ANNUAL REPORT 2008w w w.oefcu.org

Our Mission Statement

Your Credit Union exists to provide economical and beneficial services, which specifically address the needs of our members and their families. Financial services should be provided in an atmosphere of understandingwith proper consideration given to safety, efficiency and the continuing need to enhance the strength of our financial structure.

Credit Union Management

Leon Lanfri - President/Chief Executive Officer (seated middle)clockwise from middle:Joanna Boedecker - VP of Information TechnologyJeffrey Hampton - Chief Financial OfficerCarol Rosas - VP of Member ServicesMichael Donohue - Executive Vice PresidentRonald Poff - VP of Business DevelopmentCyndi Guerzon - VP of Marketing & Education

Board of Directors

Board of Directors - O�cers

Dan Reding Jim Sullivan Carl Go�Bradley Parres Luther Slack Michael Brandt IIITim Lassiter Stanley Green Gus McClain James Spain Jim Graham Michael Johnson Andrew Lagosh Michael Sierra Dylan GallagherRichard Valentine Glenn Smith

Supervisory Committee & Credit Committee

Mariano Gonzalez - Chairman Stephen Bentivoglio - Secretary Ken Oku - Committee Member Joe Vieira - Committee Member

Supervisory Committee

Russ BurnsBoard Chairman

Fred HerschbachVice Chairman

Credit Committee

Andrea Brooks Kim Sandelin Judy Allen

Message from the Supervisory Committee

The 2008 review of the Credit Union’s �nancial records conducted by Turner, Warren, Hwang & Conrad, Certi�ed Public Accountants resulted in an excellent audit. Upon completion of the audit it was determined that the books and records accurately re�ect the healthy �nancial condition of the Credit Union an are in accordance with generally accepted accounting principles.

In many instances, OEFCU goes above and beyond the requirements of the National Credit Union Administration (NCUA) who oversees the �nancial strengths of credit unions in general. You can rest assured that OEFCU is safe and secure when it comes to handling your �nancial needs.

Respectfully Submitted,Marianno GonzalezChairman Supervisory Committee

Robert L. WiseSecretary/Financial O�cer

Supervisory Committee & Credit Committee

Mariano Gonzalez - Chairman Stephen Bentivoglio - Secretary Ken Oku - Committee Member Joe Vieira - Committee Member

Supervisory Committee

Credit Committee

Andrea Brooks Kim Sandelin Judy Allen

Message from the Supervisory Committee

The 2008 review of the Credit Union’s financial records conducted by Turner, Warren, Hwang & Conrad, Certified Public Accountants resulted in an excellent audit. Upon completion of the audit it was determined that the books and records accurately reflect the healthy financial condition of the Credit Union and are in accordance with generally accepted accounting principles.

In many instances, OEFCU goes above and beyond the requirements of the National Credit Union Administration (NCUA) who oversees the financial strengths of credit unions in general. You can rest assured that OEFCU is safe and secure when it comes to handling your financial needs.

Respectfully Submitted,Mariano GonzalezChairman Supervisory Committee

Chairman’s Message

Having responded swiftly and e�ectively to the changing marketplace brought upon primarily by the turmoil in the mortgage industry, the Credit Union must now turn its focus to the future and prepare for 2009. And although we realize that the coming year will not be “business as usual”, we also know that these are extraordinary times, and recognize that the long-term growth strategy we have been carrying out is still very much the right one, given the environment in which OEFCU–and the industry–will be operating in the years ahead. In light of the challenges we face this coming year, we will continue to look for additional ways to implement that strategy to further enhance the Credit Union’s growth.

For our members who have been a�ected by our troubled economy, and are experiencing �nancial hardship, please be assured that we are committed to working with you to �nd a comfortable solution to your �nancial problems. In 2008, we focused on educating our sta� and members on �nancial literacy and doing all we can to provide a helping hand; we made it a point to provide our members access to �nancial �tness programs and �nancial literacy articles in our newsletters and on our website. This year we will continue to publish articles that will provide our members with helpful information on how to manage debt, how to establish and stick to a budget, and how to avoid a foreclosure. At the same time, we will maintain our menu of a�ord-able, practical services geared to supporting you on your journey to �nancial success.

To express our gratitude for your trusted business, we will continue to enhance our products and services to meet your changing needs. It is an honor and a pleasure to serve you and your families through both good times and bad. The employees, Management, and Board Members are dedicated to providing you dependable products and understanding service that will help you achieve your �nancial goals. Thank you for your business and we look forward to serving you and your family for years to come.

Respectfully Submitted,Russ BurnsChairman of the Board

Chairman’s Message

Having responded swiftly and e�ectively to the changing marketplace brought upon primarily by the turmoil in the mortgage industry, the credit union must now turn its focus to the future and prepare for 2009. And although we realize that the coming year will not be “business as usual”, we also know that these are extraordinary times, and recognize that the long-term growth strategy we have been carrying out is still very much the right one, given the environment in which OEFCU–and the industry–will be operating in the years ahead. In light of the challenges we face this coming year, we will continue to look for additional ways to implement that strategy to further enhance the Credit Union’s growth.

For our members who have been a�ected by our troubled economy, and are experiencing �nancial hardship, please be assured that we are committed to working with you to �nd a comfortable solution to your �nancial problems. In 2008, we focused on educating our sta� and members on �nancial literacy and doing all we can to provide a helping hand; we made it a point to provide our members access to �nancial �tness programs and �nancial literacy articles in our newsletters and on our website. This year we will continue to publish articles that will provide our members with helpful information on how to manage debt, how to establish and stick to a budget, and how to avoid a foreclosure. At the same time, we will maintain our menu of a�ord-able, practical services geared to supporting you on your journey to �nancial success.

To express our gratitude for your trusted business, we will continue to enhance our products and services to meet your changing needs. It is an honor and a pleasure to serve you and your families through both good times and bad. The employees, management, and board members are dedicated to providing you dependable products and understanding service that will help you achieve your �nancial goals. Thank you for your business and we look forward to serving you and your family for years to come.

Respectfully Submitted,Russ BurnsChairman of the Board

CEO’s Message

Supervisory Committee & Credit Committee

As we look back on 2008, the management and sta� of Operating Engineers Local 3 Federal Credit Union shared in the hope that the �nancial industry would move in a positive direction. Unfortunately, the environment we �nd ourselves in today is much worse than a year ago. Although Operating Engineers Local 3 Federal Credit Union remains �nancially strong, we now accompany many other �nancial institutions from various industries in experiencing a world-wide economic slump. We are fortunate, however, that while we hoped for the best, we prepared for the worst.

Although we have experienced a record number of loan losses this past year, our practice of setting aside more than adequate reserves has provided us with the resources to maintain a healthy capital position. However, throughout the year the economic environment continued to put pressure on us and we had to look for creative ways to minimize cost and still remain competitive with our loans and savings rates. We are also sensitive to the fact that this has been a very di�cult year for our members as well. The Credit Union will continue to extend a helping hand to our members experiencing �nancial di�culty, and will work with you to �nd a practical solution to your problems. While hoping for a better year, we are taking all of the necessary steps to prepare for another challenging period. Regardless of what occurs, our goal is to maintain our strong �nancial position for the years ahead. Our success as a union credit union is attributed to the dedication and loyalty of our members and their families, who continue to use our many services.

We thank our knowledgeable and dedicated sta�, members and Board Members for their support during these extraordinary times. With your help and membership I am con�dent that we will continue to lead our industry into the future.

Together we have built a unique and successful organization, and look forward to many more years of growth and success.

Respectfully Submitted,Leon LanfriPresident/CEO

CEO’s Message

As we look back on 2008, the management and sta� of Operating Engineers Local 3 Federal Credit Union shared in the hope that the �nancial industry would move in a positive direction. Unfortunately, the environment we �nd ourselves in today is much worse than a year ago. Although Operating Engineers Local 3 Federal Credit remains �nancially strong, we now accom-pany many other �nancial institutions from various industries in experiencing a worldwide economic slump. We are fortunate, however, that while we hoped for the best, we prepared for the worst.

Although we have experienced a record number of loan losses this past year, our practice of setting aside more than adequate reserves has provided us with the resources to maintain a healthy capital position. However, throughout the year the economic environment continued to put pressure on us and we had to look for creative ways to minimize cost and still remain competitive with our loan and savings rates. We are also sensitive to the fact that this has been a very di�cult year for our members as well. The credit union will continue to extend a helping hand to our members experiencing �nancial di�culty, and will work with you to �nd a practical solution to your problems. While hoping for a better year, we are taking all of the necessary steps to prepare for another challenging period. Regardless of what occurs, our goal is to maintain our strong �nancial position for the years ahead. Our success as a union credit union is attributed to the dedication and loyalty of our members and their families, who continue to use our many services.

We thank our knowledgeable and dedicated sta�, members and Board members for their support during these extraordinary times. With your help and membership I am con�dent that we will continue to lead our industry into the future.

Together we have built a unique and successful organization, and look forward to many more years of growth and success.

Respectfully Submitted,Leon LanfriPresident/CEO

Message from the Financial O�cer

Operating Engineers Local 3 Federal Credit Union remains �nancially secure despite these unstable economic times. It is due in no small part to our members’ loyalty and support through partcipating in our products and services. Although 2008 brought on new challenges, we were able to sustain loan originations of over $73.8 million, with over 4,600 new loans granted to our members. Share deposits by year-end totaled $640.3 million, and our membership is currently 80,324 strong. As a re�ection of our philosophy of “people helping people” we also managed to �nd practical solutions for some of our members who were experiencing �nancial distress and we continue to look for ways to assist our members in whatever capacity needed.

The Credit Union starts this New Year with con�dence and pride; the business decisions made in the past have placed us in a strong position to face any new challenges. Our objective of safeguarding members‘ �nances, as well as member information remains our priority and our focus. As a matter of practice, our pursuit of excellence in member service and products continue despite obstacles we may encounter in the future. And, as your needs change, we too will change, to assist you in your �nancial growth.

Although the Credit Union was not immune to the impact the economic crisis had on the �nancial industry, we remain in a solid �nancial position ready and able to serve you and your families. I want to personally thank you for your membership and your loyalty throughout the years. As I embark on my new journey of retirement I leave with the con�dence knowing the membership is in good hands.

Respectfully Submitted,Robert L. WiseSecretary/Financial O�cer

Message from the Financial O�cer

Operating Engineers Local 3 Federal Credit Union remains �nanciall secure despite these unstable economic times. It is due in no small part to our members’ loyalty and support through partcipating in our products and services. Although 2008 brought on new challenges, we were able to sustain loan originations of over $73.8 million, with over 4,600 new loans granted to our members. Share deposits by year-end totaled $640.3 million, and our membership is currently 80,324 strong. As a re�ection of our philosophy of “people helping people” we also managed to �nd practical solutions for some of our members who were experiencing �nancial distress and we continue to look for ways to assist our members in whatever capacity needed.

The Credit Union starts this New Year with con�dence and pride; the business decisions made in the past have placed us in a strong position to face any new challenges. Our objective of safeguarding members‘ �nances, as well as member information remains our priority and our focus. As a matter of practice, our pursuit of excellence in member service and products continue despite obstacles we may encounter in the future. And, as your needs change, we too will change, to assist you in your �nancial growth.

Although the Credit Union was not immune to the impact the economic crisis had on the �nancial industry, we remain in a solid �nancial position ready and able to serve you and your families. I want to personally thank you for your membership and your loyalty throughout the years. As I embark on my new journey of retirement I leave with the con�dence knowing the membership is in good hands.

Respectfully Submitted,Rob L. WiseSecretary/Financial O�cer

Financial Statementsas of December 31

Net Gain Before Dividends: $ 31,525,060 $ 33,175,311 Dividends: $ (18,241,717) $ (20,664,276)Non-Operating Inc(Exp): $ 279,644 $ 253,734 Net to Reserve & Undiv. Earnings: $ 13,562,987 $ 12,764,769 Financial Highlights Earnings Pd. Mbers Since 1964: $ 380,517,002 $ 362,275,285

Earnings Paid Members in 2008: $ 18,241,717 $ 20,664,276 Number of Loans Issued Since 1964: 268,519 263,145 Loaned Amount Since 1964: $ 3,0345,579,917 $ 2,864,686,696 Number of Member Accounts: 80,324 78,229 Avg. Savings Balance: $ 7,414 $ 7,846 Avg. Loan Balance: $ 13,518 $ 13,514

Number of Loans Granted: 5,374 Amount of Loans Granted: $ 150,893,221 Employee Comp & Bene�ts: $ 11,126,835 Other Expenses: $ 10,417,215 Dividends/Interest: $ 18,241,717 Reserve & Retained Earnings: $ 13,562,987 Assets: $ 831.67 Million Savings: $ 640.30 Million Loans: $ 460.35 Million

Distribution of Loans, Income, and Growth

2008 2007 20072008 Assets Loans to Members: $ 460,345,472 $ 499,990,272 Investments: $ 325,251,160 $ 262,638,294 Cash: $ 22,941,780 $ 31,024,360 Land & Building: $ 22,314,526 $ 23,034,857 Furniture & Equipment: $ 560,340 $ 583,039 Other Assets: $ 261,606 $ 3,804,571Total Assets: $ 831,674,884 $ 821,075,392 Liabilities & Capital Share Accounts: $ 640,299,798 $ 659,193,582 Borrowings: $ 63,147,456 $ 25,000,000 Accts Payable/Liabilities: $ 7,297,950 $ 8,563,893 Regular Reserve: $ 18,012,611 $ 18,012,611 Undivided Earnings: $ 104,184,809 $ 110,804,165 Accum. Gain/Loss on Invest: $ (1,267,740) $ (498,859) Unrealized Gain/Loss on RE Sales: $ - $ - Total Liabilities & Capital: $ 831,674,884 $ 821,075,392 Income & Expense Income Income from Loans: $ 34,741,731 $ 35,000,835 Income from Investments: $ 11,767,524 $ 13,654,613 Other Income: $ 6,249,060 $ 6,150,329 Total Income: $ 52,758,316 $ 54,805,777 Expenses Employee Comp/Bene�ts: $ 11,126,835 $ 10,602,715 Member Insurance: $ 43,868 $ 167,346 Loan Servicing Expense: $ 855,635 $ 923,458 Ed. & Promotional Expense: $ 306,885 $ 328,141 O�ce Occupancy Expense: $ 1,864,141 $ 1,812,217 O�ce Operations Expense: $ 5,332,444 $ 5,650,334 Professional & Outside Services: $ 545,239 $ 458,271 Provision for Investment Loss: $ - $ - Interest on Borrowed Money: $ 681,104 $ 1,298,307 Misc Operating Expense: $ 477,105 $ 389,678 Total Operating Expense: $ 21,233,256 $ 21,630,466

Financial Statements Net Gain Before Dividends: $ 31,525,060 $ 33,175,311 Dividends: $ (18,241,717) $ (20,664,276)Non-Operating Inc(Exp): $ 279,644 $ 253,734 Net to Reserve & Undiv. Earnings: $ 13,562,987 $ 12,764,769 Financial Highlights Earnings Pd. Mbers Since 1964: $ 380,517,002 $ 362,275,285

Earnings Paid Members in 2008: $ 18,241,717 $ 20,664,276 Number of Loans Issued Since 1964: 268,519 263,145 Loaned Amount Since 1964: $ 3,045,579,917 $ 2,894,686,696 Number of Member Accounts: 80,324 78,229 Avg. Savings Balance: $ 7,414 $ 7,846 Avg. Loan Balance: $ 13,518 $ 13,514

Number of Loans Granted: 5,374 Amount of Loans Granted: $ 150,893,221 Employee Comp & Bene�ts: $ 11,126,835 Other Expenses: $ 10,417,215 Dividends/Interest: $ 18,241,717 Reserve & Retained Earnings: $ 13,562,987 Assets: $ 831.67 Million Savings: $ 640.30 Million Loans: $ 460.35 Million

Distribution of Loans, Income, and Growth

2008 2007 20072008 Assets Loans to Members $ 460,345,472 $ 499,990,272 Investments: $ 325,251,160 $ 262,638,294 Cash: $ 22,941,780 $ 31,024,360 Land & Building: $ 22,314,526 $ 23,034,857 Furniture & Equipment: $ 560,340 $ 583,039 Other Assets: $ 261,606 $ 3,804,571Total Assets: $ 831,674,884 $ 821,075,392 Liabilities & Capital Share Accounts: $ 460,345,472 $ 499,990,272 Borrowings $ 63,147,456 $ 25,000,000 Accts Payable/Liabilities: $ 7,297,950 $ 8,563,893 Regular Reserve: $ 18,012,611 $ 18,012,611 Undivided Earnings: $104,184,808 $ 110,804,165 Accum. Gain/Loss on Invest $ (1,267,740) $ (498,859) Unrealized Gain/Loss on RE Sales: $ - $ - Total Liabilities & Capital: $ 831,674,884 $ 821,075,392 Income & Expense Income Income from Loans: $ 34,741,731 $ 35,000,835 Income from Investments: $11,767,524 $ 13,654,613 Other Income: $ 6,249,060 $ 6,150,329 Total Income: $52,758,316 $ 54,805,777 Expenses Employee Comp/Bene�ts: $ 11,126,835 $ 10,602,715 Member Insurance: $ 43,868 $ 167,346 Loan Servicing Expense: $ 855,635 $ 923,458 Ed. & Promotional Expense: $ 306,885 $ 328,141 O�ce Occupancy Expense: $ 1,864,141 $ 1,812,217 O�ce Operations Expense: $ 5,332,444 $ 5,650,334 Professional & Outside Services $ 545,239 $ 458,271 Provision for Investment Loss: $ - $ - Interest on Borrowed Money: $ 681,104 $ 1,298,307 Misc Operating Expense: $ 477,105 $ 389,678 Total Operating Expense: $ 21,233,256 $ 21,630,466