2010 Annual Report

Balance Sheet

2010 2009 2009-2010Amount % of Gross Income Amount % of Gross Income Difference

INCOMELoan Interest $31,054,104 74.20% $31,000,946 75.56% $53,158 Investment Income 1,568,125 3.75% 1,558,529 3.80% 9,596 Other Income 9,280,344 22.17% 8,342,214 20.33% 938,130 Gain (Loss) On Investments - 0.00% 249,200 0.61% (249,200)Gain (Loss) Disposition Of Assets (50,291) -0.12% (124,569) -0.30% 74,279 TOTAL GROSS INCOME $41,852,282 100.00% $41,026,319 100.00% $825,962 EXPENSESStaff Compensation/Benefits $12,165,973 29.07% $11,237,050 27.39% $928,923 Conference/Education 137,569 0.33% 177,297 0.43% (39,728)Association Dues 59,600 0.14% 56,392 0.14% 3,207 Cost of Space 1,009,386 2.41% 1,009,023 2.46% 363 Cost of Operations 4,664,859 11.15% 5,240,186 12.77% (575,327)Marketing/Promotions 395,822 0.95% 565,651 1.38% (169,829)Annual Meeting/BOD Election 40,612 0.10% 42,462 0.10% (1,850)Provision For Loan Losses 3,705,462 8.85% 4,165,688 10.15% (460,226)Professional Services 410,137 0.98% 699,130 1.70% (288,993)Loan Expenses 1,629,810 3.89% 1,587,178 3.87% 42,632 Member Insurance Expense 735,544 1.76% 865,203 0.00% (129,659)Borrowed Money Expense 1,434,264 3.43% 1,482,627 3.61% (48,364)Miscellaneous Expense 193,698 0.46% 153,438 0.37% 40,260 TOTAL OPERATING EXPENSE $26,582,734 63.52% $27,281,324 64.39% $(698,590)PAID TO MEMBERSCertificate Interest $5,971,647 14.27% $8,023,308 19.56% $(2,051,661)Dividends 3,350,662 8.01% 4,752,624 11.58% (1,401,962)Bonus Dividend - 0.00% - 0.00% - Loan Interest Refund - 0.00% - 0.00% - TOTAL PAID TO MEMBERS $9,322,309 22.27% $12,775,932 31.14% $(3,453,623)Added To Equity $5,947,238 14.21% $969,064 2.36% $4,978,175NCUSIF Stabilization Expense $795,474 1.90% $(2,732,537) -6.66% $3,528,011 Net Added to Equity $5,151,764 12.31% $3,701,601 9.02% $1,450,164

Income Statement

Treasurer’s Report (continued)

Loan QualityOur delinquency rate (based on all loans) increased slightly from 0.47% in2009 to 0.53% at year-end. Net write-offs in 2010 were $3.0MM or 0.41% ofaverage assets, which is about the same as the $3.0MM or 0.43% in 2009.These ratios, by far, continue to outperform industry averages.

SummaryThese financial results are a positive reflection of the prudent Balance Sheetmanagement being conducted by the Management Team and the Board ofDirectors during these challenging economic times. We look forward to anotherstrong year in 2011 and, as always, appreciate your cooperation and support.

$70,000,000

$60,000,000

$50,000,000

$40,000,000

$30,000,000

$20,000,000

$10,000,000

$ in million

20092005 2006 2010

Figure 4 shows equity in dollars for the past 6 years.

2007 2008

540.946.3200 • 800.245.8085 • www.mydccu.com

Equity (net worth) Our equity position increased from 9.00% to 9.45% of assets at year-end. The$67.6MM of equity helps maintain our sound financial position, and benefitsboth savers and borrowers as it provides a cushion for loan losses and othereconomic pressures that may arise.

$41,852,282 in Total Income

Paid to Members 22%

Equity 14%

Oper. Exp 64%

Figure 3 illustrates the distribution of income.

2010 2009 2009-2010Amount % of Assets Amount % of Assets Difference

ASSETSLoans To Members (Net Of Allow For Loan Loss) $578,715,388 78.17% $579,749,876 80.58% $(1,034,487)Cash and Deposits in Transit 11,712,022 1.58% 12,927,716 1.80% (1,215,694)Investments 112,716,540 15.23% 89,225,540 12.40% 23,491,000 Accrued Income

Loans 1,252,844 0.17% 1,283,767 0.18% (30,923)Investments 315,087 0.04% 333,652 0.05% (18,565)

Building/Land (Net) 18,498,898 2.50% 17,567,716 2.44% 931,182 Furniture/Fixtures (Net) 2,473,999 0.33% 2,857,690 0.40% (383,691)NCUA Deposit 5,922,255 0.80% 5,768,017 0.80% 154,238 Other Assets 8,731,187 1.18% 9,800,749 1.36% (1,069,5TOTAL ASSETS $740,338,221 100.00% $719,514,723 100.00% $20,823,497LIABILITIES AND EQUITYCorporate Drafts Outstanding $1,530,290 0.21% $2,861,917 0.40% $(1,331,626)Regular Shares/Clubs/IRA's 121,170,418 16.37% 106,955,733 14.86% 14,214,685 Money Market 167,400,281 22.61% 139,946,157 19.45% 27,454,124 Certificates 225,404,097 30.45% 231,445,429 32.17% (6,041,332)Checking 105,440,030 14.24% 124,671,484 17.33% (19,231,453)Accounts Payable 443,746 0.06% 292,539 0.04% 151,207Loans Payable 41,900,533 5.66% 43,798,876 6.09% (1,898,343)Other Liabilities 9,416,383 1.27% 7,256,064 1.01% 2,160,319 TOTAL LIABILITIES $672,705,779 90.86% $657,228,199 91.34% $15,477,580 EQUITYReserves $19,899,638 2.69% $19,899,638 2.77%Accumulated Other Comprehensive Loss $(2,303,679) -0.31% $(2,497,833) -0.35% 194,154 Retained Earnings 50,036,483 6.76% 44,884,719 6.24% 5,151,764 TOTAL EQUITY $67,632,441 9.14% $62,286,524 8.66% $5,345,918 TOTAL LIABILITIES AND EQUITY $740,338,221 100.00% $719,514,723 100.00% $20,823,497

$

The 2010 financial performance and accomplishments are reflected bycategory in detail below.

GrowthAssets grew at a rate of 2.9% or $20.8MM ending2010 at $740.3MM. Member savings grew 2.7% or$16.4MM during 2010. The ratio of our loans toassets was 78.2%. Total loans outstanding decreasedslightly by 0.2% or $1.0MM. Our liquidity position,readily available funds (not including available lines ofcredit), was 2.8% at year-end. The investmentportfolio increased 26.3% or $23.5MM during the

year. All of our investments are in U.S. Government agency securities orinsured institutions.

The Credit Committee is appointed by the Board ofDirectors from the Credit Union membership. Currently,the members are Marv Schaff, Chairman, James (Jim)W. Roberts, III, Secretary, and Yvonne S. Weatherholtz.

The Credit Union has a staff of LoanProfessionals to originate everyday loanrequests. This allows the Credit Committee to:(1) meet with members appealing loan denials,(2) review denied loans in order to monitor loan

decisions, and (3) make decisions regarding request for loan extensions,insurance waivers, etc. as defined by current Credit Union policy. In 2010, theCommittee had 85 meetings with members.

The Credit Committee meets Monday through Thursday from 4 PM to 6 PM.We are dedicated to serving the membership and any member wishing tomeet with us about a lending problem can arrange an appointment by callingthe Credit Union.

William Roy BarksdaleMary Louise Leake

Elizabeth Middleton

Nominating Committee

The Supervisory Committee is appointed by the Boardof Directors to protect the interest of credit unionmembers. The committee is charged with:

• The ongoing review of Credit Union operations• Oversight and coordination of the annual audit and

other audits as required by Federal and State laws• Evaluating and upgrading internal controls,

procedures, & compliance regulations• Safeguarding member assets

The Supervisory Committee had three members during 2010, Bruce Hamrick,Ron Harlow, and Jerry Campbell; we worked closely with the Department ofRisk Management and Compliance.

During 2010, Larson Allen, a CPA firm from Northern Virginia, performed theannual audit. The resulting report stated that your Credit Union is beingoperated in a cost effective and financially sound manner. The auditors notedonly minor exceptions that were promptly corrected by the Credit Union staff.The auditors commented on the high level of professionalism shown by themanagement and staff.

Since we are State Chartered we are subject to State examinations on aperiodic basis. The state examiners also completed their exam in 2010 andgave us a high rating with favorable comments. Additional audits wereconducted in Information Systems, Human Resources, ATM controls and theBank Secrecy Act as required by State and Federal regulations.

During 2010 the Audit Committee performed branch cash audits. All of thebranches audited were found to be in order. Several suggestions to improvesecurity and internal controls were made by this Committee and accepted by staff.

We continue to recommend that members routinely review their accounts andfeel free to contact a member of the Supervisory Committee with any problemthey may have.

This Committee along with the Risk Management Department continuallyreviews the effectiveness of internal controls through the use of various audittechniques such as unannounced cash counts, account reviews, expensereport reviews, and sampling of various Credit Union reports and procedures.The Committee works closely with management to improve fraud detectiontechniques while maintaining cost effective operations and member services.

In summary, your Credit Union continues to be in excellent financial conditionand the audits show the Credit Union to be managed in a sound andcompetent manner.

Many challenges for the financial sector continued during2010. Your Board of Directors and Management Teamremained vigilant and took actions necessary to operatewith new regulations in a manner intended to minimizeadverse effects to our members. To understand the breadthof this regulatory challenge, I’ve listed the main laws andregulations that were either enacted or made effectiveduring 2010: The Credit Card Accountability, Responsibility,and Disclosure Act (CARD Act), Dodd-Frank Wall StreetReform and Consumer Protection Act, Unlawful Internet

Gambling Act (Reg GG), Secure and Fair Enforcement for Mortgage LicensingAct (SAFE Act), Real Estate Settlement Procedures Act (RESPA) Good FaithEstimate revisions, and new gift card and overdraft program rules underRegulation E. Despite this heavy regulatory focus for 2010, your Credit Unionwas able to produce some very positive results for our members.

Our efforts to improve the quality of products and member services includedthe following accomplishments during the past year:

• To better determine your needs and wishes DCCU began conducting moreextensive member surveys. Survey results are utilized to assist staff inbetter serving our members.

• We have been hearing for many years that DCCU needs a greater presencein the Harrisonburg area. To fill that need DCCU purchased property onReservoir Street and the opening is anticipated in the fall of 2011.

• There has been much talk in the media in 2010 about the importance ofsmall businesses in our economy. DCCU has been supporting smallbusinesses in our communities for four years now and during 2010 madenearly $11 million in member business loans.

• In these troubled times for the housing market , DCCU funded $116 millionin real estate loans.

• Our fully owned title agency, DCCU Title Services, began offering settlementservices which necessitated moving to their office to #106-B in Jefferson.

• We added private Student Loans to our product offerings and funded over$250,000 in loans.

• Continued to improve our technology by adding “Member to Member”transfers to Home Banking, expanded Bill Payer with eBills and expeditedpayment options, and upgraded ART to a fully touch-tone system.

• We rolled out instant access to account information with text banking.• Our Call Center expanded weekday hours to 7 AM – 7 PM.• Deployed our Mobile ATM Kiosk to a number of events throughout the area

for easy cash access and support of community events.• DCCU’s staff demonstrated their strong commitment to our community by

supporting three regional SPCAs as our 2010 Corporate Charity. Our employeesraised almost $11,000 bringing the Credit Union’s total contribution to almost$16,000. Employees also raised over $14,000 for the United Way. These effortswere recognized by the Virginia Credit Union League with a 3rd Place for theDora Maxwell Social Responsibility Recognition Award.

• DCCU also earned 1st Place in the Desjardins Youth Financial EducationAward for the third straight year from the Virginia Credit Union League and1st Place for the Louise Herring Award for Philosophy in Action for DCCU’s

Everett J. CampbellChairman of the Board

$740,338,221 in Total Assets

Fixed Assets 3%Investments 15%

Other 4%

Loans 78%

20062005 2008 2009

$800,000,000

$700,000,000

$600,000,000

$500,000,000

$400,000,000

$300,000,000

$200,000,000

$100,000,000

Treasurer’s Report

AssetsSavingsLoans

2007

Figure 1 illustrates the 6-year relationship of assets, savings and loans.

Q. Maurice GreshamTreasurer

Board of Directors

Chairman’s Report

Credit Committee Report

Center: James (Jim) W.Roberts, IIILeft: Yvonne S. WeatherholtzRight: Marv A. Schaff, Chairman

Front (left to right): Robert (Bob) Arbaugh, Vice Chairman; Everett J. Campbell, Jr., Chairman; Q. Maurice Gresham, Treasurer

Back (left to right): Raymond Reed, Director; Shane Wills, Director; Leslie E. Ramsey, Director; Mary Rothacker, Secretary

Net Income Net Income for 2010 was $5.1MM, an increase of $1.5MM. Dividends andinterest paid to members totaled $9.3MM, a decrease of $3.5MM or 27.0%compared to 2009.

$ in million

Supervisory Committee Report

Center: Bruce F. Hamrick,Chairman

Left: Jerry M. CampbellRight: Ron L. Harlow

Debt in Focus program.• Shred Days were held on 10 dates which saw 19 tons of personal and

business documents professionally shredded. Over 1 ton of food wasdonated to the Blue Ridge Area Food Bank by generous shredders.

• DCCU’s Member Investment Services, partnering with the Social SecurityAdministration, conducted two very successful workshops for members andthe public.

The financial state of your Credit Union remains strong. Your Board andManagement Team will continue to consider and implement changes that will resultin improving our operating efficiencies, and service/products to the membership.

Thank you again for your continued support of your member-owned financialcooperative.

Figure 2 shows the distribution of assets.

2010