FORWARD.

OUR STORY BEGAN 85 YEARS AGO.

IT’S THE STORY OF EVERYDAY PEOPLE WORKING TOGETHER TO BUILD A STRONGER COMMUNITY.

PEOPLE SUPPORTING

COMMUNITY

TABLE OF CONTENTS 3

Board of Directors and Management Team

5

Chairman’s Message

7

President & CEO Report

9

Year-end 2017

13

Audit Committee Report

14

Statements of Financial Condition

15

Statements of Income

17

Community Impact Statements

19

Services

21

Locations

BOARD OF DIRECTORS Armando Jimarez

Guadalupe Giner SECRETA RY/ TREASU RE R

Grace Vaughn

Javier Rangel

Gregory J. Watters C H AI R M AN

John Runkles

Teresa Quezada

Michelle Padilla

Ricardo Soto

Jose Quiñonez VI C E-C H A I RM A N

BOARD OF DIRECTORS Gregory J. Watters Chairman of the Board Jose QuiĂąonez Vice-Chairman Guadalupe Giner Secretary/Treasurer

EXPIRATION OF TERMS April 2018

April 2018

April 2019

Grace Vaughn Teresa Quezada Ricardo Soto John Runkles

EXPIRATION OF TERMS April 2020 April 2019 April 2020 April 2020

Advisory Directors Armando Jimarez Javier Rangel Michelle Padilla

September 2018 September 2018 September 2018

MANAGEMENT TEAM Crystal Long President & CEO

Lettie Ramos Vice President, Mortgage

Ceci Davila Sr. Vice President, Chief Operations Officer

Mike Sarabia Vice President, Internal Audit

Hazel Kennedy Sr. Vice President, Chief Lending Officer*

David Solis Sr. Vice President, Chief Financial Officer

Teresa Montoya Sr. Vice President, Chief Marketing Officer

Chris Tompkins Sr. Vice President, Chief Commercial Services Officer

Fernando Ortega Sr. Vice President, Chief Information Officer

Joe Underwood Vice President, Human Resources

Darlene Palmore Sr. Vice President, Chief Compliance Officer

Daniel Vasquez Vice President, Career & Talent Development

*Indicates a change in position title as of December 31, 2017.

PA G E 3

PEOPLE

EMPOWERING COMMUNITY

CHAIRMAN’S MESSAGE This year — your credit union’s 85th year — was packed with growth and achievement in service to you, our member-owners. The GECU story is a story of hands-on service to our members and our community.

All of our services are built on your credit union’s strong and stable financial foundation. In 2017, your credit union paid you $17,510,446 in interest and dividends, an increase of $422,826 over last year. Our deposits increased by $79,308,819, and our loan portfolio increased by $143,184,459. Your credit union reached a net income of $19,484,721, increasing GECU’s net worth to 9.60%. Take pride in knowing that your credit union is strong and stable, and we’re using that strength — our strength — to elevate our community.

Since our 11 founders began our story 85 years ago, we’ve not only held on to their vision of service, we’ve expanded it to include more people than ever before.

Through everything from branches and tellers to GECU Community Development and our educational outreach, we are here to serve you and our community at every stage of life. Every day — one member at a time — we’re telling our story about the good we can accomplish by working together.

I am very proud to tell you some of the highlights of this story — a big-picture look at the results of your credit union’s tireless work to elevate our community. In 2017, our Volunteer Income Tax Assistance volunteers, along with the Coalition for Family Economic Progress and our community partners, helped 8,026 local families receive more than $14.3 million in tax refunds and $6.3 million in Earned Income Tax Credits — free of charge.

In 2017, we launched the Welcome Home El Paso program, which provides hardworking local families with

down-payment assistance on the purchase of a home, with the El Paso Housing Finance Corporation. This is in addition to our financial education and homeownership seminars that also help local families qualify for down-payment assistance. Together, these two programs have helped 74 local families purchase a home of their own, which has helped build the assets that create financial stability in our community.

When we share these figures, think about the lives that have been touched. These are hardworking families that now have a home of their own where they used to rent, a nest egg where they used to live paycheck to paycheck, and the ability to build wealth that spans generations.

This is the vision of our founders, an idea brought to life through hope and hard work. None of this would be possible without you, our member-owners. When you place your trust in GECU, we work to earn that trust each and every day through service. Being a member of GECU is more than a choice about where you keep your money, it’s adding your voice to the story of a hopeful community that’s working toward a more-prosperous future. Thank you for being a part of our story, and for letting us be a part of yours. Together, we’re doing great things, and there are many more great things yet to come.

Gregory J. Watters Chairman of the Board Change to GECU Bylaws — 2017 The amendments to the GECU Bylaws were approved on February 13, 2017. The GECU Bylaws were amended to allow the president to preside over annual and special meetings in the absence of the chairman and indicate that other officers designated by the board of directors may preside in the absence of the president and chairman. Amendments to the Bylaws were also included to clarify that the vice-chairman shall perform duties of the chairman, unless otherwise designated in the bylaws.

PA G E 5

PEOPLE FOR PEOPLE

COMMUNITY HELPING PEOPLE

PRESIDENT & CEO REPORT For 85 years, we have celebrated the values of the credit union movement — the idea that everyday people working together can make a difference. Our story is a story that is told in many voices. It is a story about hope and prosperity.

Your voice guides us as we build branches, add services and serve our community. Together, we are putting our people helping people philosophy into action. Thank you for placing your trust in us and for supporting the credit union movement with your voice. It’s an honor to serve you and our community, to listen to you, and to build our credit union around your needs.

I’m excited to tell you that in our 85th year, your credit union is strong, stable and growing. Our membership has grown to 370,901 members and we’ve added two GECU Neighborhood BranchSM locations, including the Piedras and Yandell location, to serve you. Your credit union has reached 25,199 community members with free financial education seminars, including more than 100 events for students in local schools. In addition to our support of the Sageland Elementary MicroSociety, our UTEP Pillar Partnership, and the GECU Foundation Scholarship that helps local students attend UTEP and EPCC, we’ve started serving local students and faculties directly in their own schools. Starting with the successful in-school location at Del Valle High School, we have also opened other locations in Coronado and Pebble Hills high schools, and a location in the EPCC Valle Verde campus. All of the in-school branches provide job training and real-world experience to the students that they employ. These locations are also hubs of financial education for both students and faculty, where previously there was a need for personalized financial advice. Your credit union is growing because it is a full-circle institution, reaching out with education and service to meet your needs at every stage of life.

We write our story through service. When you place your trust in GECU, we commit our efforts to helping you, your family and your neighborhood thrive. Just as we work together through our credit union, GECU works with our community partners to make an impact. We are proud to support organizations that share our same values and make a difference across the Borderland. Together, we’re building a more-prosperous community for everyone.

You — the member-owner — keep our story moving forward.

Since our founding, we’ve kept our people helping people philosophy at the forefront of our mission to serve you. We’re continuing the story that our founders started 85 years ago — one person and one day at a time — in which financial independence is achievable for everyone. More than ever, our movement needs your voice to speak out in favor of common-sense regulations that help your credit union serve you and our community.

Thank you for trusting us with all your hopes and dreams.

Our strength as a credit union comes from our members.

Whether you are a new member or you’ve made GECU a family tradition that spans generations, thank you for letting us be a part of your journey. You’re the reason why we’re celebrating this milestone anniversary. The GECU story is your story because this is your credit union. Together, we’re building a brighter future for our community.

Crystal Long GECU President & CEO

PA G E 7

PEOPLE FOR

COMMUNITY

BELIEVING

PEOPLE IN EACH OTHER

YEAR-END 2017 LOANS FUNDED 14% 16%

Indirect Auto Loans $457,962,956

19% 17% 38%

2017

Direct Auto Loans $166,268,588 Credit Cards — Advances $233,810,387 Installment $134,320,888

11%

Lines of Credit $11,780,907 Real Estate Loans (First & Second Lien) $141,969,176

39%

12%

16%

4% 11%

Home Equity Real Estate Loans $49,933,617

1%

Member Business Loans $15,844,223 TOTAL LOANS FUNDED: $1,211,890,742

1%

RETURN TO MEMBERS

53.6%

Interest — CD $9,388,987 Interest — IRA $3,994,791

22.8%

Interest — MMA $2,201,456 Dividends — Shares $1,633,205

12.6%

Interest — Checking $292,007 TOTAL RETURN TO MEMBERS: $17,510,446

PA G E 9

9.3%

1.7%

INSPIRING CHANGE COMMUNITY PEOPLE PEOPLE FOR

YEAR-END 2017 (CONT.)

TOTAL LOAN PORTFOLIO

12%

Vehicle Loans $1,408,908,061

11% 60%

2017

Credit Card Loans $282,871,015 Home Equity Loans $261,338,865

9%

Real Estate Loans (First & Second Lien) $217,541,888 Unsecured Loans $138,582,883

6%

Commercial Loans $30,090,254 Fully Secured Loans $23,505,511 TOTAL LOAN PORTFOLIO: $2,362,838,477

1% 1%

DISTRIBUTION OF EARNINGS

53.1%

Operating Expenses $95,528,370 Employee Compensation & Benefits $46,928,234

26.2% 10.9%

Reserves $19,484,721 Return to Members $17,510,446 TOTAL DISTRIBUTION OF EARNINGS: $179,451,771

PA G E 1 1

9.8%

PEOPLE

WORKING FOR YOU

AUDIT COMMITTEE REPORT Abraham Valenzuela

The Audit Committee is responsible for ensuring the appropriate oversight of GECU’s required financial-reporting objectives and for ensuring that established practices and procedures are sufficient to safeguard members’ assets in accordance with the law.

The Audit Committee is assisted by GECU’s Internal Audit Department, which conducts comprehensive internal audits throughout the year, ensuring that 1) accounting records and reports are prepared promptly and accurately reflect operations and results; 2) established internal controls are effectively maintained and adequately protect the credit union, its assets, members, management and employees; and 3) each area of the credit union is carrying out the plans, policies and procedures for which it is responsible as directed by the Board of Directors.

The Audit Committee also oversees the annual comprehensive audit conducted by the independent certified public accounting firm of Doeren Mayhew.

Their examination was conducted in accordance with generally accepted auditing standards as issued by the American Institute of Certified Public Accountants.

As a result of the internal and independent audits, the Audit Committee believes the financial statements included in the 2017 Annual Report fairly present the financial condition of GECU for the year ending December 31, 2017.

We appreciate GECU’s Board of Directors, management and staff for their cooperation.

Ricardo Soto — Chairman Guadalupe Giner Armando Jimarez Abraham Valenzuela

A full copy of GECU’s 2017 financial statements may be obtained by contacting the office of Crystal Long, GECU President and CEO.

PA G E 1 3

Armando Jimarez

Guadalupe Giner

Ricardo Soto C H A I RM A N

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31, 2017 & 2016

ASSETS

2017 $

Cash and cash equivalents Investment Securities: Held-to-maturity Available-for-sale FHLB stock Loans held-for-sale Loans to members, net of allowance for loan losses Accrued interest receivable Property and equipment NCUSIF deposit Life insurance contracts Other assets

87,938,561

2016 $

61,142,545

3,000,000 70,216,760 7,319,000 10,399,074 2,337,212,568 7,104,826 63,851,226 20,501,624 28,559,654 14,754,715

3,000,000 81,628,914 4,435,400 5,419,574 2,194,028,109 6,755,048 61,571,299 18,929,916 27,365,547 12,714,390

$ 2,650,858,008

$ 2,476,990,742

Liabilities: Members’ shares and savings accounts Borrowed funds Accrued expenses and other liabilities

$ 2,219,110,041 154,193,454 23,223,972

$ 2,139,801,222 85,676,605 17,195,690

Total liabilities

$ 2,396,527,467

$ 2,242,673,517

16,834,261 237,575,450 (79,170)

16,834,261 218,131,115 (648,151)

Total assets LIABILITIES AND MEMBERS’ EQUITY

COMMITMENTS AND CONTINGENT LIABILITIES Members’ equity: Regular reserves Undivided earnings Accumulated other comprehensive income (loss) Total members’ equity

$

Total liabilities and members’ equity

$ 2,650,858,008

Federally insured by NCUA.

PA G E 1 4

254,330,541

$

234,317,225

$ 2,476,990,742

STATEMENTS OF INCOME

DECEMBER 31, 2017 & 2016 2017

2016

$ 121,668,798 2,757,633

$ 108,645,334 1,902,484

124,426,431

110,547,818

Interest expense: Members’ shares and savings accounts Interest on borrowed funds

17,510,446 1,480,859

17,087,620 359,681

Total interest expense

18,991,305

17,447,301

105,435,126

93,100,517

Provision for loan losses

29,432,237

24,352,031

Net interest income after provision for loan losses

76,002,889

68,748,486

Non-interest income: Gains on sale of loans Other income Fees and charges and other operating income

3,453,842 1,596,288 49,975,210

4,508,977 1,326,808 44,773,288

Total non-interest income

55,025,340

50,609,073

Non-interest expenses: Compensation and benefits Occupancy Office operations Other operating expenses

46,928,234 7,460,701 46,790,734 10,363,839

45,751,692 6,989,617 41,820,778 7,240,981

Total non-interest expenses

111,543,508

101,803,068

$ 19,484,721

$ 17,554,491

Interest income: Loans receivable Investment securities Total interest income

Net interest income

Net income

PA G E 1 5

PEOPLE

TRANSFORMING LIVES

COMMUNITY IMPACT

STATEMENTS

2017

370,901 members strong A S O F D E C E M B E R 3 1 , 2 0 17 .

Financial Education and Homeownership

FINANCIAL EDUCATION

SEMINAR

One-on-one Counseling

1,481

Financial Education

ATTENDANCE

708

Community Presentations

4,579

TOTAL ATTENDEES

18,431 25,199

VITA Tax Assistance

8,026

Tax returns filed.

GECU

Income $6.3 million inTaxEarned Credits received. $14.3 million in tax refunds.

FREE OF CHARGE

DOWN-PAYMENT

Employee Jean Day Contributions

ASSISTANCE

74

$22,368 DONATED

families received more than

$450,000

in down-payment assistance to purchase a home of their own.

TO LOCAL NON-PROFITS. PA G E 1 7

ADVOCATING

PEOPLE FOR OTHERS

SERVICES SHARE & DEPOSITS Share (savings) Accounts Christmas Club Accounts No Excuse Savers Club Accounts Certificates of Deposit Bump-up Certificates of Deposit Money Market Accounts Personal Checking Accounts Business Checking Accounts Individual Retirement Accounts (IRAs) No Excuse IRA Certificates of Deposit Second Chance Checking Youth Accounts LOANS Personal Loans New and Used Auto Loans Home Mortgage Loans Home Equity Loans Home Improvement Loans GECU Empowerment Mastercard® Credit Card GECU Rewards Mastercard® Credit Card Lines of Credit GECU Fast Cash™ Business Loans SPECIAL SERVICES ATMs and Real-time Deposit-taking ATMs Drive-up Personal Tellers Automatic Transfers (between GECU accounts) Business Cash-management System Chip-enabled Credit and Debit Cards* Community Boardrooms

Federally insured by NCUA.

*Services added in 2017.

Direct Deposits Domestic Wire Transfers GECU Mascot Dru Blue Electronic Receipts GECU Call Center GECU Loan Center GECU Online Banking — gecu.com Bill Pay Account balances and transfers Online loan applications Self-service pay channels FinanceWorks™ eStatements eSignature service GECU Mobile Banking Account balances and transfers Bill Pay Real-time mobile deposits Mobile loan applications Mobile wallet* ATM locator Mobile registration Mobile touch ID Text messaging and account alerts GECU Knowledge Base, Email and GECU Chat Night and Lobby Depositories Online Education Videos Overdraft Privilege Safe Deposit Boxes SmartLine (24-hour account information) TalkBox Welcome Home El Paso Down Payment Assistance*

PA G E 1 9

PEOPLE

CULTIVATING KNOWLEDGE

LOCATIONS* Airway & Edgemere 1245 Airway Boulevard (Drive-thru facility) Alameda & Ysleta 8936 Alameda Avenue Artcraft & Upper Valley 6101 Upper Valley Road Campbell & Mills 218 North Campbell Street, Suite 100 Eastlake & Darrington 13750 Eastlake Boulevard Edgemere & Rich Beem 12801 Edgemere Boulevard, Building A El Paso Community College Valle Verde Campus 919 Hunter Drive GECU Community Development 6801 Viscount Boulevard, Suite A GECU Investment Services and MEMBERS Trust** 7227 Viscount Boulevard Helen of Troy & Resler 7410 Helen of Troy Drive Lee Trevino & Vista Del Sol 1545 North Lee Trevino Drive Mesa & Doniphan 7955 North Mesa Street, Suite B

Mesa & Mesa Hills 5710 North Mesa Street

Yarbrough & North Loop 429 Yarbrough Drive

Montwood & Desert Sun 12400 Montwood Drive

MAILING ADDRESS PO Box 20998 El Paso, Texas 79998-0998

North Loop & Horizon 10860 North Loop Drive Operations Center 1225 Airway Boulevard Oregon & University 2208 North Oregon Street Piedras & Yandell 716 North Piedras Street Rojas & Zaragoza 11987 Rojas Drive Sean Haggerty & Marcus Uribe 11400 Sean Haggerty Drive, Building D, Suite 401 Transmountain & Dyer 5625 Transmountain Road Trawood & George Dieter 3037 Trawood Drive (Drive-thru facility) Viscount & Airway 7227 Viscount Boulevard Vista Del Sol & Yarbrough 10425 Vista Del Sol Drive

PA G E 2 1

TELEPHONE NUMBERS All Offices 778.9221 1.800.772.4328 SmartLine 778.0009 1.800.772.0009 TDD: 774.6080 GECU Call Center and Loan Center 778.9221 1.800.772.4328 WEB ADDRESS gecu.com *Services and locations as of December 31, 2017. For an up-to-date listing of locations, please visit gecu.com. **Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members.

Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution.

CBSI is a registered broker/dealer in all 50 states of the United States of America.

Nondeposit investment products available through MEMBERS Trust Company are not deposits of, or guaranteed by, the trust company, a credit union or credit union affiliate; are not federally insured or guaranteed by the NCUA, FDIC or any other governmental agency; and are subject to investment risks, including possible loss of the principal amount invested. MEMBERS Trust Company is a federal thrift regulated by the Office of the Comptroller of the Currency.

For legal advice, please consult your attorney and/or accountant.