Annual Report 2012

Board of Directors 2012

Shaukat AliPresident/CEO

Rahim MaknojiaChairman

Altaf A PraslaTreasurer

Naushad Ali DhukkaSecretary

Irfan K. AliChairman,

Supervisory Committee

Zeeshan MominMember,

Credit Committee

Barkat A. DhukkaChairman,

Credit Committee

Saddiq SunesraMember,

Credit Committee

Jahangir KhowjaDirector

Shenila A Momin Legal Advisor

Zulfiqar SunesraVice Chairman

Moiz N DhukaMember,

Credit Committee

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DESCRIPTION PAGE #

Chairman's Report 1

Supervisory Committee's Report 2

Credit Committee's Report 2

Statement of Financial Position 3

Statement of Operations 4

Statement of Cash Flows 5

Statement of Equity / Key Financial Ratios 6

Notes to Financial Statements 7

Nature of Business 7

Classifications of Loans 8

Significant Accounting Policies 9

Bar Charts & Key Indicators 11

CONTENTS

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I would like to congratulate the entire PMFCU team and membership on completing another very successful year in 2012. While dealing with a very difficult economy and a historically low interest rate environment, the PMFCU was able to meet its goals and even exceed many of them.

The year 2012 was the year of many significant achievements both financially and strategically. We stood strong and more profitable in 2012 with our net profit of $0.98 Million. Our loan portfolio stood at $47.84 Million with an increase of 6.37% as compared to previous year. Introduction of new loan products and promotions such as Education Loan Consolidation Program, Personal Line of Credit and Special interest rate promotions on Auto Loans greatly contributed to the increase and growth in our loan portfolio. While we stayed aggressive at loaning money, we were very cautious for the quality of lending in order to keep delinquency low. Our present delinquency rate stood at 1.02% which is lower than the national average rate of FDIC. Our total assets stood at $63.46 Million at the end of 2012 in comparison to $56.46 Million in 2011, an unyielding increase of 12.40%. Our total deposits of $47.90 Million also grew by 14.72%.

The introduction of Commercial Business Checking and Check Cashing Accounts was very success-ful. We received overwhelming response from our members and it has helped members to take benefits of our competitive lower rates and fees. The confidence and faith that our members have placed in us allowed us to offer them the quality service they require of their financial institution. The other major concentration was the introduction of AD&D Insurance coverage of $50,000 for our members at no cost, which will benefit the members in unforeseen circumstances.

After acquiring our permanent corporate office in Sugar Land, our goal was to relocate the Austin branch. On February 2, 2013 we celebrated the

inauguration of the new Austin office. We received very good suggestions and positive feedback from our members and they felt that the quality of the products and services were greatly beneficial to them to cater their financial needs.

In the years ahead, PMFCU will continue to grow in order to best serve our members effectively and efficiently. In keeping with our mission, we will also continue to invest in making tools and resources available to our members to help them effectively manage their finances and support them in achiev-ing their goals now and in the future - that’s our promise.

I would like to express my gratitude to our Board of Directors, Area Committee Members and volunteers who have always supported us in all aspects and have played a vital role in the development of this credit union. Most importantly, I wish to sincerely thank our members for their continued support and loyalty towards our credit union. Furthermore, we wish to thank all the Management and Staff members for providing exceptional services to our members and for their commitment and dedication in continuing high standards and quality of work.

On this occasion, I would like to thank all the members for their whole hearted support and cooperation extended to me during my tenure and it’s my honor and privilege to serve this great institution.

I am looking forward to another prosperous year 2013.

RAHIM MAKNOJIA

Chairman

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CHAIRMAN’S REPORT – 2012TO THE MEMBERSPIONEER MUSLIM FEDERAL CREDIT UNION

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The Supervisory Committee’s Responsibility is to serve Pioneer Muslim Federal Credit union (PMFCU) members by ensuring that credit union operations are effective in protecting credit union assets and records are accurately and properly reported. This Committee fulfills its obligation to members by monitoring and auditing the activities of the credit union. The committee is also responsible for ensuring adequate policies and procedures exist to adequately protect credit union resources, for provid-ing reasonable assurance that governing regulations and policies and procedures are properly followed. The Board of Directors appointed Supervisory Committee Chairman from the Board and two professionals as a Committee members from the membership to carry out these responsibilities, thus the committee comprises of the following members:

Irfan K. Ali, Chairman, Altaf A. Dholasaniya, Member Moshin Momin, Member

The Committee meets regularly to review and discuss internal controls as well as auditing matters. The commit-tee works with internal auditor, the Board of Directors, the President/CEO and staff of PMFCU to ensure that assets are safeguarded by upholding applicable regulatory policies and procedures. The committee ensures that external audits are also performed and comply with.

Based on extensive analysis, the Supervisory Committee is pleased to announce the financial statements in the report are a fair and accurate assessment of the financial position of PMFCU as of December 31, 2012. PMFCU is in excellent financial condition and is operating within the appropriate laws and regulations.

The role of the Supervisory Committee is vital to the credit union and its membership. We are grateful for your con-tinued confidence in our oversight. The assistance and cooperation of staff and the Board of Directors in the performance of our responsibilities is much appreciated.

Irfan K. Ali

Chairman, Supervisory Committee

SUPERVISORY COMMITTEE’S REPORTTO THE MEMBERSPIONEER MUSLIM FEDERAL CREDIT UNION

Irfan K. AliChairman,Supervisory Committee

The credit committee plays an essential role in maintaining regulatory requirements as per policies and procedures of the NCUA. The Committee is elected by the Board of Directors and consists of five members. The Committee meets at least twice a week to review loan applications. We are proud to inform that our credit union offers the best competitive interest rates across our league while maintaining a safe and secure capital base.

During 2012, the loan portfolio has gained a considerable growth. The Committee received 749 loan applications, of which 746 loans totaling $23,004,629.85 were approved. Overall loan portfolio stood at $ 47,836,988 in the year 2012 as compared to $ 44,974,116 in the year 2011 with an increase of 6.37%. Total loan out in last 3 years from year 2010 to 2012 are respectively as follows: $22.62 M, $22.80 M and $23.00 M.

The above growing numbers reflect our continued ability to meet financial needs of our members. There were various products and services such as car loans, personal loans, home mortgage loans and commercial loans offered throughout the year with the most competitive rates. We will continue to aim meeting the financial needs of our members by offering various loan products and services.

On behalf of the Credit Committee, I would like to con-vey my gratitude to the Board of Directors and the Staff members for their continued support as well as all the members without whom it would have not been pos-sible to accomplish our goals to enhance our member services. We look forward to continue serving you in the years ahead.

BARKAT A. DHUKKA

Chairman, Credit Committee

CREDIT COMMITTEE’S REPORTTO THE MEMBERSPIONEER MUSLIM FEDERAL CREDIT UNION

Barkat A. DhukkaChairman, Credit Committee

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STATEMENT OF FINANCIAL POSITION Year ended December 31, 2012 and 2011

ASSETS: 2012 2011 VARIANCEAmount % Amount % Amount

Loans (Schedule -1) $38,473,517 60.62 $35,698,147 63.23 $2,775,370

Members Business Loan $849,981 1.34 $961,232 1.70 ($111,251)

Real Estate Loan $6,757,924 10.65 $6,630,595 11.74 $127,329

Master Card Loans $1,755,566 2.77 $1,684,141 2.98 $71,425

Total Loans $47,836,988 75.38 $44,974,115 79.65 $2,862,873

Allowance for Loan & Lease Losses ($119,592) (0.19) ($44,974) (0.08) ($74,618)

Cash at Bank $3,742,335 5.90 $1,911,463 3.39 $1,830,872

Investments (Schedule -3) $8,360,448 13.17 $6,225,448 11.03 $2,135,000

N.C.U.S.I.F. Deposit $439,610 0.69 $383,802 0.68 $55,808

Rent & Utility Deposits $4,140 0.01 $1,365 0.00 $2,775

Receivables $17,151 0.03 $20,952 0.04 ($3,801)

Total $12,444,092 19.61 $8,498,056 15.06 $3,946,036

Prepaid Surety Bond/Staff Insurance $37,069 0.06 $0 0.00 $37,069

Prepaid for AGM $0 0.00 $7,000 0.01 ($7,000)

Total Prepaid & Deferred Expenses $37,069 0.06 $7,000 0.01 $30,069

Land & Building $2,696,964 4.25 $2,485,132 4.40 $211,832

Furniture & Fixtures $647,919 1.02 $601,037 1.07 $46,882

Less: Accumulated Depreciation on Fur/Fixture ($315,328) (0.50) ($247,716) (0.44) ($67,612)

Accumulated Depreciation on Building ($80,696) (0.13) ($29,455) (0.05) ($51,241)

Net Fixed Assets $2,948,858 4.64 $2,808,998 4.98 $139,861

Accrued Interest on Loans $181,701 0.29 $165,857 0.29 $15,844

Accrued Interest on Certificates $11,953 0.02 $4,141 0.01 $7,812

Total Accrued Income $193,654 0.31 $169,998 0.30 $23,656

Total Assets $63,460,661 100.00 $56,458,167 100.00 $7,002,494

LIABILITIES & EQUITY:Other Payables $370,548 0.58 $493,106 0.87 ($122,557)

Total Payables $370,548 0.58 $493,106 0.87 ($122,557)

Members' Shares (Schedule - 2) $29,078,412 45.83 $25,849,081 45.78 $3,229,331

Share Drafts $6,444,088 10.15 $4,874,472 8.63 $1,569,616

I.R.A. Shares $10,311,688 16.25 $9,301,888 16.48 $1,009,800

Other Saving $1,381,842 2.18 $1,247,006 2.21 $134,836

Certificate Deposits $685,132 1.08 $480,789 0.85 $204,343

Total Shares $47,901,161 75.49 $41,753,236 73.95 $6,147,926

Regular Reserves $1,250,847 1.97 $1,250,847 2.22 $0

Undivided Earnings $13,938,104 21.96 $12,960,978 22.96 $977,126

Total Equity $15,188,951 23.93 $14,211,825 25.18 $977,126

Total Liabilities & Equity $63,460,661 100.00 $56,458,167 100.00 $7,002,494

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STATEMENT OF OPERATIONS Year ended December 31, 2012 and 2011

Operating Income: 2012 2011 VARIANCEAmount % Amount % Amount

Interest on Loans $3,703,742 95.28 $3,451,759 95.64 $251,983Income from Investments $49,467 1.28 $48,130 1.33 $1,337Credit Union - Fees & Charges $74,167 1.91 $44,707 1.24 $29,461New Membership Fees $4,250 0.11 $3,980 0.11 $270MasterCard - Fees & Charges $6,954 0.18 $5,133 0.14 $1,821IRA Maintenance Fees & Charges $6,010 0.15 $5,800 0.16 $210Loan Processing Fees $42,440 1.09 $49,630 1.38 ($7,190) Total Operating Income $3,887,030 100.00 $3,609,139 100.00 $277,891

Operating Expenses:Office Salaries / Benefits $633,164 16.29 $594,425 16.47 $38,739Payroll Taxes $43,881 1.13 $40,133 1.11 $3,748NCUA Premium/Temporary Corp CU Stablization $41,763 1.07 $95,950 2.66 ($54,187)Travel & Conference $1,447 0.04 $2,141 0.06 ($694)Licenses & Taxes $74,031 1.90 $75,199 2.08 ($1,168)Office Occupancy $23,175 0.60 $25,998 0.72 ($2,824)Utilities & Phone $34,952 0.90 $28,791 0.80 $6,161Office Operations $46,947 1.21 $41,974 1.16 $4,973Insurance $8,900 0.23 $1,070 0.03 $7,830Depreciation $118,853 3.06 $66,825 1.85 $52,028BOD & Staff Training, Education & Promotion $9,983 0.26 $1,169 0.03 $8,814Postage & Stamps $12,766 0.33 $16,880 0.47 ($4,114)Loan Service Charges $16,794 0.44 $12,411 0.34 $4,383Marketing $13,955 0.36 $26,897 0.75 ($12,942)Bank Charges $7,054 0.18 $6,389 0.18 $665Credit Card / ATM / Ipay / Corporate Charges $52,879 1.36 $42,658 1.18 $10,221Professional Fees $6,419 0.18 $7,013 0.19 ($595)Office Supplies $18,751 0.48 $20,749 0.57 ($1,998)Printing & Stationery $11,374 0.29 $21,571 0.60 ($10,197)Software Maintenance Expenses $39,032 1.00 $40,238 1.11 ($1,206)TCUL Audit Fees $15,600 0.40 $10,800 0.30 $4,800TCUL Membership Fees $13,315 0.34 $10,996 0.30 $2,319Provision for Loan & Lease Losses $132,963 3.42 $23,126 0.64 $109,837Office Security / Security Guard $40,508 1.04 $30,898 0.86 $9,610I.R.A. Maintenance Fees $7,645 0.21 $5,548 0.15 $2,098Security Bond Amortization $30,380 0.78 $16,909 0.47 $13,471Federal Examiner's Fees $12,735 0.33 $11,125 0.31 $1,610Legal Fees $16,017 0.41 $7,535 0.21 $8,482Storage Expenses $2,972 0.08 $2,545 0.07 $427Donation / Subscription $274,001 7.05 $26,349 0.73 $247,652Town Hall Meeting Expenses $4,428 0.11 $4,481 0.12 ($53)Annual General Meeting Expenses $70,407 1.81 $44,000 1.22 $26,407Maintenance & Repairs $4,910 0.13 $8,452 0.23 ($3,542)Miscellaneous Expenses $19,469 0.50 $35,094 0.97 ($15,625)Corporate Office Opening Expenses $0 0.00 $21,306 0.59 ($21,306)

Total Operating Expenses $1,861,469 47.89 $1,427,646 39.56 $433,822Income from Operation $2,025,561 52.11 $2,181,493 60.44 ($155,932)Annual Dividends to Members $1,048,435 26.97 $1,064,357 29.49 ($15,922)

Other Non-Operating Gains or (Losses) Gain / (Loss) on Sale of Fixed Assets $0 0.00 $1,141 0.03 ($1,141)

MCA Depletion ( SWCFCU Shares) $0 0.00 $0 0.00 $0NCUSIF Capitalization $0 0.00 $0 0.00 $0Net Income $977,126 25.14 $1,118,277 30.98 ($141,151)

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STATEMENT OF CASH FLOWS Year ended December 31, 2012 and 2011

Cash Flows from Operating Activities: 2012 2011 VARIANCEAmount Amount Amount

Net Income for the year $977,126 $1,118,277 ($141,151)

Adjustments to Reconcile Net Income to Net Cash

provided by Operating Activities:

Add: Accumulated Depreciation $118,853 ($10,026) $128,879

(Increase) Decrease in Accrued Income ($23,656) ($21,808) ($1,848)

(Increase) Decrease in Receivables $3,801 ($14,962) $18,763

Increase (Decrease) in Loan & Lease Losses Allowance $74,618 $4,862 $69,756

Total Adjustments to Net Income $173,616 ($41,934) $215,550

Increase/Decrease in Assets or Liabilities:

(Increase) Decrease in NCUSIF Deposits ($55,808) ($54,785) ($1,023)

(Increase) Decrease in Prepaid & Deferred Expenses ($30,069) $6,242 ($36,311)

(Increase) Decrease in Office Deposit ($2,775) $3,037 ($5,812)

(Increase) Decrease in Land & Building ($211,832) ($1,145,373) $933,541

(Increase) Decrease in Furniture & Fixtures ($46,882) ($124,540) $77,658

Increase (Decrease) in Payables ($122,557) $291,878 ($414,435)

Net Cash Provided By

Assets or Liabilities: ($469,923) ($1,023,541) $553,618

Net Cash Provided or (Used) By Operating & Other Activities: $680,819 $52,802 $628,017

Cash Flows from Investing Activities:

(Increase) Decrease in CCFCU Shares $0 ($119,448) $119,448

(Increase) Decrease in CCFCU Certificates/SimpliCD ($2,135,000) ($1,688,000) ($447,000)

Net Cash Provided or (Used) By Investment Activities: ($2,135,000) ($1,807,448) ($327,552)

Cash Flows from Members' Activities:

Increase (Decrease) in Share Drafts $1,569,616 $1,931,179 ($361,563)

Increase (Decrease) in Members' Savings & Other Savings $3,364,167 $2,741,459 $622,708

Increase (Decrease) in Members' I.R.A. Savings $1,009,800 $1,017,627 ($7,827)

Increase (Decrease) in Certificates Deposits $204,343 $480,789 ($276,446)

(Increase) Decrease in Members' Loans ($2,791,448) ($5,009,037) $2,217,589

(Increase) Decrease in MasterCard Loans ($71,425) $146,660 ($218,085)

Net Cash Provided or (Used) By Members Activities: $3,285,053 $1,308,677 $1,976,376

Net Increase in Cash $1,830,872 ($445,969) $2,276,841

Add: Begining Cash Balance $1,911,463 $2,357,432 ($445,969)

Ending Cash Balance $3,742,335 $1,911,463 $1,830,872

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CONSOLIDATED STATEMENT OF EQUITY December 31, 2012 & 2011

(A) (B) (C) (A+B+C)Balance at December 31, 2010 $1,250,847 $10,765,291 $1,077,411 $13,093,549Account activities during 2011:Transfer of 2010 Current Income 0 1,077,411 (1,077,411) 0Statutory transfer to Regular Reserve 0 0 0 0Net Income - 2011 0 0 1,117,135 1,117,135Other comprehensive income:Gain (Loss) on Asset Disposal 0 0 1,141 1,141Balance at December 31, 2011 $1,250,847 $11,842,702 $1,118,276 $14,211,825Account activities during 2012:Transfer of 2011 Current Income 0 1,117,135 (1,117,135) 0Statutory transfer to Regular Reserve 0 0 0 0Net Income - 2012 0 0 977,126 977,126Other comprehensive income:Gain (Loss) on Asset Disposal 0 0 0 0Balance at December 31, 2012 $1,250,847 $12,959,837 $978,267 $15,188,951

RegularReserve

UndividedEarnings

CurrentIncome

Equity(Net Worth)

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The Regular Reserve has been established in accordance with the Statutory Requirements. Under these guidelines, PMFCU is required to make transfers from Undivided Earnings to Regular Reserve if Risk Asset Ratio is less than 4% of Gross Income. If required, the transfers can range from 5% to 10% of Gross Income depending on whether the Risk Asset Ratio is less than 4% or less than 6%.

KEY FINANCIAL RATIOSFor the Year 2008 2009 2010 2011 2012 Peer Avg.

% % % % % %26.93 26.66 26.78 25.17 23.93 10.97

0.80 0.43 0.15 0.21 1.02 1.28

0.40 (0.35) (0.22) 0.04 0.13 0.58

2.11 2.41 2.29 2.12 1.63 0.49

7.23 6.66 7.08 6.85 6.48 5.08

2.97 2.24 1.93 2.02 1.75 0.52

2.55 2.54 2.52 2.67 2.88 3.79

4.07 4.10 4.89 4.62 4.73 4.56

35.20 38.10 35.55 38.92 44.46 75.00

2.35 2.22 2.25 2.46 2.66 2.91

85.41 100.22 112.73 107.71 99.87 60.46

62.29 73.35 82.07 79.66 75.38 53.24

8.12 9.50 8.97 8.54 6.88 5.43

8.57 8.94 7.88 17.34 14.72 5.56

(5.82) 27.83 21.34 12.12 6.37 3.03

8.54 9.11 8.45 15.51 12.40 5.50

37.69 (25.33) (37.48) 19.00 42.19 13.24Investment Growth

Operating Expenses/Average Assets

Net Interest Margin/Average Assets

Operating Expenses/Gross Income

Net Operating Expense/Average Assets

Total Loans/Total Shares

Gross Income/Average Assets

Cost of Funds/Average Assets

Net Worth Growth

Market (Share) Growth

Loan Growth

Asset Growth

Total Loans/Total Assets

Net Worth/Total Assets

Delinquent Loans/Total Loans

Net Charge-Offs/Average Loans

Return on Average Assets

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Name of Loan Amount of Loan Rate (APR)*** Term (Years) Security

Secured Loan (Savings/Share Draft) Limited by Members' Savings Start from 4.5% * 6 Members' Savings

Advantage Loan Up to $25,000 8.99% 6 $500.00

Preferred Unsecured Loan $25,001 to $35,000 8.99% 6 $500.00

Jumbo Loan $35,001 to $49,900 8.99% 6 $500.00

Auto Loan – New Up to $65,000 2.99% 6 Vehicle

Auto Loan – Used Up to $65,000 2.99% 5 Vehicle

Auto Loan – New $65,001 to $150,000 3.99% 6 Vehicle

Auto Loan – Used $65,001 to 150,000 3.99% 5 Vehicle

Business Security Loan Up to $15,000 7.99% 3 First Lien on Security Equipment

Education Loan Up to $80,000 4.99% 10

Equipment Loan Up to $50,000 7.99% 5 Lien on Equipment

Personal Line of Credit Up to $49,900 8.99% 3 $100,000 Income Member Can applyPrime +2.00% 7 Property Lien/ Furniture, FixtureFixed 9.99% Inventory & Equipments, UCC filed

Prime +2.00% ^ 15 Property Lien/ Furniture, FixtureFixed 9.99% Inventory & Equipments, UCC filed

* The rates are based on last dividend earning with a minimum of 4.50%.

*** Above rates are subject to Credit Score.

^ Prime + 2.00% or 6.99% which ever is higher

LOANS

Member's Business Loan Up to $150,000

Up to $1,500,000Commercial Real Estate Loan

** Guarantor / Collateral required depending on Credit Score.

1. NATURE OF BUSINESSPioneer Muslim Federal Credit Union (PMFCU) was established in 1981. Although the general membership contin-ues to grow at a steady rate, there are many more individuals who are eligible to become members and could benefit from Credit Union’s programs. PMFCU has managed to achieve these great results in spite of an economy which is constantly under pressure. As a matter of policy and to compete in the market, the credit union has been offering competitive dividends on the shareholders’ savings and lower interest rates on the loans. The goal of PMFCU is to help the members in their financial needs through the products and services as detailed below:

LoansCredit Union continues to strive to improve and streamline the loan process by reviewing and revising its loan policies on an ongoing basis. Currently, the credit union offers the following loans:

Master CardDuring the year 2012, approximately $1,755,566 was loaned out to the members through Master Card program compared to $1,684,141 in the year 2011. The details of the total accounts and the active accounts are as detailed below:

Classic Gold Platinum Total

Accounts on file 1013 90 160 1263

Active Accounts 696 63 120 879

Percent Active 69% 70% 75% 70%

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Unsecured 1024 21,440,043 353 11,344,918 366 11,097,363 1011Secured 93 2,011,393 48 1,672,981 53 1,648,933 88

Equipment 17 210,480 4 123,708 3 70,423 18Automobiles 512 8,631,404 224 5,436,965 152 4,516,042 584Education 57 810,035 69 1,001,028 46 295,617 80

Business Security 1 6,371 0 0 0 0 1Line of Credit 68 2,588,421 38 1,866,400 17 1,037,011 89

Total Schedule 1 $35,698,147 $21,446,000 $18,665,389Business 15 961,233 1 150,000 2 261,252 14

Commercial Real Estate 8 4,489,183 2 670,000 1 498,987 9Residential Real Estate 10 2,141,412 3 619,530 2 663213 11

Total Loans 1805 $43,289,975 742 $22,885,530 642 $20,088,841 1905 Average Loans

Ending Balance

4,660,196

SCHEDULE 1: CLASSIFICATION OF LOANSOpening Balance New Loans Loans Paid

Type of Loans Amount ($) Amount ($) # of A/C# of A/C

849,981

$23,983 $30,843 $31,291 $24,190

# of A/C

21,687,598

1,515,446

# of A/C

2,097,729

Amount ($)Amount ($)

$46,081,422

1,129

263,7652,035,441

3,417,810

9,552,327

$38,473,516

CLASSIFICATION OF LOANS

Members’ SavingsMembers’ savings continue to grow at a rate comparable to previous years. On occasions, members’ ability to save money was limited to maintain the Credit Union’s cash-to-assets ratio in compliance with our Asset/Liability Management Policy. This also enables the credit union to declare higher dividends on savings as compared to market rates. The IRA was introduced in 1999 and the program has been growing steadily ever since. Saving money into an IRA account will help members’ in their retirement and tax planning. Members can open an IRA account before April 15th and the contribution will still be applied to the same year for tax purposes.

# of A/C Amount ($) # of A/C Amount ($) # of A/C Amount ($) # of A/C Amount ($)

Opening Balance 204,631 33,058 40,112 44,974 Add new funds for ALLL 1,762,440 - 23,126 132,963

Transfer to Provision ALLL (378,825) (71,983) - -

Balance Available 1,588,246 (38,925) 63,238 177,937 Loan Charge Off 77 1,251,512 2 1,715 1 31,013 4 90,644

MasterCard Charge Off 63 839,130 3 13,216 7 60,755 1 398

Other Charge Off 1 4,297 - - - - - -

Total amount Charge off 141 2,094,939 5 14,931 8 91,768 5 91,041 Balance After Charge Off (506,693) (53,856) (28,530) 86,896

Add Recovery from Charge off 539,751 93,968 73,504 32,697

Balance end of the year $33,058 $40,112 $44,974 $119,592

ALLOWANCE FOR LOAN LEASE LOSSES A/C (ALLL)DESCRIPTION

2004 - 2009 2010 2011 2012

Membership Count Opening Members New Members Accounts Closed Ending Members

Membership 5,843 425 20 6,248

Members' Shares Opening Balance Add: Deposits Less: Withdrawals Ending Balance

Savings/Shares $25,849,081 $4,214,052 $984,721 $29,078,412

$4,424

SCHEDULE 2: MEMBERS' SHARES

Average Balance of a Member's Share =8

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2. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies of PMFCU are in conformity with accounting principles generally accepted in the United States of America. A description of the more significant of these policies is as follows.

Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets, liabilities, and amount revenues and expenses for the period.

Cash EquivalentsFor purposes of reporting cash flows, the Credit Union considers all investments purchased with original maturities of three months or less to be cash equivalents.

InvestmentIn order to get better investment return on excess liquidity of $8.36 millions, up to $250K each has been invested in ‘laddered’ form of certificate of deposits (SimpliCD with various banks) through Catalyst Corporate Federal Credit Union. These CDs mature in 6 months interval up to 36 months. Investments in non marketable equity se-curities are stated at cost. Detail of the investments is as follows:

3. LINE OF CREDITPMFCU has $3,000,000 line of credit facility at 0.75% interest rate with Catalyst Corporate Federal Credit Union (CCFCU) as of December 31, 2012. Interest is payable monthly based on the daily balance. There was no outstanding balance on the Line of Credit as of December 31, 2012.

4. CONCENTRATIONS OF CREDIT RISKPMFCU maintains an account at CCFCU. The total balance of SimpliCD (36 CDs) and Cash Management Accounts (checking) was $2,154,118.89 as of December 31, 2012. This account is insured by the National Credit Union Share Insurance Fund (NCUSIF) upto $250,000 until December 2012. The Credit Union also maintains other accounts with United Central Bank (UCB) and Wallis State Bank (WSB). The total balance in the Money Market Commercial account is $246,068.16, and UCB Checking Account (Houston/Austin Branch) is $412,769.33 and WSB Checking Account balance is $250,000.00 as at December 31, 2012. The checking accounts are fully in-sured by the Federal Deposit Insurance Corporation fully insured until December 2012. Under the Personal Line of Credit and Master Card Program, members have different credit limits. At the end of year 2012, approximately $2,093,889.85 and $5,663,663.00 respectively remained unused credit limits.

Loans to membersLoans to members are stated at the current principal amount outstanding. Interest on loans is accrued monthly based upon the amount of principal outstanding.

Amount % Amount %

Catalyst CFCU Share $119,448 1.43 $119,448 1.92 $0

Catalyst CFCU / SimpliCD Certificates $7,991,000 95.58 $5,856,000 94.06 $2,135,000

Catalyst CFCU Performance Tiered $250,000 2.99 $250,000 4.02 $0

Total Investments : $8,360,448 100.00 $6,225,448 100.00 $2,135,000

Variance

SCHEDULE 3: INVESTMENTS2012 2011

Names of Banks

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Premises and EquipmentThe Credit Union occupies the new Austin premises of approximately 1,850 square feet for $2,775.00 monthly rent. The equipment is carried at cost less accumulated depreciation. Provisions for depreciation are computed using the straight-line method. Average useful lives used for depreciation with respect to major classifications of property are as follows:

Furniture and equipments 3 to 10 years

Computer and Software 2 to 5 years

Expenses for maintenance and repairs are charged against operations. Assets and related amounts are removed from the accounts upon retirement or any other disposition, and any resulting gains or losses are recorded in the statement of activities.

Income TaxesPMFCU is generally exempt from federal income taxes under Internal Revenue Code section 501(c) (6) and also exempt from Sales Tax under IRS Section 501(C)(3).

Checking & Automatic Clearing House (ACH)PMFCU has ACH services that enable the members to directly debit or credit their account.

NewsletterIn order to establish and maintain a continuous channel of communication with members, issuance of newsletters started again in year 2007. The goal of these newsletters is to communicate current events, ongoing activities, future programs, and other important financial information with the members. We also hope to use these newsletters as a tool to obtain feedback and input from the members.

To have quick means of communication with the members, we have also started emailing the newsletters, flyers, meeting notices and any other type of important information to the members.

Online BankingPioneer Muslim Federal Credit Union offers Online Banking Service to its members. Members can now check their account balances, perform transactions and review their accounts via internet through our website www.pioneeronline.org.

WebsitePMFCU has a website (www.pioneeronline.org) for members to access their accounts and learn about products and services they may avail 24/7.

Insurance CoveragePioneer Muslim Federal Credit Union is now offering Accidental Death & Dismemberment (AD&D) Insurance to all eligible members ages 18-69. An eligible member will automatically be signed up for $50,000 of complimentary AD&D insurance, fully paid for by Pioneer Muslim Federal Credit Union.

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PARTICULARS 2008 2009 2010 2011 2012

LOANS $23,824,786 $31,090,789 $38,280,939 $43,289,975 $46,081,422

MASTER CARDS $2,035,272 $1,966,762 $1,830,801 $1,684,141 $1,755,566

TOTAL LOANS $25,860,058 $33,057,551 $40,111,740 $44,974,116 $47,836,988

SHARE DRAFTS $2,468,285 $2,820,739 $2,943,293 $4,874,472 $6,444,088

SHARE SAVINGS $21,700,186 $22,878,401 $24,324,496 $27,096,087 $30,460,253

IRA ACCOUNTS $6,119,941 $7,285,064 $8,284,261 $9,301,888 $10,311,688

CERTIFICATE OF DEPOSITS $0 $0 $30,132 $480,789 $685,132

TOTAL DEPOSITS $30,288,412 $32,984,204 $35,582,182 $41,753,236 $47,901,161

NET PROFIT $631,226 $1,042,221 $1,077,411 $1,118,277 $977,126

NET WORTH $10,973,916 $12,016,137 $13,093,549 $14,211,826 $15,188,951

TOTAL ASSETS $41,307,089 $45,069,195 $48,876,959 $56,458,167 $63,460,661

MEMBERSHIP # 4,859 5,177 5,538 5,843 6,248

LOAN BORROWERS # 1,202 1,429 1,613 1,805 1,905

TOTAL LOANOUT (DURING YEAR) $11,529,816 $20,745,429 $22,623,353 $22,800,650 $23,004,630

MASTER CARD HOLDERS 832 848 947 1,047 1,263

DIVIDENDS - SHARE SAVINGS RATE 4.13% 3.00% 2.63% 2.88% 2.73%

NUMBER OF STAFF MEMBERS 9 12 14 16 16

KEY INDICATORS 2008 - 2012

11

0

10

20

30

40

50

60

70

2008 2009 2010 2011 2012

30.29 32.9835.58

41.75

47.90

25.8633.06

40.11

44.9747.84

41.3145.07

48.88

56.46

63.46

Amou

nt in

 Millions

Years

Deposits, Loans  & Assets Bar Chart  

DepositsLoansAssets

Nooruddin MominAccounting Manager

Anila MehdiLoan Officer

Swati PatelOperations Manager

Faiza AliLoan Officer

Afroja DhukaCredit Analyst

Anjum KarimAccounting Officer

Asma AliCollection Assistant

Naeema K. AliOperations Officer

Austin

Nadirshah AliAdministrative Assistant

Austin

Zahra AliMember ServiceRepresentative

Mazbine F. RajabAdministrative Assistant

Mahera MominOffice Secretary

Office Staff

Shehnaz Samnani-JiwaAdministrative Assistant

Sayrozben K. KarediaMember ServiceRepresentative

Shabira MominTeller Supervisor

Sana AliAdministrative Assistant

Joyeb I. MarediaAdministrative Assistant

Zara MarediaMember ServiceRepresentative

1521 Lake Pointe Parkway, Sugar Land, Texas 77478Phone: 281-566-8000 Fax: 281-566-8001

www.pioneeronline.org

Pioneer Muslim Federal Credit Union is federally insured by the National Credit Union Administration

8801 Research Blvd, Suite 105, Austin, TX 78758Phone: (512) 467-PMCU (7628) Fax: (512) 467-PFAX (7329)

OFFICE LOCATION SUGAR LAND

OFFICE LOCATION AUSTIN