Ron Westad
President/CEO

To do good, we must do well.

It’s all about you!

2007, perhaps more than any other year, highlighted the direct correlation between our members’ financial well-being and your credit union’s. The dramatic decline in home values, the re-setting of mortgage interest rates and the resulting higher payments, the loss of job and income opportunities due to the dramatic reversals in the housing market, the rise in the cost of living as demonstrated by increasing gas prices, and ultimately a rise in loan delinquency and loan defaults were but a few of the financial realities our members faced in 2007. While Arizona Federal was not directly involved in the so-called sub-prime mortgage crisis, many of our members were impacted either directly or indirectly. And, as our members go, the credit union goes. The only way for us to have avoided the financial impacts would have been for us to tell our members “no” to applications for credit or services. This is not our posture, because it’s all about you – our members!

2007 also highlighted the difference between our not-for-profit financial cooperative and other for-profit firms in the financial services marketplace. Most notably, for-profit firms exist to deliver outstanding financial results to their shareholders and owners, which may be in opposition to what is best for their customer. Many firms opted to restrict access to credit, remove financing options from their list of services, lay-off employees, or restrict growth in services. In other words, they told and are telling their customers “no.”

Arizona Federal, on the other hand, continued our expansion of services to provide greater convenience, returned $4 million to members in the forms of a bonus dividend and refund of loan interest paid, continued to invest in employee development with the purpose of delivering an exceptional service experience to our members, invested in technology and infrastructure to ensure continuity of operations under all conditions, and achieved a level of financial performance that maintained our financial safety. I would argue this was achieved because we exist by and for our member-owners -- it’s all about you!

As we worked with members throughout the year, we remained focused on creating real, tangible, and measurable financial value for all members. In addition to the items mentioned above, we also recognized creating real, tangible, and measurable financial value for a certain number of members meant preserving their ability to access credit, affordably, now and in the future. We established a “Save My Credit” team focused on assisting members with their credit challenges. We continued our partnership with Balance® in order to provide individualized financial counseling at no cost to members. We also teamed with Balance® to deliver financial education classes to larger groups of members providing meaningful (and valuable) course content in areas such as household budgeting, first-time home buying, and estate planning just to name a few. We continued to provide a no-cost identity theft restoration service for those members that may have had personal information compromised or stolen. The value we created took many forms, because it’s all about you!

As we enter 2008 we are positioned to enhance the financial health of our members, and your credit union. We will continue to provide access to affordable credit, expand our service options to enhance member convenience, invest in technology and infrastructure to be easy to do business with, and provide an exceptional service experience. More specifically, we will open additional branches in Maryvale’s YMCA, Apache Junction, Peoria and Surprise in 2008. We will make enhancements to CU Online so that members may view pending transactions (i.e., transactions authorized but not yet posted), we will enhance our brand promise to ensure you receive the full benefit of our not-for-profit status, we will customize our offerings giving consideration to your individual circumstance, we will follow the general direction of market interest rates and reduce loan and savings rates while positioning our rates to be advantageous as compared to other options in the financial marketplace, we will focus on our employee recruiting and development methods to serve you, and we will enhance our delivery of service that provides accurate execution and a superior experience for our members. Why? Because it’s all about you!

As is my custom in each annual report, I close with a note of thanks. I offer my heartfelt gratitude to our Board of Directors. You elect these individuals to represent your interests, and they continue to fulfill your mandate. I thank our Audit Committee. This group of individuals is appointed by the Board of Directors to ensure annual audits are completed and member verifications performed. I’d also like to thank our employees, who have faith in what we stand for as an organization, focus on what’s important – you, and follow-through on their responsibilities and commitments to ensure you are served as you define. And, of course, I am thankful for our members’ loyalty and the trust placed in us – after all, it’s all about you!

Ronald L. Westad
President & CEO