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    CHAIRMANS & PRESIDENTS REPORT

    Most new members chose the Connect Bundle, which offered potential savings of hundreds of dollars per year in fewer fees and discounted loan rates. Existing members had the choice of remaining in an "unassigned" membership or upgrading into a bundle. Many of those who have done so were already using the products in the bundle, and thus were able to get the benefits of the bundles without changing their banking behavior.

    Based on member feedback, in 2017 we will be developing and launching additional bundles to further tailor our products to our members' needs.

    ~ We improved our technology to give you easier access.

    We heard you loud and clear on our old website. The design was stale, there were too many pages, and navigation took too many clicks. We launched a new website in August, with a fresh and more modern look, cleaned up site structure, and most information available within 2 clicks from the home page. We envision the website as a 24/7 concierge for anyone seeking information about Signal's products and services, and will continue to enhance and modify the site to make information available to members and non-members as easily as possible.

    Text Banking, a new service separate from the mobile banking app, also launched in 2016, giving you the ability to get balance and history information about your accounts instantly, with a few taps on your smartphone or tabletno sign-in needed. Waiting in line to pay for something and want to make sure you can cover the expense? Text BAL to a short code, and we'll text your balance right back to you. You can also get the last four transactions just as quickly. So the next time you want to know your balance, skip the call or the ATMjust text us.

    The Signal mobile banking app also came in for enhancements in 2016. Fingerprint authentication as well as password changing are now available from within the app, plus check images, in addition to the standard functions like transfers and deposits.

    Our online banking portal got an upgrade to the newest software, as well a new look to more closely match the new website, and featuring a dashboard for members wanting a snapshot of their accounts and transactions, and a new name: eBanking. We redesigned the ads that appear in online banking as well, and even won an Intelligent Design Marketing Ad of the Month Award in December from our advertising partner, Deep Target. While we work toward a single sign-on solution to allow our credit card accounts to be included in online banking, we upgraded the design of our Visa portal as well.

    ~ We focused on fighting fraud through chip technology and education.

    The chip-enabled credit cards we issued in 2015 reduced fraud on members credit card accounts by 34% in 2016 vs. 2014. In early 2017 we will be mass-reissuing our debit cards, also with chip technology, offering another layer of security for members.

    We stepped up our efforts to educate members about card fraud, identity theft, and online safety. This included blog posts, email blasts, and education of staff to understand the benefits of chip technology,and the most common forms of identity theft. We also developed step-by-step guides to help members sign up for electronic services and learn how to use them. And in 2017 we have plans to develop a seminar on avoiding identity theft.

    ~ We increased certificate rates and offered a high-yield money market.

    We continued to build on our 2015 success by offering highly competitive rates, especially on our share certificates and money market accounts. To help our members during the sometimes uncertain election year, we created a 3-tiered ladder certificate

    Heres what we heard

    ~ Many of you were not aware of all the products and services Signal makes available to members to meet the needs of their daily lives as well as life stages like saving for retirement, buying a home, and preparing for the financial independence of a child.

    ~ Our website was dated and difficult to navigate, and our mobile and online banking programs were not up to snuff.

    ~ Members are concerned about fraud and identity theft in an increasingly online and connected world.

    ~ Many of you are concerned about your savings yields and loan rates. Making your income go farther includes finding the best loan rates and being able to get a return on your savings that actually means something.

    Thank you to all of you who contacted us, filled out our surveys, and let us know how you feel about being a Signal member. We wouldn't be here if it wasn't for you!

    Heres what we did...

    ~ We developed bundled products and services to help you simplify your banking.

    An innovative offering in the credit union industry, product bundles cater to a member's relationship with the credit union. Only need basic products? Use the Connect Bundle to get your checking and savings accounts in one package, along with free Bill Pay transactions and loan discounts. Want a bigger banking relationship? We created the Premium Bundle for those of you carrying higher balances and seeking a better return on your investments. We reward your participation with a rebate of your home appraisal fees, a boost to your certificate rates, free checks twice a year, free Bill Pay transactions, and loan discounts. All members new to Signal were offered the option of a Connect Bundle or a Premium Bundle to begin their relationship with us.

    Some new members opted for our la carte option, Signal Selections, which gave them the flexibility of creating their own banking relationship with us, but at a cost depending on their banking habits, as Selections accounts are not exempt from some fees that do not apply to the bundles.

    bundled services for all-in-one banking / website and technology enhancements to improve access / card chip technology to fight fraud /deposit rates far above the national average /

    In 2016 we followed the blueprint we developed based on the feedback you gave us in 2015.

    ground-breaking products /

    service-focused / member

    education /

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    to help our members diversify their investments into short, medium and

    longer term certificates. Our highest rate beat the national average by 40%.

    In 2016 we also recognized the importance of giving members options in how they save.

    Certificates aren't for everyone, so we turned our attention to money market accounts as well. Our

    eMoney Market Account, aka the Signal Premium Money Market Account, offers a 1% yield on balances

    above $25,000. Other high-yield money market account offerings are planned for 2017, in response to the new rate

    environment and to provide more options for members who want a good savings rate, no matter their income.

    ~ We continued to offer our ground-breaking 5/5 Adjustable Rate Mortgage.

    With a mortgage like the 5/5 ARM, which adjust no more than 1% every five years, members can get the low rates of an ARM with less risk of a payment

    increase. It's a truly attention-getting offer that's been popular with members.

    The mortgage team at Signal gets high marks for service, expertise, and accessibility. They hold regular in-branch hours, and partner with local real estate agents to help

    members consider their options and find the right house with the right financing. We look forward to 2017 being an even better year for our members to use their financial

    home (Signal) to finance their dream home.

    ~ We continued to build Signal into a more competitive, more member-focused credit union

    Signal aims to become the primary financial partner for the majority of our members. Service and relationship-building are important pieces of building our reputation as a good primary financial partner.

    In 2016, we made great strides in improving our member service, including the hiring and training of new call center operators and upgrading branch staff to Member Relationship Specialists, who can function as "universal

    tellers." Our marketing focused on building more name recognition in our area, and we strengthened our SEG relationships as well.

    To the Board of Directors, officials and staff of Signal Financial FCU: thank you for your unflagging service in 2016, and your continuing dedication to the credit union. Our warmest gratitude to all our membersyour trust and partnership allow Signal to remain one of the most successful credit unions in the Washington area, and safeguards it as an oasis of cooperation and collective benefit in a world of division and fragmentation. We look forward to continuing to grow with you in 2017!

    Andrew M. Mekelburg, Chair

    Francois R. Verleysen, President/CEO

    In 2016the year Signal Financial turned 69 years oldwe earned Better Business Bureau A accreditation and an A health rating from depositaccounts .com.

    ACCREDITEDBUSINESS

    TREASURERS REPORT

    Signal had a very good year in 2016. Net Income was $945,000an increase of $671,000 over 2015. Overall, our assets increased to $357.5 million from $333.3 million, representing an increase of $24.2 million. That's more than twice the increase of 2015 over 2014, which was $10.0 million. Our gross loan growth of 5.69% continues to improve and kept pace with tremendous paydowns and payoffs as our members' situation changed. Our commercial loan portfolio grew to $88.8 million, increasing our net interest income by $3.9 million. Total shares at the end of the year were $288.9 million, an increase of $8.6 million over 2015s $280.3 million. The introduction of bundled products, along with other strong offerings, has helped Signal increase its products per household and share of wallet.

    Credit Unions continue to compete strongly with