SCE FCU • scefcu.org • 800.866.6474

2011 Annual Report

2011 People Powered Banking Outdoor Advertising“SCE FCU was there for my business when I needed them during hard times.” ~ Ralph G. - member since 2011

Report of the Supervisory Committee

The Supervisory Committee is appointed by the Board of Directors and is responsible for ensuring the financial safety and soundness of our Credit Union.As part of their duties, they contract with external auditors for various audits and directly oversee the functions of our internal audit program on a year-round basis. They meet regularly with the Board of Directors and provide the Board with reports of their audits and audit findings. One of these audits was the annual supervisory committee audit required by our Regulator, the National Credit Union Administration. This audit was conducted by the accounting firm of Turner, Warren, Hwang & Conrad of Burbank, California, and covered the twelve months ending March 31, 2011. No significant findings were reported in this audit of the financial records and member accounts.One of our new Supervisory Committee Members, Patrick McCloskey (a CPA and partner at Gentile, McCloskey & Company), assumed the Chair role for the Supervisory Committee in 2011. His expertise is perfectly suited for this role. We will be recruiting for a new Committee member in 2012, since one of our 2011 members, Joe Coria, resigned due to increased work responsibilities. We are so appreciative of his service and he will be missed.

Patrick McCloskeyChairman

Michele DeaneMember

Robert TooheyMember

For a second consecutive year, SCE FCU benefited from the ingenuity, for the experience of having a Credit Union car buying specialist find the determination, effort and loyalty of members, volunteers, and staff to address specific car of choice, at the desired price point, and deliver it to the door the challenges in this tough economic environment and maximize the value complete with a big red bow. SCE FCU grew nearly 5% in business lending for all who have a stake in the success of their Credit Union. It to partner organizations in our local communities. Business loans was another year of celebrating members on freeway billboards, now represent 10.78% of total loans. In an effort to support the bus wraps, bus tails, and promotional materials, with a much employees of our local businesses, we visited more than 200 more disciplined approach to soliciting and responding to member employer sites to bring banking to the people, and to find new feedback. ways to delight our SCE FCU member family. A member feedback initiative was launched in July, and by The SCE FCU Foundation continued its work in our local year end, 6,868 surveys were sent to members. More than communities, with financial literacy workshops, high school1,600 members responded, providing valuable feedback about initiatives, and multiple “real-life” Mad City Money events. Our the quality of banking products and services from all delivery Edward Orosz scholarship program provided twelve very deserving students channels, and making requested suggestions for enhancements. Board Chairman with monetary assistance for college expenses. We also donated We are thrilled with your responsiveness and appreciate the many $31,100 in charitable grants to local community organizations, and great ideas you are sharing with us. Strategic response teams our employees donated 996 hours of volunteer time to a varietyare working on communication and product improvements that will of worthwhile causes. Please read the “In the Community” sectioninclude many of your ideas. Some of you tested our new products for more information. before launch, including the mobile banking application and a new The most significant initiative of the year was preparing for afinancial aggregation tool. A much needed expansion of the core merger with SONEPCO Federal Credit Union in Nevada, a $54software platform set the stage for a series of new services to million credit union serving 4,800 members with a four branch launch in 2012. network. The merger, effective January 1, 2012, formed a $557 A successful 10-year mortgage promotion fit the bill for close Dennis Huber million Credit Union with 10 branches and 45,600 members. We to 100 members, and another 150 took advantage of our President/CEO share great synergy in membership demographics, serving Edison concierge service CU at the Wheel. We received rave reviews in Southern California and NV Energy in Southern Nevada. The

A Message to Our Members

We also continued our celebration of Youth Month in April, nationally recognized as Financial Literacy Month. Through our savings challenge and finance-themed art contests, young members were encouraged to recognize the importance of building a savings habit. In keeping with the musical theme, our youth showed us with their deposits and their artistic talents that “Money Rocks” at SCE FCU. The winners of our deposit challenge and art contests

received a total of $850 in cash prizes to keep them rocking on.The Foundation’s scholarship program, in its second year, continued to provide monetary assistance for college students from low-income families who demonstrate a pattern of excellence in their academics and community involvement. In 2011, twelve very deserving students received $1,000 scholarships for their college expenses. In the spirit of paying it forward, we donated $31,100 in charitable grants to local community organizations. Through these small

grants, SCE FCU is part of caring programs that improve the quality of life for disadvantaged individuals and families. In 2011 our donations funded several youth leadership and mentoring programs; food and clothing assistance for needy families; health, wellness and fitness education for families; and holiday toys for disadvantaged children.The Foundation is proud of all we do to positively impact our communities, which wouldn’t be possible without the unwavering support of SCE FCU members, directors and employees. We thank you!

2011 was a year of building and strengthening the Foundation’s programs. We continued to form community relationships with organizations that help us achieve our goal of spreading financial literacy. We established new relationships with schools and community groups, resulting in more classroom presentations to more students.For our core training, the Foundation facilitated 138 financial literacy workshops, reaching 3,230 youth and 586 adults with personal finance education. In comparison, these numbers nearly double the results we had in the previous year!This year we introduced a new financial learning experience for high school students, by arranging a unique field trip to the Federal Reserve Bank’s branch in downtown Los Angeles. This exclusive tour, specially arranged for SCE FCU, helped students get up close and personal with our country’s national money system. It was a very eye-opening trip for twenty-seven students, and a great learning opportunity the Foundation hopes to sponsor again in the future for deserving classrooms at our other partnering schools. We continued refining our “real-life” simulation event for teens, Mad City Money, in which students experience life complete with jobs, spouses, kids, debt, and financial responsibilities. We hosted three events in 2011 for a total of 154 participating students. Parents, teachers, community leaders and SCE FCU employees all volunteered to make these events successful.

In the Community

merger also adds geographic diversification and greater convenience for the 400+ SCE FCU members who already reside in Southern Nevada. We welcome our new Nevada employees and members to the SCE FCU family, and will continue to deliver a banking experience characterized by exceptional service that meets and exceeds expectations. We will continue to look to all of you for your feedback, inviting you to partner with us toimprove your member service experience. We thank you for sharing the gift of membership by recommending your friends and family to us. We value your trust and partnership as we collectively work to make a difference for our member family and our local communities.

Edward Orosz • Chairman of the Board

Dennis Huber • Chief Executive Officer

“SCE FCU is always good to me. They reduced my debt and improved my credit score.” ~ Jesse T. - member since 2006

Treasurer’s Report

SCE FCU performed remarkably well in 2011, despite contending with a persistently challenging economic environment. We made loans for members, increasing volumes by 3.1% or $8.9 million (a 150% increase in volume over 2010). A significant portion of that increase can be attributed to a very successful 10-year mortgage promotion. We increased savings by 3.8% or

$15.6 million, which represents a 17% slower growth rate than what we experienced in 2010. A low interest rate environment makes it very difficult to raise savings rates for our members. We now have $10.2 million in our allowance for loan loss account. We are well reserved for future losses and well positioned for future earnings once loan losses subside and the provision for loan loss expense returns to more routine levels.Our financial performance showed a net income of $3.1 million, almost 20% above 2010 and $1 million above budget. A portion of that variance ($550,000) can be attributed to transactions related to our business and mortgage Credit Union Service Organizations (CUSOs). We also made significant “contributions” to the National

Credit Union Administration (NCUA) in the amount of $1.03 million to the corporate credit union stabilization fund. We had positive earnings for every quarter in 2011.We are also reporting a net worth ratio of 9.19% at year end, compared to 8.97% at year end 2010, and comfortably above the 7% ratio required for classification as a well-capitalized credit union.

Kenji ColemanTreasurer

Loan Growth

Share Growth

Capital Growth

2011

2010

2009

2011

2010

2009

2011

2010

2009

$292,475,222

$283,558,553

$279,993,101

$425,549,029

$409,976,497

$391,107,882

$48,188,152

$43,021,078

$42,693,681Edward Orosz Robert Toohey Rebecca Allie Kenji Coleman Mike DeSalvio Mary Steudle

Chairman Vice-Chairman Secretary Treasurer Director Director

Board of Directors

IRAs/Certificates44%

Savings18%

Money Market25%

Checking12%

2011 2010

Assets

Loans, Net $282,268,293 $271,411,521

Investments $182,350,934 $152,214,755

Fixed Assets $15,937,701 $19,724,054

Other Assets $22,110,095 $16,463,443

Total Assets $502,667,023 $459,813,772

Equity & Other Liabilities

Shares & Certificates $425,549,029 $391,107,882

Reserve & Undivided Earnings $46,196,527 $42,693,681

Other Liabilities $30,921,467 $26,012,209

Total Equity & Liabilities $502,667,023 $459,813,772

As of December 31 - Unaudited

Statement of Financial Condition

Distribution of Shares2011 2010 Distribution of Loans Total Income $30,850,697 $32,287,748

Expenses

Personnel $10,250,410 $9,810,863

Education / Promotion $597,927 $796,395

Professional / Outside Services $630,417 $326,566

Office Operations $6,065,290 $5,997,145

Provision for Loan Losses $3,986,000 $6,512,000

Other $1,395,494 $1,901,134

Non-Operating (Income) Expense $550,744 ($1,300,178)

Total Expenses $23,476,282 $24,043,926

Total Interest Expense & Dividends $4,296,775 $5,647,446

Net Income $3,077,640 $2,596,376 Real Estate

48% Vehicle

24% Visa 9%

Business 11%

Personal 7%

Other 1%

As of December 31 - Unaudited

Income Statement

2011 2010

Total Income $30,850,697 $32,287,748

Expenses

Personnel $10,250,410 $9,810,863

Education / Promotion $597,927 $796,395

Professional / Outside Services $630,417 $326,566

Office Operations $6,065,290 $5,997,145

Provision for Loan Losses $3,986,000 $6,512,000

Other $1,395,494 $1,901,134

Non-Operating (Income) Expense $550,744 ($1,300,178)

Total Expenses $23,476,282 $24,043,926

Total Interest Expense & Dividends $4,296,775 $5,647,446

Net Income $3,077,640 $2,596,376

As of December 31 - Unaudited

Real Estate48%

Vehicle24%

Visa9%

Business11%

Personal7%

Other1%

Income Statement

Distribution of Loans Distribution of Shares

IRAs/Certificates Savings Money Market Checking44% 18% 25% 12%

Assets

Loans, Net

Investments

Fixed Assets

Other Assets

Total Assets

Equity & Other Liabilities

Shares & Certificates

Reserve & Undivided Earnings

Other Liabilities

Total Equity & Liabilities

2011 2010

$282,268,293 $271,411,521

$182,350,934 $152,214,755

$15,937,701 $19,724,054

$22,110,095 $16,463,443

$502,667,023 $459,813,772

$425,549,029 $391,107,882

$46,196,527 $42,693,681

$30,921,467 $26,012,209

$502,667,023 $459,813,772

As of December 31 - Unaudited

Statement of Financial Condition

Board of Directors

Edward OroszChairman

Robert TooheyVice-Chairman

Rebecca AllieSecretary

Kenji ColemanTreasurer

Mike DeSalvioDirector

Mary SteudleDirector

2011

2010

2009

$48,188,152

$43,021,078

$42,693,681

Loan Growth 2011

2010

$292,475,222

$283,558,553

2009 $279,993,101

Share Growth 2011

2010

2009

$425,549,029

$409,976,497

$391,107,882

Capital Growth

SCE FCU performed remarkably well in 2011, despite contending with a persistently challenging economic environment. We made loans for members, increasing volumes by 3.1% or $8.9 million (a 150% increase in volume over 2010). A significant portion of that increase can be attributed to a very successful 10-year mortgage promotion. We increased savings by 3.8% or

$15.6 million, which represents a 17% slower growth rate than what we experienced in 2010. A low interest rate environment makes it very difficult to raise savings rates for our members. We now have $10.2 million in our allowance for loan loss account. We are well reserved for future losses and well positioned for future earnings once loan losses subside and the provision for loan loss expense returns to more routine levels. Our financial performance showed a net income of $3.1 million,

Kenji Coleman almost 20% above 2010 and $1 million above budget. A portion of Treasurer that variance ($550,000) can be attributed to transactions related

to our business and mortgage Credit Union Service Organizations (CUSOs). We also made significant “contributions” to the National

Credit Union Administration (NCUA) in the amount of $1.03 million to the corporate credit union stabilization fund. We had positive earnings for every quarter in 2011. We are also reporting a net worth ratio of 9.19% at year end, compared to 8.97% at year end 2010, and comfortably above the 7% ratio required for classification as a well-capitalized credit union.

Treasurer’s Report

merger also adds geographic diversification and greater convenience for the 400+ SCE FCU members who already reside in Southern Nevada. We welcome our new Nevada employees and members to the SCE FCU family, and will continue to deliver a banking experience characterized by exceptional service that meets and exceeds expectations. We will continue to look to all of you for your feedback, inviting you to partner with us to improve your member service experience. We thank you for sharing the gift of membership by recommending your friends and family to us. We value your trust and partnership as we collectively work to make a difference for our member family and our local communities.

Edward Orosz • Chairman of the Board

Dennis Huber • Chief Executive Officer

“SCE FCU is always good to me. They reduced my debt and improved my credit score.”~ Jesse T. - member since 2006

2011 was a year of building and strengthening the Foundation’s programs. We continued to form community relationships with organizations that help us achieve our goal of spreading financial literacy. We established new relationships with schools and community groups, resulting in more classroom presentations to more students. For our core training, the Foundation facilitated 138 financial literacy workshops, reaching 3,230 youth and 586 adults with personal finance education. In comparison, these numbers nearly double the results we had in the previous year! continued to provide monetary assistance for college students

from low-income families who demonstrate a pattern of excellence This year we introduced a new financial learning experience in their academics and community involvement. In 2011, twelve for high school students, by arranging a unique field trip to the very deserving students received $1,000 scholarships for theirFederal Reserve Bank’s branch in downtown Los Angeles. This college expenses.exclusive tour, specially arranged for SCE FCU, helped students get up close and personal with our country’s national money system. It was a very eye-opening trip for twenty-seven students, and a great learning opportunity the Foundation hopes to sponsor again in the future for deserving classrooms at our other partnering schools. We continued refining our “real-life” simulation event for teens, Mad City Money, in which students experience life complete with jobs, spouses, kids, debt, and financial responsibilities. We hosted three events in 2011 for a total of 154 participating students. Parents, teachers, community leaders andSCE FCU employees all volunteered to make these events successful.

We also continued our celebration of Youth Month in April, nationallyrecognized as Financial Literacy Month. Through our savings challenge and finance-themed art contests, young members were encouraged to recognize the importance of building a savings habit. In keeping with the musical theme, our youth showed us with their deposits and their artistic talents that “Money Rocks” at SCE FCU. The winners of our deposit challenge and art contests

received a total of $850 in cash prizes to keep them rocking on. The Foundation’s scholarship program, in its second year,

In the spirit of paying it forward, we donated $31,100 in charitable grants to local community organizations. Through these small

grants, SCE FCU is part of caring programs that improve the quality of life for disadvantaged individuals and families. In 2011 our donations funded several youth leadership and mentoring programs; food and clothing assistance for needy families; health, wellness and fitness education for families; and holiday toys for disadvantaged children. The Foundation is proud of all we do to positively impact our communities, which wouldn’t be possible without the unwavering support of SCE FCU members, directors and employees. We thank you!

In the Community

A Message to Our Members

for the experience of having a Credit Union car buying specialist find the specific car of choice, at the desired price point, and deliver it to the door complete with a big red bow. SCE FCU grew nearly 5% in business lending

to partner organizations in our local communities. Business loans now represent 10.78% of total loans. In an effort to support the employees of our local businesses, we visited more than 200 employer sites to bring banking to the people, and to find new ways to delight our SCE FCU member family.The SCE FCU Foundation continued its work in our local communities, with financial literacy workshops, high school initiatives, and multiple “real-life” Mad City Money events. Our scholarship program provided twelve very deserving students with monetary assistance for college expenses. We also donated $31,100 in charitable grants to local community organizations, and our employees donated 996 hours of volunteer time to a variety of worthwhile causes. Please read the “In the Community” section for more information. The most significant initiative of the year was preparing for a merger with SONEPCO Federal Credit Union in Nevada, a $54 million credit union serving 4,800 members with a four branch network. The merger, effective January 1, 2012, formed a $557 million Credit Union with 10 branches and 45,600 members. We share great synergy in membership demographics, serving Edison in Southern California and NV Energy in Southern Nevada. The

For a second consecutive year, SCE FCU benefited from the ingenuity, determination, effort and loyalty of members, volunteers, and staff to address the challenges in this tough economic environment and maximize the value for all who have a stake in the success of their Credit Union. It was another year of celebrating members on freeway billboards, bus wraps, bus tails, and promotional materials, with a much more disciplined approach to soliciting and responding to member feedback.A member feedback initiative was launched in July, and by year end, 6,868 surveys were sent to members. More than 1,600 members responded, providing valuable feedback about the quality of banking products and services from all delivery channels, and making requested suggestions for enhancements. We are thrilled with your responsiveness and appreciate the many great ideas you are sharing with us. Strategic response teams are working on communication and product improvements that will include many of your ideas. Some of you tested our new products before launch, including the mobile banking application and a new financial aggregation tool. A much needed expansion of the core software platform set the stage for a series of new services to launch in 2012.A successful 10-year mortgage promotion fit the bill for close to 100 members, and another 150 took advantage of our concierge service CU at the Wheel. We received rave reviews

Edward OroszBoard Chairman

Dennis HuberPresident/CEO

The Supervisory Committee is appointed by the Board of Directors and isresponsible for ensuring the financial safety and soundness of our Credit Union. As part of their duties, they contract with external auditors for various audits and directly oversee the functions of our internal audit program on a year-round basis. They meet regularly with the Board of Directors and provide the Board with reports of their audits and audit findings. One of these audits was the annual supervisory committee audit required by our Regulator, the National Credit Union Administration. This audit was conducted by the accounting firm of Turner, Warren, Hwang & Conrad of Burbank, California, and covered the twelve months ending March 31, 2011. No significant findings were reported in this audit of the financial records and member accounts. One of our new Supervisory Committee Members, Patrick McCloskey (a CPA and partner at Gentile, McCloskey & Company), assumed the Chair role for the Supervisory Committee in 2011. His expertise is perfectly suited for this role. We will be recruiting for a new Committee member in 2012, since one of our 2011 members, Joe Coria, resigned due to increased work responsibilities. We are so appreciative of his service and he will be missed.

Patrick McCloskey Michele Deane Robert Toohey Chairman Member Member

Report of the Supervisory Committee

“SCE FCU was there for my business when I needed them during hard times.”~ Ralph G. - member since 2011 2011 People Powered Banking Outdoor Advertising

2011 Annual Report

SCE FCU • scefcu.org • 800.866.6474