“People Helping People”

ANNUAL REPORT 2012

$250,000

WELCOMETO OUR 50TH ANNUAL MEETING

Dear Fellow Members,

In 2013, the Credit Union is excited to celebrate 50 years of service toyou, our loyal members. With that in mind, the events of 2012 may palein comparison as the US economy remained fairly disappointing

throughout the last twelve months:

• The Gross Domestic Product rose less than 2%• The Unemployment Rate remained stubbornly high at 7.8%• Gasoline prices hovered around $3.60 per gallon

Similarly, the 2012 election results virtually assures more political gridlock asthe country struggles with large government deficits and an enormousfederal debt. Additionally, the Federal Reserve Bank has indicated that their“near zero” short-term interest rate policy, especially hard on savings, shouldcontinue well into 2015.

While the US economic and political situationswere rather disheartening in 2012, your CreditUnion eagerly moved forward with itscommitment to helping you achieve greaterfinancial security. The financial reportscontained in this booklet reflect our growth andstability as an organization as we reflect on ourfirst 50 years of member service.

In 2012, the Credit Union provided more than twenty-four million dollars inautomobile financing and sixteen million dollars in home financing. We alsoprocessed more than fifty-five million dollars in debit card purchases andthirty million dollars in credit card purchases.

The source of all this financial activity remains the pooled deposits of you,our loyal members. We are proud to report that member deposits grew morethan sixteen million dollars. And despite the “near zero” interest rate policyof the Federal Reserve Bank, the Credit Union was able to pay more thanthree million dollars in member dividends.

The Credit Union remains committed to providing its members the safetythey deserve for their hard earned savings. And, for the second consecutiveyear, our federal regulator issued your Credit Union its highest possiblerating for safety and soundness.

Douglas L. BurgessBoard Chair

David P. HagarPresident

April 9, 2013

Because most members look for convenience when conducting their financialaffairs, the Credit Union made several investments in technology during thelast year. To better serve you, we:

• Installed new Automated Teller Machines with bigger and brighter video monitors and an audio connection for the visually impaired.

• Upgraded our internet loan application system in order to more efficiently process loan applications.

• Replaced our telephone system to reduce expenses and improve redundancy.

The year ended on a high note with the introduction ofour Mobile Banking service, QT Mobile. In four shortmonths, over six hundred members have enrolled in thiseasy to use service. From the palm of their hand,members are:

• Checking account balances• Transferring money between accounts• Viewing account history• Paying bills through on-line bill payment

Today, with more than seven thousand members using our various electronicbanking services, QT Mobile is poised to become the ultimate in memberconvenience.

While convenient account access, financial stability and competitive loan andsavings rates are important reasons for choosing a financial institution,equally important is a friendly and knowledgeable staff that conductsthemselves with honesty and integrity. We are proud to have such a group ofvolunteers and staff, with forty percent having served you for at least tenyears. Through their hard work and dedication, we will continue to help youachieve financial security and peace of mind.

Thank you for your continued support of the Credit Union and we inviteyour family members and colleagues to enjoy the benefits of credit unionmembership.

FINANCIAL REPORT OF 2012

The annual audit of the accounts and financial records of the Baltimore County Employees Federal Credit Union as of December 31, 2012, was conducted by the firm of Rowles &

Company, LLP, Certified Public Accountants. The year-end financial statements, as of December 31, 2012, were also audited by Rowles & Company, LLP.

In addition, the records of the Credit Union were evaluated for compliancewith regulations and laws by the Federal examiners employed by the NCUA(National Credit Union Administration).

A Supervisory Committee meets monthly to test and verify various financialrecords of the Credit Union. The Committee is proud to report that allrecords and accounts are kept in a satisfactory manner by the personnel at theCredit Union office.

The Supervisory Committee also serves as a membership representative. Ifmembers have an unresolved financial matter with the Credit Union, theyare encouraged to contact the committee confidentially by writing to:

Supervisory CommitteeBaltimore County Employees Federal Credit Union

P.O. Box 6785Towson, Maryland 21285-6785

Report of Independent Auditors

Supervisory CommitteeBaltimore County Employees Federal Credit UnionTowson, Maryland

We have audited, in accordance with auditing standards generally accepted in theUnited States of America, the balance sheets of Baltimore County Employees Fed-eral Credit Union as of December 31, 2012 and 2011, and the related statementsof income, changes in members’ equity, and cash flows for the years then ended; andin our report dated February 25, 2013, we expressed an unqualified opinion onthose financial statements.

In our opinion, the information set forth in the accompanying condensed financialstatements, when read in conjunction with the complete set of financial statementsincluding the notes to the financial statements, is fairly stated in all material respectsin relation to the financial statements from which it has been derived.

Baltimore, MarylandFebruary 25, 2013

101 E. Chesapeake Avenue, Suite 300, Baltimore, Maryland 21286410-583-6990 FAX: 410-583-7061

Website: www.Rowles.com

BALTIMORE COUNTY EMPLOYEES FEDERAL CREDIT UNION Condensed Statements of Financial Condition

As of December 31, 2012 and 2011

2012 2011AssetsCash and cash equivalents $ 19,342,473 18,814,597 Loans to members, net 147,131,152 149,707,718 Investment securities available for sale 15,731,817 10,479,318 Investment securities held to maturity 118,233,359 103,623,075Certificates of deposit in other financial institutions 13,479,000 15,151,000National Credit Union Share Insurance Fund deposit 2,844,438 2,691,499Property and equipment 4,241,281 4,105,025Prepaid expenses and other assets 2,715,596 2,184,572

Total assets $ 323,719,116 $ 306,756,804

Liabilities and Members’ EquityMembers’ share accounts $ 294,777,719 $ 278,388,674 Accured expenses and other liabilities 2,478,122 2,985,110

Total liabilities 297,255,841 281,373,784

Members’ equityRegular reserve 3,458,704 3,458,704Undivided earnings 25,202,558 24,335,064Accumulated other comprehensive income (2,197,987) (2,410,748)

Total members’ equity 26,463,275 25,383,020

Total liabilities and members’ equity $ 323,719,116 $ 306,756,804

$

These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements, including the notes to the financial statements, are available at the Credit Union office during normal hours of operation.

BALTIMORE COUNTY EMPLOYEES FEDERAL CREDIT UNION Condensed Statements of Income

Years Ended December 31, 2012 and 2011

Interest incomeInterest on loans $ 7,735,985 $ 8,149,391 Interest on investments 2,500,903 2,786,735

10,236,888 10,936,126 Interest expenseDividends on members’ shares 3,011,029 3,806,686

Net interest income 7,225,859 7,129,440

Provision for loan losses 591,500 666,000

Net interest income after provision for loan losses 6,634,359 6,463,440

Noninterest incomeCard services 1,322,073 1,287,657 Share draft fees 686,570 698,095 Rental income 107,603 90,010Other 593,024 475,781

2,709,270 2,551,543

Noninterest expensesCompensation and benefits 3,917,923 3,920,715 Office occupancy 631,745 638,800 Office operations 2,040,892 1,789,368 Education and promotion 167,891 185,451 ATM operating expense 752,026 666,025NCUSIF stabilization 270,222 672,875 Other 695,436 575,002

8,476,135 8,448,236

Net income $ 867,494 $ 566,747

2012 2011

These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements,including the notes to the financial statements, are available at the Credit Union office during normal hours of operation.

BALTIMORE COUNTY EMPLOYEES FEDERAL CREDIT UNION Condensed Statements of Changes in Members’ Equity

Years Ended December 31, 2012 and 2011

Balance, December 31, 2010

Net income

Defined benefit plan adjustment

Unrealized gains on investments available for sale

Balance, December 31, 2011

Net income

Defined benefit plan adjustment

Unrealized gains on investments available for sale

Balance, December 31, 2012

Regular reserve

$ 3,458,704

3,458,704

$ 3,458,704

Undivided earnings

$ 23,768,317

566,747

24,335,064

867,494

$ 25,202,558

(1,829,136)

(655,121)

73,509

(2,410,748)

155,743

57,018

(2,197,987)

Accumulated other comprehensive income

-

-

-

-

-

-

-

-

-

-

-

-

These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements,including the notes to the financial statements, are available at the Credit Union office during normal hours of operation.

$

$

566,747

232,930 666,000 180,532

1,256,0523

(2,634,576)2,793,258 (214,694)215,819

3,062,071

3,277,990(2,050,129) 3,000,000

(36,902,707)24,202,7931,763,000

(32,792)-

(37,825)

(6,779,670)

8,366,449

4,648,850

14,165,747

18,814,597

BALTIMORE COUNTY EMPLOYEES FEDERAL CREDIT UNION Condensed Statements of Cash Flows

Years Ended December 31, 2012 and 2011

Cash flows from operating activities Net income Items not requiring (providing) cash Depreciation Provision for loan losses Amortization of loan origination fees, net Amortization of premiums and accretion of discounts, net (Gain) loss on disposition of property and equipment Loans originated for sale Cash from loans sold (Increase) decrease in accrued interest and other assets Increase (decrease) in accrued expenses and other liabilities

Net cash provided by operating activities

Cash flows from investing activities Loans made, net of principal collected Purchase of investments available for sale Proceeds from maturity or call of investments available for sale Purchase of investments held to maturity Proceeds from maturity or call of investments held to maturity Net (increase) decrease in certificates of deposit Purchase of property and equipment Proceeds from disposition of property and equipment Increase in NCUSIF fund

Net cash applied to investing activities

Cash flows from financing activities Increase in members’ share accounts

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

867,494

245,976 591,500 71,859

1,232,903(311)

(2,017,848)2,017,848 (531,024)351,245

2,127,152

1,913,207(9,301,620) 4,000,000

(38,739,843)23,002,7951,672,000(382,921)

1,000(152,939)

(17,988,321)

16,389,045

527,876

18,814,597

19,342,473

$

$

$

$

These condensed financial statements do not constitute a complete presentation. The complete set of audited financial statements,including the notes to the financial statements, are available at the Credit Union office during normal hours of operation.

2012 2011

Share SavingsHoliday, Personal, and Vacation ClubsPremier Money MarketIRA SavingsShare CertificatesIRA Share CertificatesYouth Accounts

Looney Tunes SavingsTeen Checking

Special Baby Account –Starter & Gift

MEMBER SERVICESS

avin

gs

Pro

du

cts

Loan Products/Services

Specialty LoansHome CashAuto CashEducation/ComputerPersonal/Preferred Credit Share SecuredRecreational VehicleVacation, Holiday, and more

New and Used Vehicle Loans

Auto-Related Services:UBS – United Buying ServiceMVCP – Motor Vehicle Certification ProgramOne Stop Autos – Credit Union auto loans

taken at dealer showroomsEnterprise Car SalesGAP (Guaranteed Auto Protection)Mechanical Breakdown Protection

Home Equity Loans – Variable rate and Fixed rate options with “no closing costs”

Mortgage Loans – For the purchase or refinance of a home

Sp

ecia

l S

erv

ices

Additional LendingServicesOn-Line Loan applications Pre-qualification CounselingLoan Payment Calculators Disability and Credit Life Insurance

Savings ATM CardChecking ServicesStatement ExpressOverdraft Protection with line of creditCourtesy Pay protection coverageSmartCash VISA Check CardQuickTeller – Audio Response, On-Line

Account Access, and Bill PaymentMobile BankingCredit Union ATMs – Towson and Perry HallATM Network Affiliations featuring over

40,000 no-surcharge Allpoint ATMsDirect Deposit / Payroll DeductionAutomatic Transfer – payroll deduction for

our non-county government members

ACH – Automated Clearing House –electronic transfer of funds for example:payrolls, mortgage payments, insurance premiums

Money OrdersNotary PublicPostage StampsVISA Gift CardsCU Succeed Teen NetworkCoin Counting MachineDiscounted Movie PassesDiscounted Theme Park TicketsIncome Tax BookletsEducational Literature Scholarship ProgramSpecial Events

Convenience Services

VISA Platinum Credit Card with CU Rewards and no annual fee

$250,000

WWW.BCEFCU.COM

23 W. Susquehanna AvenueTowson, Maryland 21204

8640 Ridgely’s Choice DriveBaltimore, Maryland 21236

410-828-47301-800-234-4730

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