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F I RS

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N I T Y CR E U DI M M T O

CELEBRATING 65 YEARS

2019 ANNUAL REPORT

N IV E R S A RY

Sugar Land Weekly Winner

CELEBRATING 65 YEARS F I RS

Technip Weekly Winner

N I T Y CR E U DI M M T O

Alief Weekly Winner

FOUNDED IN 1954

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Bunker Hill Weekly Winner

Copperfield Weekly Winner

Sienna Plantation Weekly Winner

N IV E R S A RY

Alief Pop-up

Since 1954, we’ve been committed to the philosophy of “people-helping-people.” We have grown exponentially over the years since we first started as Spring Branch Educators Credit Union. Today, over 130,000 members have made a decision to bank with First Community Credit Union!

Aliana Weekly Winner

Barker Cypress Weekly Winner

TABLE OF CONTENTS Chairman’s Report and CEO’s Message

Credit Committee Report and Audit Committee Report

Statement of Financial Condition

Comparative Operating Statement

Financial Growth and Distribution of Loans

Lending and Commercial Services

Technology 12 Community and Texans

14 –15

Board of Directors and Executive Management

Credit Union Management

Wealth Advisors

N I T Y CR E DI

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MU M O

12 –13

Branch Operations

First Community Credit Union is dedicated to providing the members of the community sound financial services in a personal, professional manner. The credit union is committed to the philosophy of “people-helping-people.”

2–3

F I RS

MISSION STATEMENT

Celebrating 65 Years

N IV E R S A RY

First Community Credit Union’s membership increased to 133,785 members while assets grew by 8.28% ending the year at $1.54 Billion. Our gross loans grew 5.53% due to aggressive rates that provided affordable loans to assist our members. The breakdown of our loan portfolio can be found on page 10 of this report. To celebrate our 65 th anniversary, our board of directors and employees focused on our members, the most important asset at FCCU. While visiting a branch or on the phone with our Call Center, we surprised randomly selected members with a gift of $500; which brought many to tears and some paid it forward giving it to a family member. 28 members were awarded $500 for a total of $14,000 People-helping-people is not just a slogan but a way of life at FCCU. Community service remained a large focus during 2019. Our management and staff gave back to the communities we serve by packing lunches for children, supporting the American Heart Association with a heart walk team, the National Multiple Sclerosis Society by having a team ride in the MS 150 and we provided numerous local high schools with financial literacy materials equipping our future generations with the guidance to develop successful habits in life. In addition, we have donated over $100,000 to schools, charities and community organizations and continued our tradition of awarding scholarships to deserving students entering college.

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The Board is committed to supporting our community while ensuring our members’ deposits are used wisely. We are honored to serve our fellow credit union members and we look forward to continuing to make a First-Rate difference in our members’ lives in 2020.

Doug Wilcher

Chairman of the Board

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At First Community Credit Union, we celebrated our 65 th anniversary in 2019. We are proud that we have served our members and communities since 1954. We don’t just acknowledge the number of years in business; we celebrate the thousands of members who trust us with their finances, who we have had the pleasure of assisting in achieving their financial goals. Whether a new baby joined the family, a teenager needed their first car, a family moved to their forever home, a business grew beyond their dreams or members needed a place to begin investing for their future, FCCU was here to share in our member’s joy and guide them on the right path to financial success. Our central focus remains on you, our members. Without you, we would not have achieved 65 years of success. With our members at the forefront of our thoughts, we continue to provide a better banking experience, whether online or in-branch. In an ever-changing financial landscape, we remain focused on staying up-to-date with new technology that improves day-to-day banking functions, providing added convenience and efficiency to give you valuable time back in your day. First Community implemented multiple enhancements for our members. We upgraded our debit and credit card processor, improved our overdraft privilege program, reducing member fees, deployed our FCCU Card Manager app, introduced a robust real estate management platform, expanded communication to include text messaging and remodeled multiple branches with increased technology. FCCU constantly strives to ensure we are meeting our members where they are. Protecting members’ finances is a responsibility we take seriously. We introduced our FCCU Card Manager app allowing members the ability to control their FCCU cards the way they choose. A plethora of alert options, as well as, purchase controls, the ability to turn a card on/off as needed and setting travel notices right at their fingertips, provided added confidence that their cards were safe. In 2019, First Community experienced continued growth to $1.54 Billion in assets for an 8.28% increase over 2018. Exceptional teamwork from our board of directors, management team and staff yielded positive results for our members. Looking ahead to 2020, First Community will continue to be committed to our members and will expand our footprint in the Houston Community. Thank you to our members for trusting First Community with your finances for the last 65 years and know we will be here for years to come to serve you, our Ron Downing members/owners.

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On behalf of the Board of First Community Credit Union, we thank our members for placing their trust and confidence in us for 65 years. 2019 was a strong year with tremendous growth achieved through great leadership at the credit union, all the while, keeping members top of mind.

A MESSAGE FROM THE CEO

President/CEO

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CREDIT COMMITTEE REPORT

Our Credit Committee’s core responsibility is reviewing the credit union’s lending policies and practices. In 2019, the credit union experienced a net growth of 5.53% in our lending portfolio as rates remained very competitive across all loan types. Our loan officers reviewed 54,154 applications for auto loans, credit cards, personal loans and real estate loans. FCCU funded $446.39 million and closed 2019 with a loan portfolio of $1,159.4 Billion. Offering competitive rates, as well as, fast, efficient service, we assisted

our members in achieving their goals. Expanding the types of real estate loan programs we offer, 464 members and their families financed their home with FCCU. We encourage our members to reach out to FCCU for all of their loan needs. Members reap the rewards of some of the best rates in the market, our complete online application and closing process as well as peace of mind. First Community is a trusted source and partner in our member’s financial success, as well as in life.

Arlie Beckendorf Chairman, Credit Committee

AUDIT COMMITTEE REPORT

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Based on an in-depth independent audit of the operations of First Community Credit Union, the CPA firm of OCM & Co., CPAs and Advisors: A Doeren Mayhew Firm concluded that, in their opinion, the financial position of FCCU, the operations and cash flow for the year ending December 31, 2019, conforms with generally accepted accounting principles and practices.

As a state chartered credit union, FCCU has additional reviews of our lending and accounting practices by the Credit Union Department of the State of Texas and by Federal Examiners with the National Credit Union Administration (NCUA). Texas State Examiners and NCUA Examiners, in their annual audit, found First Community Credit Union sound in both policy and practice.

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A REPORT FROM THE CHAIRMAN

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Sally Moseley Chairman, Audit Committee

STATEMENT OF FINANCIAL CONDITION

COMPARATIVE OPERATING STATEMENT 2019

2018

$48,671,672 6,305,124

$44,977,340 5,559,805

TOTAL INTEREST INCOME

54,976,796

50,537,145

Interest Expense Members’ Share and Savings Accounts

11,968,779

8,131,088

43,008,017

42,406,057

6,268,000

4,235,000

$36,740,017

$38,171,057

21,446,012 5,339,652

20,959,075 5,375,415

26,785,664

26,334,490

Non-Interest Expense Compensation and Benefits Office Operating Costs

25,736,207 21,663,377

24,230,101 20,374,852

Education and Promotion

3,528,106

3,029,440

50,927,690

47,634,393

$12,597,991

$16,871,154

Interest Income Interest on Loans to Members Interest on Investments and Cash Equivalents

NET INTEREST INCOME Provisions for Loan Losses

ASSETS Cash

2019 $70,175,756

LIABILITIES AND 2018 MEMBERS’ EQUITY $105,088,204

Investment Available for Sale Held to Maturity Other Investments Loans to Members, net

Loans Other Receivables Prepaid and Other Assets Property and Equipment NCUSIF Deposit

TOTAL ASSETS

2018

$1,362,676,395

$ 1,257,156,666

246,338,351

161,975,612

Accounts Payable

3,715,645

7,372,929

Accrued Liabilities

25,679,434

25,473,019

1,719,100

1,698,400

1,156,455,701

1,097,449,391

TOTAL LIABILITIES

$1,392,071,474 $1,290,002,614

Members’ Equity Regular Reserves

723,923

483,699

3,490,785

3,076,092

Undivided Earnings

6,238,973

5,470,572

Appropriated Undivided Earnings

10,086,594

8,424,400

Accumulated Other Comprehensive

33,833,077

28,208,880

12,316,756

11,596,144

$1,541,379,016 $1,423,471,394

NET-INTEREST INCOME AFTER PROVISIONS FOR LOAN LOSSES

Liabilities Members’ Share Accounts

Accrued Interest Receivable Investments

2019

Gain/Loss

TOTAL MEMBERS’ EQUITY TOTAL LIABILITY AND MEMBERS’ EQUITY

13,213,020

135,588,348

122,990,357

506,174

(2,734,597)

$149,307,542

$133,468,780

$1,541,379,016 $1,423,471,394

Non-Interest Income Fees and Service Charges Other Non-interest Income

TOTAL NON-INTEREST INCOME

TOTAL NON-INTEREST EXPENSE NET INCOME

FINANCIAL GROWTH

DISTRIBUTION OF LOANS

ASSETS 2015 2016 2017 2018 2019

AUTO

USED 27.44%

NEW 18.70%

$1.151 B $1.249 B $1.357 B $1.424 B $1.541 B

REAL ESTATE 25.07%

46.14%

25.07%

10.49% 14.62%

GROSS LOANS 2015 2016 2017 2018 2019

$799 M $910 M $1.054 B $1.099 B $1.159 B

OTHER 3.68% COMMERCIAL 14.62%

BELOW IS THE END OF YEAR BREAKDOWN OF OUR PORTFOLIO BY LOAN TYPE:

MEMBERSHIP 2015 2016 2017 2018 2019

UNSECURED 10.49%

109,294 115,415 125,229 129,190 133,785

CREDIT CARD LOANS

$ 66,640,305

AUTO LOANS

$ 494,878,504

AUTO LEASES

$ 40,091,956

REAL ESTATE LOANS

$ 290,608,422

OTHER LOANS

$ 97,640,691

COMMERCIAL LOANS $ 169,532,349

LENDING SOLUTIONS FCCU is a trusted resource for thousands of members when they are in need of a loan to reach a goal or milestone in their life. 2019 was no different; we provided countless auto loans to empower our members to make the moves they needed. 464 families looked to us when it was time to find their forever home and put down roots. Numerous members were able to provide gifts at the holidays or work towards being debt free through a personal loan. Many businesses embarked on an unforgettable journey to expand their business with the help of First Community Credit Union. We are proud to be a trusted resource for our members to lean on when they are in need of a loan or advice. When it comes to a member’s largest investment, their home, we equipped members with a platform to access documents, make payments or request tax documents, all from one central location, putting the power in our member’s hands. With this in mind, our new robust real estate account management platform was introduced to real estate members in 2019. At First Community, it is important to us that we assist our members from start to finish with a loan. We provide numerous research tools and calculators to crunch numbers for determining if the loan fits into their budget. When applying, we make it easy and digital! We understand that time is money. With our seamless online application process, you will have a loan in no time after signing loan documents right from your digital device so you can get back to life.

COMMERCIAL LENDING AND TREASURY SERVICES Owning a business is not always an easy task but it is a rewarding accomplishment. With a solid financial partner like First Community in your corner, we are part of your business and we will help you discover the right solution to help your business grow and thrive. Over 3,000 businesses have put their trust in FCCU. We aren’t just your “bank,” we are a part of your team. Taking the time to learn about your business, in order to determine the right products and services that best benefit the future of your company, is the first step our commercial experts take. Commercial Lending includes financing for retail or owner occupied space, investment property, equipment needs and more. In 2019, our commercial lending portfolio increased by 6.30%, from $159.48 to $169.53 million dollars. Our treasury experts will help you navigate the roadmap of business banking to provide solutions that allow you to focus on what’s important, running your business. Our complete suite of business services includes checking and savings accounts, business credit card, Treasury Services including Sweep Transfers, to maximize your savings, Merchant Services, ACH payroll and payments and a dedicated commercial online banking platform. FCCU has the right tools to support the daily operations side of the business. FCCU is proud to be a trusted resource and partner for business owners in the Houston communities.

If you have a future goal, whether a new car, home or to expand and grow a business, FCCU is proud to be a partner in making our members goals attainable.

REAL ESTATE

BRANCH OPERATIONS

TECHNOLOGY LEVERAGING TECHNOLOGY TO SIMPLIFY LIFE. NEW PROGRAMS INCLUDE:

Card Swap allows members to update most automated payments, like Netflix that are set up to pay from your FCCU debit or credit card conveniently within Online Banking. When you receive a renewal card, simply enter your updated card information one time and you’re done!

Biller Direct is a convenient tool that allows members to set up their bills to pay from one central location, Online Banking, rather than logging into multiple sites. Plus, members are sure to not miss any payments.

Cybersecurity – Cyber criminals are always on the hunt to steal your information. While everyone is susceptible to experiencing fraud at some point in life, at FCCU, we take it personally. Educating members on how to be savvy when surfing the web or how to spot a spam call, when one is received, helps save members from falling victim to a cyber-crime.

FCCU constantly looks for enhancements to elevate our Mobile Banking App and we implemented several features for improved usability in 2019.

In a world that continues to become more and more digital every day, we understand that banking is no different. Technology is the number one driver of the majority of things we touch in our daily lives. Have you ever left your phone at home? If you are like me, you turned around to head back for your lifeline.

Incorporating the right technology and improving the tools available to enhance the banking experience with added convenience and efficiency is of utmost importance. While technology enhances our lives, the human touch remains alive and well.

We completed the remodeling of our Spring Branch office to provide specialized areas for our members to work with a Real Estate expert or a Wealth Advisor with added privacy. We added personal video teller units in the drive thru to provide extended hours for added convenience.

We revamped our Overdraft Privilege program in order to continue assisting our members when they fall on the wrong side of zero in their checking account. With the revamp of this program, fees were minimized to save members money. Plus, no fee is charged on transactions of $5 or less.

We remodeled our Barker Cypress, Fairfield and Sugar Land branches, providing extended hours and increasing efficiency for members to conduct transactions quicker through the use of personal video tellers.

Online Wires were announced allowing members to initiate a wire through Online Banking as needed, saving members valuable time.

FCCU upgraded our debit and credit card processing system allowing transactions to clear our members’ accounts instantly or within 1-2 business days.

In August, we broke ground on a second tower at our Copperfield Branch. We have taken steps to expand our footprint across the Greater Houston area with two new branches set to open in 2020-21.

FCCU Card Manager is a new mobile app that empowers members to take control of their FCCU debit and credit cards by monitoring all activity. Our new app provides added security, such as the ability to turn a card on/off as needed to prevent fraudulent use if lost/stolen, setting transaction alerts, travel notices and more. 262,608 members were assisted by our Call Center during normal business hours. We recognize the importance of meeting our members’ needs when it is convenient for our members and not just during business hours. With this in mind, we introduced a 24/7/365 Call Center providing support for our members whenever they need it. Our personal video tellers are similar to FaceTime and allows you to interact with a live teller when needed. You may also select to do an ATM transaction without any assistance for a safe and fast visit to the branch. In addition, members enjoy extended hours when utilizing a personal video teller. 1,561,698 teller transactions were processed for our members in 2019. Plus, 161,384 Mobile Deposits were processed totaling $113,020,985.

Flexibility is important for our members to make their loan payments the way they choose. Our Call Center processed 19,920 loan payments made with a debit or credit card from another financial institution. Text has quickly become the number one preferred method of communication. To accommodate this, we have implemented a text feature for members to text us if they prefer to communicate through this channel. eBranch continued to provide a 100% electronic experience, including texting, when opening an account or obtaining a loan.

No matter your preference, in-branch or online, FCCU has the right option for you to conduct your banking your way. First Community is here with you – our members. We look forward to bringing more convenience to our members in 2020 with new features to continue to make banking simpler.

Red Nose Day

Kid’s Meals

At First Community Credit Union, we are highly invested in our communities. Supporting local organizations or raising funds and participating in volunteer events are just a few ways FCCU gives back. Celebrating our 65th anniversary this year meant celebrating our members in a big way! We awarded 28 members, who were randomly selected, to WIN $500 as a thank you for their business. Members were appreciative of the gift we provided and many were overjoyed.

MS 150 AHA Heart Walk

FCCU IN YOUR COMMUNITY

Savings Challenge Winner

BIG Game Winner

First Community was founded by teachers and staff from Spring Branch ISD and, today, they remain near and dear to our hearts. To honor educators, we work with the Houston Texans and other community groups to benefit Houston teachers and schools. For the ninth year, FCCU partnered with the Houston Texans, as the Official Credit Union of the Houston Texans, to honor and celebrate ten teachers that go above and beyond in their classroom. Over 350 nominations were received from students highlighting the many ways their teacher is making a difference. Houston Texans Linebacker, Brennan Scarlett (#57), surprised each of the winning teachers in their classroom and FCCU donated $500 back to the winning teacher’s school district for a total of $5,000 going back to schools in

our communities. The Stars in the Classroom program will continue in 2020 and will begin accepting nominations in the fall. TORO visited 50 schools with the TORO Shoots for the STAAR program, that is sponsored by FCCU, to provide test-taking tips for students to prepare for the challenge of the STAAR test so they can ace this test! Annually, we host a food drive, raise funds to support Children’s Miracle Network, sponsor national charities, such as the American Heart Association and National MS Society, as well as partner with the Houston Fire Department for an over-the-top toy drive. We’re not stopping there though. We award scholarships to graduating high school seniors, train teens and adults in financial fitness and support schools, chambers and local charities through financial and in-kind donations totaling over $100,000. All of this means your money is going back into the community to make a difference. We are excited to continue supporting our communities in even bigger ways in 2020.

Stars in the Classroom

Scholarship Winners

HFD Toy Drive

Food Drive

12 Days of Christmas Winner

BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT

SENIOR MANAGEMENT Tricia Smith Jennifer Kilgore Katie Rigby Jon Hartman Randal Ward Velsie Borja Arthur Gordon

Douglas Wilcher

Rob Hauck

Sally Moseley

Chairman

Vice Chairman

Treasurer

Secretary

Term Expires: March 2020

Term Expires: March 2021

Term Expires: March 2020

Accounting Development & Project Management Human Resources Information Technology Lending Operations Operations

Arlie Beckendorf

VICE PRESIDENTS Robert Schumacher

Julie Eisenhauer

Director

Marty Miracle Director

Term Expires: March 2022

Term Expires: March 2021

Term Expires: March 2022

Ron Downing

Keith Domingue

Rito Garza

TJ Tijerina

Don Mozingo

Nancy Trennel

President and Chief Executive Officer

Chief Financial Officer

Chief Information Officer

Chief Operations Officer

Chief Lending Officer

Chief Marketing Officer

Mark Palomo Larry Pugh Mark Vinson Larry Hook Mike McGee Jill Vinson John Littler Steve Gregg Darrell Storrs Robbie Henegar Jesse Rocha Amber Magee Stephen Martin Jody Kohlmaier George Cheairs Karon McMahan Sabrina Atkinson

Asset Recovery Call Center Card Services Commercial Lending Commercial Lending Consumer Lending Cost Accounting Enterprise Risk Management Facilities & Construction Management Fraud Management Indirect Lending Marketing Network & Infrastructure Product Management Real Estate Special Services Staff Development

BRANCH VICE PRESIDENTS Denise Farnon DeAndre Massey Juan Alatorre Daniel Fernandez Chris Gagne Diego Daza Joy Stuart Julie Scott Juan Alatorre Alex Samoilov

Aliana Alief Barker Cypress Bunker Hill Champions Cinco Ranch Copperfield eBranch Fairfield ITMs

Taylor Borja Eric Vasquez Denise Farnon Kim Lemex Matthew Staton Lana Huff Jamie Drohan Kelly Fay Lauren Hlavaty

Katy Market Sam Houston Sienna Plantation Spring Branch Spring Market Sugar Land Technip Tomball The Woodlands

First Community

Wealth Advisors At First Community, we make available Wealth Advisors as a resource for our members’ investment and insurance needs. Whether you have specific financial questions or want to get serious about planning and saving, our Wealth Advisors are here to listen, understand your goals and work together to find the right financial path for you. Your visit and planning sessions are complimentary. It’s never too early to start planning for retirement, college tuition for your children or to protect your family with life insurance. Retirement Planning

Annuities

Asset Allocation

Stocks, Bonds, Trusts

Mutual Funds

Life, Disability or Long-Term Care Insurance

College Funding | 529 Plans

Our investment team is ready to meet with you to lay out your personal financial roadmap. They are ready to match your unique situation with strategies that will help reach your goals. Brian is a Certified Financial Planner® and Jodie is a Financial Advisor who can provide you with sound financial advice. To schedule a complimentary consultation, call 281.856.5644.

Brian Turpen, CFP®

VP of Wealth Management

Jodie Smith

Financial Advisor

*Wealth Advisors supported by CUNA Brokerage Systems (CBSI) and these funds are separate from those deposits that are held by First Community Credit Union.*Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/ dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., Is a registered broker/dealer in all fifty states of the United States of America. The CFP® certification marks are not affiliated with CUNA Brokerage Services, Inc. FR-298936S.1-0320-0422

VISION STATEMENT “Every member will recommend First Community Credit Union to their family and friends.”

MAKING A FIRST-RATE FINANCIAL DIFFERENCE IN OUR MEMBERSâ€™ LIVES