c e b r a l e

y e a r s

t i n g

2004

annual

report

t i m e l e s v a l u e s s

Mission Statement

We intend to become the financial institution of choice for our

field of membership through a focus on quality and customized

service We intend to offer primary financial services that

represent a competitive advantage to our member-owners

Core Values

Member Focus bull Sponsor Loyalty bull Commitment to Staff bull

Teamwork Everyday bull Innovation bull Community Outreach

4 0 y e a r s o f

m e s s g e f r o m t h e p r e s i d e n t a

Remember ing the real reasons for 40 years of success

As 6th century philosopher Lao-Tzu wrote ldquoA journey of a thousand miles begins with a single steprdquo Irsquom humbled by the thought that our growth to over 77000 members began with just one And from a single member deposit wersquove grown to over $1 billion in membership assets

The paradigm of it all may be that mdash from 1964 until this very moment mdash your Credit Union has never lost sight of the ldquoindividualrdquo member Our core ldquoMemberFirstrdquo philosophy is built on urgently serving your financial needs in a very personable and

uniquely friendly style And your loyalty and support in return has transformed your Credit Union into one thatrsquos admired nationwide

This is a banner year for XFCU as we proudly commemorate our 40th anniversary And the following accomplishments from the past year are certainly cause for great celebration

A+ Member Satisfaction mdash You told us that our uncompromising dedication to service continues to pay

ownership easier as well as partnering with real estate firms to secure special rebates and rewards for members

40th Anniversary Specials mdash To celebrate our milestone we offered unique Home Equity Programs 4-Year Certificate Accounts and Checking specials in June

Diversity in the Workplace Award mdash Our efforts were honored for a fourth consecutive year

This handful of highlights is just a small part of our anniversary-year accomplishments Unfortunately I donrsquot have the space to touch on every achievement and acknowledge each individual Let me just convey that our team has worked tremendously hard all year And I speak for the dedicated staff volunteers and Board of Directors when I express thank you for your gratitude trust and loyalty

As great and memorable as our first 40 years have been we look forward to breaking new ground and increasing member satisfaction in the coming years

On the following pages itrsquos my pleasure to present last yearrsquos accomplishments and a stroll down

off Our member survey returned a 97 percent ldquosatisfactionrdquo memory lane with highlights from 1964 ndash 2004 rating In fact nearly 70 percent were ldquovery satisfiedrdquo

Sincerely New Web Branch mdash Now even more user-friendly and tremendously more functional for really easy banking

More Affordable Mortgage Programs mdash We reacted to the active housing market by offering loans that make Bill Cheney

PresidentCEO

f r o m t h e c h a i r m e s s a g e

Another year of sharing success and service all around

It is apropos that our institution is referred to as a ldquofinancial cooperativerdquo or as a ldquocredit unionrdquo For 40 years we have excelled at supporting the members we serve the communities we share and the commitment to offering you a financial choice other than the big banks It really is a true ldquounionrdquo

During 2004 we further enhanced popular services and launched new banking conveniences and programs One in particular that has a special place in my heart is the Romeo Doty

Scholarship Program Mr Doty was an integral part of XFCU for over half of its existence mdash 21 years His namesake scholarship gives aid to standout high school seniors

We also continued to reach out to several communities by expanding and opening membership to prime areas in California Texas Florida Illinois and New York As we have seen a growth in membership equals a broadening of banking benefits for you

I am honored to serve as your Chairman and proud to represent our entire Board of Directors in presenting the following recap of our top financial and community achievements Success is only possible through your support Thank you

Best regards

Murray Spector Chair Board of Directors

t i m e l e s v a l u e s s

Mission Statement

We intend to become the financial institution of choice for our

field of membership through a focus on quality and customized

service We intend to offer primary financial services that

represent a competitive advantage to our member-owners

Core Values

Member Focus bull Sponsor Loyalty bull Commitment to Staff bull

Teamwork Everyday bull Innovation bull Community Outreach

4 0 y e a r s o f

m e s s g e f r o m t h e p r e s i d e n t a

Remember ing the real reasons for 40 years of success

As 6th century philosopher Lao-Tzu wrote ldquoA journey of a thousand miles begins with a single steprdquo Irsquom humbled by the thought that our growth to over 77000 members began with just one And from a single member deposit wersquove grown to over $1 billion in membership assets

The paradigm of it all may be that mdash from 1964 until this very moment mdash your Credit Union has never lost sight of the ldquoindividualrdquo member Our core ldquoMemberFirstrdquo philosophy is built on urgently serving your financial needs in a very personable and

uniquely friendly style And your loyalty and support in return has transformed your Credit Union into one thatrsquos admired nationwide

This is a banner year for XFCU as we proudly commemorate our 40th anniversary And the following accomplishments from the past year are certainly cause for great celebration

A+ Member Satisfaction mdash You told us that our uncompromising dedication to service continues to pay

ownership easier as well as partnering with real estate firms to secure special rebates and rewards for members

40th Anniversary Specials mdash To celebrate our milestone we offered unique Home Equity Programs 4-Year Certificate Accounts and Checking specials in June

Diversity in the Workplace Award mdash Our efforts were honored for a fourth consecutive year

This handful of highlights is just a small part of our anniversary-year accomplishments Unfortunately I donrsquot have the space to touch on every achievement and acknowledge each individual Let me just convey that our team has worked tremendously hard all year And I speak for the dedicated staff volunteers and Board of Directors when I express thank you for your gratitude trust and loyalty

As great and memorable as our first 40 years have been we look forward to breaking new ground and increasing member satisfaction in the coming years

On the following pages itrsquos my pleasure to present last yearrsquos accomplishments and a stroll down

off Our member survey returned a 97 percent ldquosatisfactionrdquo memory lane with highlights from 1964 ndash 2004 rating In fact nearly 70 percent were ldquovery satisfiedrdquo

Sincerely New Web Branch mdash Now even more user-friendly and tremendously more functional for really easy banking

More Affordable Mortgage Programs mdash We reacted to the active housing market by offering loans that make Bill Cheney

PresidentCEO

f r o m t h e c h a i r m e s s a g e

Another year of sharing success and service all around

It is apropos that our institution is referred to as a ldquofinancial cooperativerdquo or as a ldquocredit unionrdquo For 40 years we have excelled at supporting the members we serve the communities we share and the commitment to offering you a financial choice other than the big banks It really is a true ldquounionrdquo

During 2004 we further enhanced popular services and launched new banking conveniences and programs One in particular that has a special place in my heart is the Romeo Doty

Scholarship Program Mr Doty was an integral part of XFCU for over half of its existence mdash 21 years His namesake scholarship gives aid to standout high school seniors

We also continued to reach out to several communities by expanding and opening membership to prime areas in California Texas Florida Illinois and New York As we have seen a growth in membership equals a broadening of banking benefits for you

I am honored to serve as your Chairman and proud to represent our entire Board of Directors in presenting the following recap of our top financial and community achievements Success is only possible through your support Thank you

Best regards

Murray Spector Chair Board of Directors

m e s s g e f r o m t h e p r e s i d e n t a

Remember ing the real reasons for 40 years of success

As 6th century philosopher Lao-Tzu wrote ldquoA journey of a thousand miles begins with a single steprdquo Irsquom humbled by the thought that our growth to over 77000 members began with just one And from a single member deposit wersquove grown to over $1 billion in membership assets

The paradigm of it all may be that mdash from 1964 until this very moment mdash your Credit Union has never lost sight of the ldquoindividualrdquo member Our core ldquoMemberFirstrdquo philosophy is built on urgently serving your financial needs in a very personable and

uniquely friendly style And your loyalty and support in return has transformed your Credit Union into one thatrsquos admired nationwide

This is a banner year for XFCU as we proudly commemorate our 40th anniversary And the following accomplishments from the past year are certainly cause for great celebration

A+ Member Satisfaction mdash You told us that our uncompromising dedication to service continues to pay

ownership easier as well as partnering with real estate firms to secure special rebates and rewards for members

40th Anniversary Specials mdash To celebrate our milestone we offered unique Home Equity Programs 4-Year Certificate Accounts and Checking specials in June

Diversity in the Workplace Award mdash Our efforts were honored for a fourth consecutive year

This handful of highlights is just a small part of our anniversary-year accomplishments Unfortunately I donrsquot have the space to touch on every achievement and acknowledge each individual Let me just convey that our team has worked tremendously hard all year And I speak for the dedicated staff volunteers and Board of Directors when I express thank you for your gratitude trust and loyalty

As great and memorable as our first 40 years have been we look forward to breaking new ground and increasing member satisfaction in the coming years

On the following pages itrsquos my pleasure to present last yearrsquos accomplishments and a stroll down

off Our member survey returned a 97 percent ldquosatisfactionrdquo memory lane with highlights from 1964 ndash 2004 rating In fact nearly 70 percent were ldquovery satisfiedrdquo

Sincerely New Web Branch mdash Now even more user-friendly and tremendously more functional for really easy banking

More Affordable Mortgage Programs mdash We reacted to the active housing market by offering loans that make Bill Cheney

PresidentCEO

f r o m t h e c h a i r m e s s a g e

Another year of sharing success and service all around

It is apropos that our institution is referred to as a ldquofinancial cooperativerdquo or as a ldquocredit unionrdquo For 40 years we have excelled at supporting the members we serve the communities we share and the commitment to offering you a financial choice other than the big banks It really is a true ldquounionrdquo

During 2004 we further enhanced popular services and launched new banking conveniences and programs One in particular that has a special place in my heart is the Romeo Doty

Scholarship Program Mr Doty was an integral part of XFCU for over half of its existence mdash 21 years His namesake scholarship gives aid to standout high school seniors

We also continued to reach out to several communities by expanding and opening membership to prime areas in California Texas Florida Illinois and New York As we have seen a growth in membership equals a broadening of banking benefits for you

I am honored to serve as your Chairman and proud to represent our entire Board of Directors in presenting the following recap of our top financial and community achievements Success is only possible through your support Thank you

Best regards

Murray Spector Chair Board of Directors

f r o m t h e c h a i r m e s s a g e

Another year of sharing success and service all around

It is apropos that our institution is referred to as a ldquofinancial cooperativerdquo or as a ldquocredit unionrdquo For 40 years we have excelled at supporting the members we serve the communities we share and the commitment to offering you a financial choice other than the big banks It really is a true ldquounionrdquo

During 2004 we further enhanced popular services and launched new banking conveniences and programs One in particular that has a special place in my heart is the Romeo Doty

Scholarship Program Mr Doty was an integral part of XFCU for over half of its existence mdash 21 years His namesake scholarship gives aid to standout high school seniors

We also continued to reach out to several communities by expanding and opening membership to prime areas in California Texas Florida Illinois and New York As we have seen a growth in membership equals a broadening of banking benefits for you

I am honored to serve as your Chairman and proud to represent our entire Board of Directors in presenting the following recap of our top financial and community achievements Success is only possible through your support Thank you

Best regards

Murray Spector Chair Board of Directors

mdash

f i n a n c i a l h i g h l i g h t s XFCU News

1964 mdash Origin Started as Scientific Data Systems Credit Union and ended the year with $61728 in assets and 620 members

1969 mdash Xerox Scientific Data Systems acquired by Xerox Corporation

1969 mdash New Building The Credit Union broke ground for its new headquarters in El Segundo

World News

1964 The Beatles The mop tops took the world by storm

1967 mdash Heart Transplant First successful procedure in Cape Town South Africa

1969 mdash Moon Landing Neil Armstrong took giant leap for mankind

Growing ldquouprdquo through the years including last year

Even as we continue to increase membership and raise your bull Return on Assets Ratio mdash Favorable results once again credit unionrsquos assets we will never lose sight of keeping on including a 77 percent return top of XFCUrsquos cherished banking conveniences and award-winning service While we prove year after year that there is bull Delinquency Ratio mdash Like golf the lower the score

the better We dropped to a record low of 39 percent strength in numbers it is your complete satisfaction that returns the greatest rewards

bull Growth in 2003 vs 2004 mdash In just one year XFCU has increased $25 million in assets $26 million in loans and $24 million in savings

751 537 726bull Net Worth Ratio mdash A well-capitalized 512

level is 7 percent but the better news is 475 636 that XFCU came in at 1065 percent 432 571

bull IDC Rating mdash Wersquore ldquoExcellentrdquo once again as judged by one of the nationrsquos most prestigious groups

bull Bauer Rating mdash Another 5-Star Rating of ldquoSuperiorrdquo from the industry-leading analyst organization Million Million

544

521

437

385

Million 2001 2002 2003 2004 2001 2002 2003 2004 2001 2002 2003 2004

TOTAL TOTAL TOTAL MEMBER ASSETS MEMBER SAVINGS LOANS

mdash

Innovations amp Security Updates Expanded Conveniences Transformed Web Branch Launches mdash Banking has never We put the ldquomorerdquo in Mortgage Program clicked so easily before bull All-new Housing Partner Program featuring real estate

bull Search engine on every page mdash Find what you want quicker contacts and substantial cash rebates for members bull Related services links so you can tap into other helpers Cash in on buying and selling through XFCUrsquos partners

(ie loan calculators insurance info and more) bull Developed Online Application for convenience and bull Express access to Web Bankinge-Statements and ease with some approvals as quickly as one day

Visa Online bull Interest-only mortgage loan mdash Wersquore offering more bull Easy check reordering while logged in to Web Banking members a chance for home ownership with these bull Wireless Web Banking mdash The ultimate convenience lower payments bull e-Statement direct access (in case you forget your PIN) bull First-time homebuyer mortgage mdash This generous

to view past 12 months and check images 97 percent LTV program rewards members with bull Funds transfer upgraded for transactions to XFCU good credit but limited down payment a chance to

accounts and other financial institutions affordably own

Remodels and Relocations Automated Security System mdash Our audit team and fraud bull Enhanced the member experience and in some filter systems are aggressively hard at work protecting your

communities gave our entire membership easier accounts from possible identity manipulations and possible access to a branchaccount takeovers Every new account is reviewed under a risk

management program to protect you and the Credit Union Upgraded 42 XFCU ATMs for faster easier service

We maintain critical security by keeping computer system virus clean year after year Prompt Service mdash XFCUrsquos popular TeleServices

Department is answering member calls in less than 11 seconds

a n d a d d i n g m o r e o f w h a t y o u l i k e i n v e n t i n g m o r e o f w h a t y o u rsquo l l n e e d

The lsquo70s

XFCU News

1970 mdash XEFCU Name changed to Xerox Employees Federal Credit Union and served 3718 members with $25 million in assets

1975 mdash Expansion Services offered to all Xerox employees

1976-77 mdash New Branches Opened offices in Texas and Rochester

World News

1974 mdash Nixon Resignation Richard Nixon is the first President in history to resign

1976 mdash Bicentennial 200-year celebration of the Declaration of Independence

1978 Test-Tube Baby The first test-tube girl was born in England

rsquo

Community Service Sponsor Relations Our Communities mdash Throughout the year the XFCU staff The Womenrsquos Alliance mdash Diane McGarry Vice President volunteered their time to causes such as Beach Clean-Up Day Chief Marketing Officer Xerox Corporation stated for Heal the Bay Revlon Breast Cancer Walk MS Walk Red ldquoThe Womenrsquos Alliance organization might not have Cross of Los Angeles Troop Homecoming Childrenrsquos survived without XFCUrsquos continued supportrdquo Advocacy Center Fund Raiser for Ovarian Cancer and Toys for Tots as well as many other worthwhile causes Industry Support mdash Staff have participated on committees

like the annual Xerox Womenrsquos Conference and Xerox Camp XFCU for Kids mdash Life-enhancing financial retreats in Management Association and were featured speakers on El Segundo Rochester Dallas and Parsippany and solely for numerous key issues including Identity Theft kids ages 6 to 11

Xerox Teamwork Day mdash We were out in numbers XFCU was flattered by numerous awards in 2004 showing our support for the corporation

bull Desjardins Youth Financial Education Award from the Credit Union National Association Associational Partnerships mdash Supported our partners

bull 4th consecutive year honored with the Dora Maxwell at Bay Days for Heal the Bay Zoobilation and ZooFest Social Responsibility Award by the New York State for the Seneca Park Zoo and Wines of the Wild for the Credit Union League Buffalo Zoo

bull 4th consecutive year XFCU has been highlighted for Supporting Our Neighbors mdash Raising money and diversity in the workplace mdash this time from the satisfying appetites at Chili for Charity in Rochester and California Credit Union League

providing ongoing support to the Lewisville bull 3rd year recognized for our community service community and Chamber of Commerce initiatives from Xerox Management Association Plus we welcomed 3900 new bull Safety Team won ldquobest of bestrdquo safety practices memberships by extending XFCU services to the communities of San Jose Rochester Dallas Chicago and St Petersburg

s t i l l m a k i n g ldquo n e w s rdquo e v e n a f t e r 4 0 y e a r s XFCU News

1980 mdash El Segundo Placed headquarters in California and offered Checking with Direct Deposit

1985 mdash $100 Million Asset size ranked XFCU as one of nations biggest ATM service started

1986 mdash New Products Launched Mortgage Loans Visareg Credit Cards and 24-hour phone service

1987 mdash Subsidiaries Started XCU Capital Inc and Focus Insurance

World News

1981 mdash Royal Wedding Prince Charles married Lady Diana Spencer with 700 million TV viewers

1986 mdash Challenger Tragedy The space shuttle exploded 73 seconds after launch

1989 mdash Wall Crumbles Communist government of East Germany collapsed Berlin wall came down

e v e n m o r e i m p o r t a n t i n t h e f u t u r e g r o w i n g p a r t n e r r e l a t i o n s h i p s

Credit Union Auto Financing (CUAF) CUAF co-owned by XFCU and ESL FCU celebrates seven years of indirect auto lending in Rochester and Buffalo New York XFCU members shop for their vehicle at preferred dealerships and get on-site Credit Union financing

In July 2004 XFCU launched one-stop vehicle shopping in Texas XFCU grew by $70 million through our indirect lending channels and added over 6000 new members With five dealers producing over $9 million in sales in Texas alone success is well under way XFCU continues to add dealerships to our portfolio in Buffalo New York and Texas Through controlled growth XFCU and CUAF continue to solidify their positions in these markets and aim to remain strong in the indirect automobile lending market for years to come

Credit Union Direct Lending (CUDL) CUDL allows auto dealers in select markets throughout the United States to partner with credit unions who offer automobile lending programs in these selected areas XFCU has been a part of this credit union-owned program in El Segundo California for over two years In late 2004 we added our St Petersburg Florida market to the CUDL family and we are looking to expand our California market into San Jose in 2005

XFCU News

1995 mdash Online First First credit union to offer online Bill Payer service started PC-based 24-hour Home Banking

1997 mdash Web Winner Web site xfcuorg went live and won multiple awards

1999 mdash Extra Services Began Housing Partner Program and Credit Union Auto Finance plus nationwide mortgages

World News

1992 mdash LA Riots Unrest followed the not guilty ruling of officers involved in Rodney King case

1997 mdash Dolly the Sheep First cloning by scientists at the Roslin Institute in Scotland

1999 mdash Y2K Over-hyped computer software glitch set the world into panic

XCU Capital amp Focus Insurance 2004 was another remarkable year for XCU Corporation Inc the holding company for XCU Capital Corporation Inc and Focus Insurance Agency Inc While four existing credit union clients became owners XCU welcomed six new credit unions as partners The only nationwide 100 credit union-owned brokerdealer XCU Capital launched a new technology platform and added Financial Advisors to many programs Focus Insurance the 100 credit union-owned subsidiary introduced several credit union insurance products this year through ldquoaggregate negotiationrdquo benefiting the members of Xerox Federal Credit Union

By yearrsquos end XCU had 30 credit union partners including 21 owners with a combined membership base of nearly 32 million and assets totaling more than $50 billion XCU provides investment and insurance services to more than 47000 retail clients nationwide and remains committed to offering high quality products and services for all of our shareholders partner credit unions Financial Advisors and members

rsquo

rsquo

Loan Review Committee Report The Loan Review Committee is pleased to report that our Credit Union continues to

have a strong loan portfolio By the end of 2004 our total member loan portfolio reached $544 million Credit Union policies ensure that our loans are the highest quality and in the best interest of each member

At year-end 100 percent of Credit Union membership savings dollars

were loaned out to the membership This attests to our commitment to member service and to performing in the best interest of all our members

Rick Schmidt Chair Loan Review Committee

Supervisory Committee Report The Supervisory Committee is responsible for overseeing your Credit Unionrsquos business affairs and monitoring operating procedures and policies to ensure absolute financial integrity and soundness We continue our

commitment to maintaining Xerox Federal Credit Unionrsquos high standards and financial performance

The committee reviews account records and reports regularly to check their accuracy and timeliness We also conduct periodic on-site unannounced branch audits and oversee audits by our independent auditing firm McGladrey

amp Pullen Certified Public Accountants

I am pleased to report again that the affairs of this Credit Union are in outstanding order

Wayne Johnson Chair Supervisory Committee

t h e r e p o r t s a r e i n

a n d t h e p e r f o r m a n c e i s o n t o p

2000-2004

XFCU News

2000 mdash Express Mortgage Started online and phone-in mortgage service national ATM deposit-taking service

2001 mdash $1 Billion Membership assets reached all-time high New Yorks first mortgage e-Close loan

2002-03 mdash Banking Breakthroughs Started e-Statements Shared Branching online access to Visareg accounts and community expansion

2004 mdash Web Enhancements The easiest access to Web Banking e-Statements Visareg Online

World News

2000 mdash Dot com Bust Beginning of the end of the Internet stock boom

2001 mdash 911 Hijackers crashed jetliners into New York City s World Trade Center and Pentagon

2004 mdash Red Sox Win After an 86-year drought the boys from Boston won World Series

d s t i n g u i s h e d

1) Dennis Ruffner 2) Murray Spector 3) Roni Crichton

4) Bill Cheney 5) John Antonio

6) Christina Brown 7) Raleigh Steinbach

8) Jon Fate 9) Richard Jones

10) Lois McFarland 11) Timothy Myers

12) Rick Schmidt 13) Michael Mishkin

14) Gretchen Valentine 15) Loren Winckler

16) Fred Nichols 17) Barbara Bannister

18) Lewis Siegler 19) Wayne Johnson

16

1 5432

6 987

11 1312

y o u r i

Volunteers amp Executive Staff

10

191817

1514

XEROX FEDERAL CREDIT UNION STATEMENTS OF FINANCIAL CONDITION DECEMBER 31 2004 AND 2003

ASSETS

2004 2003

Cash and cash equivalents $ 45875992 $ 37654676 Investments

Available-for-sale 67919226 88741493 Other 69447290 56394736

Loans net 552268363 528996836 Accrued interest receivable 2508135 2460692 Property and equipment 5697749 5547676 National Credit Union Share Insurance Fund deposit 4499120 4403552 Other assets 3117949 1756660

$ 751333824 $ 725956321

LIABILITIES AND MEMBERSrsquo EQUITY

Liabilities

Notes payable $ 84200000 $ 89200000 State of California Treasury deposits 47000000 47000000 Accrued expenses and other liabilities 4356158 4336356

Total Liabilities 135556158 140536356

Commitments and contingent liabilities

Membersrsquo Equity

Membersrsquo shares 537125279 511974714 Retained earnings substantially restricted 80021261 74370540 Accumulated other comprehensive loss (1368874) (925289)

Total membersrsquo equity 615777666 585419965

$ 751333824 $ 725956321

Savings Mix 2004 Loan Mix 2004 New Autos

Checking Accounts Savings Accounts

Pre-owned Autos IRA Accumulator Other Secured Loans IRA Certificates Real Estate First TD Share Certificates Real Estate Second TD Money Market Accounts Home Equity Lines of Credit Non-Member Savings PowerLines of Credit

Other Unsecured Loans Participation Loans (Net)

This is an unaudited financial report For a complete auditorrsquos report and opinion please visit our Web Branch at wwwxfcuorg or contact a Credit Union representative

mdash

Innovations amp Security Updates Expanded Conveniences Transformed Web Branch Launches mdash Banking has never We put the ldquomorerdquo in Mortgage Program clicked so easily before bull All-new Housing Partner Program featuring real estate

bull Search engine on every page mdash Find what you want quicker contacts and substantial cash rebates for members bull Related services links so you can tap into other helpers Cash in on buying and selling through XFCUrsquos partners

(ie loan calculators insurance info and more) bull Developed Online Application for convenience and bull Express access to Web Bankinge-Statements and ease with some approvals as quickly as one day

Visa Online bull Interest-only mortgage loan mdash Wersquore offering more bull Easy check reordering while logged in to Web Banking members a chance for home ownership with these bull Wireless Web Banking mdash The ultimate convenience lower payments bull e-Statement direct access (in case you forget your PIN) bull First-time homebuyer mortgage mdash This generous

to view past 12 months and check images 97 percent LTV program rewards members with bull Funds transfer upgraded for transactions to XFCU good credit but limited down payment a chance to

accounts and other financial institutions affordably own

Remodels and Relocations Automated Security System mdash Our audit team and fraud bull Enhanced the member experience and in some filter systems are aggressively hard at work protecting your

communities gave our entire membership easier accounts from possible identity manipulations and possible access to a branchaccount takeovers Every new account is reviewed under a risk

management program to protect you and the Credit Union Upgraded 42 XFCU ATMs for faster easier service

We maintain critical security by keeping computer system virus clean year after year Prompt Service mdash XFCUrsquos popular TeleServices

Department is answering member calls in less than 11 seconds

a n d a d d i n g m o r e o f w h a t y o u l i k e i n v e n t i n g m o r e o f w h a t y o u rsquo l l n e e d

The lsquo70s

XFCU News

1970 mdash XEFCU Name changed to Xerox Employees Federal Credit Union and served 3718 members with $25 million in assets

1975 mdash Expansion Services offered to all Xerox employees

1976-77 mdash New Branches Opened offices in Texas and Rochester

World News

1974 mdash Nixon Resignation Richard Nixon is the first President in history to resign

1976 mdash Bicentennial 200-year celebration of the Declaration of Independence

1978 Test-Tube Baby The first test-tube girl was born in England

rsquo

Community Service Sponsor Relations Our Communities mdash Throughout the year the XFCU staff The Womenrsquos Alliance mdash Diane McGarry Vice President volunteered their time to causes such as Beach Clean-Up Day Chief Marketing Officer Xerox Corporation stated for Heal the Bay Revlon Breast Cancer Walk MS Walk Red ldquoThe Womenrsquos Alliance organization might not have Cross of Los Angeles Troop Homecoming Childrenrsquos survived without XFCUrsquos continued supportrdquo Advocacy Center Fund Raiser for Ovarian Cancer and Toys for Tots as well as many other worthwhile causes Industry Support mdash Staff have participated on committees

like the annual Xerox Womenrsquos Conference and Xerox Camp XFCU for Kids mdash Life-enhancing financial retreats in Management Association and were featured speakers on El Segundo Rochester Dallas and Parsippany and solely for numerous key issues including Identity Theft kids ages 6 to 11

Xerox Teamwork Day mdash We were out in numbers XFCU was flattered by numerous awards in 2004 showing our support for the corporation

bull Desjardins Youth Financial Education Award from the Credit Union National Association Associational Partnerships mdash Supported our partners

bull 4th consecutive year honored with the Dora Maxwell at Bay Days for Heal the Bay Zoobilation and ZooFest Social Responsibility Award by the New York State for the Seneca Park Zoo and Wines of the Wild for the Credit Union League Buffalo Zoo

bull 4th consecutive year XFCU has been highlighted for Supporting Our Neighbors mdash Raising money and diversity in the workplace mdash this time from the satisfying appetites at Chili for Charity in Rochester and California Credit Union League

providing ongoing support to the Lewisville bull 3rd year recognized for our community service community and Chamber of Commerce initiatives from Xerox Management Association Plus we welcomed 3900 new bull Safety Team won ldquobest of bestrdquo safety practices memberships by extending XFCU services to the communities of San Jose Rochester Dallas Chicago and St Petersburg

s t i l l m a k i n g ldquo n e w s rdquo e v e n a f t e r 4 0 y e a r s XFCU News

1980 mdash El Segundo Placed headquarters in California and offered Checking with Direct Deposit

1985 mdash $100 Million Asset size ranked XFCU as one of nations biggest ATM service started

1986 mdash New Products Launched Mortgage Loans Visareg Credit Cards and 24-hour phone service

1987 mdash Subsidiaries Started XCU Capital Inc and Focus Insurance

World News

1981 mdash Royal Wedding Prince Charles married Lady Diana Spencer with 700 million TV viewers

1986 mdash Challenger Tragedy The space shuttle exploded 73 seconds after launch

1989 mdash Wall Crumbles Communist government of East Germany collapsed Berlin wall came down

e v e n m o r e i m p o r t a n t i n t h e f u t u r e g r o w i n g p a r t n e r r e l a t i o n s h i p s

Credit Union Auto Financing (CUAF) CUAF co-owned by XFCU and ESL FCU celebrates seven years of indirect auto lending in Rochester and Buffalo New York XFCU members shop for their vehicle at preferred dealerships and get on-site Credit Union financing

In July 2004 XFCU launched one-stop vehicle shopping in Texas XFCU grew by $70 million through our indirect lending channels and added over 6000 new members With five dealers producing over $9 million in sales in Texas alone success is well under way XFCU continues to add dealerships to our portfolio in Buffalo New York and Texas Through controlled growth XFCU and CUAF continue to solidify their positions in these markets and aim to remain strong in the indirect automobile lending market for years to come

Credit Union Direct Lending (CUDL) CUDL allows auto dealers in select markets throughout the United States to partner with credit unions who offer automobile lending programs in these selected areas XFCU has been a part of this credit union-owned program in El Segundo California for over two years In late 2004 we added our St Petersburg Florida market to the CUDL family and we are looking to expand our California market into San Jose in 2005

XFCU News

1995 mdash Online First First credit union to offer online Bill Payer service started PC-based 24-hour Home Banking

1997 mdash Web Winner Web site xfcuorg went live and won multiple awards

1999 mdash Extra Services Began Housing Partner Program and Credit Union Auto Finance plus nationwide mortgages

World News

1992 mdash LA Riots Unrest followed the not guilty ruling of officers involved in Rodney King case

1997 mdash Dolly the Sheep First cloning by scientists at the Roslin Institute in Scotland

1999 mdash Y2K Over-hyped computer software glitch set the world into panic

XCU Capital amp Focus Insurance 2004 was another remarkable year for XCU Corporation Inc the holding company for XCU Capital Corporation Inc and Focus Insurance Agency Inc While four existing credit union clients became owners XCU welcomed six new credit unions as partners The only nationwide 100 credit union-owned brokerdealer XCU Capital launched a new technology platform and added Financial Advisors to many programs Focus Insurance the 100 credit union-owned subsidiary introduced several credit union insurance products this year through ldquoaggregate negotiationrdquo benefiting the members of Xerox Federal Credit Union

By yearrsquos end XCU had 30 credit union partners including 21 owners with a combined membership base of nearly 32 million and assets totaling more than $50 billion XCU provides investment and insurance services to more than 47000 retail clients nationwide and remains committed to offering high quality products and services for all of our shareholders partner credit unions Financial Advisors and members

rsquo

rsquo

Loan Review Committee Report The Loan Review Committee is pleased to report that our Credit Union continues to

have a strong loan portfolio By the end of 2004 our total member loan portfolio reached $544 million Credit Union policies ensure that our loans are the highest quality and in the best interest of each member

At year-end 100 percent of Credit Union membership savings dollars

were loaned out to the membership This attests to our commitment to member service and to performing in the best interest of all our members

Rick Schmidt Chair Loan Review Committee

Supervisory Committee Report The Supervisory Committee is responsible for overseeing your Credit Unionrsquos business affairs and monitoring operating procedures and policies to ensure absolute financial integrity and soundness We continue our

commitment to maintaining Xerox Federal Credit Unionrsquos high standards and financial performance

The committee reviews account records and reports regularly to check their accuracy and timeliness We also conduct periodic on-site unannounced branch audits and oversee audits by our independent auditing firm McGladrey

amp Pullen Certified Public Accountants

I am pleased to report again that the affairs of this Credit Union are in outstanding order

Wayne Johnson Chair Supervisory Committee

t h e r e p o r t s a r e i n

a n d t h e p e r f o r m a n c e i s o n t o p

2000-2004

XFCU News

2000 mdash Express Mortgage Started online and phone-in mortgage service national ATM deposit-taking service

2001 mdash $1 Billion Membership assets reached all-time high New Yorks first mortgage e-Close loan

2002-03 mdash Banking Breakthroughs Started e-Statements Shared Branching online access to Visareg accounts and community expansion

2004 mdash Web Enhancements The easiest access to Web Banking e-Statements Visareg Online

World News

2000 mdash Dot com Bust Beginning of the end of the Internet stock boom

2001 mdash 911 Hijackers crashed jetliners into New York City s World Trade Center and Pentagon

2004 mdash Red Sox Win After an 86-year drought the boys from Boston won World Series

d s t i n g u i s h e d

1) Dennis Ruffner 2) Murray Spector 3) Roni Crichton

4) Bill Cheney 5) John Antonio

6) Christina Brown 7) Raleigh Steinbach

8) Jon Fate 9) Richard Jones

10) Lois McFarland 11) Timothy Myers

12) Rick Schmidt 13) Michael Mishkin

14) Gretchen Valentine 15) Loren Winckler

16) Fred Nichols 17) Barbara Bannister

18) Lewis Siegler 19) Wayne Johnson

16

1 5432

6 987

11 1312

y o u r i

Volunteers amp Executive Staff

10

191817

1514

XEROX FEDERAL CREDIT UNION STATEMENTS OF FINANCIAL CONDITION DECEMBER 31 2004 AND 2003

ASSETS

2004 2003

Cash and cash equivalents $ 45875992 $ 37654676 Investments

Available-for-sale 67919226 88741493 Other 69447290 56394736

Loans net 552268363 528996836 Accrued interest receivable 2508135 2460692 Property and equipment 5697749 5547676 National Credit Union Share Insurance Fund deposit 4499120 4403552 Other assets 3117949 1756660

$ 751333824 $ 725956321

LIABILITIES AND MEMBERSrsquo EQUITY

Liabilities

Notes payable $ 84200000 $ 89200000 State of California Treasury deposits 47000000 47000000 Accrued expenses and other liabilities 4356158 4336356

Total Liabilities 135556158 140536356

Commitments and contingent liabilities

Membersrsquo Equity

Membersrsquo shares 537125279 511974714 Retained earnings substantially restricted 80021261 74370540 Accumulated other comprehensive loss (1368874) (925289)

Total membersrsquo equity 615777666 585419965

$ 751333824 $ 725956321

Savings Mix 2004 Loan Mix 2004 New Autos

Checking Accounts Savings Accounts

Pre-owned Autos IRA Accumulator Other Secured Loans IRA Certificates Real Estate First TD Share Certificates Real Estate Second TD Money Market Accounts Home Equity Lines of Credit Non-Member Savings PowerLines of Credit

Other Unsecured Loans Participation Loans (Net)

This is an unaudited financial report For a complete auditorrsquos report and opinion please visit our Web Branch at wwwxfcuorg or contact a Credit Union representative

rsquo

Community Service Sponsor Relations Our Communities mdash Throughout the year the XFCU staff The Womenrsquos Alliance mdash Diane McGarry Vice President volunteered their time to causes such as Beach Clean-Up Day Chief Marketing Officer Xerox Corporation stated for Heal the Bay Revlon Breast Cancer Walk MS Walk Red ldquoThe Womenrsquos Alliance organization might not have Cross of Los Angeles Troop Homecoming Childrenrsquos survived without XFCUrsquos continued supportrdquo Advocacy Center Fund Raiser for Ovarian Cancer and Toys for Tots as well as many other worthwhile causes Industry Support mdash Staff have participated on committees

like the annual Xerox Womenrsquos Conference and Xerox Camp XFCU for Kids mdash Life-enhancing financial retreats in Management Association and were featured speakers on El Segundo Rochester Dallas and Parsippany and solely for numerous key issues including Identity Theft kids ages 6 to 11

Xerox Teamwork Day mdash We were out in numbers XFCU was flattered by numerous awards in 2004 showing our support for the corporation

bull Desjardins Youth Financial Education Award from the Credit Union National Association Associational Partnerships mdash Supported our partners

bull 4th consecutive year honored with the Dora Maxwell at Bay Days for Heal the Bay Zoobilation and ZooFest Social Responsibility Award by the New York State for the Seneca Park Zoo and Wines of the Wild for the Credit Union League Buffalo Zoo

bull 4th consecutive year XFCU has been highlighted for Supporting Our Neighbors mdash Raising money and diversity in the workplace mdash this time from the satisfying appetites at Chili for Charity in Rochester and California Credit Union League

providing ongoing support to the Lewisville bull 3rd year recognized for our community service community and Chamber of Commerce initiatives from Xerox Management Association Plus we welcomed 3900 new bull Safety Team won ldquobest of bestrdquo safety practices memberships by extending XFCU services to the communities of San Jose Rochester Dallas Chicago and St Petersburg

s t i l l m a k i n g ldquo n e w s rdquo e v e n a f t e r 4 0 y e a r s XFCU News

1980 mdash El Segundo Placed headquarters in California and offered Checking with Direct Deposit

1985 mdash $100 Million Asset size ranked XFCU as one of nations biggest ATM service started

1986 mdash New Products Launched Mortgage Loans Visareg Credit Cards and 24-hour phone service

1987 mdash Subsidiaries Started XCU Capital Inc and Focus Insurance

World News

1981 mdash Royal Wedding Prince Charles married Lady Diana Spencer with 700 million TV viewers

1986 mdash Challenger Tragedy The space shuttle exploded 73 seconds after launch

1989 mdash Wall Crumbles Communist government of East Germany collapsed Berlin wall came down

e v e n m o r e i m p o r t a n t i n t h e f u t u r e g r o w i n g p a r t n e r r e l a t i o n s h i p s

Credit Union Auto Financing (CUAF) CUAF co-owned by XFCU and ESL FCU celebrates seven years of indirect auto lending in Rochester and Buffalo New York XFCU members shop for their vehicle at preferred dealerships and get on-site Credit Union financing

In July 2004 XFCU launched one-stop vehicle shopping in Texas XFCU grew by $70 million through our indirect lending channels and added over 6000 new members With five dealers producing over $9 million in sales in Texas alone success is well under way XFCU continues to add dealerships to our portfolio in Buffalo New York and Texas Through controlled growth XFCU and CUAF continue to solidify their positions in these markets and aim to remain strong in the indirect automobile lending market for years to come

Credit Union Direct Lending (CUDL) CUDL allows auto dealers in select markets throughout the United States to partner with credit unions who offer automobile lending programs in these selected areas XFCU has been a part of this credit union-owned program in El Segundo California for over two years In late 2004 we added our St Petersburg Florida market to the CUDL family and we are looking to expand our California market into San Jose in 2005

XFCU News

1995 mdash Online First First credit union to offer online Bill Payer service started PC-based 24-hour Home Banking

1997 mdash Web Winner Web site xfcuorg went live and won multiple awards

1999 mdash Extra Services Began Housing Partner Program and Credit Union Auto Finance plus nationwide mortgages

World News

1992 mdash LA Riots Unrest followed the not guilty ruling of officers involved in Rodney King case

1997 mdash Dolly the Sheep First cloning by scientists at the Roslin Institute in Scotland

1999 mdash Y2K Over-hyped computer software glitch set the world into panic

XCU Capital amp Focus Insurance 2004 was another remarkable year for XCU Corporation Inc the holding company for XCU Capital Corporation Inc and Focus Insurance Agency Inc While four existing credit union clients became owners XCU welcomed six new credit unions as partners The only nationwide 100 credit union-owned brokerdealer XCU Capital launched a new technology platform and added Financial Advisors to many programs Focus Insurance the 100 credit union-owned subsidiary introduced several credit union insurance products this year through ldquoaggregate negotiationrdquo benefiting the members of Xerox Federal Credit Union

By yearrsquos end XCU had 30 credit union partners including 21 owners with a combined membership base of nearly 32 million and assets totaling more than $50 billion XCU provides investment and insurance services to more than 47000 retail clients nationwide and remains committed to offering high quality products and services for all of our shareholders partner credit unions Financial Advisors and members

rsquo

rsquo

Loan Review Committee Report The Loan Review Committee is pleased to report that our Credit Union continues to

have a strong loan portfolio By the end of 2004 our total member loan portfolio reached $544 million Credit Union policies ensure that our loans are the highest quality and in the best interest of each member

At year-end 100 percent of Credit Union membership savings dollars

were loaned out to the membership This attests to our commitment to member service and to performing in the best interest of all our members

Rick Schmidt Chair Loan Review Committee

Supervisory Committee Report The Supervisory Committee is responsible for overseeing your Credit Unionrsquos business affairs and monitoring operating procedures and policies to ensure absolute financial integrity and soundness We continue our

commitment to maintaining Xerox Federal Credit Unionrsquos high standards and financial performance

The committee reviews account records and reports regularly to check their accuracy and timeliness We also conduct periodic on-site unannounced branch audits and oversee audits by our independent auditing firm McGladrey

amp Pullen Certified Public Accountants

I am pleased to report again that the affairs of this Credit Union are in outstanding order

Wayne Johnson Chair Supervisory Committee

t h e r e p o r t s a r e i n

a n d t h e p e r f o r m a n c e i s o n t o p

2000-2004

XFCU News

2000 mdash Express Mortgage Started online and phone-in mortgage service national ATM deposit-taking service

2001 mdash $1 Billion Membership assets reached all-time high New Yorks first mortgage e-Close loan

2002-03 mdash Banking Breakthroughs Started e-Statements Shared Branching online access to Visareg accounts and community expansion

2004 mdash Web Enhancements The easiest access to Web Banking e-Statements Visareg Online

World News

2000 mdash Dot com Bust Beginning of the end of the Internet stock boom

2001 mdash 911 Hijackers crashed jetliners into New York City s World Trade Center and Pentagon

2004 mdash Red Sox Win After an 86-year drought the boys from Boston won World Series

d s t i n g u i s h e d

1) Dennis Ruffner 2) Murray Spector 3) Roni Crichton

4) Bill Cheney 5) John Antonio

6) Christina Brown 7) Raleigh Steinbach

8) Jon Fate 9) Richard Jones

10) Lois McFarland 11) Timothy Myers

12) Rick Schmidt 13) Michael Mishkin

14) Gretchen Valentine 15) Loren Winckler

16) Fred Nichols 17) Barbara Bannister

18) Lewis Siegler 19) Wayne Johnson

16

1 5432

6 987

11 1312

y o u r i

Volunteers amp Executive Staff

10

191817

1514

XEROX FEDERAL CREDIT UNION STATEMENTS OF FINANCIAL CONDITION DECEMBER 31 2004 AND 2003

ASSETS

2004 2003

Cash and cash equivalents $ 45875992 $ 37654676 Investments

Available-for-sale 67919226 88741493 Other 69447290 56394736

Loans net 552268363 528996836 Accrued interest receivable 2508135 2460692 Property and equipment 5697749 5547676 National Credit Union Share Insurance Fund deposit 4499120 4403552 Other assets 3117949 1756660

$ 751333824 $ 725956321

LIABILITIES AND MEMBERSrsquo EQUITY

Liabilities

Notes payable $ 84200000 $ 89200000 State of California Treasury deposits 47000000 47000000 Accrued expenses and other liabilities 4356158 4336356

Total Liabilities 135556158 140536356

Commitments and contingent liabilities

Membersrsquo Equity

Membersrsquo shares 537125279 511974714 Retained earnings substantially restricted 80021261 74370540 Accumulated other comprehensive loss (1368874) (925289)

Total membersrsquo equity 615777666 585419965

$ 751333824 $ 725956321

Savings Mix 2004 Loan Mix 2004 New Autos

Checking Accounts Savings Accounts

Pre-owned Autos IRA Accumulator Other Secured Loans IRA Certificates Real Estate First TD Share Certificates Real Estate Second TD Money Market Accounts Home Equity Lines of Credit Non-Member Savings PowerLines of Credit

Other Unsecured Loans Participation Loans (Net)

This is an unaudited financial report For a complete auditorrsquos report and opinion please visit our Web Branch at wwwxfcuorg or contact a Credit Union representative

e v e n m o r e i m p o r t a n t i n t h e f u t u r e g r o w i n g p a r t n e r r e l a t i o n s h i p s

Credit Union Auto Financing (CUAF) CUAF co-owned by XFCU and ESL FCU celebrates seven years of indirect auto lending in Rochester and Buffalo New York XFCU members shop for their vehicle at preferred dealerships and get on-site Credit Union financing

In July 2004 XFCU launched one-stop vehicle shopping in Texas XFCU grew by $70 million through our indirect lending channels and added over 6000 new members With five dealers producing over $9 million in sales in Texas alone success is well under way XFCU continues to add dealerships to our portfolio in Buffalo New York and Texas Through controlled growth XFCU and CUAF continue to solidify their positions in these markets and aim to remain strong in the indirect automobile lending market for years to come

Credit Union Direct Lending (CUDL) CUDL allows auto dealers in select markets throughout the United States to partner with credit unions who offer automobile lending programs in these selected areas XFCU has been a part of this credit union-owned program in El Segundo California for over two years In late 2004 we added our St Petersburg Florida market to the CUDL family and we are looking to expand our California market into San Jose in 2005

XFCU News

1995 mdash Online First First credit union to offer online Bill Payer service started PC-based 24-hour Home Banking

1997 mdash Web Winner Web site xfcuorg went live and won multiple awards

1999 mdash Extra Services Began Housing Partner Program and Credit Union Auto Finance plus nationwide mortgages

World News

1992 mdash LA Riots Unrest followed the not guilty ruling of officers involved in Rodney King case

1997 mdash Dolly the Sheep First cloning by scientists at the Roslin Institute in Scotland

1999 mdash Y2K Over-hyped computer software glitch set the world into panic

XCU Capital amp Focus Insurance 2004 was another remarkable year for XCU Corporation Inc the holding company for XCU Capital Corporation Inc and Focus Insurance Agency Inc While four existing credit union clients became owners XCU welcomed six new credit unions as partners The only nationwide 100 credit union-owned brokerdealer XCU Capital launched a new technology platform and added Financial Advisors to many programs Focus Insurance the 100 credit union-owned subsidiary introduced several credit union insurance products this year through ldquoaggregate negotiationrdquo benefiting the members of Xerox Federal Credit Union

By yearrsquos end XCU had 30 credit union partners including 21 owners with a combined membership base of nearly 32 million and assets totaling more than $50 billion XCU provides investment and insurance services to more than 47000 retail clients nationwide and remains committed to offering high quality products and services for all of our shareholders partner credit unions Financial Advisors and members

rsquo

rsquo

Loan Review Committee Report The Loan Review Committee is pleased to report that our Credit Union continues to

have a strong loan portfolio By the end of 2004 our total member loan portfolio reached $544 million Credit Union policies ensure that our loans are the highest quality and in the best interest of each member

At year-end 100 percent of Credit Union membership savings dollars

were loaned out to the membership This attests to our commitment to member service and to performing in the best interest of all our members

Rick Schmidt Chair Loan Review Committee

Supervisory Committee Report The Supervisory Committee is responsible for overseeing your Credit Unionrsquos business affairs and monitoring operating procedures and policies to ensure absolute financial integrity and soundness We continue our

commitment to maintaining Xerox Federal Credit Unionrsquos high standards and financial performance

The committee reviews account records and reports regularly to check their accuracy and timeliness We also conduct periodic on-site unannounced branch audits and oversee audits by our independent auditing firm McGladrey

amp Pullen Certified Public Accountants

I am pleased to report again that the affairs of this Credit Union are in outstanding order

Wayne Johnson Chair Supervisory Committee

t h e r e p o r t s a r e i n

a n d t h e p e r f o r m a n c e i s o n t o p

2000-2004

XFCU News

2000 mdash Express Mortgage Started online and phone-in mortgage service national ATM deposit-taking service

2001 mdash $1 Billion Membership assets reached all-time high New Yorks first mortgage e-Close loan

2002-03 mdash Banking Breakthroughs Started e-Statements Shared Branching online access to Visareg accounts and community expansion

2004 mdash Web Enhancements The easiest access to Web Banking e-Statements Visareg Online

World News

2000 mdash Dot com Bust Beginning of the end of the Internet stock boom

2001 mdash 911 Hijackers crashed jetliners into New York City s World Trade Center and Pentagon

2004 mdash Red Sox Win After an 86-year drought the boys from Boston won World Series

d s t i n g u i s h e d

1) Dennis Ruffner 2) Murray Spector 3) Roni Crichton

4) Bill Cheney 5) John Antonio

6) Christina Brown 7) Raleigh Steinbach

8) Jon Fate 9) Richard Jones

10) Lois McFarland 11) Timothy Myers

12) Rick Schmidt 13) Michael Mishkin

14) Gretchen Valentine 15) Loren Winckler

16) Fred Nichols 17) Barbara Bannister

18) Lewis Siegler 19) Wayne Johnson

16

1 5432

6 987

11 1312

y o u r i

Volunteers amp Executive Staff

10

191817

1514

XEROX FEDERAL CREDIT UNION STATEMENTS OF FINANCIAL CONDITION DECEMBER 31 2004 AND 2003

ASSETS

2004 2003

Cash and cash equivalents $ 45875992 $ 37654676 Investments

Available-for-sale 67919226 88741493 Other 69447290 56394736

Loans net 552268363 528996836 Accrued interest receivable 2508135 2460692 Property and equipment 5697749 5547676 National Credit Union Share Insurance Fund deposit 4499120 4403552 Other assets 3117949 1756660

$ 751333824 $ 725956321

LIABILITIES AND MEMBERSrsquo EQUITY

Liabilities

Notes payable $ 84200000 $ 89200000 State of California Treasury deposits 47000000 47000000 Accrued expenses and other liabilities 4356158 4336356

Total Liabilities 135556158 140536356

Commitments and contingent liabilities

Membersrsquo Equity

Membersrsquo shares 537125279 511974714 Retained earnings substantially restricted 80021261 74370540 Accumulated other comprehensive loss (1368874) (925289)

Total membersrsquo equity 615777666 585419965

$ 751333824 $ 725956321

Savings Mix 2004 Loan Mix 2004 New Autos

Checking Accounts Savings Accounts

Pre-owned Autos IRA Accumulator Other Secured Loans IRA Certificates Real Estate First TD Share Certificates Real Estate Second TD Money Market Accounts Home Equity Lines of Credit Non-Member Savings PowerLines of Credit

Other Unsecured Loans Participation Loans (Net)

This is an unaudited financial report For a complete auditorrsquos report and opinion please visit our Web Branch at wwwxfcuorg or contact a Credit Union representative

rsquo

rsquo

Loan Review Committee Report The Loan Review Committee is pleased to report that our Credit Union continues to

have a strong loan portfolio By the end of 2004 our total member loan portfolio reached $544 million Credit Union policies ensure that our loans are the highest quality and in the best interest of each member

At year-end 100 percent of Credit Union membership savings dollars

were loaned out to the membership This attests to our commitment to member service and to performing in the best interest of all our members

Rick Schmidt Chair Loan Review Committee

Supervisory Committee Report The Supervisory Committee is responsible for overseeing your Credit Unionrsquos business affairs and monitoring operating procedures and policies to ensure absolute financial integrity and soundness We continue our

commitment to maintaining Xerox Federal Credit Unionrsquos high standards and financial performance

The committee reviews account records and reports regularly to check their accuracy and timeliness We also conduct periodic on-site unannounced branch audits and oversee audits by our independent auditing firm McGladrey

amp Pullen Certified Public Accountants

I am pleased to report again that the affairs of this Credit Union are in outstanding order

Wayne Johnson Chair Supervisory Committee

t h e r e p o r t s a r e i n

a n d t h e p e r f o r m a n c e i s o n t o p

2000-2004

XFCU News

2000 mdash Express Mortgage Started online and phone-in mortgage service national ATM deposit-taking service

2001 mdash $1 Billion Membership assets reached all-time high New Yorks first mortgage e-Close loan

2002-03 mdash Banking Breakthroughs Started e-Statements Shared Branching online access to Visareg accounts and community expansion

2004 mdash Web Enhancements The easiest access to Web Banking e-Statements Visareg Online

World News

2000 mdash Dot com Bust Beginning of the end of the Internet stock boom

2001 mdash 911 Hijackers crashed jetliners into New York City s World Trade Center and Pentagon

2004 mdash Red Sox Win After an 86-year drought the boys from Boston won World Series

d s t i n g u i s h e d

1) Dennis Ruffner 2) Murray Spector 3) Roni Crichton

4) Bill Cheney 5) John Antonio

6) Christina Brown 7) Raleigh Steinbach

8) Jon Fate 9) Richard Jones

10) Lois McFarland 11) Timothy Myers

12) Rick Schmidt 13) Michael Mishkin

14) Gretchen Valentine 15) Loren Winckler

16) Fred Nichols 17) Barbara Bannister

18) Lewis Siegler 19) Wayne Johnson

16

1 5432

6 987

11 1312

y o u r i

Volunteers amp Executive Staff

10

191817

1514

XEROX FEDERAL CREDIT UNION STATEMENTS OF FINANCIAL CONDITION DECEMBER 31 2004 AND 2003

ASSETS

2004 2003

Cash and cash equivalents $ 45875992 $ 37654676 Investments

Available-for-sale 67919226 88741493 Other 69447290 56394736

Loans net 552268363 528996836 Accrued interest receivable 2508135 2460692 Property and equipment 5697749 5547676 National Credit Union Share Insurance Fund deposit 4499120 4403552 Other assets 3117949 1756660

$ 751333824 $ 725956321

LIABILITIES AND MEMBERSrsquo EQUITY

Liabilities

Notes payable $ 84200000 $ 89200000 State of California Treasury deposits 47000000 47000000 Accrued expenses and other liabilities 4356158 4336356

Total Liabilities 135556158 140536356

Commitments and contingent liabilities

Membersrsquo Equity

Membersrsquo shares 537125279 511974714 Retained earnings substantially restricted 80021261 74370540 Accumulated other comprehensive loss (1368874) (925289)

Total membersrsquo equity 615777666 585419965

$ 751333824 $ 725956321

Savings Mix 2004 Loan Mix 2004 New Autos

Checking Accounts Savings Accounts

Pre-owned Autos IRA Accumulator Other Secured Loans IRA Certificates Real Estate First TD Share Certificates Real Estate Second TD Money Market Accounts Home Equity Lines of Credit Non-Member Savings PowerLines of Credit

Other Unsecured Loans Participation Loans (Net)

This is an unaudited financial report For a complete auditorrsquos report and opinion please visit our Web Branch at wwwxfcuorg or contact a Credit Union representative

d s t i n g u i s h e d

1) Dennis Ruffner 2) Murray Spector 3) Roni Crichton

4) Bill Cheney 5) John Antonio

6) Christina Brown 7) Raleigh Steinbach

8) Jon Fate 9) Richard Jones

10) Lois McFarland 11) Timothy Myers

12) Rick Schmidt 13) Michael Mishkin

14) Gretchen Valentine 15) Loren Winckler

16) Fred Nichols 17) Barbara Bannister

18) Lewis Siegler 19) Wayne Johnson

16

1 5432

6 987

11 1312

y o u r i

Volunteers amp Executive Staff

10

191817

1514

XEROX FEDERAL CREDIT UNION STATEMENTS OF FINANCIAL CONDITION DECEMBER 31 2004 AND 2003

ASSETS

2004 2003

Cash and cash equivalents $ 45875992 $ 37654676 Investments

Available-for-sale 67919226 88741493 Other 69447290 56394736

Loans net 552268363 528996836 Accrued interest receivable 2508135 2460692 Property and equipment 5697749 5547676 National Credit Union Share Insurance Fund deposit 4499120 4403552 Other assets 3117949 1756660

$ 751333824 $ 725956321

LIABILITIES AND MEMBERSrsquo EQUITY

Liabilities

Notes payable $ 84200000 $ 89200000 State of California Treasury deposits 47000000 47000000 Accrued expenses and other liabilities 4356158 4336356

Total Liabilities 135556158 140536356

Commitments and contingent liabilities

Membersrsquo Equity

Membersrsquo shares 537125279 511974714 Retained earnings substantially restricted 80021261 74370540 Accumulated other comprehensive loss (1368874) (925289)

Total membersrsquo equity 615777666 585419965

$ 751333824 $ 725956321

Savings Mix 2004 Loan Mix 2004 New Autos

Checking Accounts Savings Accounts

Pre-owned Autos IRA Accumulator Other Secured Loans IRA Certificates Real Estate First TD Share Certificates Real Estate Second TD Money Market Accounts Home Equity Lines of Credit Non-Member Savings PowerLines of Credit

Other Unsecured Loans Participation Loans (Net)

This is an unaudited financial report For a complete auditorrsquos report and opinion please visit our Web Branch at wwwxfcuorg or contact a Credit Union representative

XEROX FEDERAL CREDIT UNION STATEMENTS OF FINANCIAL CONDITION DECEMBER 31 2004 AND 2003

ASSETS

2004 2003

Cash and cash equivalents $ 45875992 $ 37654676 Investments

Available-for-sale 67919226 88741493 Other 69447290 56394736

Loans net 552268363 528996836 Accrued interest receivable 2508135 2460692 Property and equipment 5697749 5547676 National Credit Union Share Insurance Fund deposit 4499120 4403552 Other assets 3117949 1756660

$ 751333824 $ 725956321

LIABILITIES AND MEMBERSrsquo EQUITY

Liabilities

Notes payable $ 84200000 $ 89200000 State of California Treasury deposits 47000000 47000000 Accrued expenses and other liabilities 4356158 4336356

Total Liabilities 135556158 140536356

Commitments and contingent liabilities

Membersrsquo Equity

Membersrsquo shares 537125279 511974714 Retained earnings substantially restricted 80021261 74370540 Accumulated other comprehensive loss (1368874) (925289)

Total membersrsquo equity 615777666 585419965

$ 751333824 $ 725956321

Savings Mix 2004 Loan Mix 2004 New Autos

Checking Accounts Savings Accounts

Pre-owned Autos IRA Accumulator Other Secured Loans IRA Certificates Real Estate First TD Share Certificates Real Estate Second TD Money Market Accounts Home Equity Lines of Credit Non-Member Savings PowerLines of Credit

Other Unsecured Loans Participation Loans (Net)

This is an unaudited financial report For a complete auditorrsquos report and opinion please visit our Web Branch at wwwxfcuorg or contact a Credit Union representative

XEROX FEDERAL CREDIT UNION STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31 2004 AND 2003

2004 2003 INTEREST INCOME

Interest on loans $ 29735255 $ 30176756 Interest on investments and cash equivalents 5769554 5817424

35504809 35994180

INTEREST EXPENSE Dividends on members shares 8707724 9381991 Interest on notes payable and State of California

Treasury deposits 3146474 2419931

11854198 11801922

NET INTEREST INCOME 23650611 24192258

PROVISION FOR LOAN LOSSES 2498605 1464330

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 21152006 22727928

NON-INTEREST INCOME Service charges and other fees 4665886 3826514 Debit card interchange income 1258716 1315776 Rental income 1205336 798592 Net (loss) gain on sale of residential mortgage loans (99208) 786234 Other 280463 110986

7311193 6838102

28463199 29566030

GENERAL AND ADMINISTRATIVE EXPENSES Salaries and benefits 11257869 10561310 Operations and occupancy 11554609 12116707

22812478 22678017

NET INCOME $ 5650721 $ 6888013

This is an unaudited financial report For a complete auditorrsquos report and opinion please visit our Web Branch at wwwxfcuorg or contact a Credit Union representative

COMMITTEES

Executive Committee Murray Spector Chair John Antonio Roni Crichton Dennis Ruffner

Nominating Committee John Antonio Chair Roni Crichton Loren Winckler

Finance amp Investment Committee Christina Brown Chair Richard Jones Lois McFarland Anita Moore-Millon Fred Nichols Dennis Ruffner Gretchen Valentine

Supervisory Committee Wayne Johnson Chair Fred Nichols Michael Mishkin Lewis Siegler Gretchen Valentine

Planning amp Marketing Committee Jon Fate Chair John Antonio Roni Crichton Richard Jones Timothy Myers Michael Mishkin Lewis Siegler Raleigh Steinbach Gretchen Valentine Loren Winckler

Loan Review Committee Rick Schmidt Chair Kathy Hansen Debra Terrill

OFFICERS amp DIRECTORS

Board of Directors Murray Spector Chair John Antonio Vice Chair Roni Crichton Secretary Bill Cheney Richard Jones Lois McFarland Dennis Ruffner Raleigh Steinbach Loren Winckler

Senior Management Bill Cheney PresidentCEO Jon Fate Executive Vice PresidentCOO

Christina Brown Senior Vice PresidentCFO

Barbara Bannister Senior Vice President Human Resources amp Organizational Effectiveness

Rick Schmidt Vice President Operations

Timothy Myers Vice President Sales amp Marketing

XCU Corporation Inc XCU Capital Corp and Focus Insurance Agency Board of Directors Bill Cheney Chair Wayne Johnson Vice Chair Henry Wirz Treasurer John Bommarito Roni Crichton Scott Jenner Lois McFarland John Merlo Michael Mishkin Fred Nichols Barry Nelson

Credit Union Auto Finance LLC Board of Directors David Fiedler Chair Bill Cheney Vice Chair Don Aldred Jon Fate

For a listing of XFCU and XCU offices visit our Web Branch at wwwxfcuorg or give us a call at 800XFCU222

h a p p y n n i v e r s a r y

40 Years Over 77000 Reasons to Celebrate XFC-You

There are over 77000 reasons that go into this successful organization And they are all the members of Xerox Federal Credit Union Year after year we can only be as good as our people mdash and thanks to you the Credit Union has continued to be a great success

a

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