2008 Annual Report Strength and Stability BOARD OF DIRECTORS MANAGEMENT TEAM

Manuel R. Ybarra Harriet May Chairman of the Board President/CEO

Gregory J. Watters Fermin Acosta, Jr. Vice Chairman Senior Vice President Administrative Services Frank Garcia Secretary/Treasurer Rudolf Kuehne Senior Vice President Harriet May Information Technology President/CEO Crystal Long Yolanda M. Estrada Senior Vice President Consumer Loans and John Fernandez Remote Services

Annie Koch Steven G. Lutz Senior Vice President Luis C. Mata Chief Financial Officer

Jose I. Quiñonez, Jr. Sarah Newman Senior Vice President General Counsel

ADVISORY MEMBERS Musette Bracher Vice President Daniel Anchondo Marketing

Guadalupe Giner Ceci Davila Vice President Robert C. Nagel Sales and Service Operations Ricardo Soto Barbara Franco Vice President Internal Audit AUDIT COMMITTEE Arturo Moreno Gregory J. Watters Vice President Chairman Business Services

Frank Garcia Janie Shockley Vice President Luis C. Mata Human Resources chairman’s message

The year 2008 was a difficult one for millions of hardworking Americans. With the collapse of the housing market, the Wall Street bailout, closures of major financial institutions, corruption and mismanagement at the highest levels of corporate America and increased unemployment across the country, our country faced one of the worst years in recent memory. Long shielded from the sharp ups and downs of the national economy, El Paso was one of 58 cities in the United States that continued to grow during 2008. And, the same was true for GECU. While many financial services organizations throughout the country struggled, 2008 was a year of growth, strength and financial stability for your credit union as we ended the year with over $1.42 billion in assets and 281,983 members. Nevertheless, GECU was presented with challenges including a decrease in loan demand. But, as Yogi Berra once said, “If you donʼt know where youʼre going, you might wind up somewhere else.” Thanks to a proactive professional staff and the safe and sound business practices put in place to protect the money youʼve entrusted to us, we met those challenges head on, adapted to a changing environment and stayed the course. While itʼs fair to say we operated more conservatively in 2008, we didnʼt change our commitment to our members. When many troubled financial institutions made it difficult, GECU continued to provide loans for members purchasing or remodeling homes and buying automobiles. We never wavered from the philosophy on which we were founded 76 years ago – people helping people – not just in good times, but when times are tough. In 2008, we also celebrated the grand opening of GECUʼs Operations Center, “our diamond in the desert.” Built to house GECUʼs administrative functions, the striking design of our building is a symbol of stability and a testament to the strength of El Pasoʼs largest, locally-owned institution. Your board of directors is proud of what it represents for GECU and El Paso and congratulates GECUʼs management and staff team for keeping the vision alive. We may be in for a rough road ahead as the full effects of the economic crisis continue to unfold. But one thing you can count on, GECU is solid as a rock. Weʼve been here for 76 years and plan to be around for another 76. Rest assured your money is safe and it will be business as usual in 2009. Thank you for placing your confidence in GECU.

Manuel R. Ybarra Chairman of the Board

(left to right, front to back) Manuel R. Ybarra - Chairman of the Board , Harriet May - President/CEO , John Fernandez, Yolanda M. Estrada, Frank Garcia - Secretary/Treasurer , Luis C. Mata, Ricardo Soto, Guadalupe Giner, Jose I. Quiñonez, Jr., Gregory J. Watters - Vice Chairman , Daniel Anchondo, (not pictured) Annie Koch, Robert C. Nagel president’s report

I Del Valle High School Branch Iʼm happy to report it was a good year GECU experienced for your credit union. At the end of 2008, numerous achievements In October 2008, we opened our second membership climbed to over 281,000. We in-school branch at Del Valle High School used to say that meant one out of three and accomplishments providing numerous financial opportunities El Pasoans were GECU members; today, throughout the year, to students in another underserved area of that percentage is even higher. And, thanks including: El Paso County. to you, GECU reached $1.29 billion in deposits I GECU Horizon Branch and $1.42 billion in assets with a return on I Savings Challenge '08 assets of 1.28%. What did that mean for you? GECUʼs Horizon branch opened in July 2008 Simply put, we made loans, served our membersʼ As El Pasoans continued to look for ways to to great fanfare and much anticipation from needs and earned income during difficult save money and reduce their debt, GECUʼs our Horizon City members. economic times. Thatʼs an extraordinary Savings Challenge ʼ08 continued to be a accomplishment in a year when many source of financial management skills for our GECUʼs roots go deep. It was built on the financial institutions posted record losses. membership. Launched as an experiment in shoulders of a handful of risk takers who cared During 2008, we improved the lives of our 2007, we learned people wanted the tools and for each other, their co-workers, families and members by making over $665 million in loans. practical advice to change the way they handled neighbors. It took courage to get GECU going Representing an increase of $117.8 million their finances. Weʼre proud of the impact Savings and strength to keep us going! In 2008, our (10.23%) in our loan portfolio, we ended the Challenge ʼ08 had on thousands of families who financial health was excellent; our balance sheet year with a loan-to-deposit ratio of 97.5%, followed the journey of our participants, Isabel strong; and our underwriting standards solid. meaning 97.5% of your deposits were invested Castillo, Adrian and Haydee Duran, Keith and GECU is safe, sound and here for the long haul. in loans to other GECU members. Thatʼs the Christine Huse, Peter and Araceli Ortiz, Lorena As Adolfo Loera always asked when making credit union mission and one we took seriously, Quezada and Jerry and Liza Marquez. decisions for our membership, “is this in the best that of people helping people . I Financial Education interest of and for the service to our members?” I On the downside, bankruptcy filings increased am proud to say, every decision weʼve made and by $4.6 million from 2007. As we have in years 2008 was a banner year for GECUʼs financial continue to make is always in your best interest. past, we will continue to monitor the situation and education outreach program. Not only were our step up our financial education and counseling to seminars available in each of our branches, we serve as a proactive measure in bankruptcy took them out into the community. Over 1,200 prevention in 2009. teens, young adults, couples and families learned to manage their finances at free seminars and workshops held in high school classrooms, Harriet May gymnasiums and businesses throughout El Paso. President/CEO GECU’s lending accomplishments during 2008

GECU’s Lending Accomplishments During 2008 I I Indirect lending led the way with $225 million in vehicle loans funded. I SmartCall, GECUʼs in-bound and out-bound call center, funded over $111.6 million in loans. I Mortgage lending funded $77.1 million in home equity loans and $52.7 million in first lien mortgages. GECUʼs Business Services Departmentʼs portfolio was $66 million in business loans at the I close of business December 31. SmartBranch, GECUʼs online banking channel, realized an impressive increase in volume with over $30 million in consumer loans. Consumer Loans by Type Made in 2008

Loan Type Number of Loans Loan Totals New Vehicles (Lobby/SmartCall) 2,797 $ 49,276,407 Used Vehicles (Lobby/SmartCall) 2,815 $ 30,831,152 New Vehicles (Dealerships) 6,662 $ 168,946,849 Used Vehicles (Dealerships) 3,282 $ 56,315,616 Other Installment Loans 15,511 $ 73,313,585 Mortgage Loans (First Lien) 468 $ 52,745,326 Home Equity Loans 1,502 $ 77,100,064 Credit Card Advances 937,679 $ 82,540,059 audit committee report

The Audit Committee, comprised of three volunteer member-owners, oversees the Internal Audit Department which conducts comprehensive internal audits throughout the year ensuring 1) accounting records and reports are prepared promptly and accurately reflect operations and results; 2) established internal controls are effectively maintained and adequately protect the credit union, its assets, members, management and employees; 3) each area of the credit union is carrying out the plans, policies and procedures for which it is responsible as directed by the board of directors. The Audit Committee also oversees the annual comprehensive audit conducted by the independent certified public accounting firm of Lauterbach, Borschow & Company, P.C. Their examination was conducted in accordance with generally accepted auditing standards as issued by the American Institute of Certified Public Accountants. As a result of the audits performed, the Audit Committee believes the financial statements included in the 2008 annual report present the preliminary financial condition of GECU for the year ended December 31, 2008, subject to a possible decrease in income resulting from pending accounting pronouncements for an NCUSIF assessment expected by March 31, 2009.

Gregory J. Watters, Chairman Frank Garcia Luis C. Mata

A full copy of GECUʼs 2008 financial statements may be obtained by contacting the office of Harriet May, GECU President/CEO. return to members 3 4 2

1 1 Life Savings $ 24 7,554 0.7% 5 2 Dividends - Shares 3,15 1,964 8.3% 3 Interest - MMA 1,109,977 2.9% 4 Interest - Checking 1,085 ,644 2.9% 5 Interest - IRA 6,497,034 17.2% 6 Interest - CD 25,779,817 68.0%

Total Return to Members $ 37,8 71,990 100.0% 6 distribution of earnings 2

1 Return to Members $ 37,871,990 32.1%

2 Employe e Compensation & Benefits 32 ,200,461 27.3%

3 Operating Expenses 43 ,568 ,683 36.9% 1 4 Reserves 4,394 ,789 3.7% 3 Total Distributi on of Earnings $ 118 ,03 5,923 100.0% 4 statements of financial condition December 31, 2008 and 2007

ASSETS 2008 2007

Cash and cash equivalents $ 52,101,778 $ 61,079,954 Investments: Securities available for sale 12,133,221 5,823,193 Securities held to maturity 12,359,992 59,948,301 Other investments 9,903,794 13,769,864 Loans held for sale – 2,138,653 Loans receivable, net 1,260,283,515 1,144,107,650 Accrued interest receivable 5,697,550 5,481,188 Accounts receivable and other assets 4,250,587 5,054,213 Mortgage servicing rights 673,773 1,196,490 Property and equipment, net 52,591,338 42,957,072 NCUSIF deposit 10,960,368 10,662,156

Total assets $ 1,420,955,916 $ 1,352,218,734

LIABILITIES AND MEMBERS’ EQUITY Members’ share and savings accounts $ 1,289,237,662 $1,173,044,803 Interest and dividends payable to members 1,957,146 2,396,857 FHLB advances 178,564 50,945,008 Accrued expenses and other liabilities 5,786,734 5,052,623

Total liabilities 1,297,160,106 1,231,439,291

Members’ Equity Retained earnings, partially restricted* 123,795,810 120,779,443

Total members’ equity 123,795,810 120,779,443

Total liabilities and members’ equity $ 1,420,955,916 $1,352,218,734

*See footnote on Statements of Income. statements of income Years Ended December 31, 2008 and 2007

2008 2007 Interest income Loans $ 86,287,959 $ 75,925,167 Investments 2,732,782 3,540,296 89,020,741 79,465,463 Interest expense Members’ share and savings accounts 37,624,436 32,535,183 Borrowed funds 384,915 324,927 38,009,351 32,860,110 Net interest income 51,011,390 46,605,353 Provision for loan losses 13,685,987 6,234,389 Net interest income after provision for loan losses 37,325,403 40,370,964 Fees and other operating income Service fees 25,026,710 24,247,267 Loan late charge fees 2,325,598 1,821,429 Net gain on sale of loans 153,316 757,008 Mortgage servicing 91,059 97,174 Other 1,401,284 3,940,627 28,997,967 30,863,505 Operating expenses Compensation and benefits 32,200,461 25,067,894 Office operations 18,416,372 19,005,094 Occupancy 3,356,132 2,632,322 Education, promotions and conferences 4,855,015 3,377,239 Other, net 3,117,816 3,644,253 61,945,796 53,726,802 Income from operations 4,377,574 17,507,667 Non-operating income Gain on sale of property and equipment 17,215 77,658

Net income* $ 4,394,789 $ 17,585,325

*2008 net income may decrease upon receipt of accounting pronouncements for an estimated $5.5 million NCUSIF assessment expected by March 31, 2009. SHARE AND DEPOSIT ACCOUNTS LOCATIONS Share (savings) Accounts Main Office Christmas Club Accounts 7227 Viscount Boulevard No Excuse Savers Club Accounts Airway Driv e-thru Certificates of Deposit 1245 Airway Boulevard Money Market Accounts Horizon Office Personal Checking Accounts 14476 Horizon Boulevard Individual Retirement Accounts (IRAs) Northeast Office No Excuse IRA CDs 5625 Transmountain Road Business Checking Accounts West Offices 5670 North Mesa Street LOANS 1500 North Resler Drive Personal Loans East Offices New and Used Auto Loans 10435 Vista Del Sol Drive Home Mortgage Loans 11987 Rojas Drive Home Equity Loans 3037 Trawood Drive Home Improvement Loans (Driv e-thru only) MasterCard ® Credit Cards Lower Valley Office Lines of Credit 8936 Alameda Avenue Business Loans Downtown Office 700 East San Antonio Street SPECIAL SERVICES 1st Floor, Federal Building SmartBranch (online services) Operations Center www.gecu-ep.org 1225 Airway Boulevard SmartLine (24-hour account information) MAILING ADDRESS SmartCall P.O. Box 20998 (new accounts and loans call center) El Paso, TX 79998-0998 ATMs MasterMoney ® Debit Card TELEPHONE NUMBERS Direct Deposit All Offices Automatic Transfers 915.778.9221 (between GECU accounts) 1.800.772.GECU (4328) Safe Deposit Boxes SmartLine Night and Lobby Depositories 915.778.0009 IRnet International Remittance Network 1.800.772.0009 (for international wire transfers) SmartCall Domestic Wire Transfers 915.778.9221 VIGO – Wire Transfers to Mexico 1.800.772.GECU (4328) Overdraft Privilege WEB ADDRESS www.gecu-ep.org