ANNUAL REPORT FEDERALLY INSURED BY NCUA

ANNUAL REPORT FEDERALLY INSURED BY NCUA

CHAIRMAN S AND PRESIDENT S REPORT AIR Academy Federal Credit Union (AAFCU ) received its charter (Number 10600) on October 25, 1955, at Lowry Air Force Base in Denver, Colorado. The purpose of the credit union was to serve the cadets and staff of the newly developed United States Air Force Academy. The first Annual Membership meeting of AAFCU was held on January 23, 1956, at the Cadet Theater, Lowry AFB, with 27 members in attendance. The assets reported as of December 31, 1955, were $4,346.34, loans totaled $2,875.00, and shares totaled $4,339.14. As we celebrate our 60th anniversary, assets as of December 31,, were $515 million, loans totaled $445 million, and shares totaled $468 million. Membership totaled 46,915. AAFCU moved from Lowry AFB to the Air Force Academy site in September 1958, at the same time the other Academy functions moved. AAFCU was housed in Building 8034. In 1978, the Board of Directors made the decision to build a headquarters facility to house the credit union. Land was purchased just south of the South Entrance of the Air Force Academy to construct a 20,000 square foot building. AAFCU moved into its new facility in November 1980. In 2009, we moved into our new 52,000 square foot building on a site with the potential to support growth for many more years. Your credit union has a great history and the future looks exciting. continues the string of successful years for AAFCU. As highlighted in the Treasurer s Report, the credit union had a great year in asset, loan, and member growth. We surpassed the half-billion dollar mark in assets as members continued to show their support and commitment to AAFCU. The continued improvement of the economic environment contributed to our success. The unemployment rate dropped to 5.0% at the end of December, and has improved from 5.6% in December 2014. Lower fuel prices has increased household cash flow and helped new car sales set a record at 17.47 million units and eclipsed sales of 17.41 million set in 2000, according to Autodata Corp. Housing prices in many parts of the country have increased and in our primary market areas sales have been strong. In addition to an improved economy, product and service enhancements also aided our success in. We converted our Visa Debit card to a chip and pin Debit MasterCard, improved our financial advisory services through LPL, enhanced our Net Promoter Score system, introduced My Way Mortgage, and formally launched Air Academy Insurance Services. These enhancements are to improve the lives of our members and create financial opportunities for their families. To provide world-class service, we must have outstanding employees. One of our strategic objectives is to Grow our Employees. We continued our journey toward an unmatched corporate culture though employee and organizational development. We started an employee wellness program and continued to be heavily involved in the community as shown in another part of this annual report. One of the credit union s core values is Community be involved and invested where we live and work. Our employees certainly espouse this value and we are proud of their contributions. For 60 years, AAFCU has served our members with great success. Thank you for your commitment and loyalty as we look forward to the next 60. ~Dr. Donald M. Bird Chairman ~Glenn L. Strebe President/CEO

Total Assets $515,209,500 Total Members (12/31/15) FINANCIAL HIGHLIGHTS 46,915 $424 Assets (millions) $446 2011 2012 $470 2013 $481 2014 $515 STATEMENT OF FINANCIAL CONDITION (unaudited) As of December 31, and 2014 Loans to members Less: Allowance for Loan Losses Net Loans to Members Cash and Investments Other Assets $445,464,863 (2,308,868) 443,155,995 38,064,511 33,988,994 2014 $392,227,485 (1,843,385) 390,384,100 57,177,518 33,861,144 TOTAL ASSETS: $515,209,500 $481,422,762 For the Years Ended December 31, and 2014 Operating Income $22,782,633 Operating Expenses (16,452,480) STATEMENT Provision for Loan Losses (2,131,125) OF INCOME Non-Operating (Losses) Gains, Net (39,642) Dividends Paid to Members (1,716,725) (unaudited) Net Income $2,442,661 2014 $20,528,925 (15,142,071) (569,000) (71,162) (1,811,075) $2,935,617 2011 2012 2013 2014 Total Assets $423,714,494 $445,548,352 $470,009,634 $481,422,762 Dividends Paid $2,513,359 $2,193,113 $1,920,600 $1,811,075 Capital 8.13% 8.19% 8.24% 8.51% $515,209,500 $1,716,725 8.66% FEDERALLY INSURED BY NCUA

Wacky W Bicycle Ride Courage Classic Courage Classic January Discover Goodwill Pizza Party February Castle View High School Art Scholarship Awards Colorado Springs School District 11 March Art Scholarship Awards Elbert County School District C-2 Academy School District 20 April Colorado Springs Teen Court Art Scholarship Awards Elbert School District 200 Falcon School District 49 Elizabeth School District C-1 Lewis Palmer School District 38 Fountain-Fort Carson School District 8 Tesla Educational Opportunity School May AAFCU Community Shred Day Foothills Elementary School Woof and Wine Event- Benefiting the Humane Society of South Platte Valley June Colorado Springs Western Street Breakfast 3rd Annual Warrior Golf Tournament Climb for Courage- Benefiting the Children s Hospital Colorado July Veterans Cup Golf Tournament- Benefiting Veterans in Colorado The Courage Classic Bicycle Tour- Benefiting the Children s Hospital Colorado Fountain Valley Scholars Golf Tournament August BBB/AAFCU Foundation Golf Tournament Tri Lakes Relay For Life- Benefiting the American Cancer Society Sky Sox Sponsorship Night 80 s Bobble Head Giveaway September USAFA Parents Weekend Wacky W Bicycle Ride- Benefiting Douglas County Schools Discover Goodwill Pizza Party AAFCU Community Shred Day October Fittin It In 5K- Benefiting Douglas County Schools Trick or Treating at AAFCU Branches November Colorado Springs School District 11 Career Information Event Veterans Day Parade Garden Ranch Turkey Drive- Benefiting Care and Share Discovery Canyon Campus Castle Rock Starlighting Ceremony Briargate Family YMCA Turkey Trot 5K Run/Walk December Adopt-A-Student Holiday Assistance Program Griffith Center for Children-Chins Up Holiday Party with special guest Denver Bronco, Danny Trevathan AAFCU COMMUNITY SUPPORT INTEGRITY QUALITY SERVICE COMMUNITY

TREASURER S REPORT was a year of milestones for Air Academy Federal Credit Union (AAFCU ). Not only did we celebrate the 60th anniversary of serving our membership, we eclipsed $500 million in total assets ending the year at $515 million. This represented growth of $34 million, a 7% increase over 2014. Our loan portfolio surpassed the $400 million mark helped in large part by the creation of our new personal by design My Way Mortgage loan. By allowing members to pick any term between one and thirty years, we were able to grow our mortgage portfolio $42 million, or 34%. Our consumer loan portfolio also grew, increasing $13 million, or 5%. Overall, AAFCU loaned our members $265 million in, to help build their dreams. This tremendous loan growth did not come at the expense of our safety and soundness. We ended the year with a net worth ratio of 8.66%, well above the 7% level our regulators the National Credit Union Administration consider well capitalized. Our delinquent loans were only 0.76% of total loans and our charge offs were only 0.40%. Both figures are in line with our peer averages. As we continue to invest in electronic services for our members, we saw the number of members downloading our mobile application exceed 12,000. This means over 25% of our members enjoy the convenience of banking whenever and wherever they wish. During, members remotely deposited 47,000 checks totaling $17 million using mobile banking. While we celebrated many milestones in, we are excited about even better things for 2016. As we strive to grow and offer new products and services to our members, we never lose sight of our responsibility to be good stewards of our members finances. Thanks to the high standards of integrity and through the guidance of our leadership and Board of Directors, AAFCU remains a reliable place to invest and borrow with confidence. ~Dr. Harlan Else Treasurer SUPERVISORY COMMITTEE S REPORT The Supervisory Committee provides the membership with an independent evaluation of the safety and soundness of Air Academy Federal Credit Union s (AAFCU ) operations and activities. The committee, which is appointed by the Board of Directors, works with AAFCU s full time internal auditor to ensure all aspects of the credit union are routinely monitored. The auditor regularly conducts internal audits and reviews internal controls to ensure the assets of the credit union are protected. Annually, the National Credit Union Administration (NCUA) our federal regulatory agency, performs a safety and soundness examination on AAFCU to verify the credit union is complying with federal regulations. The Supervisory Committee also employs an Independent Certified Public Accountant (CPA) firm to perform a comprehensive annual financial statement opinion audit. For, the firm of CliftonLarsonAllen LLP, issued AAFCU an unmodified opinion, the highest audit opinion issued by a CPA firm. Based on the results of our internal audit procedures, the NCUA s examination report and the Independent Auditor s report, it is the opinion of the Supervisory Committee that AAFCU continues to be financially sound and well managed. The Supervisory Committee serves as your voice in AAFCU s affairs. We invite you to share your comments with us throughout the year. Please send correspondence addressed to the Supervisory Committee to the following address: Supervisory Committee PO Box 62907 Colorado Springs, CO 80962-2907 ~David E. Fitzkee Chairman

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