LEADERSHIP TEAM - Members 1st Federal Credit Union

LEADERSHIP TEAM
Jackie Eakin
Chairman
Michael Whiteman
Vice Chairman
Dan DeLutis
Treasurer
Dennis Hocker
Secretary
Branch & ATM Locations
Adams County
• Gettysburg
Charles M. Courtney
Director
John Devlin
Director
Nate Douty
Director
David L. Foreman
Director
Donald Geistwhite, Jr.
Director
Cumberland County
• Camp Hill
• Carlisle
• Enola
• Mechanicsburg
• Newville
• Shippensburg
Dauphin County
• Harrisburg
• Hershey
• Middletown
“The key to
happiness
is having
dreams.
Jon Kirssin
Director
Ronald Robinson
Director
Nancy Rockey
Director
Lois Witmer
Director
Bob Marquette
President & CEO
Lancaster County
• Lancaster
• Lititz
• Neffsville
Lebanon County
• Lebanon
• Palmyra
The key to
success is
making
dreams
come true.”
Craig Golfieri
Executive Vice President
Human Resources & Training
Kevin Lee
Executive Vice President
Operations
Stephen Murray
Executive Vice President,
Finance & Accounting,
Chief Financial Officer
George Nahodil
Executive Vice President
Retail Delivery, Public Relations
and Marketing
Jay Parrish
Executive Vice President
Information Technology Systems
Chief Information Officer
York County
• Dillsburg
• Etters
• Hanover
• New Cumberland
• Red Lion
• York
–Anonymous
Operations Center Administrative Annex Web site Email
5000 Louise Drive 5020 Louise Drive www.members1st.org accountinquiries@members1st.org
Mechanicsburg, PA 17055 Mechanicsburg, PA 17055
(800) 283-2328
Equal Opportunity Lender. Equal Housing Lender.

Executive Summary
We were fortunate to celebrate three milestones in 2011 including:
• Exceeding $2 billion in assets as of April 30
• Exceeding 200,000 members as of October 31
• Opening our 50th branch location on Hempstead Road in Lancaster
Our dedicated volunteers and staff have been committed to helping members to make their dreams come true
and that’s why we can celebrate these milestones and set our sights toward achieving more in 2012. We note
the following highlights from 2011:
• According to recent data available as of September 30, 2011, we moved into the prestigious ranks of being
one of the 59 credit unions in existence with $2 billion or more in assets (we are 58th) and remain one of the
top three largest credit unions in Pennsylvania.
• We achieved a 98.1% Membership Satisfaction Rating and 86.5% of those randomly surveyed were very or
extremely satisfied with our products and services.
• We have relationships with 3,707 Select Employer Groups representing an increase of 887 from 2010.
• Our associates participated in more than 239 community and charitable events and provided 4,554
volunteer hours for the benefit of our local community. We also participated in a total of 153 chamber of
commerce events. Members 1st and our associates raised and contributed over $432,370 to charitable, civic
and credit union industry organizations.
• We opened four new stand-alone branches: Lebanon County – Quentin Road; Dauphin County –
Middletown; Lancaster County – Lititz Pike and Hempstead Road. We also began construction of the first
credit union ever in Perry County and will open our Duncannon branch in April 2012.
• New products and services offered included: Debit Card Personalization; Merchant Lending; online VISA®
balance transfers; 5/1 Adjustable Rate Mortgage; USDA Guaranteed Rural Development 100% financing;
72-month term financing for qualified high-end model vehicle purchases; longer term/higher limit
Signature Loans; VISA® eStatements; and online certificate renewal and certificate dividend payment option
selection. We also expanded the availability of Settlement Services throughout our branch market areas.
• Rewards Distribution – Consumer VISA® cash-back rewards totaled $955,758. Business VISA® Card cashback
rewards totaled $129,741. VISA® Debit Card users received a total of $865,098 in Swipe 5® rebates
while Business VISA® Debit Card users received $21,940 in rebates.
• Electronic & Mobile Services – We introduced our new in-house bill payer service and iCal Bill Pay feed. We
realized an increase in home banking usage with 143,726 home banking accounts. Mobile Banking usage
increased to 10, 982 active accounts.
• Local awards: We were named “Simply the Best” Credit Union from Harrisburg Magazine for the 8th time.
We won “Best Bank” for Carlisle and the West Shore and “Best Mortgage Lender” for the West Shore from The
Sentinel (Carlisle). We were named “Who’s Who in Business in York” from Susquehanna Style magazine.
We are pleased to report that we remain financially sound and we will continue to plan well for our future and
yours. Thank you for allowing us to bring you unparalleled service and experiences as we move forward in such
uncertain economic times.
Supervisory Committee Report
The Supervisory Committee of Members 1st Federal
Credit Union consists of independent volunteers and
operates under a written charter adopted by the
Committee and the Board of Directors. The members
of the Committee are John Devlin (Chairman), Michael
McGinley, Bob May, Dan Oneufer, and Karen Mashinski.
The Committee has oversight responsibilities for the:
1. Integrity of the Credit Union’s financial statements
and related reporting processes;
2. Credit Union’s system of internal controls regarding
finance, accounting, legal, compliance, and ethics;
3. Independent accountant’s qualifications and
independence;
4. Performance of the Credit Union’s internal audit
function and independent accountants.
The Supervisory Committee contracted the independent
accounting firm of Orth, Chakler, Murnane & Co., CPAs,
to perform the audit of the Credit Union’s June 30, 2011
financial statements.
The Committee met with the internal auditors
and independent accountants, with and without
management present, and discussed the results of their
examinations, their evaluations of the Credit Union’s
internal controls, and the quality of the Credit Union’s
financial reporting. It is the Committee’s responsibility
to monitor these processes by working closely with
both the independent accounting firm and the Credit
Union’s internal auditors. Management has the primary
responsibility for the Credit Union’s financial statement
and reporting process, including the system of internal
controls. The independent accountants are responsible
for expressing an opinion on the conformity of the Credit
Union’s financial statements with accounting principles
generally accepted in the U.S. We are pleased to report
that the annual audit conducted for June 30, 2011was
completed successfully and the Credit Union’s financial
statements were certified without qualification.
The Supervisory Committee acts as a liaison between the
Board of Directors and our members. If members ever
need assistance, or experience difficulties that cannot be
resolved through normal channels, they are encouraged
to contact the Supervisory Committee at: P.O. Box 3036,
Shiremanstown, PA 17011. The Supervisory Committee
reviews and responds in writing to all letters received.
John Devlin
Chairman
Meeting Our Members Borrowing Needs
Although the level of unemployment continues to remain high, 2011 did
show some signs of recovery resulting in very strong growth in our loan
portfolio. In the housing market, which was soft in both prices as well
as demand, there were refinancing opportunities as a result of lower
interest rates. Auto lending showed improvement and, even though
banks became more competitive in this market, Members 1st continued
to be the leading financial institution for auto financing. Small business
lending also experienced good growth, as did other areas of lending.
We outpaced our peers and exceeded our financial plan ending with
10.18% loan growth for 2011. Automobile loans increased by $39
million as we held a market share of 10.04%, the highest of any
financial institution in our 8-county market area. Real Estate secured
business loans increased $21 million; fixed rate home equities increased
$14 million; mortgages increased by $35 million and VISA® increased
by $12 million. The overall quality of our loan portfolio remained high
as the percentage of loans that are delinquent or charged off was
significantly below our peer group.
The number of approved applications increased in almost every loan
category:
Number of Approved $ Approved
Applications
Traditional Loans 20,058 $229,059,526.29
On The Spot Vehicle Loans 27,784 461,490,558.03
First Mortgages 1,649 269,397,260.00
Fixed Rate Home Equity Loans 3,259 180,768,292.68
Student Loans 1,621 8,518,854.00
Business Loans 532 174,579,049.00
At Members 1st, we continue to offer a wide variety of loan and lineof-credit
products. In 2011 we introduced higher-limit, longer-term
signature loans to assist our members with their financing needs. We
expanded our VISA® and Home Equity programs through competitive
promotional offerings, added 19 new dealerships to our indirect loan
program, 21 to our auto leasing program and 33 merchants to our new
merchant lending program. In Business Lending, we closed over $74
million in new business loans.
We again offered our members the very popular holiday skip-a-pay
promotion as well as a special one in the spring. Continuing our focus
on member service, we maintained an average decision time on
our consumer loans of less than 15 minutes while processing both a
record number of loan applications and answering a record number of
member phone calls. Through our commitment to member service, our
technology, and the processes we employ, our loan products offer many
value-added benefits to our members.
Kevin Lee
Executive Vice President
Operations
Condensed Financial Information
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in Thousands)
Dec 31, 2011 Dec 31, 2010
ASSETS
Cash and Cash Equivalents $ 92,429 $ 95,925
Investments
Available-for-Sale 217,988 10,114
Held-to-Maturity 79,878 242,555
Other 5,545 5,300
Loans - net of Allowance 1,561,691 1,433,493
Accrued Income Receivable 9,474 8,468
Property, Plant, Equipment 90,534 79,010
Deposit NCUSIF 17,241 15,908
Other Assets 6,834 10,892
TOTAL ASSETS $ 2,081,614 $ 1,901,665
LIABILITIES AND MEMBERS’ EQUITY
Liabilities
Members’ Shares $ 1,881,521 $ 1,733,208
Other Liabilities 23,530 16,533
Total Liabilities 1,905,051 1,749,741
Members’ Equity 176,563 151,924
TOTAL LIABILITIES AND MEMBERS’ EQUITY $ 2,081,614 $ 1,901,665
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in Thousands)
Dec 31, 2011 Dec 31, 2010
INTEREST INCOME
Interest on Loans $ 84,723 $ 81,734
Investment Income 5,591 7,543
Total Interest Income 90,314 89,277
INTEREST EXPENSE
Member Dividends & Interest 16,380 20,521
Net Interest Income 73,934 68,756
PROVISION FOR LOAN LOSSES 7,740 10,500
Net Interest After Provision for Loan Losses 66,194 58,256
NON-INTEREST INCOME
Fees and Charges 17,942 15,815
Other Non-Interest Income - net 17,085 16,588
Total Non-Interest Income 35,027 32,403
NON-INTEREST EXPENSES
Compensation and Benefits 41,066 36,640
Office Operations 34,185 32,103
Other 502 454
Total Non-Interest Expenses 75,753 69,197
NET INCOME Before NCUSIF Stabilization Assessment 25,468 21,462
NCUSIF Stabilization Assessment 4,310 4,080
NET INCOME $ 21,158 $ 17,382
Bob Marquette
President & CEO
Jackie Eakin
Chairman
Members 1st Federal Credit Union is federally insured by the National Credit Union Administration.