Deposit Growth $37MM+

Member Loans $202 MM

49,468 Members

Annual Report2017

NEIGHBORHOOD CREDIT UNION 88TH ANNUAL MEMBER MEETING

Agenda

I. Welcoming Remarks

II. Meeting Call to Order

III. Appointment of Parliamentarian and Recording Secretary

IV. Introduction of Head Table

V. Ascertain presence of a Quorum

VI. Reading of 87th Annual Meeting Minutes

VII. Chairman’s Report

VIII. President’s Report

IX. New Business

X. Nominating Committee Report / Election

XI. Results of Election

XII. Door Prizes

XIII. Adjournment

Executive Committee Report The Board of Directors is responsible for ensuring the credit union’s established policies and procedures are adhered to and that the credit union’s operations are performed in compliance with state and federal guidelines. Neighborhood Credit Union is a state-chartered credit union insured by the National Credit Union Share Insurance Fund (NCUSIF). Because of this unique structure, our financial operations are examined annually by the Texas Credit Union Department and the National Credit Union Administration (NCUA). Neighborhood Credit Union has a professional internal auditor on staff. Their job is to review, evaluate and make recommendations to strengthen internal controls and to provide oversight of our operations. The credit union received an “unqualified” opinion with regards to the financial statements and results of operations and cash flows certified by the independent public accounting firm Doren Mayhew CPA’s and Advisors. Doren Mayhew’s financial statement audit was as of June 30, 2017, and was conducted in accordance with auditing standards generally accepted in the United States of America. Message from the Chairman All great organizations have supporting pillars that are the foundation of their success. At Neighborhood Credit Union, those pillars are our members, our employees, and the technology that powers the services our members demand. In 2017, we had a another successful year because of the participation of our members, the dedication of our employees, and our continued commitment to technology that provides the best in online and mobile digital services. Your credit union had the following results this past year:

• Membership of 49,468. • Loans originated to our members of over $202 million. • Deposits grew by over $37 million.

In February 2017, we opened a new branch in Highland Village to serve residents and members in Denton County. The branch received a warm welcome and has made great strides in the community over the past year. We migrated to an updated credit card processing platform that will position us to offer new enhancements in the near future. And we merged Good Street Baptist Church FCU, a small-church based credit union, into our credit union family. There will undoubtedly be challenges in 2018, but by working together, we are well poised to address them. Your participation places us in a strong financial position to continue to meet your lending needs, offer innovative savings products, such as Prize Savings and Kasasa, ensure top notch online and mobile services, and contribute to the communities in the twelve neighborhoods that we serve. In conclusion, I want to thank my fellow board members for their passion, commitment, and dedicated service. I am confident that under Chet’s leadership, the guidance of the board

of directors, the commitment of a dedicated staff, and the support and loyalty of our members, that Neighborhood Credit Union will continue to seize every opportunity to build upon our financial success and provide service excellence to our membership in 2018. Message from the President In 2017, the success of our credit union continued. We are stronger today than we’ve ever been – and that is a tribute to the participation in this institution of you, our loyal members. Neighborhood Credit Union has solid brand recognition and is known favorably in the Dallas Fort-Worth market. During 2017, we continued the trend of steady member growth as we expanded our branch network into Denton County and welcomed the field of membership from the Dallas-based Good Street Baptist Church FCU merger. Our focus on being a leader in technology earned us national recognition in 2017 as a top performer in mobile banking. MyNCU Mobile is consistently rated highly in the app stores at a score of 4.5 which is equivalent to big banks such as Chase and Capital One. Neighborhood CU deposits grew over 7.22% in 2017. And, we saw an equal increase in loans of almost 7%. Our revenue continues to be robust ensuring a healthy bottom line that allows us to give more back to you, our members. Over $340,000 was returned back to members in ATM fee reimbursements. We awarded over $125,000 in cash and prizes in 2017 including our annual grand prize of $49,999.99 again this year in January. We paid $4.5 million to you in dividends. Even though interest rates are still low in the market, your Credit Union’s cost of funds - the amount we pay back to you - is approximately twice the rate of other financial institutions. These results were not achieved by chance, but by the design of talented employees and an extremely dedicated board of directors, all focused on taking care of our members. And my commitment to you is that we will continue to provide you with the highest level of service. In closing, I want to express my appreciation to our staff and volunteers. I also want to once again thank you, our members, for your confidence in Neighborhood Credit Union. You are at the center of everything we do. It’s our privilege and our pleasure to serve you.

Statement of Operations 2017 2016

Income Interest on Loans $23,076,424 $20,355,361

Investments 2,093,535 1,950,445 Other Operating income 16,303,385 15,895,426 Total Income $41,473,344 $38,201,232

Expenses Operating Expenses $25,312,112 $25,301,988 Interest Expenses 4,587,059 3,797,314 Provision for Loan Loss 5,460,222 3,437,909 Other Non-Operating (Income) Expenses -193,322 -42,870 Total Expenses 35,166,071 32,494,341 Net Income $6,307,273 $5,706,891

Distribution of Income Dividends Returned to Members $4,587,059 $3,787,209 Transferred to Reserves 6,307,273 5,706,891 Total Distribution $10,894,332 $9,494,100

Balance Sheet

Assets $639,379,631 $596,163,545 Deposits $559,672,384 $521,981,735 Loans $464,866,776 $434,841,611 Members 49,468 48,263

Assets Loans $464,866,776 $434,841,611 Less Allowance for Loan Loss -4,760,767 -4,180,678 Net Loans 460,106,009 430,660,933 Cash 48,337,390 44,178,491 Investments 100,046,150 89,926,496 Fixed Assets 17,694,845 18,824,898 Other Assets 13,195,237 12,572,727 Total Assets $639,379,631 $596,163,545

Liabilities Accounts Payable and Accrued Expenses $9,684,699 $10,386,347

Membership Equity Shares $183,901,204 $191,324,347 Share Drafts 134,722,075 108,574,096 Certificates of Deposit 157,142,227 131,858,868 IRA Deposits 48,214,647 47,092,195 Money Market Deposits 35,692,231 43,132,229 Total Membership Equity $559,672,384 $521,981,735

Reserves Regulatory $9,277,031 $9,277,031 Contingency -146,114 -106,648 Equity Acquired Through Merger 20,282,738 20,323,460 Undivided Earnings and Net Income 40,608,893 34,301,620 Total Reserves $70,022,548 $63,795,463

Total Liabilities, Membership Equity and Reserves $639,379,631 $596,163,545

Director Information Terms Expiring – March 2018 Gerald Townsend, Director Clarissa (Lisa) Salas, Director John Logan, Vice-Chairman Jan Frum, Director Terms or Appointment Expiring – March 2019 Jimmy Slayton, Director Dwain Woodard, Secretary/Treasurer Randall Till, Director Terms Expiring – March 2020 Carolyn Mathis, Director Arthur Young, Director Dwayne Boozer, Chairman Ron Taylor, Director Bylaw Amendments The bylaws were amended in 2017 as follows: Field of membership (FOM) expanded to reflect merger of Good Street Baptist Church Federal Credit Union with Neighborhood Credit Union as the surviving credit union. Executive Changes No executive changes occurred in 2017. New Products and Services Added an Automated Skip-A-Payment Loan service as a feature in Online Banking and MyNCU Mobile in March 2017.