CONTENTS. Vision. Mission. Core Values LETTER FROM THE PRESIDENT AND CEO: 02 USSCO SENIOR LEADERSHIP: 04 FINANCIAL CONDITION/INCOME: 06

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3 CONTENTS LETTER FROM THE PRESIDENT AND CEO: 02 USSCO SENIOR LEADERSHIP: 04 FINANCIAL CONDITION/INCOME: 06 CHARTS/GRAPHS: 08 USSCO TEAM: 09 Vision USSCO Federal Credit Union, a growing community based financial institution, strives to be our members primary financial partner. Mission Build lasting relationships through high quality, competitive financial solutions and friendly member service every time. Core Values Integrity Service Family Accountable Adaptable 2016 USSCO Annual Report 01

4 REPORT FROM THE PRESIDENT AND CEO Dear Fellow Member, In thinking about our history, the founders of USSCO FCU would not recognize how our community- and member-focused organization has grown. As we approach the 60th anniversary, we continue to live out our vision as a growing, community-based financial institution, striving to be our members primary financial partner. Even with the operating environment getting more challenging to remain relevant, viable, and to provide competitive products and services to our members, we strongly believe we have a significant opportunity to help our members individually as well as our communities. As personal service becomes hard to find, we believe we can fill that void and provide both high tech and high touch service[s]. We believe this happens through our employees unwavering commitment and dedication to provide that service day in and day out. We are pleased to share our accomplishments during the past year and let you know what s in store for the year ahead.complishments KEY ACCOMPLISHMENTS Successfully converted core banking system to technology leaders Symitar/Epysis, allowing us to offer competitive products and services. Implemented a new indirect lending program. With over 35 local dealerships signed, we successfully grew vehicle financing by $8.9 million and signed up 264 new members at the dealers. Maintained consistent and effective loan underwriting, monitoring, and collection practices resulting in very strong credit quality. Installed new electronic message sign to increase Somerset Office s visibility. Increased annual high school scholarship program awards from $1,000 to $1,500 for the four selected students. Introduced new godough Mobile Banking and Mobile Check Deposit. Won Reader s Choice Best Credit Union in Somerset County for the second year in a row. Introduced our newest strategic partner Elavon, a third party leader in debit/credit card merchant processing to business members. Invested in three management personnel s professional development and leadership skills training. All devoted the extra time and dedication for these impactful, quality community-based programs developed by Somerset Chamber of Commerce and Johnstown Chamber of Commerce s well-known Gunter Leadership Program USSCO Annual Report

5 FINANCIAL HIGHLIGHTS Net Income increased from $147,000 to $202,000 due to increased interest income from loan activity and controlling expenses. Loans Outstanding increased by $4.8 million, or 11%, to $49.6 million in 2016 as compared to $44.8 million in Deposits/Shares decreased by $2.7 million, or 3%, to $90.9 million in 2016 versus $93.7 million in Net Interest margin improved from 4.2% in 2016 compared to 4% in Capital Ratio remains strong at 10% in 2016 compared to 9.61% in IN THE FUTURE We are committed to improving and enhancing member products and services. New initiatives include: Convert to new EMV chip-enabled debit card that increases the level of security and reduces fraud-related card losses for members and the credit union. Convert to new EMV chip-enabled business and retail credit cards. Enhance and refresh our website to pursue a social marketing strategy. Continue to improve and enhance our IT infrastructure including a new phone system. Hold branch-specific business appreciation events instead of one evening event in Richland for all business members. CONCLUSION We look forward to serving our members and providing a relevant financial solution for people looking for a quality alternative to larger commercial banks. We believe in our credit union and the philosophy of people helping people. We believe we will provide that level of service and value while managing the credit union in a proactive, responsible, safe, and secure manner. We are thankful for a dedicated and hardworking group of employees and Board of Directors. Most of all, we thank you our members for your support and trust in choosing USSCO Federal Credit Union as your primary financial institution. Sincerely, Kenneth A. Mesko President, Board of Directors Todd L. Cover Chief Executive Officer 2016 USSCO Annual Report 03

6 USSCO SENIOR LEADERSHIP Board of Directors Ken Mesko President Brian Keiper Vice President Gerald Smith Secretary/Treasurer Bonnie Bouch Member Richard Boxler Member Peggy Miller Member Scott Morris Member Mark Sotosky Member Rick Wilson Member USSCO Annual Report USSCO Annual Report

7 USSCO SENIOR LEADERSHIP Nominating Committee Beverly Rager, Chair Robert M. Bantly Joseph Cassanese Supervisory Committee Peggy Miller, Chair Robert Hancock, Member Kevin Ziance, Member SENIOR EXECUTIVE TEAM Todd Cover CEO C. Joseph Dona COO Matthew Stumpo CFO 2016 USSCO Annual Report 05

8 STATEMENTS OF FINANCIAL CONDITION ASSETS Loans to Members, Net Allowance for Loan Losses $49,417,948 $44,562,296 Cash and Cash Equivalents $3,336,492 $7,882,933 Restricted Cash $500,000 $500,000 Investment Securities Available-for-Sale Securities $44,166,115 $46,815,986 Credit Union Service Organizations [CUSOs] $1 $1 Accrued Interest Receivable $316,351 $304,509 Property, Buildings and Equipment, $2,325,016 $2,469,819 Net of Accumulated Depreciation NCUSIF Deposit $885,129 $888,231 Assets Held In Foreclosure $1,260 $1,260 Other Assets $668,230 $334,078 Total Assets $101,616,542 $103,759,113 LIABILITIES Members Share and Savings Accounts $91,010,356 $93,685,198 Advance Payments by Borrowers for Taxes and Insurances $0 $23,945 Accounts Payable and Other Liabilities $584,235 $277,824 Total Liabilities $91,594,591 $93,986,967 MEMBERS EQUITY Retained Earnings, Unrestricted $8,695,811 $8,493,389 Accumulated Other Comprehensive Loss $[151,280] $[198,663] Appropriated Statutory Regular Reserve $1,477,420 $1,477,420 Total Members Equity $10,021,951 $9,772,146 Total Liabilities and Members Equity $101,616,542 $103,759,113 Unaudited 2016 Financials / Audited 2016 Financial Statements available on website USSCO Annual Report

9 STATEMENTS OF INCOME INTEREST INCOME NON-INTEREST INCOME NON-INTEREST EXPENSES Interest and Fees on Loans $2,052,451 $2,084,169 Interest on Investments $671,295 $629,467 DIVIDEND AND INTEREST EXPENSE Total Interest Income $2,723,746 $2,713,636 Members Share and Savings Accounts $203,436 $254,403 Borrowed Funds $1,103 $274 CREDIT AND LOAN LOSSES Total Dividend and Interest Income $204,539 $254,677 Net Interest Income $2,519,207 $2,458,959 Credit for Loan Losses $24,000 $[77,000] Net Interest Income after Credit for Loan Losses $2,495,207 $2,535,959 Member Account Servicing Fees $1,089,153 $979,197 Gain on Sale of Investments Available-for-Sale $37,354 $[6,061] Other $126,778 $123,923 Total Non-Interest Income $1,253,285 $1,097,059 Salaries and Wages $1,179,272 $1,111,627 Employee Benefits $250,033 $253,693 Insurance Premiums $49,785 $50,821 Professional and Outside Services $1,033,136 $1,058,624 Office Operation Expense $461,293 $458,544 Office Occupancy Expense $302,362 $302,864 Association Dues and Operating Fees $37,157 $36,385 Education and Promotion $87,076 $84,983 Other Operating Expenses $145,956 $128,648 Total Non-Interest Expenses $3,546,070 $3,486,189 Net Income $202,422 $146,829 Unaudited 2016 Financials / Audited 2016 Financial Statements available on website 2016 USSCO Annual Report 07

10 CHARTS/GRAPHS THREE-YEAR TRENDS Unaudited 2016 Financials / Audited 2016 Financial Statements available on website USSCO Annual Report

11 THE USSCO TEAM Supervisors Jeff Brlansky MBL/Collections Manager Joyce Cerula Richland Community Manager Kathleen Condo Marketing Manager Lynne Faint Business Development Manager Sue Goch Accounting Manager Shawn Hildebrand IT Manager Jeff Hill Consumer/ Indirect Lending Manager Shannon Knopp Ebensburg Community Manager Jessica Lund Moxham Community Manager David Saylor Somerset Community Manager 2016 USSCO Annual Report 09

12 THE USSCO TEAM Richland Community Office Joyce Cerula, Community Manager Nancy Trabold, Member Services Specialist Tammy Costlow, Receptionist Scott Mamula, Deborah Cooke, Korie Himes, Jessica Lund, Community Manager Christina Bowser, Member Services Specialist Rose Miller, II Janet Calka, Austin Rodgers, Diane Dena, Moxham Community Office USSCO Annual Report

13 THE USSCO TEAM David Saylor, Community Manager Sandra Pyle, Member Services Specialist Crystal Koval, Carrie Baugher, Alex Howlett, Somerset Community Office Ebensburg Community Office Shannon Knopp, Community Manager Heidi Weber, Member Services Specialist Tammy Monito, Kelly Minor, 2016 USSCO Annual Report 11

14 THE USSCO TEAM Senior Executives Todd Cover, CEO C. Joseph Dona, COO Matthew Stumpo, CFO Consumer Lending Jeff Hill, Consumer/Indirect Lending Manager Karen Williams, Loan Officer Sue Empfield, Loan Officer Ethel Sciullo, Loan Specialist Marketing Kathleen Condo, Marketing Manager USSCO Annual Report Business Development Lynne Faint, Business Development Manager

15 THE USSCO TEAM Member Business Lending/ Collections Jeff Brlansky, MBL/Collections Manager Melinda Onder, Collections Specialist Juscinda Matlin, MBL Specialist IT Department Shawn Hildebrand, IT Manager Accounting Sue Goch, Accounting Manager Amy Kohan, Accounting/IRA Specialist 2016 USSCO Annual Report 13

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