2 0 0 2ANNUALREPORT

Building a New Location to Better Serve Our MembersBuilding a New Location to Better

Chairman’s ReportThe uncertainty of the economy in the year 2002 affected Telco as well

as our members. Be assured our efforts are always directed toward main-taining the highest return to our savers and the lowest possible rates toborrowers.

Even with the slowed economy, we experienced a modest increase of1.85% in total gross income. Net income of 1.20% was realized by closelycontrolling expenses.

A healthy growth of over $11.6 million in shares reflects the trust mem-bers have in the stability of Telco. We recognize that some of this shareincrease may be the result of declining stock values and diminishing inter-est rates elsewhere.

Membership growth over the years has come mainly from groupsadded into our field of membership. During the past year, NCUA declaredTangipahoa Parish to be underserved and approved our application to pro-vide membership to any individuals who reside, work or attend school inthat parish. We are now actively pursuing this avenue of membershipgrowth.

To make Telco services more available to our members, we will soonoccupy a new building on Airline Highway at Briarwood Place in BatonRouge. This facility will meet our need for additional space and will bemore convenient to members in the southeast Baton Rouge and Ascensionareas.

Audits by the Supervisory Committee confirmed the high degree of sta-bility and continuing proper management of this credit union.

You will find details of Baton Rouge Telco Federal Credit Union opera-tions in other sections of this annual report. I invite you to closely reviewthem and direct any questions you may have to the Board or Management.

Once again, it has been a pleasure to serve you this year.

Win Landry, Chairman

Building a New Location to Better Serve Our Members

Supervisory Committee ReportThe supervisory committee is responsible for verifying the credit union’s

financial records and internal controls to assure the safety of member assetsand that operations are in compliance with State and Federal regulations.To accomplish this objective the supervisory committee performed the fol-lowing activities in 2002.

1. Reviewed the 2002 audit proposal and contracted the auditor.2. Directed quarterly audits performed by Grimball and Associates. In

2002, this included an E-Commerce audit to review issues related totransactions conducted over the Internet.

3. Held regular meetings to review operations, review audits, andaddress member concerns.

4. Met periodically with the auditor throughout the year to discussprogress, concerns, and findings.

5. Followed up on any audit findings to see that they were resolved sat-isfactorily.

6. Members of the Supervisory Committee took turns attending BoardMeetings to stay informed on Baton Rouge Telco Federal CreditUnion operations.

The Baton Rouge Telco Federal Credit Union was examined by the fed-eral examiners and is in compliance with the federal standards and lawsgoverning credit unions. Audits for 2002 were successfully completed andall issues were resolved. We look forward to another outstanding year in 2003.

Supervisory Committee:Chuck Carney, Chairman; Suzanne Diez,Secretary; Neal King, Member; Jim Mobley,Member; Brenda Nix, Member; FreddyeSmith, Member and Jay Terry, Member.

Chuck Carney,Supervisory Committee Chairman

Statement of Financial Condition

1998 1999 2000 2001 2002

TOTAL ASSETS IN MILLIONS80706050403020100

52.2 54.9 56.960.9

73.7

1998 1999 2000 2001 2002

47.7 52.2 54.9 56.9

TOTAL SHARES IN MILLIONS70

60

50

40

30

20

10

0

Key Financial RatiosTelco FCU Peer

Net Worth/Total Assets 12.52% 10.82%

Total Delinquent Loans/Net Worth 2.81% 4.44%

Delinquent Loans/Total Loans 0.62% 0.74%

Net Charge-Offs/Average Loans 0.44% 0.45%

Net Income/Average Assets 1.20% 1.01%

Net Operating Expense/Average Assets 2.53% 2.77%

47.6 49.152.3

63.9

45.6

ASSETS Dec. 31, 2002 Dec. 31, 2001

Loans to Members $43,342,951 $42,436,575

Loans Liquidating 7,176 63,205

Less Allowance for Loan Losses (264,327) (284,202)

Cash & Cash Equivalents 3,129,617 1,909,331

Investments 24,760,987 14,642,052

Furniture & Equipment 284,578 198,306

Land & Building 1,504,004 1,476,422

Construction in Progress 437,157 52,505

Other Assets 570,617 449,535

TOTAL ASSETS $73,772,760 $60,943,729

LIABILITIES

Accounts Payable & Other Liabilities $(2,921) $12,193

Dividends Payable 368 2,621

Total Shares 63,966,113 52,348,985

Regular Reserve 1,928,304 1,928,304

Undivided Earnings 7,880,896 6,651,626

TOTAL LIABILITIES $73,772,760 $60,943,729

Statement of Income

1998 1999 2000 2001 2002

TOTAL LOANS IN MILLIONS44

42

40

38

36

341998 1999 2000 2001 2002

INVESTMENTS IN MILLIONS30.0

25.0

20.0

15.0

10.0

5.0

0.0

37.2

40.3

43.2 42.4 43.3

11.9 10.3 10.414.6

24.8

INCOME Dec. 31, 2002 Dec. 31, 2001

Interest on Loans $3,507,913 $3,635,275

Income from Investments 864,396 695,584

Other Operating Income 866,795 812,733

TOTAL INCOME $5,239,104 $5,143,592

EXPENSES

Salaries and Benefits $1,090,959 $975,697

Travel and Conference 31,082 26,421

Association Dues 19,190 17,735

Office Occupancy & Operations 882,943 872,085

Educational & Promotions 40,205 38,590

Loan Servicing 105,464 130,270

Professional & Out. Svc. 90,513 88,583

Member’s Insurance 0 19,404

Provision for Loan Loss 170,000 226,000

Cash Over & Short 781 238

Annual Meeting 6,874 7,391

Misc. Operating Expenses 18,887 21,456

TOTAL EXPENSES $2,456,898 $2,423,870

Gain on Investments $445 $0

INCOME BEFORE DIVIDENDS 2,782,651 2,719,722

Dividend Expense 1,971,024 2,061,319

NET CONTRIBUTION TO CAPITAL 811,627 658,403

Regular Reserves 0 0

Undivided Earnings $811,627 $658,403

StaffOfficialsBATON ROUGE STAFF

MANAGER/CEODarryl K. Long

ACCOUNTINGLaurie ScaliseAccounting Supervisor

Dawn DodsonAccounting Clerk

Paula SpeedAccounting Clerk

COLLECTIONSNannette CouteeCollection Officer

Laura LejeuneCollection Officer

DATA PROCESSINGRobert TarverInformation System Specialist

LENDING Micky TassinLoan Supervisor

Sherri O’NealLoan Officer

Deidre LewisLoan Officer

Vi RuemkerLoan Officer

Pat BrownLoan Processor

Bernie HimelLoan Auditor

MARKETINGCharlene RocaMarketing Director

Lisa GillBusiness Development Officer

MEMBER SERVICESTrina PortuneMember Services Supervisor

Nicole SpiersCard Service Clerk

Heidi Andre’IRA Specialist

Claire LortieNew Accounts Rep.

Debbie CampbellSenior Member Services Rep.

Kory ClardySenior Member Services Rep.

Darla BradfordMember Services Rep.

Joe GremillionMember Services Rep.

Lori FreemanMember Services Rep.

BOARD OF DIRECTORSWin LandryChairman

A. P. LandryVice-Chairman

Darrell GoudeauTreasurer

Marianne MerrittSecretary

Andrew EamesDirector

Floyd EskineDirector

Dell OliverDirector

SUPERVISORY COMMITTEEChuck CarneyChairman

Suzanne DiezSecretary

Neal KingMember

Jim MobleyMember

Brenda NixMember

Freddye SmithMember

Jay TerryMember

NOMINATING COMMITTEEB. B. JohnsonChairman

Rose EmanuelMember

Margaret FletcherMember

Herbert LandryMember

Johnny RingeMember

Tracie NettlesMember Services Rep.

Mandy RamagosMember Services Rep.

Kendrick ScottMember Services Rep.

Paula SullivanMember Services Rep.

Elizabeth ThousandMember Services Rep.

Laure WilliamsonMember Services Rep.

REAL ESTATEMona WorthyReal Estate Specialist

HAMMOND BRANCH STAFFDebbie StevensBranch Manager

Crystal StewartLoan Officer

Rose StahlSenior Member Services Rep.

Melanie LeBoeufMember Services Rep.

Diane ValureMember Services Rep.

LOCATIONS ANDCONTACT INFORMATION

Airline Office13404 Airline HighwayBaton Rouge, LA 70817(225) 924-8900(800) 634-3044

Wooddale Office2226 Wooddale Blvd.Baton Rouge, LA 70806(225) 924-8900Fax (225) 923-3136(800) 634-3044

Hammond Office1115 W. University Ave.Hammond, LA 70401(985) 542-8086Fax (985) 542-4482(800) 400-1761

Under Construction