Welcome & Call to Order Approval of Minutes CEO/President s Report Supervisory Committee Report. Treasurer s Report Board Elections Adjournment

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2 Welcome & Call to Order Approval of Minutes CEO/President s Report Supervisory Committee Report Treasurer s Report Board Elections Adjournment Annual meeting opened at 4:32 with 18 members present. Minutes read and motion to accept made by R. Kent, second J. McInroy carried Everything is going so well, it is hard say anything negative all feedback positive the way we treat our members is greatly appreciated. Supervisory Committee Report: everything went well with the auditors and examiners during the last year The committee is very proud of the CU and Board. Jim Monterville thanked his committee members. He also thanked the Board for help performing duties (Including Brian, Mary, Barb Smucinski, Audra Stevens). Pat Kelly: Thanks to the Supervisory Committee. Pat Kelly also thanked the Board for their work and the staff for all their hard work during the year. Brian introduced Keri Comstock, Our new Manager of Member Services. He thanked the Board and Supervisory Committee for dedication throughout the year and their willingness to adapt and accept change the industry is changing quickly. Thank the staff also for their work great NCUA exam this year. Another year of substantial growth. The new manager of our staff accepts change and excels at leading a team. Financials: Had a great year assets increased, loans and deposits increased. Loan interest income dropped, and margins dropped and will continue to decrease, however, we have controlled expenses as a percentage of our assets, while expenses are rising, therefore, we maintained an excellent return on assets. We are double our peers in ROA. In this environment we must continue to grow in assets and gross income to outrun the increase in expenses. We are in a great position to wait this out until the interest rate environment changes. Net income increased approximately $60,000 for the year. Increased e-teller users (1,000+). Expense ratio as a percentage of assets, has remained stable when comparing year over year. March 2012 was 2.55% and March 2013 was 2.50%. we will keep an eye on it. Gross income is decreasing. ROA at Glenda Hall s term on the Board has expired. Nominate Glenda Hall to continue as a Board Member K. Putt asked the secretary to cast one ballot for Glenda Hall, second J. McInroy carried Pat: Thank you to the staff that is present for everything you do and asked that they pass it on to the rest of the employees. Meeting adjourned at 4:43 with motion by L. Stoughton, second J. Monterville carried

3 Organized on October 6, 1972, 2013 marked 41 years of continued growth for the Olean Area FCU. During 2013, we provided our members with over $60 million in new loans and our loan portfolio now totals over $157 million. When you are a member of our Credit Union, your deposits are invested locally. Our total reserves have grown to over $29 million and our net worth ratio, which measures our capital strength, is now 12.03%. This gives you assurance that our Credit Union is strong. The Credit Union is currently offering the highest interest rates for deposits, compared to area financial institutions, while offering very competitive loan rates and low fees. Our Credit Union s goal is to provide you with great service. To better serve our membership, we completed construction of a 7,000 square foot, two story addition to our building in This addition allows for adequate space for our members and staff now and into the future. We look forward to providing a warm, friendly, efficient environment with increased privacy for our member s experience in the member service and lending areas. This addition is more space than we currently require; however, it includes projected growth over the next years. We thank you for your membership and your participation in the growth we have experienced. The mission of the Supervisory Committee is to safeguard member assets by overseeing the integrity of the Credit Union s financial statements, internal controls and compliance with legal and regulatory requirements. The Supervisory Committee is also responsible for engaging internal and external auditors to ensure management meets financial reporting objectives and follows General Accepted Account Principals (GAAP) and NCUA regulations. In 2013, an internal audit was conducted by The Bonadio & CO LLP. The internal audit provides an additional layer of review of the financial controls used. An external CPA audit was conducted by Mengel Metzger Barr & Co. LLP in October Throughout 2013, we observed that Olean Area FCU continued to meet the requirements of the National Credit Union Administration (NCUA). The federal examiners of NCUA also audited the Credit Union and no findings were reported. All Committee members as well as Board of Directors completed training required by the NCUA. The Committee has concluded that the Olean Area FCU operated in a safe and sound financial manner and assets of the membership are being effectively safeguarded. The committee welcomes all comments and suggestions from our members. Concerns and questions may be directed to: Olean Area Federal Credit Union Supervisory Committee, PO Box 201, Olean, NY

4 During 2013, Olean Area Federal Credit Union maintained strong earnings while the Olean Area s economy was struggling. In 2013 our balance sheet remained strong with our total assets reaching over $243 million, a total growth of 8.79%. While, loans outstanding decreased by -2.48% to $157.6 million, member deposits increased by 7.38% to $210.7 million, the largest increase occurred in money markets of $6.8 million. Olean Area s Net Worth remained strong at 12.02%, as compared to peer s Net Worth of 10.74%. In 2013, net income was over $2.5 million. Our largest source of revenue is interest on loans to our members. Revenues are then used to pay dividends to our members and operating expenses. During 2013, our cost of funds ratio remained higher than credit union s peers at 0.67%. Our operating expenses to average assets remained below the credit union s peers at 2.52%. Olean Area s Return on Assets for 2013 was 1.11% well above our peer s average of 0.56%. Olean Area Federal Credit Union now enters 2014 strong and well positioned for future growth in years to come. Year End December 31, % Change Assets (millions) % Loans (millions) % Shares (millions) % Operating Expense/Avg. Assets 2.52% 2.60% -3.08% The following are new candidates for Board of Directors vacancies. Michele Pancio The following incumbents are nominated for a 3-year term to the Board of Directors: Ronald Inzana Patrick Kelly Jean McInroy

5 Year End December 31, ASSETS Loans $157,554,949 $161,569,863 Allowance for Loan Loss (2,568,300) (2,581,543) Net Loans 154,986, ,988,320 Cash 2,004,882 2,336,712 Total Investments 76,929,741 56,843,836 Other Assets 9,416,016 5,508,686 TOTAL ASSETS $243,337,287 $223,677,554 LIABILITES AND EQUITY TOTAL LIABILITIES $3,456,513 $410,572 Savings 49,881,908 43,611,852 Checking 25,589,440 22,771,111 Money Market 74,535,790 67,720,032 IRA 4,720,950 3,666,457 Certificates 55,919,143 58,399,206 TOTAL SHARES 210,647, ,168,658 TOTAL RESERVES 29,233,543 27,098,324 TOTAL LIABILITIES AND EQUITY $243,337,287 $223,677,554 Interest Income Interest on Loans $8,106,545 $8,763,000 Interest on Investments 658, ,490 Total Interest Income $8,765,010 $9,522,490 Interest Expense Dividends Paid on Shares $1,416,226 $1,760,494 Interest on Borrowed Funds 11,251 0 Total Interest Expense $1,427,477 $1,760,494 Net Interest Income $7,337,533 $7,761,996 Provision for Loan Losses 900,000 1,200,000 Net interest income after PLL $6,437,533 $6,561,996 Non Interest Income 2,122,967 1,973,330 Non Interest Operating Expense 5,969,999 5,674,308 NET INCOME $2,590,501 $2,861,018

6 Millions Millions Millions Millions 12.50% 12.00% 11.50% 11.00% 10.50% 10.00% Net Worth 11.93% 12.03% 11.40% 10.54% 10.69% $260 $240 $220 $200 $180 $160 $140 Total Assets $180 $160 $ Member Loans Member Deposits $120 $ $4.00 $3.00 $2.00 $1.58 Net Income $2.28 $2.81 $2.86 $ % 1.00% 0.95% 1.22% ROA 1.35% 1.32% 1.11% $ % $ % Year End December 31, % Change Membership 19,341 19, % # New Accounts 1,518 1, % # Share Accounts 36,712 38, % # of Loans 9,316 9, % # Employees % # on E-Teller 8,174 7, %

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