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Serving and Protecting Your Financial Future

Serving and Protecting Your Financial Future

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Assets $142,455,953 $165,559,156 ($23,103,203) (13.95%)

Shares $123,905,419 $121,067,618 $2,837,801 2.34%

Equity $17,951,883 $18,578,116 ($626,233) (3.37%)

Loans $47,228,087 $47,909,413 ($681,326) (1.42%)

Number of Members 11,551 11,470 81 0.71%

MMaaiinn OOffffiiccee1537 Young Street, 3rd Floor

Honolulu, Hawaii 96826Phone: (808) 973–4311

Toll-Free Phone: (866) 351-4311Fax: (808) 949–0556

Hours: Monday – Friday, 7:30 a.m. to 4:00 p.m.

KKaappoolleeii BBrraanncchh889 Kamokila Blvd.

Kapolei, Hawaii 96707Hours: Monday – Friday, 9:00 a.m. to 6:00 p.m.

Saturday, 8:00 a.m. to 2:00 p.m.

BBrraanncchh OOffffiicceeMain Police Station

Hours: Monday, Wednesday, Friday: 9:00 a.m. to 1:00 p.m.

(also open on City & County paydays and on the work day following a holiday)

The Hawaii Law Enforcement Federal Credit Union is entrusted with creating financial stability and long-term wealth for its ohana by offering competitive services and products that are delivered with aloha in a

timely, confidential and professional manner.

CCEEOO’’ss RReeppoorrttLast year proved to be a challenging and exciting year filledwith changes meant to benefit all members. Throughout 2010,our credit union added a myriad of products and services toenhance members’ credit union experience. The year beganwith the establishment of a Member Care Team that assistsmembers with transactions, requests, and to resolve problems over the phone. In addition, eStatements and Mobile Banking also became available.

As the year progressed, our credit union became mindful ofour members’ financial difficulties due to furloughs. The creditunion offered special loan programs to assist members withthis reduction in work hours. In addition, the credit union hadthe honor of assisting with Civilian Appreciation Days heldthroughout the year at the Honolulu Police Department.

Summer quickly turned the corner, and several new productsbecame available. Boat Loans, Solar Energy Loans, GuaranteedAsset Protection (GAP) Insurance and Vehicle Extended Warranties joined the credit union’s host of products.

As the year came to an end, the credit union added 8 ATMmachines at police stations around Oahu and Kauai. Finally,we opened our new Pearl City Police Station and KapoleiBranches, which also extended the credit union’s hours of operations to Saturdays.

Upon review of last year’s progress, I realized that all of thiscould not have been possible without the hard work of staff,committee members and the Board of Directors. We have beenblessed with a great team that is dedicated to serve the needsof a great membership. Thank you all for your commitment!

This year, we will continue to seek ways to help your lives bemore prosperous, worry-free, and have the credit union bemore available to you. We will remain committed to beinggood stewards for your hard-earned money. And, we will continue to sustain our sound financial performance, withsafety and soundness in mind.

We are grateful for your loyalty and trust. Thank you!

With great respect and aloha,

Rene Matsuura,President and Chief Executive Officer

CChhaaiirrppeerrssoonn’’ss RReeppoorrttWe, the Board of Directors, are committed to the relevancyand sustainability of Hawaii Law Enforcement Federal CreditUnion for its membership. The changes and enhancementsrolled out in 2010 are a testament to the business plan we developed through comments of the membership. We haveadded another day of business by opening on Saturdays, installed automated teller machines at various police stations,opened several branch locations for your convenience and

developed a call center to better serve you. We have also added ahost of products, services and technological advancements (eStatements, GAP Insurance, extended warranty insurance, boatloans, solar energy loans, mobile banking and extended hours) toenhance our offerings to you. We are continually building a strongteam of dedicated individuals that are committed to our credit unionmembership.

One of many goals is the growth of our credit union and we recognizethat financial stability continues to be the forefront of our success. Although 2010 proved to be financially challenging, we havecontinued to maintain a strong capital ratio of 12.88%, which exceedsthe 7% ratio mandated by the National Credit Union Administration.As stewards of your hard-earned money, we will strive to maintain astrong and viable credit union for future generations to come.

In closing, I would like to thank my fellow Board Members, membersof the Credit and Supervisory Committees, and the dedicated stafffor their support and assistance during the past year. Finally, to ourmembers, we appreciate your confidence, trust, and loyalty and willcontinue to work diligently to be your financial institution of choice.

We are “Serving and Protecting Your Financial Future.”

Aloha and Malama Pono,

Delbert Tatsuyama, Chairperson of the BoardRussell Ikeda, Vice ChairpersonDerrick Tsukayama, SecretaryFrank Fujii, TreasurerRobert Kane, DirectorRobert Aton, DirectorMark Nakagawa, Director

SSuuppeerrvviissoorryy CCoommmmiitttteeee RReeppoorrttAs members of Hawaii Law Enforcement Federal Credit Union’s Supervisory Committee, our job is to oversee all aspects of the creditunion, to determine whether it is soundly managed and to ensurethat members’ assets are safeguarded. To fulfill this function, wemonitor and evaluate the quality of the credit union’s finances andoperations. In order to accomplish these tasks, the Committee obtained the services of CU Pacific Audit Solutions, Inc. to provide adetailed audit of the credit union’s financial records and operations.In addition, the Committee continuously reviews the credit union forcompliance of internal controls, policies and procedures.

We are pleased to report that your credit union is financially sound!Our comprehensive audit verified sound accounting and operationalpractices. We are proud to once again receive a five-star rating,which is the highest rating a credit union can receive, from BauerFinancial. BauerFinancial is a leading independent bank,credit union and thrift rating agency.

Please be assured that we take our jobs very seriously. It is anhonor and privilege to be a part this great organization. Thank youto the Board of Directors, Credit Committee and staff for their continued support in our efforts to serve you.

Nathan Matsuoka, ChairpersonAllan Lewis, MemberLloyd Josey, Jr., MemberCary Okimoto, Member

CCrreeddiitt CCoommmmiitttteeee RReeppoorrttCredit unions were created to provide members with loans at a reasonable cost, and that concept has not changed at Hawaii LawEnforcement Federal Credit Union. The credit union continues toprovide loans to its members at lower than market rates. In fact, wecontinue to provide rates that are not based on a credit score, butrates that are set across the board. What you see is what you get!

We faced many challenges in 2010 as loan demands decreased anddelinquencies increased due to the economy. As a result, the creditunion’s loan portfolio decreased slightly by 1.4%, with our loan portfolioending at $47.2 million. Additional funding of Allowance for Loan andLease Losses was required due to the increase in delinquencies.However, our delinquency ratio remained relatively low, compared toothers in the industry.

As the economy improves, we expect demand for loans to increaseand we will continue to do our best to provide you with competitiveloan rates and products. We stand committed to our membership andwill continue to assist all our members through furlough assistanceloans, workout plans, and financial guidance.

Thank you for entrusting us with your financial needs.

Roy Helepololei, Chairman

TTrreeaassuurreerr’’ss RReeppoorrttIn 2010, the financial performance of the Hawaii Law EnforcementFederal Credit Union was impacted by the struggling economy asinvestment yields declined along with decreased loan demands. Aswas the case for credit unions nationwide, our credit union was required to pay assessments to the National Credit Union Administration Share Insurance Fund and the Corporate CreditUnion Stabilization Fund, and fund our reserve for loan losses,which resulted in a net loss in income for 2010. Despite the netloss, our credit union continues to maintain a very strong capital position with over $17.9 million in equity and has continued to payour members dividends that are overall better than market rates.

As we move forward in 2011, please be assured that we will remainvigilant in maintaining a strong and viable credit union. We will continue to monitor the lingering effects of the economic recessionand take necessary steps to ensure the long-term success of yourcredit union.

Thank you to everyone for your faith in the credit union. I appreciatethe opportunity to serve you as your Treasurer and wish everyonegood health and financial success in 2011!

Frank Fujii, Treasurer

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OOppeerraattiinngg IInnccoommee

Interest On Loans $2,668,412 $2,729,826 Interest On Investments $2,006,749 $2,783,844Fees And Charges $110,541 $126,689Misc. Operating Income $416,100 $329,534

TToottaall OOppeerraattiinngg IInnccoommee $$55,,220011,,880022 $$55,,996699,,889933

OOppeerraattiinngg EExxppeennsseess

Compensation $1,158,620 $843,122Employee Benefits $405,481 $344,179Travel And Conferences $50,222 $71,896Association Dues $32,744 $39,969Office Occupancy $210,155 $162,896Office Operating Expenses $275,790 $279,784Education And Promotion $130,013 $94,086Loan Servicing $217,900 $217,918Professional/Outside Services $918,359 $860,428Provision For Loan Loss $659,176 $205,840Member Insurance $390,205 ($43,759)Federal Examination Fees $33,047 $30,424CUSIP Interest On Borrowed Money $20,394 $86,319Annual Meeting $51,033 $43,236Miscellaneous $90,974 $80,094

TToottaall OOppeerraattiinngg EExxppeennsseess $$44,,664444,,111155 $$33,,331166,,443311

Income/(Loss) From Operations $557,687 $2,653,462

Gain/(Loss) On Investments $1,100 $0Gain/Loss On Disposal Of Assets ($13) ($53)Non-Operating Income $0 $713,768Dividends Expense $1,185,008 $1,685,451

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