2019 ANNUAL REPORT

WE’LL BE THERE FOR YOUA·M·O·C·O

WHO WE AREA Member Owned Cooperative Organization

OUR VISIONA Billion Points of Service

OUR MISSIONTo Serve the Financial Needs of Our Members

OUR CORE VALUESRespect, Integrity, Service, and Excellence

ANNUAL MEETING82ND

• Ascertainment that a Quorum is present

• Reading and approval or correction of the “Minutes” from the last meeting

• Chairman’s Report

• President’s Report

• Treasurer’s Report

• Supervisory Committee Report

• Unfinished Business

• New Business Other Than Elections

• Elections

• Adjournment

• Mr. Shawn Bailey, President/CEO, called the meeting to order on February 19, 2019, at 5:25 p.m. at the Doyle Convention Center, Texas City, Texas. A quorum was declared with more than 15 members present (estimated attendance 400).

• Mrs. Tina Foster called on Mr. Andre Parker to lead the invocation and pledge of allegiance.

• Mr. Bailey introduced the Board of Directors, Supervisory Committee, Nominating/Governance Committee, Executive Team, and other special guests.

• Mr. Bailey recognized the Rookie of the Year, Jermaine Brown; Employee of the Year, Jessica Powers; and the Manager of the Year, Claudia Maldonado.

• Mr. Bailey recognized the Volunteer of the Year, Josh Chapman.

• Mr. Bailey announced that the Santa Fe Branch was named after and dedicated to Director Roger McCrary for his 33 years of service to the credit union as well as, a scholarship was established in his honor.

• Mr. Bailey recognized the Member of the Year, Jimmy Fullen; and the SEG(s) of the Year, Santa Fe ISD & Santa Fe TX Education Foundation.

• Mr. Bailey presented his state of the credit union address.

• Mr. Bailey asked for a motion from the floor to dismiss the reading of minutes and various reports and accept as reported in the Annual Report.

• Moved: Hedy Minter l Second: Ann Lambousy Motion Carried

• Mr. Bailey asked if any unfinished/new business needed to be discussed. None presented.

81ST ANNUAL MEETING MINUTES

CALL TO ORDER

ELECTIONS

• Mr. Bailey reported that the Nominating Committee met in November 2018 and nominated the following members for the 2019 Board of Directors:

• Pat Tinsley - Position #1

• Andre Parker - Position #7

• Mr. Bailey declared Mr. Tinsley and Mr. Parker elected by acclamation.

ADJOURNMENT

• Mr. Bailey adjourned the meeting at 5:50 p.m.

AGENDA

DIGITAL STRATEGYFor many years, our physical branches were the hub for member activity and transactions. While these branches will remain a necessity in the financial industry, the reality is that a majority of members are now accessing the credit union via electronic means (call center, digital banking, automated clearinghouse, indirect lending, internet lending, etc.). Therefore, the credit union needs to ensure these “touchpoints” deliver the level of service that meets the needs of our members and differentiates us from the competition; hence why the digital strategy was introduced by the board in 2016.

Since the inception of these strategies in 2005, the credit union has tripled in loans outstanding to $700 million from $185 million; doubled deposits to $845 million from $316 million; increased reserves to $86 million from $51 million; and is projected to reach $1 billion in assets by end of 2020. As these numbers demonstrate, I am confident that the board’s strategic initiatives are meeting the credit union’s mission of “serving the financial needs of our members.”

CHAIRMAN’S REPORTThe primary purpose of the credit union’s Board of Directors is to provide general direction and establish strategies designed to ensure credit union success and achievement of long-term objectives. These strategies are developed by adhering to the credit union’s mission and vision while aligning the credit union’s strengths and weaknesses with environmental opportunities and threats. Adhering to this model, the board of directors has established the following key strategies for the credit union:

GROWTH STRATEGYSince 2006, the credit union has focused on growing the credit union in three core areas: loans, deposits, and membership. Growing in these areas should be the true benchmark as to whether or not the credit union is successfully serving the membership. A critical component of this growth strategy was the expansion of the credit union’s physical branch network—one branch to ten branches (seven full- service branches and three micro branches).

L.U.V.E. STRATEGYThe credit union introduced its differentiation strategy in 2010, focusing on building loyalty with our membership and employees; being different or unique from our competitors and their offerings; ensuring everything we do adds value; and making the credit union’s products and services easy to use.

RON MULLENChairman of the Board

3 | CHAIRMAN’S REPORT

$266+ million in new loans

$39+ million in new home loans

5,258 new checking accounts

15+ million debit card transactions

2,400+ credit cards opened

915,000+ credit card transactions

1+ million saved with better rates and lower fees

562,000+ cleared checks

251,000+ calls answered by Call Center

2,391 policies with TruStage Insurance Agency, LLC

934 members served by AMOCO Investment & Retirement Advisor

$8,000 awarded in scholarships

$48,000 provided for internship program

$215,000+ donated to community organizations

$32,700+ donated through Create Change program

2,000+ visitors at AMOCO’s Sneak-A-Peek Night at Galveston County Fair & Rodeo

$35,888 in livestock purchased at auction from local 4-H programs

236 employees

44.5 hours of financial literacy events for youths and adults

560+ Select Employer Groups

2019 AT A GLANCE

BEST CREDIT UNIONThe Daily News Readers’ Choice

LARGE BUSINESS OF THE YEARLeague City Regional Chamber of Commerce

LARGE BUSINESS OF THE YEARTexas City-La Marque Chamber of Commerce

AWARDS

5 | 2019 AT A GLANCE 6

PRESIDENT’S MESSAGE

users converted to our new digital banking provider in just a three-week period

As part of the credit union’s current digital strategy, some significant upgrades/conversions occurred this past year. In response to the acquisition and subsequent “sunsetting” of the credit union’s previous digital banking provider, the credit union converted to a new digital banking platform in 2019. As with any major conversion, there were obstacles and issues to overcome, and still, there are enhancements and features to be introduced. Management appreciated the membership’s patience and understanding as the credit union converted over 40,000 users to this new platform in just a three-week period. Now that the dust has settled, I am confident that the membership will find this new platform to be superior to the credit union’s previous offering.

In addition to the digital banking conversion, the credit union also upgraded its digital loan and account opening platform. Both proved to be a faster and more accessible channel, as demonstrated by the credit union completing more loan business for

40,000+

our members through this channel than any physical branch. The credit union also added a third-party provider to assist with call overflow service, and will be making enhancements to the Call Center platform to better serve our members via phone services in 2020.

While not as visible but arguably the most valuable enhancement the credit union made this past year, was to its Information Systems & Technology infrastructure. From storage, servers, network, routers, switches, software, and endpoints, the credit union completely upgraded the foundation that all of its systems run upon, which improved the credit union’s speed, reliability, and security.

In closing, the biggest investment made this past year was with you, our members, with the introduction of the credit union’s Member Loyalty Program. In the first year, the Member Loyalty Program returned over $1 million to the membership in the form of bonus dividends and loyalty discounts.

On behalf of the management and staff of the credit union, I thank the board for its strategic direction and thank the membership for your confidence and trust in allowing the credit union to manage your financial affairs.

SHAWN BAILEYPresident/CEO

7 | PRESIDENT’S MESSAGE

CREATING CHANGEIN OUR COMMUNITYAMOCO proudly supported the following organizations through our Create Change program in 2019:

Alvin Community College Foundation

Alvin ISD Education Foundation

Alvin Noon Lions Club

Alvin-Manvel Area Chamber of Commerce

Anchor Point

Animal Alliance of Galveston County

Bay Area Habitat for Humanity

Bay Area Houston Ballet & Theatre

Bay Area Pet Adoptions

Bay Area Turning Point Inc.

Butler Longhorn Museum

CCISD Special Education PTA

Christian Renewal Center

Clear Creek ISD Education Foundation

Clear Lake Area Chamber of Commerce

Clear Lake Regional Center on behalf of March of Dimes

College of the Mainland Foundation

Communities In Schools-Bay Area

Communities In Schools TX Joint Venture

Community Association for Nassau Bay Enhancement

Devereux Texas

Dickinson ISD Education Foundation

Edgar A. Smith Family YMCA

Family Promise of Clear Lake

Family Service Center of Galveston County

Friendswood Chamber of Commerce

Galveston County Fair & Rodeo

Galveston County Food Bank

Galveston ISD Education Foundation

Galveston Island Humane Society

Galveston Regional Chamber of Commerce

Gloria Dei Lutheran Church

Good Shepherd Episcopal Church

Greater St. Matthews Baptist Church

Gulf Coast Big Brothers Big Sisters, Inc.

Hitchcock Chamber of Commerce

Hitchcock ISD Education Foundation

Hitchcock Little League

Hope Village

Houston Methodist Hospital

Houston Methodist St. John

Interfaith Caring Ministries

League City Chamber of Commerce

Lighthouse Christian Ministries

M.I. Lewis Social Service Center

CREATING CHANGE IN OUR COMMUNITY | 10

Marathon Galveston-Bay Refinery United

Mark Kilroy Foundation

Methodist Retirement Community

Our Lady of the Lourdes Catholic Church

Perry Family YMCA

Rachel’s Challenge

S.A.V.E. Rescue Coalition

Sacred Heart of Jesus Catholic Community

Santa Fe Chamber of Commerce

Santa Fe Education Foundation

Second Chance Pets

Space City Cruisers

St. John the Baptist Catholic Church

St. Mary of the Miraculous Medal Church

St. Vincent De Paul

Texas City ISD Foundation for the Future

Texas City-La Marque Chamber of Commerce

Texas EquuSearch

The Friends of Freeman Memorial Library

The Independence Village

Thelma Ley Anderson Family YMCA

United Way Galveston County Mainland

United Way of Galveston

University of Houston - Clear Lake Bayou Theater

Vic Coppinger Family YMCA

West Galveston County Interfaith Caring Ministries

Workplace Campaign

The credit union’s financial performance is the benchmark for evaluating the credit union’s success in achieving its mission, “to serve the financial needs of our members.” As treasurer of your credit union, I am pleased to report on the credit union’s financial performance for 2019.

The credit union surpassed $700 million in total loans outstanding in 2019. To achieve this milestone, the credit union funded over $300 million in loans which led to loan growth of over $50 million this past year. The credit union had its best year in history for growth in real estate funding and credit card balances. In accordance with the growth in loans and to protect against future loan losses, the credit union maintained its allowance for loan losses to over $7 million.

The credit union also surpassed $800 million in deposits in 2019 and had its second-best year in history for deposit growth at almost $68 million. A majority of this growth came in certificates, as the credit union introduced jumbo certificates and the Member Loyalty Program. Combined, the credit union paid almost $8 million in interest to members in 2019; in spite of the low-interest rate environment.

TREASURER’S REPORT

in total assets in 2019$982 MILLION

Collectively, the credit union’s total assets increased by a record $100 million to $982 million in 2019.

The credit union recorded back-to-back years of $6 million-plus in income, generating $6.8 million in 2018 and $6.3 million in 2019. With this record net income, the credit union also surpassed another significant financial milestone of $85 million in total reserves. These reserves have been built up over the past 82 years by adhering to prudent management principles.

Again, the most important story behind the credit union’s financial success is that the credit union is serving the financial needs of more members than at any point in its history. In 2019, the credit union grew by over 1,700 members and reached 86,536 total members.

On behalf of the board of directors, I want to thank you, my fellow members, for making it all possible.

86,536

$700+MILLION

MEMBERS

IN TOTAL LOANS

IN TOTAL DEPOSITS

$800+MILLION

J.R. NORMANTreasurer of the Board

11 | TREASURER’S REPORT

ASSETS

DEPOSITS MEMBERS

LOANS

646,999,341

797,376,545

777,727,527

480,025,452

500,180,039

611,455,626

651,755,288

700,351,136

761,484,410

2019

2019

2018

2018

2017

2017

2016

2016

2015

2015

817,024,757

910,630,631

881,974,788

982,421,250

698,335,878

77,212

79,134

83,348

84,795

86,536 845,807,210

GROWTHOVER THE YEARS

EMPLOYEES CELEBRATED

MILESTONES

30 YEARSMelissa Davenport (Retired)Kathy Warnell

25 YEARSDebbie Castaneda

15 YEARSNathan AshworthJoanna Knape

10 YEARSPaul LaddBrittany McKinneyMegan SeayKrystle Ulhaq

5 YEARSLyndsey BlockSharon GaspardJuan GonzalesJohn HermanChristina JamesShelby PlylerReginal PrattAbigail RansomMalia SifuentesMichelle Walker

MEMBER OF THE YEARGilbert Gustafson

SELECT PARTNER OF THE YEARA&A Machine & Fabrication, LLC

VOLUNTEER OF THE YEARHedy Minter

NEW EMPLOYEE OF THE YEARHaley Adams

EMPLOYEE OF THE YEARJustin Batson

MANAGER OF THE YEARDarby McDermott

AWARD WINNERS

13 | GROWTH OVER THE YEARS MILESTONES | 14

2018$33,762,379164,746,246644,888,077

24,162,03414,416,052

$881,974,788

$778,060,4930

19,771,0467,785,589

13,525,36119,000,00047,805,940(3,973,641)

$881,974,788

Assets Cash and Cash equivalents Investments Loans to members, net Fixed Assets Other AssetsTotal Assets

Liabilities Shares Dividends Payable Accounts Payable Other Liabilities

Equity Regular Reserves Other Reserves Undivided Earnings Unrealized Gain/(Loss)Total Liabilities & Equity

2019$44,418,562206,133,851

692,687,04323,450,22915,731,565

$982,421,250

$845,807,2100

40,529,19510,088,839

13,525,36119,000,00054,110,957

(640,312)$982,421,250

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

Income Interest on loans to members Interest on investments & cash equivalents OtherTotal Income

Operating Expenses Employee Compensation & Benefits Operations General & AdministrativeTotal Operating Expenses

Provisions, Dividends, and Refunds Provision for Loan Losses Cost of Funds Bonus Dividend Interest RefundTotal

NET INCOME BEFORE

NON-OPERATING GAINS/(LOSSES)

NET INCOME AFTER

2018$28,315,675

4,361,28716,917,048

$49,594,010

$14,726,2854,832,112

10,296,988$29,855,385

$7,820,0004,898,234

154,2360

$12,872,470

$6,866,155

$(66,751)

$6,799,404

2019$32,309,257

5,397,79817,139,661

$54,846,716

$16,176,3414,938,153

12,514,078$33,628,572

$7,065,0007,992,522

00

$15,057,522

$6,160,622

$144,395

$6,305,017

CONSOLIDATED STATEMENTS OF INCOMEAS OF DECEMBER 31, 2019 & 2018AS OF DECEMBER 31, 2019 & 2018

15 | STATEMENTS OF FINANCIAL CONDITION STATEMENTS OF INCOME | 16

I would like to thank the membership for entrusting me and my fellow committee members with this responsibility.

The Supervisory Committee is comprised of volunteers from the membership and is appointed by the Board of Directors to independently function as the members’ “watchdog.” The most important responsibilities of the Supervisory Committee are to ensure that the credit union’s financial statements accurately depict the credit union’s financial condition, and that management’s policies and procedures protect the members’ assets.

To fulfill our responsibilities, the committee retained the Cornerstone Credit Union League to perform audits on a monthly basis throughout 2019 and an independent certified public accounting firm, CliftonLarsonAllen, LLP, to conduct the annual opinion audit and member verification audit. The National Credit Union Administration also performed an annual federal examination of the credit union.

On behalf of the Supervisory Committee, I am proud to report the credit union’s financial position is fairly and accurately represented in its financial statements in conformity with generally accepted accounting principles.

In addition to reviewing the credit union’s audits and examination, the Committee also attends board meetings, reviews board materials, and monitors credit union operations throughout the year to ensure that members’ assets remain secure and protected.

SUPERVISORY

CONRAD & TAMMIE C.

INTERESTED IN SHARING YOUR STORY?

COMMITTEE REPORT

AMOCO is the credit union of your choice if you want to build a lifelong relationship that rewards your loyalty. AMOCO always has the members’ best interest at heart.

MEMBERS SINCE 1987

MEMBERS OF THE MONTHNOVEMBER 2019

We love hearing how we’ve helped our members! If you’d like to share your experience, contact us at socialmedia@amocofcu.org and you could be featured as our next Member of the Month!

“

”

HEDY MINTERSupervisory Committee Chairman

17 | SUPERVISORY COMMITTEE REPORT

EMPOWERING

Ashley Carner, our Chief Operations Officer, is heavily involved in the community, as she is on the Santa Fe Economic Development Corporation Board and Houston Methodist’s Women’s Advisory Group. Plus, she volunteers and is a foster for S.A.V.E. Rescue Coalition.

In addition to her role as our Chief Administration Officer, Gail Figueroa serves on the Texas City-La Marque Chamber of Commerce Board of Directors as well as their Executive Committee.

Recognized as one of the 40 Under 40 Honorees in Galveston County by The Daily News in 2019, Jeremy Silva, our Chief Financial Officer, also serves on the Cornerstone Credit Union Foundation Grants Committee and is one of their Ambassador Committee Members. He is on the United Way Allocations Committee as well.

ASHLEY CARNER

GAIL FIGUEROA

JEREMY SILVA

STACEY MALBROUGHIn addition to her role as Culture & Communications Manager, Stacey Malbrough mentored a student through Communities in Schools-Bay Area and graduated from the Clear Lake Area Chamber of Commerce leadership class in 2019.

SHAWN BAILEYOur president/CEO, Shawn

Bailey, was awarded the Business

Professional of the Year at the

League City Regional Chamber

of Commerce Annual Gala. In

addition, he was sworn in as the

Chairman of the Board of the

Clear Lake Area Chamber of

Commerce. He also serves on the

United Way Galveston County

Mainland Board of Directors.

OUR COMMUNITY

19 | EMPOWERING OUR COMMUNITY 20

CHET RICH | Board Position #2Mr. Rich has been a member for 28 years and currently serves as a Director of the Board. After 38 years employed with the Texas City Police Department, he is now retired and resides in Texas City, TX.

BOARD OF DIRECTORS NOMINEES

ROGER MCCRARY | Board Position #4Mr. McCrary has been a member for 44 years and currently serves as Vice Chairman of the Board. After 32 years employed at Amoco/BP, he is now retired and resides in Santa Fe, TX with his wife, Dianne.

RUBEN TORRES | Board Position #6Mr. Torres has been a member for 38 years and currently serves as a Director of the Board. After 32 years employed at Amoco/BP, he is now retired and resides in League City, TX with his wife, Rachel.

In accordance with AMOCO Federal Credit Union’s by-laws for board elections, there will be no nominations from the floor for any board position open for re-election unless insufficient nominations have been made by the Nominating Committee and/or a Nomination by Petition(s) has been received.

For the 2019-2020 board elections, the Chairman of the Board appointed the following members to serve as the Nominating Committee:

2020

2020

BOARD ELECTIONS

Mr. Josh Chapman, Chairman

Mrs. Stacy Cortez

Mr. Craig Mason

The Nominating Committee has selected one applicant for each open position on the Board of Directors, and the credit union received no Nominations by Petition. Therefore, the Chairman can declare each nominee elected by general consent or acclamation.

BOARD OF DIRECTORS

SUPERVISORY COMMITTEE

GOVERNANCE COMMITTEE

Ron MullenChairman

Hedy MinterChairman

Josh ChapmanChairman

Chet RichDirector

Roger D. McCraryVice Chairman

Chris DeVriesMember

Stacy CortezMember

Ruben TorresDirector

J.R. NormanTreasurer

Sonny TholckenMember

Craig MasonMember

Tim BulotHonorary Director

Emeritus

Andre ParkerSecretary

Bob F. Steel (Deceased)Honorary Director

Emeritus

Pat TinsleyDirector

21 | BOARD ELECTIONS & BOARD OF DIRECTORS NOMINEES

Federally insured by NCUA.