2889 E. MapleTroy, MI 48083(248) 619-0440

11905 Joseph CampauHamtramck, MI 48212

(313) 365-1000

25555 West WarrenDearborn Heights, MI 48127

(313) 563-8200

www.pacfcu.com

Boa

rd o

f Dire

ctor

sO

ffice

Sta

ff

Anita Dul, Chief Operations OfficerJohn Swidwinski, Chief Executive OfficerKazimierz Kozlowski, Loan ManagerStanislaw Rozmiej, Accounting ManagerHalina Bilek, Branch ManagerAllison Poshadlo, Branch ManagerMaria Grabas, Branch ManagerSuzanna Zwirko, Member Services Andrzej Leszczynski, Member ServicesJoanna Baran, TellerArkadiusz Czabanski, TellerIrena Filip, TellerIwona Golebiewski, TellerAnna Kardasz, TellerKaren Oliverio, Teller

Lukasz Put, TellerElzbieta Stevens, TellerSylwia Szczesiak, TellerPaulina Wilcox, TellerNatalia Wolniewicz, TellerMagdalena Bednarczyk, Accounting AssistantAgnieszka Nedelcu, Accounting AssistantDavid Senderowski, Lending ConsultantGrazyna Zukowska, Lending ConsultantGrazyna Pawlowski, Adm. Assistant, CreditPiotr Skorupka, Credit SpecialistJoanna Ostentoski, IT CoordinatorMariola Thiel, Marketing ManagerThomas Wolski, Finance Specialist

Zdzislaw Miloboszewski, ChairmanHendrik Zenicki, Vice-ChairmanStefan Kobylecki, SecretaryGeorge Kurzatkowski, TreasurerJoanna Strzalkowski, Director

Call to OrderAscertainment of QuorumReading of Annual Meeting MinutesBoard of Directors' ReportTreasurer's ReportCredit Committee Report

Supervisory Committee ReportUnfinished BusinessNew BusinessElectionsAdjournment

Stanislaw Boguszewski, DirectorAdam Rusinowski, DirectorSophie Kosowski, DirectorZbigniew Martusiewicz, Director

2011Annual Report

36th Annual Membership MeetingThursday, April 19, 2012

American-Polish Cultural Center, Troy, Michigan

AgenDA

During 2011, the Supervisory Committee of PAC Federal Credit Union, in conformity with National Credit Union Administration rules and regulations, retained the certified public accounting firm of Cindrich, Mahalak, & Company to conduct an independent audit of our Credit Union operations.

That audit included examinations of financial records, audits of the Credit Union’s loan and investment portfolios, internal controls, verification of member accounts and a review of our policies and procedures. In addition to the audit performed by Cindrich, Mahalak, & Company, our regulator, the National Credit Union Administration also conducted their annual examination.

Based on the results of the examination and independent audit, the Supervisory Committee submits to its Members that PAC Federal Credit Union has operated in conformity with generally accepted accounting principles and the financial statements as presented in the Credit Union annual report are a true presentation of the results of the Credit Union’s operation in 2011.

On behalf of the Supervisory Committee, we would like to congratulate the Staff, Management, and Board of Directors of the Credit Union for yet another successful year.

The Supervisory Committee Mark Reaume, Chairman C. Leslie Banas Arkadiusz Gladysz Karol Gutowski Richard Konrad

Rep

ort o

f the

PA

C F

eder

al C

redi

t Uni

onSu

perv

isor

y C

omm

ittee

Last year saw a reversal of what our Credit Union experienced in 2010. When most financial institutions saw a steep decline in loan growth in 2010, PAC FCU’s total loans increased by a remarkable 5.3%. In 2011 that changed as members slowed their pace of borrowing. In spite of our efforts to encourage our members to take advantage of historically low interest rates, the results showed that home borrowing was the area that was most affected. Our consumer loans, credit card balances and business loans all increased over the prior year with consumer loans leading the way with an 8.31% increase. Our Visa credit card balances exceeded the one million dollar level every month for the second year in a row, ending the final quarter of the year at their highest levels ever. Member business loans also increased by almost two percent. Mortgages declined however, as members took a breather, concerned about whether home value declines have bottomed out yet.

Foreclosures as reported last year, continued. Last year we charged off more than $420,000 in loans, the majority of those in first and second mortgages. We also had a flood of bankruptcies that accounted for almost $32,000 in non-mortgage loan losses. The decision was made to fund our loan loss allowance by a substantial amount and to place these losses behind us. In 2011 there were 652 loans granted for more than $8.49 million and advances on open ended credit and purchases made using our PAC FCU Visa Credit Cards exceeded $3.66 million.

To celebrate our Credit Union’s 35th birthday, we offered a low, 3.5% interest special on most of our loans throughout the year. We’re continuing that for the near term as our members have responded to this great rate, at least on the consumer loan side.

PAC Federal Credit Union Credit CommitteeKazimierz Kozlowski, Chairman Anita Dul Stefan Kobylecki Zbigniew MartusiewiczJohn Swidwinski

Rep

ort o

f the

C

redi

t Com

mitt

ee

Income and expensesFor the year ending December 31, 2011

Statement of Financial ConditionAs of December 31, 2011

Income 2011 2010

Interest on Loans $ 2,867,111 $ 2,944,748

Interest on Investments $ 410,488 $ 517,673

Other Operating Income $ 545,975 $ 462,643

Total Gross Income $ 3,823,574 $ 3,925,064 expenses Compensation & Benefits $ 1,228,036 $ 1,300,700

Office Occupancy Expense $ 229,706 $ 216,822

Office Operation Expense $ 277,667 $ 288,871

Education and Promotion Expense $ 81,599 $ 88,041

Loan Servicing Expense $ 107,358 $ 100,667

Professional & Outside Services $ 376,116 $ 391,182

Operating Fees $ 21,972 $ 22,138

Interest Expense $ - $ -

Provision for Loan Losses $ 807,427 $ 265,000

Member Insurance $ 11 $ 105,569

Corporate Stabilization Expense $ 221,013 $ 115,325

Other Expenses Travel & Conference $ 15,136 $ 12,383 Annual Meeting $ 2,438 $ 3,845 Association Dues $ 5,787 $ 10,573 Other Misc. Expense $ 102,580 $ 101,852 Total Other Expenses $ 125,941 $ 128,653

Total Operating Expense $ 3,476,847 $ 3,022,968

Income Before Dividends $ 346,727 $ 902,096

Non-Operating Gain (Loss) $ (33,020) $ (58,850)

Member Dividends $ (677,486) $ (1,049,511)

Net Change to Reserves $ (363,780) $ (206,265)

Assets 2011 2010Cash $ 1,195,421 $ 1,120,626 Loans: Real Estate Loans $ 51,480,509 $ 52,984,962 Real Estate Lines of Credit $ 1,960,417 $ 2,019,777 Consumer Loans $ 3,737,291 $ 3,450,435 Credit Cards & Lines of Credit $ 1,131,859 $ 1,128,370 Business Loans $ 2,248,073 $ 2,205,056 Less Participations Sold $ (863,963) $ (891,338) Allowance for Loan Losses $ (330,000) $ (56,843) Total Net Loans $ 59,364,185 $ 60,840,419

Investments: Deposits in Central CU and Banks $ 2,625,765 $ 1,618,389 Federal Home Loan Bank Stock & Deposit $ 538,335 $ 510,877 Certificates of Deposit $ 25,298,588 $ 28,714,918 Government Securities $ 3,507,729 $ - Corporate Central Capital Deposit $ 433,100 $ 410,381 Total Investments $ 32,403,517 $ 31,254,565

Other Assets: Land & Buildings $ 1,552,150 $ 1,633,117 Other Fixed Assets $ 95,275 $ 127,601 NCUA Insurance Deposit $ 884,053 $ 849,113 Other Assets Accrued Investment Income $ 38,822 $ 27,773 Accrued Loan Income $ 134,205 $ 155,691 Prepaid Expenses $ 70,283 $ 106,729 Other $ 704,168 $ 417,390 Total - Other Assets $ 947,478 $ 707,583 Total Assets $ 96,442,079 $ 96,533,024

Liabilities & Equity: Accounts Payable $ - $ - Dividends Payable $ 194,103 $ 267,857 Other Liabilities $ 181,225 $ 152,392 Total Liabilities $ 375,328 $ 420,249

Members’ Equity: Member Shares $ 21,239,093 $ 19,381,389 Money Market Shares $ 27,320,710 $ 26,651,129 Share Draft Accounts $ 8,640,683 $ 8,273,191 Share Certificates $ 16,336,230 $ 18,927,726 Individual Retirement Accounts $ 15,617,922 $ 15,587,093 Total Members’ Equity $ 89,154,638 $ 88,820,528

Reserves: Regular Reserves $ 1,495,057 $ 1,495,057 Undivided Earnings $ 5,417,056 $ 5,797,190 Total Reserves $ 6,912,113 $ 7,292,247 Total Liabilities, Equity & Reserves $ 96,442,079 $ 96,533,024