2010 annual report

“ “

Member Relations

Member Loyalty Business Development ATM Group

Sales and Service Consumer Loans

“I’d compare banking with BCU to a breath of

fresh air. The Deposit Anywhere is great, you

can’t go wrong.”Lucas H.12-2010

To some it is simply a slogan. For BCU, it is ingrained in our culture and reinforces the attitude of putting each member fi rst in everything we do. Th at spirit of partnership, transparency and integrity helps defi ne BCU and our commitment to you as we continue to meet your needs through focused eff orts on delivering consistent service, expanded product off erings and access, and competitive pricing. We made a lot of progress together in 2010 and we have a lot more planned in 2011. And as we look ahead to a bright future, your fi nancial security will continue to motivate us and guide our actions.

Because it’s not just a slogan…at BCU, ‘We’ve Got Your Back.’

“Personal service is a dying art in America,

except at BCU. I’ve NEVER had a bad

experience in my decades of membership. I

have been trying to get folks to join all that

time. You have a perfect record

with me.”

Thanks,

Blanche H.

11/2010

time. You have a perfect record

with me.”

Thanks,

Blanche H.

11/2010

have been trying to get folks to join all that

2010 marked a year of great progress for BCU and cautious optimism for many of our members. We were pleased to roll out new deposit and loan products, enhanced convenience through easy-to-use channels, as well as continuing to off er highly competitive rates. To underscore that progress, BCU member loyalty, which is measured through the Net Promoter Score™ methodology, continued to increase and is more than twice as high as the average banking score in the program.

We welcomed over 5,000 new member/owners to BCU during the year while continuing to responsibly serve our 130,000 plus members. As a result, we extended more credit, assumed more deposits, and handled more transactions while growing our capital position to ensure that all members have confi dence in the long-term strength and stability of BCU.

While the economy showed signs of slow growth in 2010, BCU balanced the wide ranging needs of our membership and continued to serve all members with passion and commitment. For the second year in a row, we originated over $500 million in fi rst mortgage loans, helping achieve a milestone in 2010 as BCU is now servicing more than $1.3 billion in mortgages. Additionally, over $230 million in consumer loans, representing approximately 18,000 members were originated during the year.

As a not-for-profi t cooperative organization, we acknowledge our role to help those members who continue to be impacted by the residual eff ects of the recession through credit counseling programs, budgeting tools and fi nancial education. We believe it is our obligation to lead by example, and in that spirit, I am delighted to share that BCU was named for the 6th year in a row to the Honor Roll of Companies that Care. Th is designation recognizes our ongoing commitment to serving members, communities and our employees with standards that promote value, ethical behavior and integrity in our decisions and actions.

CHAIRPERSON’S MESSAGE

H O N O R R O L L 2 0 0 5 - 2 0 1 0

Additionally, as part of our mission to give back, BCU and its employees donated in excess of $150,000 and more than a thousand hours of time in volunteer roles to more than 40 worthwhile causes. Some of those causes, such as the Riverside Foundation, MMRF (Multiple Myeloma Research Foundation), March of Dimes, Youth and Family Counseling, Zacharias Center, and Midwest Palliative Care provide immediate regional benefi ts. Contributions to the American Cancer Society, Habitat for Humanity, American Heart Association and others fund the attainment of important long term goals. Th ese activities underscore our ambition to be “the most selfl ess fi nancial institution on the planet.”

As BCU begins its 30th year of service, the foundation that we have collectively built and you have grown to depend upon, will continue to expand with new product and service introductions. We aspire to create an indispensible relationship with each of our key Partner Companies and every one of our members. Our commitment is to keep working for your benefi t.

On behalf of the Board and staff of BCU, we thank you for your support in 2010 and look forward to serving you and your family in 2011 and well into the future.

Margot Kaplan

Some causes we support

Youth & Family Counseling

Riverside Foundation

“Thank you for being a champion for all babies

by fostering a work environment of caring and we

hope that you can join us on walk day 2011!”

Thanks,Rebecca M.March of Dimes4/2010

At BCU, we believe that a successful fi nancial relationship begins with a commitment. Th at commitment involves fostering trust and confi dence with each member through products and services that are off ered in a consistent, responsive, competitive and ethical way. In summary, always putting our members fi rst in everything we do.

As a result, we introduced the “We’ve Got Your Back” initiative in mid 2010 to demonstrate our singular focus in placing our members fi rst. In the context of this focus, I am pleased to share some of the highlights of 2010.

Products• Introduced a consolidated student loan and MBA loan product• Introduced green home equity loans and expanded hybrid loan discounts• Introduced new Investment Advisory money managers and products• Introduced instant issue debit cards at our service centers• Introduced a comprehensive ex-patriot program to support our members both here

and abroad

Convenience and Delivery • Launched Deposit Anywhere, a new remote deposit service available from a home

scanner or smartphone• Launched a mobile phone application for iPhoneTM and AndroidTM to improve

mobile experience• Introduced an electronic signature option to add convenience for loans closed

electronically• Added 63 new shared branching locations to now provide members with over 6,500

locations to conduct transactions • Introduced single sign on capability so members can now see their balances and

investment information on the same screen as their BCU loan and deposit products within Online Banking

PRESIDENT’S REPORT

Some of our partner companies

“BCU made it easy to complete a balance transfer of my Credit Card and move my car loan from a previous bank.”Anna L.10/2010

Infrastructure• Added a service center in San Antonio, TX• Introduced a new mortgage loan servicing partner to deliver expanded functionality

for our mortgage loan members• Introduced a new business partner for our Investment Advisory services to

support new products, account aggregation and members’ portfolio performance measurement

• Updated the Web site with new navigation functionality and expanded education, demos and instructional guides

As a result of our investment and commitment to convenience and the tools we provide, online access by our members increased 20% to average approximately 550,000 logins per month, and we now have over 50,000 members actively using our online channel. Mobile banking logins increased 170% to 43,000. Due to the continued expected rapid growth in mobile banking, we will be rolling out many new enhancements in 2011 to support our banking anywhere at anytime access.

By making our interest rates highly competitive, BCU was able to help members purchase or refi nance consumer and mortgage loans that totaled $730 million. Additionally, we actively reduced credit card interest rates, and coupled with the attractive rewards and cash back programs off ered, we added a record amount of new credit card users in 2010.

In closing, the economic environment of the past few years has been challenging for many. However, thanks to the support of the key companies we serve, the active participation of our members, the guidance of our Board and volunteers, and the hard work of our staff , BCU is better positioned and stronger than ever.

We look forward with great optimism to a bright future and being your indispensible fi nancial partner.

Michael Valentine

“I have always received great service

and the fact that the location is on-site at the

employer is invaluable.”

Thanks for always having my back,

Michael A.Nov. 2010

STATEMENTS OF FINANCIAL CONDITIONAs of December 31, 2010 and 2009

(in thousands) 2010 2009ASSETSCash and cash equivalents $ 29,285 $ 75,292Investments

Trading, at fair value 56,368 59,044Available-for-sale, at fair value 24,678 34,756Other 22,894 24,669

Mortgage loans held for sale 52,075 15,067Loans to members, net 1,199,946 1,159,450

(including $38,387 at fair value as of December 31, 2010)

Accrued interest receivable 4,350 4,549Property and equipment, net 17,742 19,549NCUSIF deposit 12,363 12,064Mortgage servicing rights, at fair value 10,819 9,785Other assets 13,433 8,570

Total Assets $ 1,443,953 $ 1,422,795

LIABILITIES AND MEMBERS’ EQUITYLiabilitiesMembers’ shares $ 1,313,993 $ 1,259,218Accrued expenses and other liabilities 18,803 16,804Borrowed funds - 40,000Total Liabilities 1,332,796 1,316,022

Members’ EquityRetained earnings, substantially restricted 110,803 106,494Accumulated other comprehensive gain 354 279Total members’ equity 111,157 106,773

Total Liabilities and Members’ Equity $ 1,443,953 $ 1,422,795

“I have never been

so happy banking

with anyone. I

will NEVER go

back to a bank!”

Marcie S.11/2010

Years ended December 31, 2010 and 2009STATEMENTS OF INCOME

(in thousands) 2010 2009Interest IncomeInterest on loans and mortgage loans held for sale $ 73,339 $ 75,330Interest on investments and cash equivalents 3,283 3,283Total interest income 76,623 78,613

Interest ExpenseDividends on members’ shares 18,436 27,280Interest on borrowed funds 1,185 2,383Total interest expense 19,621 29,663Net Interest Income 57,002 48,950

Provision for loan losses 27,500 28,750Net Interest Income A� er Provision for Loan Losses 29,502 20,200

Non-Interest IncomeService charges and other fees 11,914 13,795Interchange income 10,616 9,634Other mortgage income 4,098 3,977Net gains on sales of loans 5,101 5,974Other non-interest income 6,834 6,538Gain on sale of investments available-for-sale 763 690Gain (loss) on assets at fair value (663) 11Corporate credit union capital impairment (446) (1,053)Recapitalization gain on NCUSIF deposit - 9,013Total non-interest income 38,217 48,579

Non-Interest ExpenseSalaries and benefi ts 27,671 27,005Loan costs 10,207 9,164Equipment and data processing 5,906 6,114Occupancy 3,810 3,849Other operating 12,564 11,371NCUSIF assessment 3,252 158Total non-interest expense 63,410 57,661

Net Income $ 4,309 $ 11,118

“We received the best rate

around!!! Since we already had a

mortgage through BCU the application

process was really easy.”

Steven G.

10/2010

We are excited to introduce 360 Banking, our newest eff ort to provide access to BCU through any of the multiple access channels that you prefer using. Mobile access will be augmented by a new generation of text banking and text alerts while mobile applications will have expanded functionality to include credit card and mortgage history and transfer options.

Additionally, service center expansion is planned in select new locations to support the growing needs of our partner companies. Our goal is to deliver the same high quality, seamless, consistent service to you wherever you are, however you want, and whenever you need access to your accounts and BCU.

As we recognize the various needs and niches of our membership, we will be introducing a new Visa Signature® credit card that delivers exclusive features and benefi ts. Additionally, we are rolling out ‘Design Your Own Card’ which allows you to personalize your credit card with the picture or image of your choice. For those members who have a business, a Visa Business credit card will also be introduced in 2011 to provide benefi ts that make using and tracking business expenses more convenient and rewarding.

BCU plans to make your experience applying for membership, a loan, or switching your banking relationship to BCU as eff ortless as possible through redesigned processes and systems. We also plan to introduce an innovative auto concierge service to assist members in locating and purchasing a vehicle.

Our Investment Advisor Group will continue to enhance value for each member with expanded products, expertise and tools with an emphasis on investments, insurance and fi nancial and retirement planning.

So, stay tuned for many high value products, services and activities at BCU. Because, unlike many other fi nancial institutions, at BCU, it’s more than a slogan when we say ‘We’ve Got Your Back.’

LOOKING AHEAD

“I was referred to the credit union by a co-worker. I knew that they were

located on-site, but I didn’t know anything about them. I usually don’t go

looking for a different financial service unless I’m not happy with my existing

bank, but I’m so glad that I’ve been ‘turned on’ to the credit union here at

Cardinal. They’re convenient, friendly, and helpful.” Mary W.10-2010

BOARD OF DIRECTORS,COMMITTEES & OFFICERSBoard of DirectorsTh omas M. AbateMichael J. BaughmanRobert A. BenzigerMichael J. CurranDavid F. DrohanTh omas W. HodsonMargot F. KaplanRon K. LabrumJames H. Taylor, Jr.Charles W. Th urmanMichael G. Valentine

Executive CommitteeMargot F. KaplanChairperson

Th omas M. AbateTh omas W. HodsonRon K. LabrumJames H. Taylor, Jr.

Supervisory CommitteeMichael J. BaughmanChairperson

John M. BirdSebastian J. BufalinoScott A. KilgrenWendy W. Hart

Finance CommitteeCharles W. Th urmanChairperson

Todd A. GustafsonTh omas W. HodsonMargot F. Kaplan

Offi cers

Michael G. ValentinePresident/CEO Treasurer

Margot F. KaplanChairperson

� omas M. AbateVice Chairperson

Robert A. BenzigerSecretary

Todd A. GustafsonSenior Vice President/CFO/Asst. Treasurer & Secretary

Robert McKaySenior Vice President/COO

John BratsakisSenior Vice President/Business Development

Je� rey M. JohnsonSenior Vice President/Information Systems

� omas G. MooreSenior Vice President/Financial Products & Strategies

Lisa A. WilsonSenior Vice President/Human Resources

Herbert O. BehrensVice President/Mortgages

James R. BlockVice President/Lending

Patti DixonVice President/Service Centers

C.J. PrestoVice President/Finance

Carey A. PriceVice President/Sales & Service

John S. SahagianVice President/Collections

Charles E. SmithVice President/Controller

Sarah � orrensVice President/Talent Management

Douglas N. WrightVice President/Audit & Compliance

Director EmeritusSamuel G. O’Kelly

“BCU has great services, like PowerChecking

and low interest rates on loans.”

Melody M. 3/2010

ArkansasMountain Home1900 North Highway 201Mountain Home, AR 72653

CaliforniaBrea250 S. Kraemer BlvdBrea, CA 92822

Glendale4501 Colorado BoulevardLos Angeles, CA 90039

Fremont47900 Bayside ParkwayFremont, CA 94538

Irvine*1212 Alton ParkwayIrvine, CA 92606

Westlake Village1 Baxter WayWestlake Village, CA 91362

FloridaKendall11800 S.W. 147th AvenueMiami, FL 33196

Miami8600 N. W. 41st StreetDoral, FL 33166

IllinoisCrystal Lake*415 South Main StreetCrystal Lake, IL 60014

Deerfield1 Baxter ParkwayDeerfield, IL 60015Lake Forest

Trustmark400 North Field DriveLake Forest, IL 60045

Brunswick1 North Field CourtLake Forest, IL 60045

McGaw Park1485 Waukegan RoadMcGaw Park, IL 60085

Round LakeRoute 120 & Wilson RoadRound Lake, IL 60073

Vernon Hills*340 N. Milwaukee AvenueVernon Hills, IL 60061

IndianaBloomington927 South Curry PikeBuilding BBloomington, IN 47403

MassachusettsNatickOne Boston Scientific PlaceNatick, MA 01760-1534

Marlborough100 Boston Scientific WayMarlborough, MA 01752

MinnesotaMaple Grove2 Scimed PlaceMaple Grove, MN 55311

St. Paul4100 Hamline Avenue NorthSt. Paul, MN 55112

MississippiCleveland911 N. Davis AvenueCleveland, MS 38732

New YorkGlens Falls8 Glens Falls Tech ParkGlens Falls, NY 12801

North CarolinaNorth Cove67 Pitts Station RoadMarion, NC 28752

OhioDublin7000 Cardinal PlaceDublin, OH 43017

TexasSan Antonio7034 Alamo Downs Parkway San Antonio, TX 78238

Puerto RicoAibonitoRoad 721 KM 0.3Aibonito, PR 00705

AñascoRoad 402, North KM 1.4Anasco, PR 00610

Bianca*Salón de Actividades BiancaCarretera #2 KM 143.0Anasco, PR 00610

CarolinaRoad 109 KM 0.7Carolina, PR 00987

Coopervision/Ponce500 Carr., 584Lote 7Amuelas Industrial ParkJuana Diaz, PR 00795

JayuyaRoad 144 KM 20.6Jayuya, PR 00664

MaricaoRoad 357 KM 0.8Mariacao, PR 00606

San GermánRoad 122 KM 0.5San Germán, PR 00683

*Public Access

SERVICE CENTERS as of December 31, 2010

“BCU is like Cheers...everybody knows your name.“ Michael K.11-2010

BCU Main OfficeP.O. Box 8133340 North Milwaukee AvenueVernon Hills, IL 60061

Member Relations800-388-7000847-522-8749 fax

24-Hour Telephone Teller800-944-8143

Online Bankingwww.BCU.org

Email AddressaskBCU@BCU.org

Servicios En Español800-214-5098www.tuBCU.orgpreguntaBCU@BCU.org

To serve members who do not live near a BCU location, your credit union is affiliated with a network that allows members to conduct transaction at over 6,500 locations in 50 states and 8 countries. Visit the Branch and ATM Loca-tor at www.BCU.org to search for the shared location nearest you.

“I’d compare banking with BCU to a breath of

fresh air. The Deposit Anywhere is great, you

can’t go wrong.”Lucas H.12-2010

iPhone™ is a registered trademark of Apple Inc.Android™ is a registered trademark of Google Inc. Use of this trademark is subject to Google PermissionsVisa® is a registered trademark of Visa Inc.