63rd

Annual Meeting

2014 Annual Report February 27, 2015

Houston, Texas

63rd

Annual Meeting

February 27, 2015

6:00 p.m. Social Hour

6:30 p.m.

Dinner

7:15 p.m. Business Meeting

Marriott Houston Westchase Hotel

Rose Garden Room 2900 Briarpark Drive

Houston, Texas 77042

Agenda

I. Call Meeting to order and ascertain a quorum present

II. Minutes of 2014 Annual Meeting

III. Reports

a) Chairman’s Report b) Treasurer’s Report c) Credit Committee Report d) Audit Committee Report e) Membership Report f) President/CEO’s Report

IV. Old Business

V. New Business

VI. Election of New Directors

a) Nominating Committee Report b) Nominations from the floor

VII. Moment of Silence to remember deceased members

VIII. Door Prizes

IX. Adjournment

Minutes of 2014 Annual Meeting

The 62nd Annual Dinner Meeting of the CTECU-serving employees of Chevron Corporation was held on Friday, February 7, 2014; at the Marriott Houston Westchase Hotel, Houston, Texas. A cocktail hour at 7:00 p.m. and dinner at 7:30 p.m. preceded the Business Meeting which was called to order by Chairman, Michael Beard at 8:35 p.m. Chairman Beard declared a quorum of members present since more than 25 members were in attendance. There were 57 members and 9 guests

among the 66 attendees.

Chairman Beard introduced those Directors in attendance: Mike Jung, Vice-Chairman; Bill Alvarez; Gary Cohen; Glenn Ewan; John Hanten; Jackie Kapalski; and himself as Chairman. Chairman Beard introduced Audit Committee members present: Charlie Hancock; and Pat Whitnel members of Audit Committee. Chairman Beard introduced Credit Committee members present: Wanda Reves, Chairwoman of Credit Committee. Chairman Beard called for a reading of the 2013 Annual Meeting Minutes by Glenn Ewan, Acting Secretary. John Prestwood moved and Gerald Rush

seconded the motion to dispense with the reading of the minutes from last year’s annual meeting. All attendees received a written copy of last year’s

annual meeting minutes with their annual report booklet. Motion passed by unanimous vote.

Chairman Beard gave his Chairman’s report for 2013, written report found in annual report booklet. Chairman Beard asked the audience for any recommendations for additional services or products that they might want to see at CTECU. Chairman Beard called on Gary Cohen to give the Treasurer’s report in Kane Prestwood’s absence, details of which are found in the annual report

booklet.

Chairman Beard called on Wanda Reves to give the Credit Committee report. Complete reports found in the annual meeting booklet.

Chairman Beard called on Charlie Hancock to give the Audit Committee Report for 2013, details of which are found in the annual report booklet.

Chairman Beard reported that the Membership Report could be found in annual report booklet. Chairman Beard called on President/CEO Kapalski to introduce her staff and give her President/CEO’s report. Details of reports are found in annual report booklet. President/CEO Kapalski introduced the Office Staff: Anita Woolley, EVP-CFO; Orelia Clay, EVP-COO; Sara Cantu, Assistant Operations Manager; Kim Barnett, Wilcrest Branch Assistant Manager; Delia Martinez, Downtown Branch Manager; Trinh Nguyen, Accounting Clerk & MSR; Lory Ayala, Member Service Representative; and herself as President/CEO.

Chairman Beard called for Old Business from the floor. There was one item of Old Business from the previous year,

Old Business entailed a call by Chairman Beard from the membership for a vote to change the annual meeting to a Saturday versus a Friday. Chuck

Edwards moved and Charlie Hancock seconded the motion to change the Annual Meeting date from a Friday to a Saturday. Motion carried with 50 for

and 4 against 2 abstained.

Chairman Beard then called for New Business other than Elections. There was none. Chairman Beard then called for New Business involving Election of New Directors to fill a total of three positions on the Board with three expiring 3-year

terms.

Chairman Beard called upon Wanda Reves to give the Nominating Committee report. Mike Beard, Gary Cohen, and Kane Prestwood have expiring 3-

year terms this year and all have agreed to rerun for their positions. The Nominating Committee recommends the following candidates for the three 3-

year terms expiring February 2014: Mike Beard, Gary Cohen, and Kane Prestwood. There are some vacancies on the committees that will be appointed

at the organizational meeting.

Nominations from the floor were requested three times. Reid Carter made the motion and Chuck Edwards seconded the motion to close the

nominations and the nominees be elected by acclamation. Motion carried unanimously.

Chairman Beard called for a moment of silence to remember deceased members.

Chairman Beard requested, President Kapalski to assist him in presenting EVP/CFO Anita Woolley with a $100 gift card to Ruth’s Chris Steakhouse

commemorating her 10 years with CTECU and 23 years in the industry.

Business being finished, Chairman Beard requested President Kapalski to assist with the Door Prize drawings.

John Hanten moved and Jessica Gonzalez seconded the motion to adjourn the meeting. Motion carried. The meeting adjourned at 9:20 p.m.

Michael Beard Glenn Ewan

Chairman Acting Secretary

Reports

Chairman’s Message It gives me great pleasure to welcome you to the 63

rd annual meeting of CTECU. I appreciate you taking the time

to attend tonight’s meeting. It’s an honor to be working for you, the members of CTECU. I would like to thank my fellow board members, credit committee members, and audit committee members for their dedicated service and commitment to making CTECU a great credit union. I would also like to thank Jackie Kapalski and the CTECU Staff for the great services they provide to our members. These are the people who have contributed greatly to the success of CTECU.

Some of the highlights for CTECU in fiscal year 2013-14 are:

The Net Worth/Asset Ratio increased to 10.55% December 31, 2014 from 9.81% December 31, 2013.

Due to the outdated Core Processor computer system, we upgraded CTECU’s Core Processor computer system to serve the members more effectively.

You, the members and owners of this institution, borrowed $4,344,677, adding 122 new loans.

Whether you were a new home buyer or renovating your home, I'm thrilled that you turned to CTECU for your mortgage needs. In fiscal year 2013-2014, CTECU wrote 6 home loans, worth $666,713.

Favorable interest rates and a strengthening economy motivated many of you to buy new vehicles. In fiscal year 2013-2014, CTECU wrote 72 auto loans totaling $1,820,086.

The median delinquency ratio in CTECU is now .01%, which tells me you're staying on top of your debt obligations.

Your ongoing participation in CTECU means that we will remain in a strong financial position to continue meeting your financial needs. I think you all recognize that as not-for-profit cooperatives, credit unions are different than banks. Though we have to make a profit to keep the doors open, we don't have shareholders waiting with their hands out—there are no shareholders. When we can, we distribute those profits back to you.

By exercising sound business and service strategies, we can help you navigate your life-cycle challenges, weather these uncertain economic periods, and recognize the true benefits of your membership. We hope and plan for a bright future for us all, and in reaching for the stars, we want to look at new and better ways of defining and redefining our success as we grow and learn and change.

For instance . . .

We want to offer more and better resources that allow us to focus more attention on our members using the most efficient and safe use of technology available;

We want to grow our community impact through basic interest payouts, financial capability programs, payment deferral during community emergencies, and working with members facing the challenges of the life phase they might be in;

We want to target particular segments of our community where we can make the greatest impact—for example, helping with financial literacy and account management for our members who are most vulnerable, such as pre-high school children, young adults, retirees, and our elderly;

As members focus more on use and less on ownership, we will consider how our credit union can responsibly finance life activities, such as education, small businesses, and transportation; and

We want to be a knowledge hub that places the credit union at the center of our members' financial lives by allowing them to trade peer advice and insights about budgeting, buying, retiring, and saving.

As a financial cooperative, we understand that we can most effectively serve you and strengthen the credit union movement by working through local, regional, national, and even international structures. That is why we seek to

be involved in our local chapter of credit unions, taking advantage of the training, tools, and resources available through our trade association, the Cornerstone Credit Union League.

We are very supportive of Cornerstone's advocacy efforts because we understand the impact legislation has on our ability to serve your financial needs. Unfortunately, tax reform is not yet off the table, and as federal legislators consider tax reform in 2015, we want to reiterate that a federal tax on your credit union is equivalent to a tax on you. Against a massive banking lobby doing its best to convince our lawmakers that the credit union tax exemption puts them at an unfair disadvantage—since they only hold about 92 percent of the financial services market—we will need to remain vigilant in our advocacy efforts.

My friends, with the continued success of CTECU, we can offer a wealth of savings tools and other financial products and services that enhance your life, improve our delivery channels, and expand our outreach in the community and beyond.

In closing, let me express my confidence in the leadership of Jackie Kapalski, the guidance of our esteemed board of directors, the commitment of a dedicated staff, and the support and loyalty of our 1973 members. And let me also assure you that CTECU is well positioned to face any challenge and seize any opportunity that presents itself in 2015.

Thank you ladies and gentlemen, and all the best for the coming year!

Michael Beard

Chairman

Treasurer’s Report During 2014, your credit union received $308,915 in interest on loans, $663,972 in investment income, and

$10,489 in Non-Interest Income which represented Fee Income. This total income of $983,376 represents a decrease of 22.53% percent over the previous year.

Of this income, $946,903 (approximately 96.3 percent) was used to cover operating expenses. Also, $156,577 (approximately 15.9 percent) was used for members' share dividends and deposit account interest. We had a credit adjustment of $7,602 for Provision for Loan Losses (approximately -0.8 percent). We also had $49,381 in other Non-Operating Losses (due to sale of long-term investments due to Regulatory oversight). The remaining net loss of $112,502 (approximately 11.4 percent) was transferred from undivided earnings. CTECU is very sound and strong with a 10.55 percent net worth-to-asset ratio.

CTECU’s assets were $49.7 million at year-end 2014. Dividends were maintained at 0.10 percent stated rate equating to 0.10 Annual Percentage Yield on Regular Shares during the year. IRA Share dividends decreased to 0.15 percent stated rate equating to 0.15 Annual Percentage Yield during the year. To compensate for lower Share and IRA Share dividends, CTECU offers shorter-term certificates of deposit beginning with 3-month certificates of deposit along with Money Market Accounts.

CTECU is in strong financial condition. Your continued support will ensure CTECU’s continued success.

Kane Prestwood Treasurer

Credit Committee Report

During 2014, there were 122 regular loans made for a total of $4,344,677. Loans outstanding increased by 5.95 percent from $8,023,548 on December 31, 2013 to $8,500,852 on December 31, 2014. This increase was mainly due to very competitive rates on vehicle and home loans in a low-rate environment. CTECU made over $666,713 in first mortgage and Home Equity in-house loans during 2014 via our alliance with Credit Union Members Mortgage and Morton Baird, Attorney-at-Law for Home Equity loan underwriting. CTECU has partnered with several vendors such as Credit Union Members Mortgage, Morton Baird Law Firm, and Vantiv/Town North Bank for MasterCard and MasterCard Gold, Auto Exam, Dealer Select, etc. We look forward to assisting you with all your loan needs, whether it is a personal loan, MasterCard, vehicle loan, vehicle warranty, vehicle GAP insurance, home loan, Home Equity loan or vacation home loan.

Audit Committee Report The Audit Committee consisting of six members appointed by the Board of Directors is charged with conducting

an annual audit of CTECU's records and submitting a summary to the Board of Directors at the annual meeting. The 2014 Audit Committee members were Charlie Hancock, Committee Chairman; Joan Kelly; Sharon Savage; Mary Thompson; David Whiteside; and Pat Whitnel. The Audit Committee verified that all cash accounts were reconciled with the bank statements and all loans were reviewed for proper execution and for supporting documentation. The Audit Committee reviewed 106 loans and found no exceptions during their quarterly loan audits. We have determined that the Credit Union is in compliance with the appropriate regulations and accounting practices. In 2014, the Audit Committee was assisted by outside auditor, Lois Rothrock, CPA & Consultant/Owner of CU-Consulting. She verified the existence of all assets and liabilities of the Credit Union. We have determined that the credit union is in compliance with the appropriate regulations and accounting practices.

Charlie Hancock

Audit Committee Chairman

A required annual review of the credit union’s books and records was conducted during January 2015. It involves testing and reviewing of transactions as recorded in CTECU's records for 2014. In addition, various forms of verifications of account balances and transactions were performed. The review will be finalized in February 2015 and a report submitted to the Audit/Supervisory Committee Chairman and Board of Directors. There are no material findings to date in the credit union's financial records. CTECU also appears to conduct business based on sound business practices and to be in compliance with the regulatory requirements of the Texas Credit Union Department and the National Credit Union Administration. The annual review is being conducted by Lois Rothrock with CU-Consulting. She is a CPA with 20 years of credit union experience. CU-Consulting has performed the following additional services for CTECU during 2014:

Four cash audit counts at various times in 2014 on a surprise basis

A verification of member accounts was performed as of September 30, 2014

An Annual Compliance Review was performed in October 2014

Lois Rothrock, Consultant CU-Consulting

Membership Report

During 2014, our membership decreased from 2,009 to 1,973; a little more than 1.8 percent decrease or 36 members less than the previous year. The CTECU field of membership includes CTECU employees; employees of Chevron Energy Technology Company nationwide; employees of any subsidiary of Chevron Corporation and any affiliates, divisions, or subsidiaries located within Texas; employees of Chevron Phillips Chemical Company paid out of The Woodlands, Texas; retirees of any one of the organizations/companies as well as family members of the above mentioned employees; any business or organization included within this field of membership; as well as groups of employees or members of companies or associations which are located within a ten mile radius of this credit union’s main office or any additional office of this credit union. We invite you to sign up your coworkers as well as your immediate family members.

President/CEO’s Message Good evening and welcome. On behalf of the management and staff of CTECU, I want to say what a pleasure it is to be here with all of you. Because of your trust and involvement, your credit union is able to thrive and provide so many important benefits, not only to our members but to our community.

Allow me a few minutes to introduce our office team, the CTECU Staff: Orelia Clay, EVP/COO; Anita Woolley, EVP/CFO; Sara Cantu, Operations Manager/Loan Officer; Kim Barnett, Assistant Branch Manager-Wilcrest; Delia Martinez, Downtown Branch Manager; Maribel Amaya and Donte Green, Member Service Representatives.

As a financial cooperative, our success is your success. When you participate in the credit union, you are contributing to its growth. And because of our cooperative structure, we are able to return our profits back to you, the owners and members, by offering competitive rates, new products, enhanced services, and additional points of service.

Now, it is my privilege to provide a state of our credit union address at this 2015 annual meeting.

Let me begin by saying that 2014 was a significant year, not just for our credit union but also for our state and the nation. In addition to the headline-grabbing midterm elections, the credit union movement weathered another round of banker attacks on our credit union tax exemption, cyber security became an even higher-profile matter, and regulatory issues like risk-based capital continued to be hot-button topics that demanded we devote some of our time and resources to advocating with our lawmakers on behalf of credit unions.

I am pleased that as loan demand has grown 5.95 percent, delinquencies remain low at 0.01 percent. This tells me that you value the competitive rates we are able to offer and that you have a strong commitment to honoring your financial obligations with your credit union.

Just as you are committed to CTECU, we are committed to you, and the following are but a few highlights from 2014 that demonstrate this:

Expanded our marketing of Mobile banking for “tech” savvy members,

Enhanced online services with an upgrade of our Core Data Processor;

Reduced personnel to focus more resources towards online experiences for members.

I'm delighted to point out that CTECU is a well-capitalized financial institution, with a strong capital ratio of 10.55 percent. To put that in perspective, 7 percent is the industry standard.

Our 2014 results illustrate that CTECU is a strong, sustainable, and efficient financial institution. Indeed, we are confident in our ability to meet all of your financial services’ needs. But we are far more than an institution that offers financial products and services.

Here are but a few differentiators that make CTECU special:

We have a real presence in this Chevron community. In 2014:

o We hosted Youth Week celebrations in April;

o We continued to offer low-rate Home Equity Loans at below market rates;

o We participated in Chevron’s Houston Health Fairs in October;

o We hosted International Credit Union week activities in October;

o We continued to offer lower rate New and Late model vehicle loans at 1.59% APR for up to 80 percent financing with up to 72 months repayment.

We have a team of talented professionals who report to work every single day with one objective: to help you meet your financial goals. Our accomplishments would not have been possible without the heartfelt commitment and unified effort of our dedicated credit union staff, volunteers, board of directors, and committees. I want to recognize Orelia Clay, EVP/COO who graduated from the SCMS’s 3-year Strategic Management Program. As your President/CEO, I completed the Certified CU Financial Counselor in November. And Sara Cantu, Operations Manager will be completing her Certified Financial Counselor certification in March of 2015. Their passion is truly inspiring, and I am continuously moved by their steadfast desire to serve the credit union movement. I thank them for their continuous commitment and I thank you, our member, for having the confidence in these individuals who help drive the success of your credit union.

We also have a highly capable volunteer board of directors who share their expertise and knowledge to guide this organization toward continued success. In 2014, our board of directors completed a total of 108 training hours, and I think that illustrates their strong desire to ensure they are a highly skilled and educated governing body.

And, we have a unique business model that empowers every single member to have a voice. One member, one vote.

As we grow, we will keep our focus on doing what’s right. Locally, we will continue to provide better services and more convenience for our members. We will seek to help more people in our community get on solid ground through financial education and our charitable activities. Nationally and on the state level, we will remain vigilant in making sure our elected officials know that a tax on credit unions is a tax on all of our members; and we must be sure they understand the credit union difference.

Through it all, we will continue to focus on people first. It’s what makes your credit union different, and what makes us strong.

As we embark on the year ahead, my commitment to you today is that CTECU will continue to:

Grow responsibly, while listening and responding to your needs;

Explore innovative product/service solutions to enhance your financial life, such as Remote Deposit Capture and provide access to an on-site Certified Financial Planner; and

Develop our staff and board so they can confidently serve you.

Many thanks for being an integral part of our credit union family. On behalf of the entire staff, we look forward to a

happy and successful 2015 for us all.

Jackie Kapalski, SCMS, CCUFC

President/CEO

Year End Analysis

2014 Total Income

Dollars Percent of Total

Loan Interest Income

$ 308,915 31.4% Investment Income

$ 663,972 67.5%

Other Non-Operating Income $ 10,489 1.1% Miscellaneous Income

$ - 0%

Total

$ 983,376 100.0%

Total Expenses

Dollars Percent of Total Operating Expenses *

$ 946,903 96.3%

Provision for Loan Losses Exp. $ (7,602) -0.8%

Dividends & Interest Paid

$ 156,577 15.9% Reserve Transfers

$ - 0%

Net Income before ONOG(L) $ (112,502) -11.4%

Other Non-Operating Gain (Loss)** $ (49,381) -5.1% Net Income (Loss)

$ (161,883) -16.5%

(Transferred from Und. Earnings) Total

$ 983,376 100.0%

* excludes Provision for Loan Losses credit of $7,602.

** includes Discount/Cost from sale of Certificates of Deposits, included in Net Income.

Total Member Deposit

Dollars Percent of Total Share Accounts

$ 19,644,679 44.3%

IRA Accounts

$ 1,636,884 3.7% Share Drafts (checking)

$ 3,552,583 8.0%

Money Market Shares

$ 6,696,195 15.1% Certificates of Deposit

$ 12,797,635 28.9%

Total

$ 44,327,976 100.0%

Statement of Financial Condition

Assets

2014 2013 2012 Loans to Members

$ 8,500,852 $ 8,023,548 $ 6,818,682

Less: Allow for Ln Ls

$ 23,094 $ 30,643 $ 23,501 Investments

$ 40,957,616 $ 46,853,174 $ 49,872,602

Fixed Assets

$ 11,304 $ 4,913 $ 9,784 Other Assets

$ 267,234 $ 215,267 $ 265,809

Total Assets

$ 49,713,912 $ 55,066,259 $ 56,943,376

Liabilities & Equity

2014 2013 2012 Payables

$ 143,276 $ 93,981 $ 133,450

Shares

$ 19,644,679 $ 19,687,419 $ 19,443,705 Share Draft (checking)

$ 3,552,583 $ 3,181,676 $ 3,042,634

Money Market Shares

$ 6,696,195 $ 7,744,778 $ 7,389,689 Certificates of Deposit (Reg. & IRA) $ 12,797,635 $ 17,084,229 $ 18,969,799 IRA Accounts

$ 1,636,884 $ 1,869,632 $ 2,683,996

Regular Reserves

$ 610,516 $ 610,516 $ 610,516 Undivided Earnings

$ 4,632,144 $ 4,794,028 $ 4,669,587

Total Liabilities &Equity $ 49,713,912 $ 55,066,259 $ 56,943,376

Investment Income 67.50%

Non-Operating Income 1.10%

Loan Interest Income 31.40%

Operating Expenses 96.30%

Dividends and Interest Paid

15.90%

Other Non-Operating Income (Expense)

-5.10%

Net Income (loss) Transferred from

Undivided Earnings -11.40%

Provision for Loan Losses -0.80%

Shares 44.30%

Share Draft Accounts 8.00%

IRA Accounts 3.70%

Money Market Shares 15.10%

Certificate of Deposit 28.90%

Year End Analysis - 2014

Officials and Staff

- Board of Directors - (Term Expiration)

Chairman Michael Beard (2017)

Vice-Chairman

Mike Jung (2015) Treasurer

Kane Prestwood (2017) Secretary

Johnny Van Etta (2016) Directors

Bill Alvarez (2016) ● Gary Cohen (2017) ● Glenn Ewan (2015) John Hanten (2016) ● Jackie Kapalski (2015)

- Audit Committee - Chairman

Charlie Hancock Secretary

Pat Whitnel Joan Kelly ● Sharon Savage

Mary Thompson ● David Whiteside

- Office Staff - President/CEO

Jackie Kapalski EVP-CFO

Anita Woolley EVP-COO

Orelia Clay Operations Manager/Loan Officer

Sara Cantu Assistant Branch Manager – Wilcrest Location

Kim Barnett Branch Manager – Downtown Location

Delia Martinez Member Service Representatives

Maribel Amaya Donte Green

Locations and Hours of Operation

CTECU – Serving Employees of Chevron Corporation 4800 Fournace Place, BOB Room #E133 3100 Wilcrest, Suite 141 (Wilcrest Branch) Bellaire, Texas 77401 (Restricted Access Site) (713)532-7570 Fax: (713)532-7578 (713)432-0038 Fax: (713)432-0737 P.O. Box 430 1415 Louisiana, Suite 100 (Downtown Branch) Bellaire, Texas 77402-0430 (713)650-3400 Fax: (713)650-3401 Toll Free: 1-888-658-2328 Email: mail@ctecu.org

- Office Hours - Monday through Friday 8:00 a.m. until 4:00 p.m.

Wilcrest & Downtown Branches closed for lunches 1:00 p.m.-1:30 p.m. Closed on Chevron Corporation holidays.

- Website - www.ctecu.org

Mission Statement

To offer members exceptional service, competitive interest rates, and sound financial management.

CTECU Vendors

CTECU would like to send a special thank you to all the vendors who contributed door prizes for our 63rd Annual Meeting:

AGBS Texas, Inc.

American Share Insurance (ASI)

Auto Exam

Catalyst Corporate FCU

Community Trust Bank

CU-Consulting/Lois Rothrock, CPA

Credit Union Employment Resources, Inc.

Davis & Davis Business Equipment

Dealer Select

Decision Dynamics, Inc.

FiStaff

For Members Only Insurance Services

Harland Clarke

Ideascope, Inc.

Larry Plaxe, SVP with Wells Fargo Advisors

Marriott Houston Westchase Hotel

Neis Insurance Agency for Travelers Companies

OfficeMax

Symitar

Total/1 Services

Vantiv

Wedge Tower

World Wide Interactive Services

Established 1952

Federally insured by NCUA