SUPERVISORY COMMITTEE REPORT TREASURER’S REPORT

2017 Annual Report

PRESIDENT'S REPORT

2017 was a continuation of our obsessive focus on

our membership, empowering members to take

return on members' investment in our cooperative. Members' active participation, increased saving and borrowing, and greater account utilization contributed

by our $6.2 million PLUs (Payback for Loyalty to Us)

distribution. Arizona Federal Credit Union ended the year with total members' assets under management of $1.5 billion, net operating income of $25.7 million after the $6.2 million payout, and increased capital reserves of more than 15 percent of assets. You can

your credit union.

Ronald L. Westad President & CEO

We added new members to our cooperative, which creates greater value for all

of Us, invested further in technology solutions both for enhanced security and for

member service, completed our branch network realignment, and expanded our support of community organizations. Member feedback and NPS? scores were overwhelmingly positive and constructive.

credit to every active and participative member.

owned, locallyve, and that is a

As employees we are keenly aware that we work for you and because of you. We are committed

to creating a consistently excellent service experience, and providing self-service options that are similarly exceptional. If you want to avoid telephone hold times or the travel time to a branch, utilize TouchTone 24, online account access or our mobile app. Apply for loans via the web or mobile, and execute documents digitally and securely from the comfort of your home. Call for assistance after hours when wait times are shorter utilizing our 24x7 call center. The futu will continue to evolve, and we will continue to invest to provide the highest level of

we create a return on your investment in your credit union.

Us ? PL distribution ? 89,000 active members received $6.2 million (an average payout of $69) resulting in a total distribution of more than $30 million since 2012.

? New members ? more than 15,000 new members contributing to our cooperative by transacting, saving, borrowing, investing, insuring and actively participating.

? New loan originations ? nearly $250 million in new loan originations to meet members' borrowing needs.

? Technology enhancements

and PLUs payout summaries within online banking and our mobile app,

upgraded ATM network for added security and deposit automation, l

that lets members create budgets and track spending.

?

Us ? "The Experience," where members were reintroduced to

TM, SaversGuide? discounts, Purchase

Rewards, CardPowerTM, car buying services (Members' Auto Center), insurance

services (Arizona Federal Insurance Solutions and The Arizona Group),

investment and retirement services, and more.

? Branch network ? we completed our branch realignment plan that we announced in 2016:

? Opened our new Chandler Branch and closed the Tempe/Baseline and Mesa/Stapley branches.

? Invested in many of our existing locations by refreshing interiors and adding stations to increase convenience.

? Planned and prepared for our new Avondale branch, scheduled to open in April 2018.

? Community investments ? our long history of supporting local organizations and enriching our community was evidenced most notably in 2017 by the following:

?

ll

Club, which included introducing a co-branded debit card, developing

at local

youth soccer camps.

? Created a co-branded Visa? debit card as part of our ongoing support of the 100 Club of Arizona, for introduction in early 2018. For every new card issued, Arizona Federal will make an annual donation to the 100

? locally-owned businesses.

at t

? Continued our funding of scholarships through the Maricopa Community College Foundation to support the educational pursuits of our members and their children.

2017 was an exceptional year for Arizona Federal. As always, I extend my heartfelt gratitude to our member-elected Board of Directors, members of the Supervisory Committee, and my co-workers ? all of whom played a vital role in serving all of

Us. Also, thank you to all of our active and participating members for looking to us Arizona Federal.

Sincerely,

Ronald L. Westad President & CEO

CHAIRWOMAN'S REPORT

As chairwoman of your member-elected Board of Directors, it is my pleasure to share with you the progress made by our cooperative in 2017.

Looking back, Arizona Federal had another year of strong performance, which resulted in our biggest

PLUs (Payback for Loyalty to Us) payout yet ($6.2

million!) to more than 89,000 active members. We had an 18 percent increase in loan originations, for a total of $247.4 million in new loans issued to members, and total member deposits increased to $1.26 billion in 2017.

While most of you are aware of the core services

provided by Arizona Federal (like your deposit and

loan accounts), PLUs is just one example of how your

membership with us is so much more than just a

Cathleen Gleason Board Chairwoman

checking or savings account. As a member-owned,

plus capital to our

active members through competitive rates on loans and deposits, lower fees,

and our year-end PLUs payout. In addition, as a member, you have access to a

of only $3 per

17:

? Identity theft protection and resolution package (ID ProtectTM), available at no cost to you and your household.

? No-cost credit monitoring services for ongoing access to your credit report and credit score.

? Convenient on-the-go account access with cutting-edge mobile banking, mobile deposit and the CardPowerTM app.

, for help tracking spending, creating budgets and more.

? CO-OP shared branch and ATM network, providing account access at more than 5,000 branches and 30,000+ surcharge-free ATMs nationwide.

? Financial coaching for assistance creating spending plans and recommendations for improving your credit score.

? Purchase Rewards cash-back discounts on dining and shopping when you use your Arizona Federal debit card.

? SaversGuide? powered by Entertainment? for discounts at thousands of local and national retailers.

? No-cost, no-obligation insurance reviews so you can be sure you have the right coverage at a fair price.

? Personal car buying experts who can help you locate the perfect new vehicle at a great, no-haggle price.

? Discounted tickets to Phoenix Rising Football Club home matches.

being one of Us, e of them throughout the year. As a member-owner of your local cooperative, the more orm, and the more value you can get back.

Thank you for continuing to place your trust in our cooperative, and for giving me and your Board of Directors the opportunity to serve you.

Cathleen Gleason Board Chairwoman

TREASURER'S REPORT

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Total Assets

Net Worth

$1,537,437,178 $1,243,346,680 $1,285,809,573 $1,398,708,945 $1,475,306,124 $1,537,437,178 11.75% 13.40% 14.11% 14.79% 15.86% 11.75%

2017

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2013 2014 2015 2016 2017

2013

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SUPERVISORY COMMITTEE REPORT

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