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 4:30 PM. Minutes of May 20, 2013 read and accepted by motion by J. Monterville, second M. Pancio carried Few notes from 2013: Over $60 million in loans were closed in 2013 total out standings : $157 MM Reserves over $29 million Net worth ratio: 12.02% 7200 square foot addition completed. Current building was completely remodeled, including enclosed offices as opposed to cubicles. The addition should provide us with enough space to take us through the next years Supervisory Committee report read Jim thanked the Board of Directors for their guidance In addition, he thanked Management for their cooperation with the Supervisory Committee and with the Examiners. Jim also thanked the committee members. Treasurer s Report: 2013 was a challenging year. Total Assets $243 million, up over 8% ROA 1.11%, down from 1.32% in 2012 Net Income $2.59 million, down from $2.86 million in 2012 Loans $157 million, down from $161 million in % Net Worth 12.02% - Peer Net Worth 10.74% Challenges for 2014: Loan growth Investments stay short term while obtaining yield Control Operating Expenses Elections Nominating Committee review of accounts was performed for candidates R. Inzana, R. Kent, J. McInroy, M. Pancio each candidate is a member in good standing. Nominations closed. J. Monterville asked the Secretary to cast one vote for each nominee, B. Olander second carried Net membership is down due to the Inactive fee to members who do not have any activity in their accounts for 12 months. Once the account reaches zero, the account is closed. Brian Thanked the Board of Directors and Supervisory Committee for all the dedication, guidance and support in our many endeavors. R. Inzana thanked the staff and front line people for their dedication. He mentioned that he hears from the members regarding our good service. J. Monterville Mentioned that Marketing programs are reaching the youth market. These members and future members are the future of our credit union. P. Kelly Thanked the Board and Supervisory Committee for their commitment; He also thanked the staff without the staff commitment, we would not be in business well done everyone. Pat asked the Supervisory Committee if they would commit to another year. All answered yes. Motion to adjourn 4:48 PM motion J. McInroy, second L. Stoughton carried

3 Loan volume has decreased in the last couple of years as a result of the economy and declining population. This decrease has a significant impact on earnings. New York State and local municipalities must decrease the cost of living and doing business in our State. In addition, the nationwide economy makes it difficult for the Federal Reserve to raise interest rates. The Fed s zero interest rate stance is great for borrowers, however poses a negative impact on financial institution s net interest margin. We have stayed our course and remained short on our investments. The shorter the investment term, the lower the earnings, however, this philosophy protects us when interest rates rise. The continued burden of new regulations continues to pose significant compliance costs, leaving credit unions paying the price for problems caused by a few large financial institutions. Our core members continue to support the credit union as we saw deposits rise again in We continue to invest these funds locally through loans and donations. Our business loan originations increased by $2.5Million to $8.3Million. Our recent upgrades in building and technology have allowed us to offer more banking alternatives and efficiency to our membership, currently served by more than 50 employees. We will soon add four new volunteers to our team. Jason Crisafulli, Robert Elmore, Katelyn Himes and Carol Mahoney- Katzenstein are joining our team of volunteers to assist and guide us with the operation of our Credit Union. I thank them for volunteering to serve our credit union. Again, thank you for supporting your Credit Union. Thank you for your membership and continued support of your Credit Union. Our Credit Union finished 2014 with strong earnings. Although strong, earnings are down from 2013 due to the economic conditions in our area and in many parts of our country. We continue to see our local population decline. Many are leaving to seek higher paying jobs as well as lack of opportunity for our local youth. 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 2014, 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 2014, 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 Thank you to the Board of Directors, Committee Members and Credit Union Management.

4 During 2014, Olean Area Federal Credit Union continued to focus on maintaining earnings amidst the continued struggling Olean area economy. In 2014 our balance sheet remained strong as total assets reached over $247 million, a growth of 1.86%. While loans outstanding decreased by -2.31% to $ million, member deposits increased by 0.99% to $ million, the largest increase occurring in savings of $4.9 million. Olean Area s Net Worth remained strong at 12.89%, as compared to peer s Net Worth of 10.93%. Net worth is a measure of capital strength of the credit union. Our strong net worth provides us the opportunities to invest in new products and services that enhance the value of membership. In 2014, net income was over $2.6 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 2014, while loan income decreased just over 8.0%, our cost of funds remained higher than credit union peers at 0.53%, and our operating expenses to average assets remained below credit union peers at 2.38%. This resulted in tighter net margins. Olean Area s Return on Assets for 2014 was 1.09%, well above our peer s average of 0.59%. Olean Area Federal Credit Union enters 2015 financially stable, and well positioned for future growth in years to come as the area economy rebounds. Year End December 31, % Change Assets (millions) % Loans (millions) % Shares (millions) % Operating Expense/Avg. Assets % -5.56% The following incumbents are nominated for a 3-year term to the Board of Directors: Lola Stoughton Ronald Kent, Jr. Michele Pancio

5 Year End December 31, ASSETS Loans $153,911,026 $157,554,949 Allowance for Loan Loss -2,611,398-2,568,300 Net Loans 151,299, ,986,649 Cash 2,809,335 2,004,882 Total Investments 78,492,624 76,929,741 Other Assets 15,268,260 9,416,016 TOTAL ASSETS $247,869,846 $243,337,287 LIABILITES AND EQUITY TOTAL LIABILITIES $2,988,515 $3,456,513 Savings 54,778,314 49,881,908 Checking 26,054,495 25,589,440 Money Market 73,006,933 74,535,790 IRA 4,899,896 4,720,950 Certificates 53,989,192 55,919,143 TOTAL SHARES 212,728, ,647,231 TOTAL RESERVES 32,152,501 29,233,543 TOTAL LIABILITIES AND EQUITY $247,869,846 $243,337,287 Interest Income Interest on Loans $7,391,052 $8,106,545 Interest on Investments 955, ,466 Total Interest Income $8,346,365 $8,765,010 Interest Expense Dividends Paid on Shares $1,281,269 $1,416,226 Interest on Borrowed Funds 17,660 11,251 Total Interest Expense $1,298,929 $1,427,477 Net Interest Income $7,047,436 $7,337,533 Provision for Loan Losses 772, ,000 Net interest income after PLL $6,275,436 $6,437,533 Non Interest Income 2,204,604 2,122,967 Non Interest Operating Expense 5,815,159 5,969,999 NET INCOME $2,664,881 $2,590,501

6 Millions Millions Millions Millions 14.00% 13.00% 12.00% 11.00% 10.69% Net Worth 11.40% 11.93% 12.03% 12.89% $260 $240 $220 $ Total Assets % $180 $180 $160 Member Loans Member Deposits $140 $ $ $4.00 $3.50 $3.00 $2.50 $2.28 Net Income $2.81 $2.86 $2.59 $ % 1.30% 1.10% 0.90% 0.95% 1.22% ROA 1.35% 1.32% 1.11% 1.09% $ % $ % % Change Membership 18,853 19, % # New Accounts 1,270 1, % # Share Accounts 36,062 36, % # of Loans 8,780 9, % # Employees % # on E-Teller 8,781 8, %

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