2020Annual Report

Emrich StellarJoe Dragovits Gerard JudgeGary Haas Robert NolterJessica Ryan Frederick Molchany

Board of Directors:Chairperson

Vice-Chairperson Treasurer

Assistant TreasurerSecretary

DirectorDirector

CHAIRPERSON’S REPORT

People First continued to live the credit union philosophy of “People HelpingPeople” during a year that will be remembered for its difficulties and challenges. Throughout 2020, the Board of Directors and the Senior Management Teamfocused on keeping everyone safe while still serving our members.

In early spring, Governor Wolf imposed a Stay-at-Home Order to prevent thedeadly spread of COVID-19 that restricted travel and resulted in school andbusiness closures across the state. As an essential business, People First quicklypivoted to a modified operating model that served members with drive-thruservices, appointment-only, and digital banking alternatives. During the summer months, our online banking usage increased 65%. As the restrictions eased, wereopened our lobbies while following pandemic protocols.

People First recognized the pandemic’s impact on its members and quicklyresponded. Members were able to skip their monthly loan payments for up to three months. This meant that 1,890 members could defer their payments at no cost. Inaddition, a total of 1,187 credit cardholders were able to do the same. Our staffworked diligently to help members with their finances throughout the year.

In early 2020, the Board of Directors began a nationwide search for a new President and CEO. In September, we were proud to announce Howie Meller as our new leader. Howie’s extensive financial services’ background and collaborative leadership style will enable him to provide the visionary leadership needed to grow the credit union while honoring the time-honored tradition of “People Helping People”.

Emrich Stellar, Chairperson

Always friendly smilesand very happy toanswer any questions!

-Christian L.

12/31/19 12/31/20Loans 392,806,142 356,900,881Less: Allowance for Loan Losses (2,417,755) (2,422,408)Add: Deferred LoanOrigination Costs & Premiums

4,132,276 3,636,257

Net Loans 394,520,663 358,114,730Cash and Investments 190,646,980 360,469,582Land and Building (Net) 9,261,289 9,424,643Furtniture, Fixtures and Equipment 2,964,024 2,318,442All Other Assets 20,044,850 38,743,634

Total Assets:

$617,437,806

$769,071,031

Assets

12/31/19 12/31/20Current Liabilities 811,642 1,325,916 Shares 373,437,840 519,283,270 Money Market Shares 49,390,274 60,806,921 Share Certificates 149,066,934 134,023,213 Regular Reserve 4,194,127 4,194,127 Undivided Earnings 48,355,747 56,330,285 Unrealized InvestmentGain/(Loss)/OCI

(7,818,758) (6,892,701)

Total Liabilities and Equity: $617,437,806

$769,071,031

Liabilities & Equity

12/31/19 12/31/20Interest from Loans 19,910,889 19,081,431 Income on Investments 3,882,203 3,979,419 All Other Income 8,060,468 7,763,774 Total Income 31,853,560 30,824,624 Operating Expenses 23,350,989 23,229,607 Net Operating Income 8,502,571 7,595,017 Non-Operating Gain/(Loss) 124,762 2,294,455 Net Income Before Dividends 8,627,333 9,889,472Dividends 3,274,964 2,858,202Net Income After Dividends 5,352,369 7,031,270

Income & Expense

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

Balance Sheet

To be able to assure the members of the credit union’s sound position, theSupervisory Committee utilizes the services of a certified public accountingfirm, RKL, of Wyomissing, PA. They conduct a comprehensive annual audit and complete the verification of members’ accounts as required by federal law. The credit union also utilizes third party consultants that review the credit union’s internal controls, policies and procedures in addition to the regular federalexamination by the NCUA.

Federal credit union bylaws dictate that the Supervisory Committee isresponsible for completing annual and supplemental audits to determine that accounting records and reports accurately reflect operations and actual results.

With the help of our Board of Directors, management, and staff, our committeeis able to perform our duties and satisfy the legal responsibilities entrusted to us.

Jessica P. Ryan, Chairperson, Supervisory Committee

SUPERVISORY COMMITTEE REPORT

Amazing staff! Been goingto this location since I wasa teen and now almost adecade later they helped me purchase my second vehicle through their loan options. Extremely happy overall!

-Jorge R.

People First is an excellent place. I’ve been a member for over a year now and they’ve been the best. I was in need of financial help and was suggested to contact the Nazareth Branch. They are phenomenal and helped me out tremendously. With the covid-19 out there the building is very safe with all of their guidelines.

-Jay M.

I am pleased to report that People First Credit Union’s assets grew by 25% to a total of$769 million in 2020. This asset growth was primarily due to share growth of $142 millionas our members put their trust in People First to protect their funds. The year of 2020 willbe remembered as one of uncertainty and change in our lives and in our finances. In March, we were all faced with a global pandemic and the Federal Reserve Bank quicklydecreased its overnight rates by an unprecedented 1.5%, causing financial institutionsacross the country to reduce offering rates on deposits. Stimulus money from the federal government flowed into credit union accounts providing much needed assistance to our members and local small businesses.

Early in the year, we saw a general decline in lending requests due to the impact of COVID-19. As the year went on, lending demand began to increase, notably in themortgage and business lending sectors. Members have been refinancing their mortgages, thereby improving their financial conditions, as mortgage rates remain at historic lows. Our consumer lending rates are among the lowest in the Lehigh Valley, and we have money to lend. Delinquency and loan losses remained extremely low in 2020, contributing to a year of financial stability for your credit union.

During 2020, People First recorded total income of $30.8 million derived from interest on loans of $19.1 million, interest on investments of $3.9 million, and other operating income of $7.8 million. Operating expenses were $23.2 million, non-operating gains were $2.2 million, and total dividend and interest expense paid to members was $2.8 million. As a result, net income for the year was $7 million, representing a return on average assets of .91%. and a net worth ratio of 7.87%, which is well above the minimum 7.00% ratio necessary for us to be classified as a “well-capitalized” credit union.

We look forward to another year of growth and financial stability in 2021.

Respectfully submitted,Gerard J. Judge, Treasurer

TREASURER’S REPORT