Annual Report

KEEPING YOU SAFE IN 2016

Consolidated Statement of IncomeAs of December 21, 2015 (Unaudited)

2015 2014 Loans $15,428,023 $13,889,594 Cash $529,204 $659,803 Investments $10,100,130 $7,170,500 Prepaid/deferred Expenses $112,819 $88,900 Fixed Assets $2,738,146 $2,711,586 Other Assets $230,402 $217,829 Accrued Income $107,891 $96,581 Total Assets $29,246,614 $24,834,793

Accrued Expenses $494,944 $177,390 Shares $27,056,006 $23,040,159 Total Liabilities $27,550,950 $23,217,549

Undivided Earnings $351,847 $406,205 Regular Reserves $1,343,817 $1,211,038 Total Equity $1,695,664 $1,617,244

2015 was one of the most chaotic and truly remarkable years for our credit union. Our credit union grew a whopping 17% over the past year and added more than 200 new members. We introduced more than 10 new products and greatly enhanced the products and services we offer to our members. Our mobile banking application has helped to expand member convenience and our new core processing system is allowing the credit union to serve our members more efficiently every day. Our membership continues to grow thanks to your continued support, kind words, and efforts to continue to share the Desert Valleys experience with friends, family, and colleagues.

Desert Valleys continues our commitment to the community thru our multiple fundraising and involvement efforts. One focus of these efforts has been our “Bite of Reality” event and continued efforts to improve financial education for teens in our community. We have now presented this program to more than 120 students in our valley. During the course of the year, Desert Valleys made monetary contributions of more than $30,000 in support to a variety of community organizations. We are committed to building our community by improving our memberʼs financial future.

We have many new projects and products which we are working on for our members in 2016. This includes upgrades to our checking programs, expansion of our loan products, and continued improvements and enhancements to our mobile and online banking. Our focus this year is on providing members the tools to help protect and insure themselves and their families. Included in this report are some highlights of the exciting products we have coming in 2016.

We continue to work every day on improving how we serve our members and truly appreciate the support our members gave us during all of the improvements we made in 2015. Thanks again for being a part of our credit union family.

Presidentʼs Report

2015 2014Interest On Loans $1,036,792 $993,459 Income From Investments $93,895 $85,459 Fees & Charges $336,485 $439,986 Miscellaneous Income $381,047 $171,139 Total Income $1,848,219 $1,690,044

Salaries And Benefits $745,817 $674,671 Office Operating Expenses $672,621 $609,832 Other Expenses $179,388 $177,461 Provision For Loan Losses $119,239 $90,800 Total Operating Expense $1,717,066 $1,553,871

Share Dividends $20,787 $18,485 Ceritifcate Dividends $31,929 $30,602 Total Dividends $52,716 $49,087 Net Income $78,438 $87,086

IncomeAssets

Liabilities

EquityIncome Before Dividends

Expense

• Identity Theft Protection & Credit Monitoring

• Cell Phone Protection • Accidental Death Insurance • Free Checks & Instant Issue Debit Cards

PREMIUM CHECKINGMAY 2016

UPGRADES TO ENCRYPTION & MOBILE PLATFORMMAY 2016

NEW LOAN PROGRAMSJULY 2016

FINANCIAL EDUCATIONMAY 2016

EMV CHIP CARD SECURITYLATE 2016

• Upgraded Layout for On-Line Banking • Touch ID Authentication • Additional Transfer Options

• Bite of Reality April 23rd, 2016 • Reality Bites – Teen & Adult Education Course

• Title Loan Alternative Program • Mortgage Lending

We Take Your Security PersonallyUpcoming Upgrades in 2016

SAFE . S IMPLE . SMART

®

PRSRT STDUS POSTAGE

PAIDRidgecrest, CA

Permit #62

P.O. Box 367Ridgecrest, CA 93555

Phone: (760) 446-3500Fax: (760) 446-6904Email: info@desertvalleys.org

70th AnnualMembership Meeting

April 26, 2016 - 6 p.m.

Community Resource Center atDesert Valleys FCUMeeting Details:

www.desertvalleys.org/annualmeeting

2016 DESERT VALLEYS FCUBOARD STAFF ROSTERBoard of Directors: Chip Holloway - Chairman Mike Myers - Vice Chairman Dave Barrett - Secretary Teresa Sizemore - Treasurer Justin OʼNeill - Director Sam Hand - Director Jill Board - DirectorSupervisory Committee: Timothy Neipp - Chair Barry Lowry - Member Michael Pierce - Member Lucas Llewellyn - Member Cherish Rindt - Member

Staff: Eric Bruen – President/Chief Executive Officer Dana Griffin – Vice President of Operations Dana Beene - Senior Vice President/ Chief Financial Officer Robert Tulao – Senior Loan Officer Kristi Myers – Head Teller Cindee Llewellyn – Loan Fulfillment Officer Tonja Lavarreda – EFT Services Adrian Ochoa – Loan Officer Alex Diaz – Teller Alison OʼGara –Teller Keslie Leffler – Teller Holly Lukens – Teller Lorena Reveles – Teller Brianna Green – Teller

The Nominating Committee of Desert Valleys Federal Credit Union has nominated the following three persons to fill three vacancies on the Board of Directors.· Teresa Sizemore (Incumbent) – Three Year Term· Dave Barrett (Incumbent) - Three Year Term· Sam Hand – (Incumbent) – Three Year TermThe election will not be conducted by ballot and there will be no nominations from the floor when there is only one nominee for each position to be filled. If you are interested in becoming a Desert Valleys FCU Board Member you may pick up a packet for petition at the credit union office or have one mailed to you by calling the credit union. All notices and certificates must be returned to the CEO no later than April 20th, 2016 in order to be eligible for election.

Notice to members regarding the upcoming elections for the Desert Valleys Federal Credit Unionʼs Board of Directors