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2013

ANNUAL REPORT

Progress & Growth

Real People. Reliable Service. Right in Your Backyard. This report was designed for digital viewing - visit www.mlcu.org This credit union is federally insured by NCUA.

Our Mission Our mission is to provide consistent and fiscally responsible services for the mutual benefit and satisfaction of our membership.

Our Vision Our vision is to provide needed financial services and education to our members and the communities that we serve. This vision is to empower both individual and community economic prosperity to assist in making Lake and Mendocino counties great places to live and work.

Our Values • • • • • •

Accuracy Integrity and Trust Professional/Knowledgeable Confidential/Protects Privacy Advocacy/We Care Community Focused/Involved

“This is the best local community credit union. All are so friendly and there is never a problem. Thank you for excellent customer service and the best checking and savings accounts for seniors!” - Beverly Owen, Member since 2012

“MLCU is like family. It brightens my day to see the staff.” - Staci Nelson, Member since 2009

Chairman of the Board’s Report As Chairman of your Board of Directors I am honored to represent the membership of our vibrant and increasingly popular financial cooperative. MLCU’s nine member Board and five member Supervisory Committee are all volunteers. This hard working group provides leadership and oversight for the organization and works directly with the CEO and staff to help assure the continued success of our credit union. 2013 will be remembered by all involved as the year of the merger with Fort Bragg Community Federal Credit Union (FBCFCU). The decision to merge is a difficult one and MLCU was honored to be considered by FBCFCU as a partner. After a thorough review of all the details by both institutions, it was determined that the combined entity would realize substantial savings which in turn would contribute to the long term sustainability of the surviving credit union. FBCFCU members voted and agreed to the merger in August with approval received from our regulators following shortly thereafter. On October 1, the combined entity opened for business with the Fort Bragg branch location of MLCU moving to the FBCFCU building on Franklin Street. The positive financial results of the merger showed up almost immediately – and the budget projections for 2014 look very positive thanks to increased economies of scale. This strategic combination of the two institutions provides our 25,000 members with Pictured left to right: Rob Scott, Jack Daniels, Karen Chistopherson, Arlene Colombini, Cameron Reeves,Gale the security of $174 million in total assets. Beauchamp, Monte Hill, Dale Simpson, Larry Myers.

In closing, I would like to express my sincere thanks to FBCFCU Board Chair Chuck Tell and to retired FBCFCU CEO, Pam Merritt; along with the FBCFCU and MLCU management, staff and volunteers whose combined work helped assure our successful merger. We are pleased to welcome previous FBCFCU volunteers Gale Beauchamp and Dale Simpson as MLCU board members and Bobby Duffy to the MLCU Supervisory Committee. We look forward to the opportunity to continue to grow and provide the best in financial services to the communities that we proudly serve.

Cameron Reeves Chairman of the Board

Board of Directors Cameron Reeves, Chairman Rob Scott, Vice Chairman Gale Beauchamp, Director Karen Christopherson, Director Arlene Colombini, Secretary

Jack Daniels, Director Monte Hill, Director Larry Myers, Director Dale Simpson, Director

Supervisory Committee Report The Mendo Lake Credit Union Supervisory Committee acts as the watchdog for the credit union's members. In that role, they meet with regulators and oversee our annual, independent audit. The Supervisory Committee meets throughout the year to ensure that it is abreast of any critical issues that may need their attention. In 2013, the auditing firm that was employed by the supervisory committee provided the credit union with an unqualified opinion on the credit union's financial statements. The audit report confirmed that Mendo Lake Credit Union’s financial statements accurately represent the financial condition of the credit union and comply with Generally Accepted Account Principles (GAAP). Based on results of the annual CPA audit and MLCU’s internal audits and reports from its regulators, Mendo Lake Credit Union continues to be a financially sound organization. Respectfully submitted, Mendo Lake Credit Union Supervisory Committee Paul Racine, Chairman Dave Goodman, Committee member Madelin Holtkamp, Committee member Carolyn Welch, Committee member John Burke, Committee member Bobbi Duffy, Committee member

Pictured left to right: John Burke, Paul Racine, Dave Goodman, Madelin Holtkamp.

“I love walking in to Big Smiles and Friendly People - MLCU staff obviously love their jobs!” - John Joseph Burciaga, Member since 2013

“Mendo Lake Credit Union has excellent member service.” - Bill Bennett, Member since 2010

Financial Highlights BALANCE SHEET

12/31/2012

12/31/2013

5,361,678 42,100,359 74,248,875 5,063,994 $126,774,906

7,523,135 61,073,852 98,546,273 6,893,235 $174,036,495

113,367,836 1,337,262

157,729,407 1,420,753

749,484 11,320,324 $126,774,906

749,484 14,136,851 $174,036,495

12/31/2012

12/31/2013

Interest on Loans Investment Income Other Income Non-Operating Income Total Income

4,627,562 616,162 1,643,603 0 $6,887,327

5,144,832 502,020 1,911,092 0 $7,557,944

Dividend & Interest Expense Operating Expense Provision for Loan Loss Total Expense Net Income (Loss)

254,990 5,989,582 642,215 $6,886,787 $540

198,054 6,887,056 288,347 $7,373,457 $184,487

Assets Cash and Cash Equivalents Investments Loans (net) Other Assets (net) Total Assets Liabilities Share & Deposits Other Liabilities Equity Regular Reserves Retained Earnings Total Liabilities & Equity

STATEMENT OF OPERATIONS Income

Expense

2013

President/CEO Report 2013 was a year of amazing growth and substantial progress. Thanks in part to our merger with Fort Bragg Community Federal Credit Union (FBCFCU), assets increased by $47.3 million to a new all-time record of $174 million. Membership grew by over 6,500 to just over 25,000. $33 million and 4,745 members came from the merger with FBCFCU. These numbers put us in the top 10% of fastest-growing California credit unions. After almost 20 years on the same core processing system, we had to make the challenging decision to move to a new option. Keeping in mind the myriad of changing regulations, member needs, and a variety of access options, we chose a system utilized by a large user base, backed by substantial resources, and possessing the capacity to provide new services - including additional business accounts and loans, mortgage services, enhanced electronic banking options, as well as enhanced security and disaster recovery options. The main conversion went well. We experienced some initial issues with the home banking platform, but it is gaining acceptance - each month more and more members use its many convenient features. Thank you to the entire team who worked on this process, led by Chris Kramer and John Peterson. A special thanks to our members! We know change is hard and we appreciate your patience. 2013 brought a major increase in lending - with a total of $38.2 million in new loans. Over $22.7 million in auto loans came from our partnerships with local auto dealers and the Credit Union Direct (CUDL) lending system. This astounding total made MLCU the top choice for auto lending in our two-county area. In 2013 we invested over $85,000 to help local nonprofits provide a myriad of needed services. In addition to our Arlene Colombini Scholarship program, MLCU contributes to a variety of education-based activities, including an ongoing commitment to the many programs and services of the Mendocino College Foundation. Thank you to our dedicated volunteer group, including our Board of Directors and Supervisory Committee, as well as our remarkable team (over 60 strong!) who serve our members every day. Most importantly, thank you for the continued trust and confidence of our membership. We look forward to continuing to grow and meet your financial service needs in the years to come.

Richard Cooper President/CEO

Our celebratory ribbon cutting to commemorate our merger with FBCFCU.

# Calls

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2013 at a glance...

Member Service Center

Member Service Center

“I love all the ways MLCU gives me access to my account, including the convenient home banking and SPRIG services.” - Jonathan Dooley, Member since 2011 MLCU ATM Withdrawals

126,839

Home Banking Transactions

62,336

Calls to Member Service Center

60,499

Checks Processed

398,980

In Branch Transactions

361,185

Total New Memberships Clearlake Fort Bragg Lakeport Ukiah

3,874 866 714 1,017 1,277

In 2013, our four-branch network processed thousands of transactions worth millions of dollars in order to meet the needs of our diverse membership. No matter how you like to conduct your business, we’re here for you!

In 2013, we opened 3,874 new memberships and welcomed 4,745 former FBCFCU members to MLCU. At the end of the year, our membership peaked at 25,043. We continue to grow...and grow...and grow!

Thank you for investing in our community by keeping your loans local! We loaned out an amazing $38.2 million in 2013! $22.7 million of that was thanks to our local auto and RV partners: Thurston Auto Plaza, Guy Strohmeiers Auto Center, Thurston Honda, Kathy Fowler Auto Center, Mendo Motors, Ken Fowler Auto & Truck Center, Ukiah Ford, Sport Chrysler Jeep Dodge, Hare Creek Automotive, Redwood Empire RVs, Airport Auto Brokers, Vogel’s RVs, Ahl Motors and Warranty Motors.

Loans funded in branch

Credit Union Direct Lending

Total Loans funded in 2013

$15.5 Million

$22.7 Million

$38.2 Million

Reinvesting

In 2013, MLCU provided financial contribtutions American Cancer Society American Legion - Boys and Girls State Art Center of Ukiah Clear Lake High School Sober Graduation Clear Lake High School Sports Foundation Clear Lake Performing Arts Community Center of Mendocino - One World Festival Community Foundation - Imagination Library Court Appointed Special Advocates Early Iron Club of Ukiah Fort Bragg High School Basketball Fort Bragg Rotary - Crab Feed Fort Bragg Unified School District - Every 15 Minutes Program Gloriana Theatre Guitars for Troops Healthy Mendocino Website Human Race Kesleyville Pear Festival Kelseyville Sunrise Rotary - Denim and Diamonds Lake County Chamber of Commerce Lake County Child Care Planning Council Lake County Fair Junior Livestock Auction Lake County Friends of Mendocino College - Pianists Concert Lake County Habitat for Humanity Lake County Land Trust Lake County Office of Education - Every Student Succeeds Program Lake County Office of Education - The Big Read Lake County Wine Auction Lakeport Concert in the Park Lakeport Enhanced Education Foundation Lakeport Fairgrounds Beautification Project Lakeport Main Street Association - Taste of Lakeport Lakeport Womens Civic Club Leadership Mendocino Mendocino College Foundation Mendo Mayhem Mendocino Coast Botanical Gardens - Festival of Lights Mendocino Coast Chamber of Commerce - Whale Festival Mendocino Coast Clinics Mendocino Coast Earth Day Mendocino Coast Film Festival Mendocino Coast Hospital Foundation

totaling more than $85,000 to the following organizations: Mendocino Coast Humane Society - Wine, Kibble & Bids Mendocino Coast Recreation & Park Mendocino High School - Project Grad Mendocino Music Festival Mendocino Rotary Mendocino Women’s Choir Miss Mendocino NAACP Nor Coast Rodders Classic Car Show North Coast Opportunities Northern Circle Indian Housing Noyo Sunrise Soroptomist Quilt Show Nuestra Casa Paul Bunyan Days Pomolita Athletic Boosters Project Sanctuary Redwood Childrens Services Relay for Life Rising Stars Music Showcase Rose Family Preschool Soroptomist International of Fort Bragg - Whale Run South Ukiah Rotary Honor Flight South Ukiah Rotary Triathlon Sponsoring Survivorship St. Helena Hospital Clearlake Foundation Stars of Lake County Taylor Observatory Thrive Lake County Ukiah Concerts in the Park Ukiah High School Ukiah Lions Ukiah Players Theatre Ukiah Pumpkin Fest Ukiah Rotary Monster Bike Ride Ukiah Senior Center Ukiah Symphony Ukiah Valley Association of Habilitation United Way of the Wine Country Volunteer Income Tax Prep (VITA) Westshore Little League Westside Community Park - Grillin’ on the Green Yokayo Elementary School

in our community

Investing in Education MLCU is proud to support the following scholarship and educational programs: Banzai Online Financial Literacy for High School Students Mendo Lake Credit Union Arlene Colombini Scholarship Mendo Lake Credit Union Lake County Latino Scholarships Mendo Lake Credit Union Student Achievement Awards Mendocino College Foundation Adopt-A-Fifth-Grader Scholarships Mendocino County SELPA - Financial Literacy Classes Money Wise Elementary School Savings Program Redwood Childrens Services , Lake County Harbor on Main - NEFE High School Financial Literacy Program Redwood Childrens Services , Mendocino County Arbor on Main - NEFE High School Financial Literacy Program Ukiah Unified School District Student of the Month Program

Honors & Awards MLCU was the proud recipient of the 2013 First Place State Desjardins Youth Financial Education Award, presented by the California & Nevada Credit Union Leagues. This award was based on our work with elementary school, high school and college students across Lake and Mendocino Counties. We love collaborating with our local educational insitutions to promote financial literacy!

In 2013, the Federal Home Loan Bank of San Francisco announced 33 grant awards through its Access to Housing and Economic Assistance for Development (AHEAD) Program. As a member institution, MLCU had the honor of awarding three local initiatives: California Human Development – $42,000 to fund the Mobile Migrant Farmworker Housing Unit Demonstration Model project

• Desjardin • Ahead Awards

more details here

The Resource for Native Development – $25,000 to provide business development, consumer, and home repair loans to Indian tribes within a nine-county region of California

Redwood Children’s Services – $25,000 to support the Arbor Youth Program for at-risk youth

Community Leadership MLCU Staff served the following organizations: California Credit Union League Audit Committee Clearlake Chamber of Commerce Economic Development Finance Corporation Fort Bragg Rotary Lake County Friends of Mendocino College Lake County Wine Auction Lake County Youth Coalition Mendocino Coast Botanical Gardens Mendocino Coast Chamber of Commerce Mendocino College Foundation

North Coast Opportunities Board of Directors North Coast Opportunities Human Race Committee Mendocino Moving Forward Mendocino Private Industry Council Project Sanctuary St. Helena Hospital Clearlake Fundraising Cabinet Ukiah Senior Center Endowment Board Ukiah Valley Medical Ctr. Citizens Advisory Council West Company

2013 Team Members

Melissa Aguirre Loan Officer Luis Macias Financial Service Representative Gia Aguirre Member Service Representative II Beth McCarty Senior Loan Officer Lynne Andress Member Service Representative Tracy McDaniel Branch Manager Sarah Anzano Branch Manager Maria Mendez Call Center Representative Patty Beck Compliance/Collections Judi Mooney Utility Kim Bradley Branch Manager Taryn Norton Call Center Representative Donna Jordan Collections Supervisor Nina Nunez Branch Support Isidro Chavez Assistant Branch Manager Karina Partida Member Service Representative Maria Cooper Financial Service Representative II John Peterson Chief Operating Officer Richard Cooper President/CEO Julie Pyorre Utility Zach Correia Member Service Representative Kasey Ram irez Call Center/Member Service Rep. Brenda Diaz Member Service Representative Leticia Ram irez Member Service Representative Noel Eddings Loan Officer Angelina Ram irez Assistant Branch Manager Ashley Estrada Member Service Representative II Miriam Ram irez Financial Service Representative II Lilly Fiora Financial Service Representative David Rhoades Chief Financial Officer Lupe Flores Member Service Representative Frank Roberts IT Technician Jeniffer Giannini Financial Service Representative Andres Rodriguez Member Service Representative Jam ey Gill Director of Marketing & Comm. Dev. Am yout Rohrbough Manager In partnership with our local auto & RV dealers, we loaned $38.2 million Accounting dollars in 2013. Thank you,Guy Strohm Joe Graham Accountant Sophie Ruiz Member Service Representative Susan Hammers Member Service Representative Rainee Sanchez Member Service Representative Am ber Higgins Call Center Representative Jill Scott Branch Support Jenny Haydon Collections Clerk Angela Silva Accountant Danielle Jones Member Service Representative Jessica Sipila Member Service Representative Sam Karnatz Member Service Representative Carla Slaven Loan Officer Vickie Kinm an Loan Officer Melissa Sm ith Call Center Representative Kim berly Koschik Financial Service Representative Kristin Tanner Member Service Representative II Chris Kraem er IT Manager Jessica Tinney Call Center Supervisor Laura Kucz Accounting Clerk Teri Ullrich Branch Manager Marci LaBrash Compliance Officer Maria Velasquez Loan Department Supervisor Becky Lopez Member Service Representative Jennifer Wright Administrative Services Manager Jill Lydick Member Service Manager Jesus Zazueta Financial Service Representative

UKIAH OFFICE 526 South State Street Ukiah, CA 95482

LAKEPORT OFFICE 963 11th Street Lakeport, CA 95453

FORT BRAGG OFFICE 120 North Franklin Street Fort Bragg, CA 95437

CLEARLAKE OFFICE 14866 Olympic Drive Clearlake, CA 95422

Thank you for choosing Mendo Lake Credit Union. www.mlcu.org - 707.468.0161


Mlcu 2013 annual report