2020 Annual Report

C RYSTA L Member since 2010

IMPROVING THE FINANCIAL LIVES OF OUR MEMBERS

DENNIS & TINA

Table of Contents 2

3

Letter from Chairman of the Board, Mike Strickland

4

Letter from Chairman of the Supervisory Committee, Bill Milam

4

Five-Year Growth Analysis

5

6

Statements of Income & Financial Condition Leadership Teams

7

Mission & Core Values

8

Community & Member Impact Report

11

2020 ANNUAL REPORT

Letter from President & CEO, Brian McKay

2020 Snapshot

Brian McKay

PRESIDENT & CEO

I N R E F L E C T I N G O V E R 2 0 2 0 , I can’t help but first think of the Global Pandemic. It was unexpected and disruptive to say

the least, but it also magnified the core strength of our organization. We indeed found strength in unity, working together to continue to improve financial lives. I would be remiss if I didn’t thank you, our members, for your continued support and patience throughout it all; our staff for their continued perseverance and dedication to our members; and our volunteers for their invaluable insight in navigating the unprecedented time.

In responding to COVID, our organization established five main

We also announced the expansion into another community

priorities. First and foremost, our employees — as we knew

— Anderson, South Carolina — and the strategic partnership

that if our team felt safe and valued, they could then focus on

with Anderson Federal Credit Union that was completed in

providing incredible service to our members. I made a promise

February 2021. As a result of this merger, our organization

to our staff that no employee would be let go because of COVID,

grew to over 59,000 members, $525 million in assets, and 10

and I am proud to share that we held true on that promise.

banking locations throughout the Upstate and Midlands. This

Secondly, we continued to follow our business continuity

partnership marked the largest merger of credit unions in the

plan to ensure minimal to no disruptions in critical member

history of South Carolina. This feat was no easy undertaking.

processes. I am happy to report because of a solid plan, there

Because of the countless efforts of Team Spero, I am extremely

were no delays in processes. Thirdly, you, our members, and

proud to say that over 95% of AFCU members are still with

ensuring you could continue to access your funds as safely as

Spero today.

possible. While branch lobbies closed for a period, we extended drive-thru transaction capabilities and drive-thru hours to ensure that all members’ needs were met as best possible. And lastly, we continuously looked for ways to add value to your financial lives and lift up our local communities — at a time many needed it most. I encourage you to turn to page 8 of this report to see how we were able to do just that — from our staff to our members to our communities.

story — changing our name to reflect our proud history as well as the hopeful optimism for our future. Holding fast to our history, mission, and cooperative spirit, we became Spero Financial — a name derived from the Great Seal of South Carolina — meaning hope. In my opinion, the timing couldn’t have been any more perfect, as HOPE is what our communities needed more than ever in the face of this trying year. Even more so, our new name

While COVID-19 halted so much, at Spero Financial, we

reflects the characteristics by which we will continue to serve

continued to be laser-focused on elevating our members’

you, our members: agility, vigilance, adaptability, paired with

financial game — after all, you’re our MVPs!

innovative and dynamic financial solutions.

In many ways, COVID became a catalyst for digital

Not only did the Pandemic reveal the true strength of our

transformation. We introduced Online Loan Pay, a quick and

people but also the financial stability of our organization. We

secure platform that allows you to make online loan payments.

have wavered many economic storms in our 85-year history,

And, in conjunction with opening our new state-of-the-art Five

and I am proud to share we have done it once again. Because

Forks branch in July 2020, we launched The NEST in 8 branches,

of the foresight from our leadership and Board of Directors, we

a live-video feed with a Spero Member Service Specialist

had a surplus of capital in reserves that became essential to

allowing us to centralize staff during the Pandemic to continue

navigate the unexpected impacts of 2020.

appointments in-branch.

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In November 2020, we penned a new chapter in our organization’s

While net worth was down 7.45% year-over-year, this was

Speaking of our new Five Forks branch, it has been a pleasure

caused by a variety of factors: unexpected expenses of

planting our roots in this community — one that I personally

COVID, a large influx of deposits due to stimulus checks,

call home. We’ve had the privilege of already improving over 150

traditional income generating channels being disrupted, and

financial lives and are anticipating this number to steadily grow

merger-related expenses to prepare for the completion of the

as we move into 2021.

partnership in early 2021. →

Mike Strickland

CHAIRMAN OF THE BOARD

However, the efforts of Team Spero were unrelenting, propelling us to finish the year strong with significant growth in loans (9.35%), deposits (16.79%), and assets (8.69%).

In fact, Spero Financial is now the 13th largest financial institution in the Upstate and well on our way to becoming top 10 by 2024.

We are well positioned as we move into 2021! Our focus always has been and will continue to be on you, our members — providing intuitive financial solutions to help you soar financially. We look forward to deepening our roots in both the Anderson and Five Forks communities; executing upon our digital transformation road map and building a solid infrastructure to enhance our digital member experience; and continuing to provide the personalized service you have come to love and expect.

It is both a privilege and an honor to serve you!

I appreciate you.

A S T H E L I O N silently and stealthily stalks its prey and then attacks, our world fell victim to an unexpected and unforeseen enemy in early 2020. By mid-March the COVID-19 pandemic would change the way we conducted business, educated ourselves and interacted with one another. Healthcare delivery moved close to a breaking point. Commerce and financial services suffered through massive layoffs and business closures.

It became evident that business operations as usual would not work in this challenging new environment. Your credit union’s executive leadership and management team in concert with the board of directors quickly implemented several steps to ensure we continued to provide excellent service to our members. Although social distancing protocols sometimes required temporary branch closures, we scheduled branch appointments and extended our drive-thru hours. We implemented ninety-day loan payment deferrals and initiated emergency member loans for those struggling through job layoffs. Our team members were assisted with childcare and provided work-at-home arrangements.

Meanwhile, progress on several strategic initiatives continued unabated. After much planning, in June 2020, we successfully opened a new branch in the Five Forks area of Simpsonville, SC. This location serves a very vibrant area in the Greenville market and will assist in reaching our goal of becoming a Top Ten depository in Upstate South Carolina.

After many years in the planning stage, we implemented a rebranding initiative to better reflect who our members are. No longer just a “telecommunications” credit union, we needed an identity more inclusive of all our membership. Spero Financial, launched in November 2020, will move us forward collectively into a bright new future. Our new name, derived from the South Carolina State Motto, is the Latin word Spero meaning “hope”.

Finally, in December 2020 we announced the impending merger of Anderson Federal Credit Union (AFCU) into the Spero family.

Management and board philosophies matched. Employee jobs were protected and members from both organizations gained in expanded services. We look forward to AFCU members joining Spero in February 2021.

In Spero Financial we have a solid hope for overcoming the current challenges and realizing an even brighter future.

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Bill Milam, CHAIRMAN OF THE SUPERVISORY COMMITTEE A S C H A I R M A N of the Supervisory Committee, it is my privilege to provide our members with a summary of Spero Financial’s 2020 fiscal year. As of December 31, 2020, financial outcomes reflect sound, operational stability of the organization. These measures are a result of how the Spero Financial executive leadership team proactively prepared to endure the highs and lows of the national economy, having the foresight to reserve a surplus of capital that became vital in wavering the COVID-19 Pandemic. In

5-Year Growth Analysis ASSETS

2020 2019

$422 million $388 million

2018

$369 million

2017

$367 million

2016

$354 million

addition, both management and staff continue exercising sound judgment and agile practices as they carry out their fiduciary responsibilities of using members’ funds for the

DEPOSITS

betterment of the Credit Union.

2020

As an added layer of accountability, each year Spero

2019

Financial undergoes an external audit from a third-party CPA firm. This audit measures the effectiveness of the organization’s financial management. I am pleased to report that Spero Financial Federal Credit Union has yet again received a very positive “unmodified opinion” regarding the Credit Union’s financial statements for 2020 year-end.

2018 2017 2016

$369 million $316 million $292 million $318 million $304 million

Spero Financial also remained strong in our ongoing peer group comparison analysis. Each year, the organization compares financial metrics to that of other similar-sized credit unions to create a benchmark to measure success.

I am pleased to report that Spero Financial outperformed peers in both loan and deposit growth — by over 400 basis points in loan growth and 200 basis points in deposit growth.

2 0 2 0 K E Y P E R F O R M A N C E I N D I C AT O R S : • Assets increased to $422 million (8.69% gain over 2019)

LOANS

2020

$328 million

2019

$295 million

2018 2017

$299 million $284 million

• Loans increased to $323.6 million (9.35% gain over 2019) • Deposits increased to $368.5 million (16.79% gain

2016

$268 million

over 2019) • While net income decreased 7.45% compared to 2019, in large part, this was the result of COVID- and pre-mergerrelated expenses.

N E T W O R T H /A S S E T R AT I O

2020

11.37%

• 3,757 new members joined the credit union I encourage you to review the balance sheet, income statement and other financial information included in this year’s report. You will find that Spero Financial Federal Credit Union continues to operate in a safe and sound manner, strategically focused on improving the financial lives of our members. This financial stability positions us well as we elevate our financial game — both as an organization and for our members!

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2019 2018

13.35% 13.63%

2017

11.35%

2016

11.40%

Statement of Income INCOME

2020

2019

18,251,707

19,411,624

415,427

1,125,366

Other Income

7,650,478

8,280,003

Total Income

$26,317,612

$28,816,993

Compensation & Benefits

11,222,870

9,719,759

General & Administrative

13,368,907

9,053,179

Provision for Loan Losses

1,500,478

3,976,308

$26,092,255

$22,749,246

287,241

592,303

3,800,521

3,924,819

($3,862,406)

$1,550,624

2020

2019

$323,685,087

$294,898,518

41,704,803

54,440,124

104,881

103,560

Investments

18,549,096

9,745,526

Property & Equipment

16,282,048

15,770,352

992,469

943,268

Other Assets

20,809,470

12,493,422

Total Assets

$422,127,854

$388,394,770

368,525,730

315,539,339

Other Liabilities

5,617,440

20,949,936

Total Liabilities

$374,143,170

$336,489,275

47,984,082

51,846,488

602

59,007

$422,127,854

$388,394,770

Interest on Loans From Investments

EXPENSES

Total Expenses Interest Expense Dividends Paid to Members Net Income

Statement of Financial Condition ASSETS

Loans Cash & Cash Equivalents Short Term Interest Bearing Accounts

Accrued Interest Receivable

LIABILITIES

Shares

MEMBER'S EQUITY

Member’s Equity Reserves Unrealized Gain/Loss on Investments Total Liabilities & Member’s Equity

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Leadership Teams Images

BOARD OF DIRECTORS

Pictured left to right: Anthony Lawrence • Roy Hayes Secretary/Treasurer • Mike Strickland Chairman • Joy Owens • Steve Griffin Vice Chairman Lee Brown • Hughlyn Burgess • Bryant Harrison Not pictured • Michael Cunningham Not pictured

SUPERVISORY COMMITTEE

Pictured left to right: Sheree Ramey • Bill Milam Committee Chair • Janet Fancher Andrew Williams Not pictured • Frankie Nelson Not pictured

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EXECUTIVE LEADERSHIP TEAM

Pictured left to right: Damon Sipe Senior Vice President of Technology Jessica Baker Senior Vice President, Chief Operating Officer Brian McKay President, Chief Executive Officer Toni Davisson Senior Vice President, Chief Financial Officer Robert Wilson Senior Vice President of Lending and Sales

OG G EE T TH H EE R R ,, TT O W E '’ R E R E A C H I N G N E W H E I G H T S

Principles from our past.

A foundation for our future.

Our mission missionand andcore corevalues valuesact actasasour ourunchanging unchanginghorizon horizonasaswe we continue grow Our continue toto grow and in every interaction we have — both internally withwith our our and serve serveas asaauniting unitingforce forward in every interaction we have – both internally team communities wewe serve. team members membersand andexternally externallywith without ourmembers membersand andininthe the communities serve.

M II SS SSIIOONN M

The Spirit Spirit of of a a Warrior Warrior The

Integrity, honor, Integrity, honor,respect, respect,pride, pride,and and unwavering resolve unwavering resolve

Mind of of a a Champion Champion Mind

Passionate, coachable, Passionate, coachable,dedicated, dedicated, accountable, accountable,and andempowered empowered

Jessica Baker, CUDE

VP, Member Services The Heart of of a a Servant Servant The Heart

Compassion, humility, empathy, and Compassion, humility, empathy, selflessness and selfishness E

P F A

spero.financial

To improve financial the financial lives of our members.

CORE V VA A LL UU EESS

jbaker@speroCU.com (864) 232-5588 x2712 (864) 271-6264 PO Box 10708 Greenville, SC 29603

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Community & Member Impact Report F O R O U R STA F F

Remote Work + Safe Working Environment: There is no doubt that

The majority of Team Spero was provided the necessary tools and resources to work from home. For those unable to work from

2020 will go down in

home, increased sanitization and social distancing protocols

history as one of the most

were put into place to protect Team Spero as much as possible.

unexpected and unusual times our generation has ever experienced. The Global Pandemic took us

Kids Kamp: When schools closed due to the COVID outbreak, we knew it would put a strain on working parents. To support our frontline staff that couldn’t work remotely, we created Kids Kamp

all by storm — financially,

— allowing employees to bring their children (K5-8th grade) to

emotionally, mentally,

the corporate office during the working day. Staff voluntarily

and physically. But in the face of this trying time,

picked up shifts to supervise the children, and even some family members of staff came into help! Nine families brought their children, with an average of 6 children per day.

Spero Financial was able to share some HOPE —

Kindness Week:

coming alongside our

To elevate staff morale, we hosted Kindness Week — a fun,

staff, members, and

spirit-week like event in May. Each day, staff dressed up per the

communities.

theme and had the privilege of giving away a daily $50 VISA® Gift Card to a lucky member. Staff also had the opportunity to select an organization — Harvest Hope Food Bank — to receive a monetary donation on behalf of Spero Financial.

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FOR OUR MEMBERS

986 Skip-A-Pays

FOR OUR COMMUNITIES

were provided to members at no-cost, allowing

Supporting the Families of Habitat for Humanity:

them to skip their next loan payment

Since 2014, Spero Financial has provided Habitat for

91 mortgage members deferred their mortgage payments for up to

Humanity of Greenville County homeowners with a zeropercent, 30-year term mortgage. With the shock of COVID, Habitat anticipated 20% of their families would not be

90 days at no-cost

able to stay current on these mortgages as many worked

258 Emergency Assistance Loans

Knowing the need, we were able to restructure the

were funded for members, totaling over $1.2 million put into members’ pockets quickly

265 Paycheck Protection

Program Loan applications were submitted through Spero Financial’s joint effort with Lendio — totaling over $1.15 million in approved funding

in the service-industry that was so heavily impacted. mortgages to allow Habitat families to weather these turbulent times. To date, over 90% of Habitat families are current on their mortgage!

#LiftUpLocal: Due to COVID-19, small businesses faced loss of revenue, closures, and making life-altering decisions for their staff. At Spero, we were fortunate to be well positioned to weather the unprecedented time — allowing us to come alongside our local small businesses and support them as much as possible.

In April 2020, we launched #LiftUpLocal — a social media campaign designed to spotlight local businesses and provide them with necessary resources to navigate the Pandemic as a business-owner. Twenty-three businesses participated.

In total, the campaign reached 1.2 million people and was featured on both Wyff4 and Fox Carolina. Bill Rhodes with C Dan Joyner Realty participated noting, “Awesome, thank you so much! This is just what our community needs right now. I appreciate it more than you know.”

Operation Holiday Hope: 2020 was the inaugural year for Operation Holiday Hope with the goal to sprinkle a little hope during the holiday season after such a challenging year. We asked community members to nominate families in need. Of the 16 nominee submissions, four were chosen and given a $250 VISA Gift Card!

Virtual Reality Fairs: Traditionally, our financial wellness initiatives are inperson, but for 2020, we shifted our game plan to virtual reality fairs. In the end, we reached 536 individuals through our financial wellness efforts, including hosting 5 workshops and virtual reality fairs. These resources became more important than ever in the face of the financial struggles created by COVID-19.

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Scholarship Winners Neal Dhankhode Neal is a graduate of J.L. Mann High Academy. During his high school career, he was an active member of Youth Leadership Greenville, National Technical Honor Society, National Honor Society, and National Beta Club. In his free-time he enjoys bowling — winning two SC State Championships — and karate, where he has been practicing for 9 years and has received his black belt. In the community, Neal volunteers with the Shriners Children’s Hospital, creating a fundraising campaign during the Pandemic raising over $250 in three weeks.

He currently attends the University of South Carolina with the goal of attending medical school after the completion of his undergraduate studies.

Kitara Henry Kitara currently attends Erskine College and is studying Early Childhood Education. She also is a star-athlete on the Erskine Women’s Basketball Team and is the recipient of the Conference President Honor Roll. In the community, you can find Kitara volunteering at Loaves and Fishes Food Recovery, as well as Future Fleet Coaching. She is described by her peers as being considered top in her class in terms of professionalism, work ethic, and strength in disposition. Upon completion of her undergraduate studies, she plans to pursue a master’s degree.

Karina Wolfe Karina currently attends Bob Jones University. There, she leads as the College Society Officer and Deputy Stage Manager of the High School Stage Crew.

In the community, Karina volunteers with the Greenville Juvenile Detention Ministry and works as a media technician at Hampton Park Baptist Church. Her professors describe her as exceptionally creative and impeccably organized with a strong attention to detail. Upon completion of her Bachelor of Science degree, Karina is exploring pursuing a master’s degree.

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ASHLEE Member since 2011

2020 Snapshots

45,789 TOTA L M E M B E R S

Finalist in 2020 BEST OF THE U P STAT E C O M M U N I T Y CHOICE AWARDS

Diamond Award B E ST I N CAT E G O RY FOR RE-BRAND/NEW C O R P O R AT E I D E N T I T Y

90% of Staff are proud to work for Spero Financial (then SC Telco) IN A WORK ENVIRONMENT STUDY CONDUCTED SEPTEMBER 2020

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JEREMY & MASHAL Members since 2014

MISTY Member since 2019

DAVID & ROSSIE Members since 1972

THANK YOU T O O U R S TA F F, MEMBERS, & COMMUNITY

spero.financial