WE ARE YOUR CREDIT UNION COME GROW WITH US BANK-FUND STAFF FEDERAL CREDIT UNION 2014 ANNUAL REPORT

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1 WE ARE YOUR CREDIT UNION COME GROW WITH US BANK-FUND STAFF FEDERAL CREDIT UNION 2014 ANNUAL REPORT

2 THE 68TH ANNUAL MEETING OF BANK-FUND STAFF FEDERAL CREDIT UNION IS SCHEDULED FOR THURSDAY, APRIL 2, 2015, AT 3:00 P.M., AT THE CAPITAL HILTON, TH STREET, NW, WASHINGTON, DC COPIES OF THE MINUTES OF BFSFCU S 67TH ANNUAL MEETING WILL BE AVAILABLE AT THE 2015 MEETING. COPIES MAY ALSO BE OBTAINED FROM THE CREDIT UNION BY WRITTEN REQUEST TO BFSFCU, 1725 I STREET, NW, SUITE 150, WASHINGTON, DC

3 2014 ANNUAL REPORT 1 SUMMARY FINANCIAL STATEMENTS MESSAGE FROM THE PRESIDENT AND THE MANAGING DIRECTOR 5 BOARD OF DIRECTORS 11 FINANCIAL RESULTS 15 CREDIT COMMITTEE REPORT 20 SUPERVISORY COMMITTEE REPORT 21 TEN-YEAR PERFORMANCE SUMMARY 22

4 2 BANK-FUND STAFF FEDERAL CREDIT UNION

5 2014 ANNUAL REPORT 3 SUMMARY FINANCIAL STATEMENTS (In Thousands, US$) % Change STATEMENTS OF FINANCIAL CONDITION Cash and Cash Equivalents $ 611,920 $ 550, Investments 1,150,009 1,084, Loans (Net of Allowance for Loan Losses) 2,186,565 2,071, Loans Held-for-Sale 285 (100.00) Loans in Process 11,316 9, Other Assets 53,602 54,730 (2.06) Total Assets 4,013,412 3,770, Deposits 3,546,122 3,321, Other Liabilities 28,049 35,262 (20.46) Members Equity 439, , Total Liabilities and Members Equity 4,013,412 3,770, STATEMENTS OF INCOME Interest Income $ 80,642 $ 79, Interest Expense (Dividends) 14,622 16,277 (10.17) Net Interest Income 66,020 62, Provision for Loan Losses 7,457 9,400 (20.67) Noninterest Income 24,921 13, Noninterest Expense 59,852 61,383 (2.49) Net Income 23,632 5, KEY EQUITY RATIOS Members Equity to Deposits 12.39% 12.45% (0.54) Members Equity to Total Assets 10.94% 10.97% (0.24) OTHER HIGHLIGHTS Mortgage Servicing Portfolio $ 448,300 $ 470,700 (4.76) Members 82,340 81, Employees (3.37) Fully audited financial statements are available at BFSFCU.org.

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7 2014 ANNUAL REPORT 5 MESSAGE FROM THE PRESIDENT AND THE MANAGING DIRECTOR On October 14, 1947, Bank-Fund Staff Federal Credit Union (BFSFCU) was founded as a cooperative with the purpose of serving those working for the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) and offering a secure option for both saving and borrowing to IBRD and IMF staff. Over the subsequent 6- plus decades, this great partnership between BFSFCU and our sponsor organizations has evolved, as have both organizations. YOUR Credit union now serves the staff, retirees, and families of the World Bank Group (WBG) and the International Monetary Fund (IMF) and we have grown from 96 members and nearly $3,000 in assets at the time of our first annual report to over 82,000 members and $4 billion in assets. Over this time period, the financial services landscape has been dramatically transformed into an intensely competitive environment and many credit unions have significantly changed their sponsor-focused missions, now serving larger communities, either explicitly or through associational-based charters, that essentially allow a broad segment of people to join the credit union. During this time of great change, BFSFCU has remained true to its original mission. We have expanded the products and services we offer to meet our members unique needs, while remaining steadfast and loyal to our roots. The loyalty of you, our members, and your active feedback is what has allowed us to thrive and to continue growing and enhancing our value proposition to ensure we are meeting those unique needs. WE have been and continue to be YOUR Credit Union! Many of our services and operating philosophies are truly unique. Over the years we have welcomed thousands of new staff members of the WBG and IMF who have relocated to the Washington DC headquarters of these great organizations to start new careers. Our products and services are geared towards serving both those new to the U.S. and those who are familiar with U.S. banking, however we have remained focused on helping our new members get started with essential checking services, instant issue debit cards, credit cards and loans. Other financial institutions might be reluctant to help those new to the country with these services, however we have made this one of our core purposes.

8 6 BANK-FUND STAFF FEDERAL CREDIT UNION Payment services are a fast evolving area within financial services and YOUR Credit Union has been there to provide solutions: We were one of the first credit unions to offer EMV enabled credit cards and we expect to offer EMV enabled debit cards by the end of EMV payment cards offer greater security and convenience especially to our members regularly traveling overseas. History has shown that our members need convenient options to transfer funds both domestically and abroad. We offer several convenient options, led by our custom-developed ewires solution that, at inception, was fairly unique in the industry. Many large banks may expect a customer to visit a branch to request a wire transfer; at YOUR Credit Union, you can request a wire transfer through Online Banking when it is convenient for you. For years, we have offered on-site foreign currency services to facilitate our member s traveling needs; we also offer online foreign currency requests, foreign currency ATMs and foreign drafts in 24 distinct currencies. We are well aware that our members going on business travel have unique cash needs and we ensure that those needs are met by ensuring that we have new bills of multiple denominations available any time a member needs them. YOUR Credit Union also offers Popmoney, an industry leading person-to-person payment service you can use to pay friends and family directly from your Credit Union account whether you need to pay someone back for lunch or send a quick birthday gift. Convenience is of paramount importance to anyone in our fast-paced world today and YOUR Credit Union is there for you, offering our members access to a shared ATM network larger than any of the largest banks, with 30,000 surcharge-free ATMs across the U.S. including multiple 7-Eleven, Walgreens and Costco locations, as well as over 5,000 shared branches.

9 2014 ANNUAL REPORT 7 As YOUR Credit Union, we know that our members are fee averse and we pride ourselves on being one of the credit unions with the lowest fees in the industry. Our wire transfer fees and mortgage origination fees, in particular, are excellent when compared to other providers. We offer an onsite full-service Lending Department that has assisted our membership with their lending needs for many years; since organization, we have funded $11.4 trillion in loans for our members. We are committed to offering our members tangible rewards for their membership in the form of member giveback. Since 1992, we have returned $163 million in the form of supplemental dividends to our members. In 2014, our members received over $400,000 in rebates on their home purchases or sales using our HomeAdvantage service powered by CU Realty Services while over the life of this program, our members have benefited from over $3.6 million in rebates. Our ATM Surcharge Rebate Program has returned over $3.9 million in surcharges to our members since its inception in 2006 and is a great additional value to members beyond access to our shared ATM network. In 2014, your Credit Union faced continued challenges with the low interest rate environment and new regulatory requirements, however we remained strong and secure and our members continued to entrust us with their assets as evidenced by the 6.75% growth in deposits achieved. Our passionate and dedicated staff and our financial strength enabled us to implement many initiatives to better serve the unique needs of our members: We listened when our member-owners told us they preferred to be served by our direct staff members in our Washington, D.C. call center. By October of 2014, we transitioned from most of our member calls during regular business hours being served by a third party provider to over 90% of those calls being served by our Washington, D.C. staff. We continued to offer 24/7 phone service through our third party provider, however we also implemented process improvements to enhance that experience. We launched our new car buying service powered by TrueCar. This service provides expanded access to value pricing through a nationwide car dealer network and through online tools such as build your own auto pricing and an inventory search. Members can save on average $3,200 on the MSRP of their purchased vehicles and many also received a significant rate discount through special offers.

10 8 BANK-FUND STAFF FEDERAL CREDIT UNION We improved our loan pricing across our suite of loan products and now offer some of the most competitive low rates in the industry, while also enhancing convenience and accessibility by making Loan Officers available in our branches. We introduced more loan products to enhance our suite of real estate offerings, including our new 5/5 ARM and 10/1 ARM products, as well as our new 5/5 and 7/1 home equity loan products. We launched a new student loan product through our partners, CU Student Choice, to assist our members in refinancing existing student loan debt at more attractive rates and terms. We offered 27 free financial seminars on a variety of topics ranging from an Introduction to Credit, Home Buying and Selling, Estate Planning, and Income Taxes. We participated in more than 60 events with our sponsor groups and members including New Employee Orientations, the Summer Teen Program, New Staff Spouse Orientations, the IMF Symposium and the WBFN Open House and hosted our second Credit Union Expo in October to show our appreciation for our members and showcase our products and services. We supported our community both financially and through our actions, donating more than $50,000 to community events, the Community Connections Campaign, and various charitable endeavors through the work of our Community Relations Committee. We returned $10 million to our members in the form of a Supplemental Dividend paid in January As we look to 2015, we remain focused on being YOUR Credit Union and on ensuring that we not only meet your unique needs but also provide you with the best value in the financial services industry and opportunities to grow with us. In 2015, we will continue to introduce new unique products and to enhance your member experience as we have done for the past 68 years. Some of our upcoming initiatives that our members can look forward to include:

11 2014 ANNUAL REPORT 9 WE ENHANCED OUR SUITE OF REAL ESTATE LOAN OFFERINGS, ADDING NEW 5/5 AND 10/1 ARM PRODUCTS AS WELL AS NEW 5/5 AND 7/1 HOME EQUITY LOAN PRODUCTS.

12 10 BANK-FUND STAFF FEDERAL CREDIT UNION The introduction of Mobile Banking and Mobile Check Deposit. Enhancements to credit card fraud monitoring including the introduction of two-way transaction alerts sent to a member s mobile phone. Implementation of a smartphone app that will allow members to manage their debit cards and how they are used. The introduction of higher yield long term share certificates to enhance member investment options. The introduction of a new elite credit card, BFSFCU s Visa Signature card. Introduction of ApplePay for member credit and debit cards. Enhancements to our Member Rewards website to include improved ease of use and new redemption options. Introduction of EMV debit cards. Improvements to our loan application process and turn-around time on loan decisions. Introduction of two new advanced ATM machines with deposit automation features which allow nonenvelope cash and check deposits. For 68 years, we have remained true to our original mission of providing unique financial services to meet the needs of the members we know and value so highly. Your loyalty has allowed us to do so and we remain committed to our roots. WE are YOUR Credit Union and we thank you for your support and for your feedback and engagement which helps us to remain focused on what is important to you, our memberowners. We invite you to come grow with us as we dedicate ourselves to improving your financial future.

13 2014 ANNUAL REPORT 11 BOARD OF DIRECTORS Kerry Mack President Stephanie Von Friedeburg Vice President Giuliano Caloia Treasurer Tom C. Tsui Secretary Manuela Adl Director Kenneth M. Miranda Director Christian Mulder Director Van Pulley Director Inder Sud Director Adam M. Shayne Counsel to the Board

14 12 BANK-FUND STAFF FEDERAL CREDIT UNION 2014 SUCCESS IN NUMBERS $3,200 AVERAGE SAVINGS WITH CAR BUYING SERVICE $10,000,000 SUPPLEMENTAL DIVIDEND $385,645,571 NEW MORTGAGE AND CONSUMER LOANS

15 $400,069 HOMEADVANTAGE REBATES TO MEMBERS 2014 ANNUAL REPORT 13 $845,880 ATM SURCHARGE REBATE PROGRAM $4.0 BILLION IN TOTAL ASSETS 82,340 TOTAL MEMBERSHIP

16 14 BANK-FUND STAFF FEDERAL CREDIT UNION IN 2014, WE LAUNCHED A NEW STUDENT LOAN PRODUCT TO ASSIST OUR MEMBERS IN REFINANCING EXISTING STUDENT LOAN DEBT AT MORE ATTRACTIVE RATES AND TERMS.

17 2014 ANNUAL REPORT 15 FINANCIAL RESULTS Total assets increased 6.43% to $4.0 billion from $3.8 billion at year-end Net loans increased 5.57% to $2.2 billion, reflecting a continued demand for first mortgage loans, which was primarily driven by low rates and new products throughout much of the year. During 2014 we increased our allowance for loan losses (the reserve ) as we continued to strengthen our coverage ratios for loan delinquencies. The increase was not driven by credit deterioration nor significant increases in loan delinquencies, but to provide for greater coverage of delinquent loans in the event those delinquent loans do not recover. The reserve, which represents management s estimate of loan losses inherent in the loan portfolio, increased 20.2% to $22.1 million from $18.4 million in This increase is driven by historical loss rates as well as changes in qualitative factors that must be considered when estimating the reserve. Currently, our reserve ratio, defined as the allowance for loan losses to gross loan balances outstanding, is 1.00% as compared to 0.88% at December 31, Total loan delinquencies experienced a modest increase over As of December 31, 2014, delinquent loans, defined as loan balances 30 days or more past due, were $36.8 million compared to $36.5 million as of December 31, Conversely, reportable delinquent loans, defined by the NCUA as those delinquent loans 60 days or more past due declined significantly to $17.7 million compared to $19.4 million as of December 31, 2013, an 8.92% decrease. Our coverage ratio improved, which is the reserve to total delinquent loans, and was 60.04% and 50.48% as of December 31, 2014 and 2013, respectively. The Credit Union s

18 16 BANK-FUND STAFF FEDERAL CREDIT UNION coverage ratio for reportable delinquent loans also improved and was % as of December 31, 2014, compared to 94.99% as of December 31, Total deposits increased $224.2 million, or 6.75%, to $3.5 billion from $3.3 billion at year-end Our money market accounts experienced the largest deposit increases of approximately $131.5 million. Revenues, defined as net interest income and noninterest income, were $90.9 million for the period ended December 31, 2014, as compared to $76.4 million for the same period last year. This increase of $14.6 million was driven primarily by the gain recognized from the termination of the postretirement health benefit plan at year-end, and increases in investment interest income. Dividends, or interest expense, which includes the Board of Directors approved supplemental dividend of $10.0 million, decreased from last year approximately $1.7 million to $14.6 million from $16.3 million. This decrease in dividend expense was a result of a shift of deposit balances to lower yielding deposit products. We experienced a decrease in our provision for loan loss of $1.9 million to $7.5 million from $9.4 million. This decrease was driven by a lower provision needed as compared to 2013 to achieve the necessary increase in the allowance for loan loss and delinquency coverage ratios noted above. Net charged-off loans were $3.7 million for the period ended December 31, 2014, compared to $3.4 million for the same period last year.

19 2014 ANNUAL REPORT 17 Noninterest expenses, or operating expenses, decreased over $1.5 million as a result of cost control and mitigation efforts throughout the year. Net income was $23.6 million as compared to $5.6 million in 2013, an $18.0 million increase primarily driven by the gain on termination of the postretirement health plan benefit. LIQUIDITY AND INVESTMENTS The Credit Union s goal is to maintain a liquidity level to accommodate potential extremes in deposit fluctuations and unusual loan demand. The cash and cash equivalents position increased $61.2 million or 11.11% over 2013 balances as we positioned liquidity for a rising interest rate environment and to cope with volatile financial markets. Investments, which are composed primarily of U.S. Treasury and U.S. Government-backed Agency obligations, increased approximately $65.7 million compared to The investments balance was $1.15 billion at December 31, 2014, compared to $1.08 billion a year ago. The total return for the investment portfolio for the period ended December 31, 2014, was 0.73% versus 0.01% a year ago.

20 18 BANK-FUND STAFF FEDERAL CREDIT UNION CAPITAL STRENGTH Members Equity, or capital, and the related capital ratio are primary indicators of a financial organization s strength and soundness. Members Equity to Total Assets was 10.94% at December 31, 2014, and continues to exceed the NCUA s well capitalized threshold of 7.00%. The Credit Union s capital base increased $25.6 million, or 6.18% in 2014 and continues to exemplify our commitment to ensuring the organization s ongoing financial viability, while investing in improvements and expansion of services to members. NCUA EXAMINATION / EXTERNAL AUDIT Our NCUA examiners completed their most recent examination of the Credit Union effective June 30, In addition, our outside independent public accountants, Grant Thornton LLP, completed their audit for the period January 1, 2014 to December 31, Their complete report containing the entirety of our audited financial statements can be found on our website at BFSFCU.org.

21 2014 ANNUAL REPORT 19 hello DC staff bye help 24/7 bfsfcu WE LISTENED WHEN OUR MEMBER-OWNERS TOLD US THEY PREFERRED TO BE SERVED BY OUR D.C. BASED STAFF MEMBERS.

22 20 BANK-FUND STAFF FEDERAL CREDIT UNION CREDIT COMMITTEE REPORT On behalf of the Credit Committee, it is a pleasure to report on another successful year in the lending area. Total gross loans outstanding at December 31, 2014, and December 31, 2013, were approximately $2.2 billion and $2.1 billion, respectively. The Credit Union s gross loansto-deposits ratio was 62.28% at the end of 2014 compared to 62.90% at the end of As our members continue to find the Credit Union safe and sound for deposits, we continue to explore options to grow loans and add value to the membership. Our loan portfolio is comprised of 90.28% real estate loans and 9.72% consumer loans. Outstanding real estate and consumer loan balances as of year-end were $1.99 billion and $215 million, respectively. Paul B. Bravery Chair MEMBERS Simon Cauchi Stuart Cohen Fernando Gaitán Heather S. H. Woolls ALTERNATE MEMBERS Tatiana Gudumac Meherji Madan Gisela Ulmschneider Our mortgage loan servicing portfolio decreased in 2014 to $448.3 million from $470.7 million in The decrease in the servicing portfolio is a result of our members refinancing existing fixed rate mortgages to lower rate products offered throughout the year or simply paying down debt. The Credit Union experienced a slight increase in the total amount of delinquent loans to $36.8 million as of December 31, 2014, from $36.5 million as of December 31, Delinquencies remain low at 1.67% of total gross loans outstanding, down from 1.75% a year ago. Reportable delinquent loans, defined by the NCUA as those delinquent loans 60 days or more past due, were $17.7 million (0.80% of total gross loans outstanding) as of December 31, 2014, compared to $19.4 million (0.93% of total gross loans outstanding) as of December 31, I would like to thank the staff of the Lending Services Department, as well as the members and alternate members of the Credit Committee, for all of their dedicated efforts on behalf of the Credit Union and its membership.

23 2014 ANNUAL REPORT 21 SUPERVISORY COMMITTEE REPORT The Supervisory Committee is responsible for confirming that management s financial reporting objectives have been met, and that management practices and procedures safeguard members assets. The Committee retained the auditing firm of Grant Thornton, LLP to conduct an audit and express an opinion on the financial statements of the Credit Union for the period January 1 through December 31, Grant Thornton, LLP have completed their audit, which was performed in accordance with generally accepted auditing standards. Their unqualified opinion, along with the Credit Union s audited financial statements, is available on the Credit Union s website located at BFSFCU.org. Nicholas Pardoe Chair MEMBERS Riaz Ahmed Mouhamadou Diagne Paul Trites We confirm that the auditors report is based on information obtained from the Credit Union s records and through direct observation by the auditors, acting on behalf of the Supervisory Committee, and that, to the best of our knowledge and belief, the statements covered by their opinion are accurate.

24 22 BANK-FUND STAFF FEDERAL CREDIT UNION TEN-YEAR PERFORMANCE SUMMARY (In Thousands, US$) STATEMENTS OF FINANCIAL CONDITION Cash and Investments $ 516,579 $ 560,845 $ 713,489 $ 879,044 Loans (Net of Allowance for Loan Losses) 1,509,477 1,571,856 1,620,944 1,644,515 Deposits 1,727,870 1,810,065 1,991,927 2,190,337 Members Equity 312, , , ,940 Total Assets 2,057,779 2,168,624 2,377,144 2,576,145 STATEMENTS OF INCOME Income $ 89,471 $ 110,758 $ 129,298 $ 118,186 Dividends 33,353 52,017 67,603 58,514 Expenses (including provision) 31,971 37,469 45,853 54,992 Net Income 24,147 21,272 15,842 4,680 KEY RATIOS Interest-rate Sensitivity % % % % Liquidity Net Loans to Deposits Members Equity to Deposits Members Equity to Total Assets OTHER HIGHLIGHTS Members 53,841 55,448 57,241 59,481 Employees Rate-sensitive assets as a percentage of rate-sensitive deposits. 2 Liquid assets as a percentage of deposits. Fully audited financial statements are available at BFSFCU.org.

25 2014 ANNUAL REPORT $ 951,621 $ 945,737 $ 1,183,896 $ 1,444,947 $ 1,635,007 $ 1,761,928 1,806,313 2,045,649 2,057,229 2,076,853 2,071,264 2,186,565 2,433,318 2,643,132 2,884,189 3,142,866 3,321,920 3,546, , , , , , ,241 2,828,142 3,056,834 3,320,746 3,593,878 3,770,872 4,013,412 $ 119,511 $ 109,455 $ 112,092 $ 105,757 $ 92, ,563 34,792 27,911 21,915 19,945 16,277 14,622 74,618 69,131 69,507 71,386 70,783 67,309 10,101 12,413 20,670 14,426 5,609 23, % % % % % % ,730 65,942 74,873 79,266 81,945 82,

26 24 BANK-FUND STAFF FEDERAL CREDIT UNION

27 WE INVITE 2014 ANNUAL REPORT 3 YOU TO COME GROW WITH US AS WE DEDICATE OURSELVES TO IMPROVING YOUR FINANCIAL FUTURE. DESIGN: PATRICIA HORD.GRAPHIK DESIGN; ILLUSTRATION: ALEXANDRA ROKITA PHOTOGRAPHY: JOHN HARRINGTON PHOTOGRAPHY; PRINTING: WORLD BANK GROUP S PRINTING & MULTIMEDIA SERVICES

28 4 BANK-FUND STAFF FEDERAL CREDIT UNION 2015 BANK-FUND STAFF FEDERAL CREDIT UNION 1725 I STREET, NW, SUITE 150 WASHINGTON, DC USA T F U.S. TOLL-FREE 800 9BFSFCU BFSFCU.ORG WB FSC# FEDERALLY INSURED BY NCUA