4Front Credit Union 2021 Annual Report

Banking, Smart and Simple.

2021 Annual Report

Board of Directors Our Board members come from all over northern Michigan.

They are unpaid volunteer professionals who selflessly lend their time and expertise to guide the direction of 4Front.

Directors are elected by the membership by a one member one vote election and serve 3 year terms.

Todd Rohrback, Chairman Byran Lindfors, Vice Chairman John “Jack” Hodge, Treasurer Charles Hague, Secretary Mike Slater, Director Brian Ausdemore, Director Skyler Fort, Director Julie Kosloskey, Director Matilyn Meadows, Director

“Wherever you are on your financial journey, we make banking smart and simple.” – The 4Front value proposition

Welcome from the CEO

Dear Member, Last year, my letter began by saying that 2020 would be one for the record books. Who knew then that 2021 had some more of the same. We had political intrigue, waves of COVID that forced uncertainty for all of us, national staffing shortages, and inflation at a 40-year high.

4Front was not immune to these issues. However, I am proud to say that we are not only surviving, but thriving. While we experienced some of the same staffing issues the rest of our communities experienced, we stepped up and provided the service that our members expected. We lent out a record amount of money. Not only to people who were looking to get into new homes, or new cars, but also millions to the small businesses in our communities. We have been there from the start of COVID, to help our communities as we emerge on the other side of this global pandemic. While we not only said “yes” to loans, we also reported best in class deposits, and member growth. We interpret this as a sign that we are not only great at saying “yes” to loans to get our members into cars, but that our members trust us enough to let their friends and family know they should join our ever growing movement. We do not take this trust lightly.

As we dealt with staffing issues, coupled with record interactions with you, our member, I know that sometimes our service level times were not as efficient as our membership has become accustomed. However, most of our members were patient and gave grace, and I would like to express my utmost gratitude for your continued faith in 4Front.

At 4Front, our focus is to help our neighbors along their respective journeys. We continually look for opportunities to offer products and services that will make your financial life that much easier. I am happy to say that we also saw a significant uptick in the use of our market leading technology, as members increasingly found out how easy it is to use our online and mobile banking systems along with our VideoTeller machines.

These machines not only allow you to talk to a person, sitting in northern Michigan, but can also be used as a traditional ATM. Members have provided significant positive feedback regarding not only the ease of use, but the fact that they allow us to handle your banking needs from 7am – 7pm, Monday – Friday, and 9am – 2pm on Saturday.

We remain vigilant in protecting our members from fraud and identity theft. We not only saved our members hundreds of thousands of dollars in potential losses due to fraud, but due to our emphasis on offering leading edge technology, we rolled out a new product, MemberPass, that is a first in the world technology used for member verification. If you are concerned with privacy and safety in your banking, ask about this product.

Now to the future. While we have many initiatives planned for 2022, the most significant change this year will be an expansion down US31, to Muskegon, Holland, and Zeeland. We plan to have these three branches up and running by the end of 2022, or early 2023. Many members have asked for financial literacy training, demonstrations of how to use products or services, or simply what we expect to see in the future. To meet these requests, we now have training videos, a blog, and a podcast that you can find on our website, 4frontcu.com, or our Facebook page, facebook.com/4frontcu.

Please know, that as we grow, we will not forget where we came from, and those who have contributed to our success. We will continue to offer best in class service, whether you wish to manage your money at a traditional branch, or through our increasingly easy-to-use technology. At 4Front, wherever you are on your financial journey, we’re here to make banking smart and simple.

We want to thank our members for trusting us with their financial needs, and we look forward to partnering in 2022 and beyond.

Andrew Kempf

Thank you from the Chairman Dear Member, Thankfully, 2021 was much less volatile than the preceding year dominated by the pandemic. However, we became confronted with other challenges, such as staffing and supply chain shortages which affected many aspects of our credit union as well as its membership.

4Front Credit Union’s management proved agile and responsive in its ability to pivot by creating additional products and services, which led to a significant increase in members. When we remain focused on helping our members achieve their financial goals, good things happen.

Members are now receiving their paychecks faster, are better protected from fraud, and are easily able to monitor their credit scores.

As a not-for-profit financial institution, 4Front is committed to the communities it serves. In order to preserve the quality of life in Northern Michigan, we continue to be steadfast in our pledge to better the places we live, work, and worship by directing resources to organizations such as the Nakwema Trailway and the Cherryland Humane Society.

Your Board of Directors has collaborated with 4Front’s management team to develop an ambitious strategic plan for 2022, building upon a successful 2021. We will be casting a wider net to increase membership through intentional growth, increasing our strength while remaining the envy of our peers. This will allow 4Front to maintain its low fees, high savings rates, and desirable loan rates for its members.

Rest assured, 4Front Credit Union has continued its emergence from the pandemic as a smarter, stronger, more secure, and more streamlined financial institution. Wherever you may be on your financial journey, we want to make banking smart and simple for you.

On behalf of the Board of Directors, thank you for the opportunity to serve; have a safe and prosperous 2022!

Todd P. Rohrback Chairman

Words from Our Members We randomly survey more than 1,000 members each month through email. We review each and every one and use the results to improve all that we do.

“The entire staff at the Petoskey North location are friendly and knowledgeable every time I come in.”

“I have been impressed with all of the employees at the 4Front Kalkaska branch since I began doing business. I am always treated with the utmost respect and professionalism.”

– Cheri, Boyne City

“I have had an amazing experience at 4Front. Always fast and friendly service.”

– Colin, Allanson

“They all know my name and the business I run. They are always helpful and friendly and help me with any questions or concerns I have. Good atmosphere and good people.”

– Julie, Kalkaska

– Jody, Kalkaska

“Quick, personal service. I am quirky and not always a typical customer, but I am treated respectfully and kindly. Much appreciated.”

– Sherry, Petoskey

“4Front makes sure that all problems are solved and they take care of your needs quickly.”

– Ondrea, Boyne Falls

The Year in Review Another year into a global pandemic and we’re still innovating to serve our members.

4frontcu.com is all new!

Going West.

We hope you’ve had a chance to take our new website for a test drive. We think you’ll appreciate the ease and speed of navigation.

While you’re there, check out our blog offering in-depth looks into topics worth knowing more about.

We’re expanding into western Michigan with the acquisition of three branches.

New members from Muskegon, Zeeland, and Holland Muskegon will soon feel the special Zeeland powers of the 4Front brand.

Holland

437,551

2:13

85.62%

Visits since launch

Minutes

Returning visitors

Launched Dec.13, 2021.

Not a bad reception.

Average time spent on new site.

14.37% new visitors.

Welcome!

SameDay BillPay.

There’s a new way to pay your bills within online and mobile banking. SameDay BillPay keeps you in front of your finances with text and email notifications of when your bills are due. There’s no mail time required like traditional BillPay services. Plus, you’ll satisfy your Straight4ward debit usage requirements.

Plinqit® saves the day.

Our members have saved over $500,000 with our fun saving tool, Plinqit. For completing their saving goals, taking tutorials and referring friends, users have nabbed almost $2,000 in free money.

We’re lenders at heart.

We put over 6,000 folks in vehicles of their choice at dealerships across Michigan. Approvals are often in six minutes. Local lending is fast.

6,238 Indirect loans funded totalling $121,000,000

91 Commercial loans funded totalling $41,000,000

When life happens, there’s QuickCash.

Car repair? Urgent care? We’ve got you covered with QuickCash. Cash to cover the unexpected, from $200 to $4,000, can be yours in minutes.

No credit check required. Certain restrictions apply.

ApplePay. Tap more, touch less.

Because it’s built into your iPhone, Apple Watch, Mac and iPad, there’s no separate app to download. Apple Pay replaces your physical cards and cash with an easier, safer, more secure, and private payment method – whether you’re in a store, online, or sending cash to friends or family.

523 Mortgage loans funded totalling $97,220,000 89% were re-fi’s saving members $692,436 per year

2022 Annual Meeting

AGENDA

March 4, 2022

Call To Order 6:00 p.m.

Approval of 2021 Annual Meeting Minutes Election of Directors State of the Credit Union Old Business New Business Questions and Answers Adjournment

2021 Annual Meeting Minutes The virtual meeting was called to order at 6:04 p.m. by the Chairman of the Board, Todd Rohrback.

Chairman Rohrback and CEO, Andy Kempf, welcomed all members and guests.

Chairman Rohrback asked for a verification of a quorum. Mike Slater, Secretary, reported that a quorum of the membership has been met.

Chairman Rohrback directed members to the minutes of the 2020 Membership Meeting. Motion by Keith Carey, seconded

by Meghan Morelli, to accept the March 6, 2020 Annual Meeting minutes as presented, unanimous, motion passes.

Three incumbents were nominated for three positions, and no mail ballot was necessary to affirm that Charles Hague, John (Jack) Hodge, and Mike Slater will fill the three (3) year terms as Directors of the Board.

Chairman Rohrback introduced the entire Board of Directors and thanked them for their service.

Report of the CEO and President CEO, Andy Kempf spoke briefly on the state of the credit union and touched briefly on financials as well as provided an update on the many ways we helped our members and communities during the global pandemic.

Old Business None

New Business None

Brian Ausdemore motioned to adjourn the meeting at 6:20 p.m.

Tammy Short seconded, unanimous approval to adjourn.

The drawing for the door prizes was held, and one member was awarded a table for 4 in the 4Front porch premium seating area for the Traverse City Pit Spitters game of their choice. Along with the tickets, the winner also received 4 - $25 gift cards that can be used for concessions or purchases in the Pit Shop.

Todd Rohrback, Chairman of the Board Mike Slater, Secretary

Financial Statement Statement of Financial Condition ASSETS

as of 12/31/2021

as of 12/31/2020

Consumer Loans

$ 350,935,707.59

$ 313,069,520.00

Residential Mortgages

$ 158,637,043.36

$ 133,286,465.00

$ 89,975,591.49

$ 76,579,234.00

$ 599,548,342.44

$ 522,935,219.00

(Less Allowance for Loan Loss)

$ (1,584,241.39)

$ (2,914,383.00)

Cash

$ 54,343,087.29

$ 43,729,938.00

Investments

$ 183,844,481.02

$ 123,969,013.00

Other Assets

$ 11,330,280.14

$ 55,687,147.00

$ 897,646,296.92

$ 743,406,934.00

$ 5,923,812.92

$ 6,479,262.00

$ 811,576,258.11

$ 663,546,433.00

$ 80,146,226.15

$ 73,381,239.00

$ 897,646,297.18

$ 743,406,934.00

Commercial Loans Total Loans

TOTAL ASSETS LIABILITIES & EQUITY Total Liabilities Member Deposits Regular Reserve & Undivided Earnings TOTAL LIABILITIES & EQUITY

Income Statement OPERATING INCOME

as of 12/31/2021

as of 12/31/2020

$ 32,600,379.19

$ 28,455,712.00

Income from Investments

$ 1,844,014.52

$ 1,373,307.00

Income from Fees

$ 5,915,958.25

$ 4,993,020.00

Miscellaneous Income

$ 9,933,854.42

$ 8,411,734.00

$ 50,294,206.38

$ 43,233,773.00

Operating Expenses

$ 39,140,188.41

$ 33,093,663.00

Dividend Expenses

$ 3,295,068.99

$ 3,404,358.00

$-

$-

$ (1,559,862.70)

$ 230,527.00

$ 40,875,394.70

$ 36,728,548.00

$ 9,418,811.68

$ 6,505,225.00

Income from Loans

TOTAL OPERATING INCOME OPERATING EXPENSES

Bonus Dividend Expenses Net Non-Operating (Income) or Expense TOTAL OPERATING EXPENSES TOTAL NET INCOME

2021 Impact Our numbers speak for themselves.

Members

Assets

Prove you are who you say you are.

MemberPass is a secure, digital, touchless, hassle-free way to prove your identity for all transactions at 4Front. It’s safe, it’s secure and it saves time. It makes every experience with us faster and smoother.

We keep growing.

$897,646,297

95,000

We’re now over 95,000 members strong. We ended the year with $897,646,297 in total asets.

Straight4ward Rewards keeps rewarding.

We made a total of 1,884,094 reward payments. Divided by 12,014 average qualifying accounts in 2021, we put an average of $157 dollars back into qualifying member’s accounts.

Member Service with an emphasis on “service”.

Our Communication Center handled 286,433 calls.

VideoTellers handled 212,908 sessions. We experienced 14,380,712 online and mobile banking logins in 2021.

Get paid up to two days sooner.

When you’re enrolled in Direct Deposit, you can get your payroll, retirement, or Social Security check up to two days early!

It’s your money, so why not have it sooner?

Community investments with many happy returns.

We invested $144,624 in northern Michigan community organizations and events. We’ve partnered with Short’s Brewery to support the Nakwema Trailway, the final connector in a 325 mile network linking multiple communities and over 25 protected natural wildlife areas.

Best & Brightest. Shine on.

The National Association of Business Resources has once again recognized 4Front as a Top 101 Best & Brightest Companies to Work For In The Nation. Shout out to the entire staff for this win.

When your hot, you’re Red Hot. Go to the head of the class.

To date, we have presented free financial literacy curriculum to 4,240 northern Michigan students at 30 schools.

Our members have spoken.

We’re 4 giving our time.

Member XP, a member experience measurement platform for high-performing credit unions, has consistently recognized 4Front for providing industry-leading experiences.

We had to follow strict safety protocols, but even during a pandemic, we racked up 2,192 volunteer hours for 2021.

HOURS 0

1,000

We’ve been recognized by the readers of Traverse Magazine for Best Bank or Financial Institution six years running. Our cheeks are red from blushing.

2,000

2,192

3,000

WE MAKE BANKING SMART AND SIMPLE, YEAR AFTER YEAR.

A LOOK BACK, A LOOK FORWARD. Online & Mobile Banking logins

14,380,712

Telephone Calls

286,433

VideoTeller Interactions

212,908

We’re busy.

More of our members experienced our online, mobile, and VideoTeller capabilities.

144,625 Invested

$ We’ve grown.

In northern Michigan community organizations and events.

We are now over 95,000 members strong, adding 6,000 members during a pandemic.

897,646,297

2,192

743,406,934

$

560,363,272

$

Volunteer Hours

516,059,884

$

From helping seniors to walking puppies, we’re there.

2019

2020

We are now worth $897,646,297 in assets.

2

3

4,240 Students

We’ve presented financial literacy curriculum in over 30 schools.

1

“4Front has been there from the start of the Nakwema Trailway providing both the financial support and leadership which invites others to join the movement. Community partnerships are what drive the development of our area trails and we could not be more grateful for this collaboration.” – Julie Clark, TART Trails, CEO

2

“We’re so grateful to 4Front for their continued support of financial education for high school students.

It truly makes a difference in their lives when they are equipped with the knowledge needed to navigate life in an informed manner.” – Traverse City High School teacher

3

“I enjoy volunteering in my community. No matter if it’s with the dogs and cats at Cherryland Humane Society or the scouts in the scouting program that I work with, it is amazing to see the impact I can make in so many lives.”

– Greg Snover, 4Front VP Information Technology

2021

Our worth.

Giving back to our communities makes each and every one of us stronger and better.

1

$

2018

We’re proud.

What’s Next?

We’re already off to an exciting start in 2022.

Watch for more webinars.

The pandemic had us switch from in-person seminars to online webinars. No problem.

We got this! Many are housed on our website, with more to come.

Tune in to our podcast.

“Tell me it’s Friday” is our podcast where Community Relations Specialist, Meghan Morelli, sits down with money matter experts, business leaders, nonprofit organizations, event organizers, and community advocates to talk about what’s going on out in their world. Tune in. Hey, it’s Monday and we’re all just trying to get to Friday! So why not start the week off with some laughs? And if we learn a few things along the way, then we’d say we’re doing alright.

We’re 4 a better world.

We’ve launched the 4Front Foundation. Our giving is focused on three pillars: providing scholarships, grants and financial wellness education to our community. Forming a Foundation gives us the opportunity to reach beyond the generosity of our members, and seek donations from anywhere.

Watch for some events in 2022 to start funding the Foundation.

Visit 4frontcu.com/foundation.

4frontcu.com