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Message from our President Working Together for Our Growth and Success

I’m just about to complete my sixth month at Nutmeg State Federal Credit Union. I have really enjoyed getting to know the membership and the communities that Nutmeg services and I look forward to the opportunity to meet all of you! In order to remain strong and competitive, we have recently made changes that will ultimately have a positive impact on you and our credit union. A few of these changes may have raised questions and concerns from some of you. I want to first assure you that Nutmeg State Federal Credit Union (NSFCU) is financially strong and our outlook for 2011 is extremely positive. We are productive and are well positioned to continue to grow to service your needs. To serve you better, Nutmeg is expanding the products and services it offers. Recently, a new service called “Privilege Pay” was introduced. This service, offered by most if not all banks and credit unions, provides members “protection” if they overdraw their account so that a check, ACH payment or debit card transaction won’t be denied or “returned for insufficient funds”. This actually can save members a fee if they overdraw their account. Typically when someone overdraws their account and a check or ACH payment is returned, a charge is assessed by the financial institution and the party that received the uncollectible item. In addition, this service can save the embarrassment of having a check returned or transaction denied. The purpose of this service is to offer you a “safety net” if you ever need it. You will not pay a dime for the service unless you use it. We also introduced a mobile banking app for the iPhone, Android, and Blackberry smart phones putting us ahead of our competition in this market. We have received calls on our $1.95 monthly service charge for our checking account. I do apologize that this may not have been communicated in a more precise manner since some of you did not understand or feel comfortable with the approach. The idea in introducing this benefit was to help protect our members at a very reasonable cost as compared to other programs such as Life Lock. In connection with this fee, there are several identity theft benefits for you. In the event that you are ever the victim of identity theft, the credit union will assign you an advocate to help restore your identity. We actually had four members in the first two weeks of introduction use this service who were the victims of identity theft and this program helped SAVE their identity! We also added $10,000 of identity theft insurance for you. This insurance reimburses you for any expenses related to costs associated with restoring your identity. For those of you that clearly didn’t find the value in these benefits, we were flexible with removing the associated fees.


In the present economy, the landscape for financial institutions remains difficult. The economic downturn resulted in record charge-offs of loans for 2010 that were originally written for members with a strong financial background. In addition, due to other credit union failures (including many “wholesale” credit unions that provide services to retail credit unions like Nutmeg), we have had to bear a mandatory assessment based on our asset size. The amount for 2010 was over $800,000. Unfortunately, we anticipate having to pay assessments like this for several years to come. In addition, several regulations have been enacted by the federal government that will likely put additional pressure on our income. That being said, it is still our goal to keep fees down and provide the best possible services for our members. Although many of the changes that I discussed did happen within a short period of time, I have listened to your feedback. Going forward, any changes implemented will be timed carefully and with consideration to our membership. In the coming months, we plan to introduce an array of products and services for businesses, offer a “More Than Free” Checking account, open a new branch in the Hartford County area, design lending products that meet your borrowing needs as well as to continue to stay in the forefront of technology by providing you with quick and easy access to your accounts. Our future is indeed bright. We plan to expand in the Middlesex and Tolland County areas soon. We will continue to develop products and services that will make us unique and attract a diverse membership. After all, we are the one for everyone! I hope that you will take the time to get to know me and give me the opportunity to serve your needs, proving to you that my vision for the credit union and the membership is its continual growth and expansion. I look forward to getting to know you better in the years to come. Thank you for your persistent loyalty. Enjoy the remainder of 2011 – where good things are to come! John Holt President and CEO


Chairman’s Report

On behalf of the Board of Directors, the Supervisory Committee, The Management Team and Staff of Nutmeg State Federal Credit Union, I am pleased to present you the following report. First and foremost I would like to recognize our former Chairman of the Board, Mark Bosse who resigned in late 2010 to pursue a key role at our credit union. I would like to recognize him for his contribution to the credit union as Chairman and wish him continued success as Vice President of Sales and Service at Nutmeg State Federal Credit Union. At last year’s Annual Membership Meeting, Loren Dickinson, President and CEO announced his plans to retire after many years of dedicated service. I am happy to announce that Loren is now retired and is enjoying the good life! Loren was Nutmeg State Federal Credit Union’s second President and CEO. A search committee was formed to conduct a nationwide search for our third President and CEO. Having only three presidents in 75 years is quite an unprecedented record that we are proud of. I am pleased to announce that after many months of searching and interviews, we have hired a new President. We want to introduce to you and welcome Mr. John Holt as Nutmeg State Federal Credit Union’s third President and CEO. 2011 is a big year for all of us as we celebrate 75 years of service and excellence at Nutmeg! Please watch for anniversary celebration specials throughout the year that will help you save money and make money. We are excited with the changes ahead and know that John will continue to keep us informed on all the new products and services, and the direction the Credit Union is headed! The economic picture has not changed much since last year. The financial markets are still very much unsettled even though we are seeing signs of recovery in some areas of the economy. The good news is that our credit union has uniquely positioned itself to stay the course in times when many financial institutions are failing and struggling for survival – not Nutmeg. While we may still feel the effects of other credit unions struggling to survive, I know the current Management Team is doing its best to keep us one step ahead of the competition.


We are confident that this trend will continue because we need to continue growing to survive and from what the Board of Directors has seen thus far, the Management Team is totally focused and committed on that goal! There is an ongoing commitment by the entire Management Team to meet or beat the competition with new and innovative ways of doing business. They are pro-actively seeking new markets, trying to attract different generations of potential members who represent the future. We are improving and expanding member access to our products and services, and introduced new Smartphone apps that are becoming a way of life. We are also conscious of the needs of our valued long-term members; after all, you are who got us here today. I would like to extend my sincere thanks to John Holt and his Staff as well as all of the Volunteers who give up their personal time to help make our credit union successful. Without this type of dedication, we would not be in the position we are in today. The Board of Directors continues to evolve and change. Two long time volunteers retired this year from the Board of Directors, John Ashe and Jim Falvey. I would like to thank John for his 39 years and Jim for his 25 years of dedicated service to our credit union and wish them both well. Many thanks for your dedication and hard work as volunteers! In summary, the credit union is made up of each and every one of us. It is your ongoing support that keeps us healthy and growing… a hearty “THANK YOU” for your continued support! I wish everyone health, wealth, and success during this upcoming year and thank you for the privilege of letting us serve you. Mike Petti Chairman


2010

Statement of Financial Condition

2010

2009

Assets

Loans to Members

$ 217,528,635.00

222,430,717.00

Less Allowance for Loan Losses

(2,293,635.00)

(1,600,757.00)

Net Loans

215,235,000.00

220,829,960.00

Cash in Banks

854,700.00

936,533.00

Investments

101,828,660.00

102,884,307.00

Accrued Income

842,440.00

1,024,716.00

Pre-paid Expenses

292,088.00

188,006.00

NCUSIF Deposit

2,885,489.00

2,862,550.00

Building & Fixed Assets

6,522,824.00

6,768,089.00

Other Assets

902,254.00

1,505,301.00

Total Assets

329,363,455.00 336,999,462.00

Liabilities & Equity Accounts Payable

300,082.00

67,872.00

Other Liabilities

494,916.00

982,545.00

Shares

160,025,119.00

146,131,540.00

Certificates

79,245,454.00

98,064,505.00

IRAs

48,601,618.00

51,524,796.00

Regular Reserve

5,458,399.00

5,460,271.00

Undivided Earnings

35,237,867.00

34,767,933.00

Total Liability and Equity

329,363,455.00 336,999,462.00


Statement of Income

2010

2009

Interest on Loans

$ 12,425,872.00

12,840,044.00

Interest from Investments

1,302,134.00

1,720,369.00

Other Income

2,089,299.00

(1,874,750.00)

Total Income

12,685,663.00 15,817,305.00

Expenses

Compensation

2,537,948.00

2,520,227.00

Employee Benefits

661,434.00

998,588.00

Travel & Conference

145,969.00

157,672.00

Association Dues

45,325.00

42,775.00

Office Operations

2,728,051.00

2,791,086.00

Loan Servicing

1,073,619.00

1,144,095.00

Provisions for Loan Losses

2,362,504.00

1,917,463.00

Member Insurance

178,414.00

2,462,815.00

NCUA Assessment

747,195.00

NCUA Operating Fee

78,962.00

77,250.00

Miscellaneous Operating Fees

927,684.00

903,024.00

Total Operating Expenses

13,014,995.00 11,487,105.00

Dividend Expense

3,860,266.00

6,252,391.00

($6,581,723.00) Net Income 469,934.00


Board of Directors Michael Petti Chairman

Luis Ramos Vice Chairman

Wallace Abramson Treasurer

Charles Sabia Secretary

John J. Ashe

Ronald Brousseau

Michael Godbout


Senior Management Kathleen McGrath Executive Vice President

Lisa Asadourian Vice President, Marketing

Mark Bosse Vice President, Sales & Service

Bob Boucher Vice President, Lending

Mike Nowicky Vice President, Operations

Carmelo Roldan

Vice President, Information Systems & Technology SINCE 1936


Supervisory Committee Report The Board of Directors appoints the Supervisory Committee in accordance with the Federal Credit Union Act. The committee’s primary responsibility is to oversee that the credit union is managed in a sound manner and that members’ assets are adequately safeguarded. The committee, as the members’ representative and official auditor, has the responsibility to review and evaluate the overall financial operations and performance of your credit union, including that of its Management Team. The committee ensures that the Board of Directors and Management Team follow all the regulations, procedures and policies that govern this institution. The Supervisory Committee retained the services of Weinstein & Anastasio, PC to conduct periodic internal control audits. The firm’s auditors work closely with the committee members to ensure that internal controls are in place and followed. The committee also retained the services of Nearman, Maynard, and Vallez, CPAs Hartford, Connecticut & Consultants, P.A. to conduct an independent opinion audit in accordance with the National Credit Union Administration (NCUA). As your Supervisory Committee Chair, I am pleased to report that the Nutmeg State Federal Credit Union financial reports and operations for the year ended as of June 30, 2010 are in conformity with accounting principles generally accepted in the United States of America. Feel free to contact us at: Supervisory Committee, P.O. Box 793, Rocky Hill, CT 06067-0793 and we will address your questions or concerns accordingly. Respectfully, Your Supervisory Committee M. Beth Bunko, Supervisory Committee Chair Charles Cole III Brenden Healy William Philippon Marlon Morgan


SINCE 1936

INTRODUCING OUR NEWEST PRODUCTS AND SERVICES Our goal is to meet all your financial needs! • • • • • •

Moneyline Line of Credit Homeowner Express $tatus Checking Credit Builder Loan e-Alerts and e-Letters iPhone, Android, and Blackberry Apps

BANK ANYTIME, ANYWHERE Our electronic services were designed to fit your needs. When you visit us online at www.nutmegstatefcu.org, you can learn all the different ways you can get instant information and 24/7 access to your accounts. • • • • • • • •

e-Banking e-Pay e-Statements e-Alerts and e-Letters Mobile Banking & Text Message Banking iPhone, Android, and Blackberry Apps Voiceline 24-Hour Lending Call Center

PRODUCTS AND SERVICES Try our other services too! We offer a comprehensive range of financial products and services. Whatever you need, we have it. • • • • • • • • • • • •

Checking Accounts Savings and Money Market Accounts Kidz Club Accounts Teen & Young Adult Accounts Direct Deposit Payroll Deduction Certificates of Deposit ATM/Debit Cards IRAs Health Savings Accounts ID Theft Protection Financial Planning

• • • • • • • • • • • • •

VISA® Platinum Credit Cards Overdraft Protection Services Club Accounts Mortgage Loans Home Equity Loans Personal Loans Vehicle Loans Recreational Vehicle Loans Money Orders Travelers Checks American Express Gift Cheques Members Benefits LLC And much, much more


521 Cromwell Avenue, Rocky Hill 270 Broad Street, Manchester 55 Curtis Street, New Britain 137 Prospect Hill Road, East Windsor 1 American Row, Hartford 81 House Street, Glastonbury Telephone: 860.513.5000 (local calls) 1.800.526.6933 (nationwide) Voiceline: 860.513.5050 (local calls) 1.800.424.6466 (nationwide) Twenty-four hour lending call center: call center: 1.877.826.4160 www.nutmegstatefcu.org


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