Federally Insured by NCUA

Member Service Representatives Liza Brooker, top and Alex Puglisi assist members from the PTM Center located in our North Haven headquarters.

Our Board of Directors approved Personal Teller Machine (PTM) technology for the new Branford Branch. This allows us to more efficiently process member transactions.

IntroducIng our new personal teller MachIne

Technology played an important role in 2012 as we continued our transition to a process that delivers security and convenience to our members. Members visiting a Connex branch experienced the first step when we transitioned to electronic signatures for their transactions. By digitally storing deposit and withdrawal information, we now avoid the unnecessary use of deposit and withdrawal slips. In addition, opening an account at a branch is now paperless and all membership applications are stored digitally. During 2012 Connex membership, loan and mortgage records were scanned and digitally indexed by account number, making retrieval of documents more streamlined and eliminating the need to store paper documents. As you can see, 2012 was a big year for going paperless!

In July, Connex replaced ATMs at all branches with ATMs that are compliant with the Americans with Disabilities Act (ADA) requirements. All ATMs are now speech enabled to service visually-impaired members and meet ADA height and reach standards.

During the fall, our Board of Directors made the decision to open a new branch in Branford. Opened in February 2013, the branch features Personal Teller Machine (PTM) technology. PTMs offer our members both convenience and efficiency with their transactions. The actual transaction processing takes place remotely from our North Haven headquarters, with one-on-one interaction via video screen. A Connex Member Service Representative processes each transaction - this truly is high-tech meets high-touch member service. Staff members are also available at the branch to open accounts, take loan applications, and assist members who have in-depth questions. PTM technology allows Connex to more efficiently manage spikes in branch traffic and reduce wait times for members.

As we continue into 2013, we look forward to launching mobile banking, a service often requested by our members. Mobile banking is a major component in our continuing effort to bring Connex members the latest in technology to make Unbanking with us even more convenient and easy.

We continued our strategic growth initiative with the purchase of CPM Insurance Services, LLC in Cheshire by Connex Insurance Services. This purchase provides our members with a broader range of personal and business insurance services. We also teamed up with Quantum Benefits to offer our members Medicare and senior insurance services. These two affiliations give us the ability to help our members save money, while providing quality insurance products and personal, local service.

To help grow awareness of our Facebook page, we held a “Favorite Branch” competition in June and July. We asked members to “like” us on Facebook and vote for their favorite branch. Each branch was supplied with marketing materials to raise awareness of the contest. Nearly 400 members voted and our North Haven branch was voted the Favorite Branch for 2012. During the promotion, 305 members “liked” us on Facebook, our largest concentration of new followers on Facebook to date.

We continued to support our local community throughout 2012 with more than $19,000 in contributions through our coin machine donation program, support of Project Graduation in North Haven and Guilford and a $1,000 contribution to Fisher House Connecticut. In addition, three area students received a total of $4,000 in scholarships from Connex.

Improving the lives of our members is the primary reason we exist. Providing members with a full range of products, competitive rates, convenience and excellent service is what we strive for every day. Your feedback guides our future and where we devote our resources, so we regularly ask our members for input. Our 2012 Net Promoter Survey, which measures members’ likelihood to recommend Connex to friends and family members, resulted in an extraordinary score of 72.45%, an increase from our 2011 score of 70.00%. The survey was conducted by Constance Anderson and Associates who says, “This score is the highest ever for Connex since we’ve started the survey. Your members are very engaged and very happy with the credit union. This puts you in the ranks not only of top credit unions, but also of top companies in the U.S., including USAA Insurance, Costco, Apple, and Amazon. A well-deserved honor!”

In November 2012, Connex Credit Union marked the retirement of President and CEO John Edwards. During his 34 years leading Connex, John managed our growth from a single sponsor credit union to a community-based credit union with $380 million in assets and more than 45,000 members. On behalf of our Board of Directors, I wish to thank John for his leadership in making Connex what it is today – a financially strong credit union with unwavering dedication to improving our members’ financial lives.

After an extensive nationwide search, the Board of Directors appointed Frank Mancini as its new President and Chief Executive Officer. Frank has been part of the Connex executive team for the past nine years, most recently serving as the Chief Financial Officer. With his extensive experience and proven dedication to Connex, Frank brings a thorough knowledge of our mission and will lead Connex into the future.

We continue to be a financially solid credit union, with strong capital, good earnings and a commitment to growing our relationship with our members. We strive to be a leader in financial services, growing with both technological advances and the promise to our members to be an advocate for their financial success. With your continued support, we welcome the challenge of meeting your financial needs, now and in the future.

Fred heimann Chairman of The Board

a Message FroM our chaIrMan

1. summary of significant accounting policiesThe accounting and reporting policies of Connex Credit Union (the “Credit Union”) conform to National Credit Union Administration and applicable state accounting rules and regulations for state chartered credit unions.

loans to Members and allowance for loan lossLoans are stated at the amount of unpaid principal, reduced by an allowance for loan losses. Interest on loans to members is recognized over the terms of the loans and calculated on principal amounts outstanding. Loan fees and certain loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income.

The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and decreased by charge-offs less recoveries. Management estimates the allowance balance required using past loan loss experience, known and inherent risks in the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in Management’s judgment, should be charged-off. Loan losses are charges against the allowance for loan losses when Management believes the uncollectibility of a loan balance is confirmed.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors.

Due to the nature of uncertainties related to any estimation process, management’s estimate of loan losses inherent in the loan portfolio and the related allowance may change in the near term. However, the amount of the change that is reasonably possible cannot be estimated. In addition, the Credit Union’s regulator, as an integral part of its examination process, periodically reviews the Credit Union’s allowance for loan losses. The regulator may require the Credit Union to adjust the allowance based on their judgments of information available to them at the time of their examination.

A loan is impaired when full payment under the loan terms is not expected. Impairment is generally evaluated in total for smaller balance loans of similar nature such as residential mortgage, and consumer loans, but may be evaluated on an individual basis if deemed necessary. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.

InvestmentsThe Credit Union’s investments are classified and accounted for as follows:

held-to-Maturity: Investments which the Credit Union has the positive intent and ability to hold to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts.

other Investments: Investments in this category do not meet the definition of a debt or equity security under accounting pronouncements. Other investments may include certain cash equivalents that Management has elected to classify as investments. Other investments are stated at the lower of cost or market.

Cost of investments sold are recognized using the specific identification method. The amortization of premiums and the accretion of discounts are recognized over the term of the related investment by a method that approximates the interest method.

Management periodically performs analyses to test for impairment of various assets. A significant impairment analysis relates to the other than temporary declines in the value of the securities. Management conducts periodic reviews and evaluations of the securities portfolio to determine if the value of any security has declined below its carrying value and whether such a decline is other than temporary. If such decline is deemed other than temporary, Management would adjust the amount of the security by writing it down to fair market value through a charge to current period operations.

property and equipmentLand is carried at cost. Building, computer equipment, furniture and equipment are carried at cost, less accumulated depreciation and amortization. Building, computer equipment, furniture and equipment are depreciated using the straight-line method over the estimated useful lives of the assets.

regular reservesThe Credit Union is required by the National Credit Union Administration to establish a reserve to absorb losses in addition to the allowance for loan losses. This required reserve is not related to amounts of losses actually anticipated and appropriations thereto have not been charged against income. The required reserve at December 31, 2012 and 2011 satisfied the minimum regulatory balance requirements of the National Credit Union Administration. This reserve, which represents a regulatory restriction of retained earnings, is not available for the payment of interest (dividends) on member share accounts.

equity acquired in MergerEquity acquired in a merger, represents equity acquired in a merger accounted for in accordance with the acquisition method of accounting. Under this accounting method, undivided earnings, both restricted and unrestricted, of the acquiree are combined on the acquirer’s statement of financial condition as a component of equity called merged equity. This component of equity is considered part of net worth as defined by regulations established by the National Credit Union Administration.

Income tax statusThe Credit Union is exempt, by statute, from Federal and State income taxes.

supervisory committee statementThe Credit Union has a Supervisory Committee, which is appointed by the Board of Directors. The Committee meets with management, officials and their independent accountants to review the financial affairs of the Credit Union. The Committee reports to the membership at the annual meeting.

An audit was performed by a certified public accounting firm for the year ended September 30, 2012 and we received an unqualified opinion. A complete copy of the audited financial statements is available upon request.

notes to FInancIal stateMents

consolidated statements of Income (unaudited)For the Years Ended December 31, 2012 and 2011

operating Income: 2012 2011 Interest on Loans $12,949,747 $14,423,645 Interest on Investments 1,677,392 2,136,496 Other Operating Income 5,669,634 3,737,415

total operating Income 20,296,773 $20,297,556 operating expenses: Compensation and Benefits 7,124,826 $6,940,903 Other Operating Expenses 7,499,125 5,782,496

total operating expenses 14,623,951 $12,723,399

non operating expenses: Provision for Loan Losses (1,3) 1,153,827 $1,284,614

total expenses 15,777,778 $14,008,013

Income Before Dividends 4,518,995 6,289,543 Dividend Expense 1,670,450 2,174,881 Interest on Borrowed Money 341,600 340,667 non operating gains or losses: Gain/Loss on Investments – 38,801 Gain/Loss on Disposition of Assets (111,283) (53,606)NCUSIF Recapitalization – –NCUSIF Impairment and Assessment (292,447) (721,018)

net Income $2,103,215 $3,038,172

See Notes to Financial Statements.

3. loans and allowance for possible loan lossesThe composition of the Credit Union’s loan portfolio as of December 31, 2012 and 2011 is as follows: 2012 2011

Fixed Rate Mortgages $69,746,741 $79,686,923 Adjustable Rate Mortgages 41,865,488 41,380,303 Fixed Rate Consumer Loans 119,360,686 119,489,677 Adjustable Rate Consumer Loans 2,078,624 2,119,739 Business Loans 2,462,979 2,704,467 Loans - Gross 235,514,518 245,381,109 Allowance for Possible Loan Losses (3,049,223) (3,447,289) loans - net $232,465,295 $241,933,820 4. property and equipment The composition of property and equipment at December 31, 2012 and 2011 is as follows: 2012 2011 Land and Building $3,515,691 $3,422,391 Computer Equipment 2,160,180 3,740,431 Furniture and Equipment 296,798 588,143 Total Cost 5,972,669 7,750,965 Less Accumulated Depreciation (2,735,860) (4,557,500) property and equipment - net $3,236,809 $3,193,465

consolidated statements of Financial condition (unaudited)As of December 31, 2012 and 2011

assets 2012 2011Loans- net (1,3) $232,465,295 $241,933,820 Cash 5,680,826 7,976,634 Investments (1,2) 125,475,952 103,676,151 Accrued Interest Receivable 1,051,161 1,300,219 Property and Equipment - Net (1,4) 3,236,809 3,193,465 NCUSIF Deposit (5) 3,078,390 2,884,072 Other Assets 6,622,591 2,057,411

total assets $377,611,024 $363,021,772 liabilities Accrued Dividends Payable $146,944 $178,292 Notes Payable 10,028,933 10,028,933 Other Liabilities 4,333,811 2,934,181

total liabilities $14,509,688 $13,141,406

equityMembers’ Share Accounts (6) $315,131,443 $304,013,688 Regular Reserve (1) 5,626,342 5,626,342 Merged Equity (1) 63,425 63,425Undivided Earnings 42,280,126 40,176,911Accum Other Comprehensive Income – –

total equity $363,101,336 $349,880,366

total liabilities and equity $377,611,024 $363,021,772

See Notes to Financial Statements.

5. ncusIF The deposit of the National Credit Union Share Insurance Fund (NCUSIF) is in accordance with the NCUA regulations, which require the maintenance of a deposit by each insured credit union in an amount equal to 1% of its insurable shares, less any reportable impairment. The deposit would be refunded to the credit union if its insurance coverage is terminated, it converts its insurance coverage to another source, or the operations of the Fund are transferred from the NCUA Board.

6. Members’ share accountsThe composition of the Members’ Share accounts at December 31, 2012and 2011 is as follows: 2012 2011

Savings Accounts $161,115,526 $142,584,978Sharedraft Accounts 60,322,200 55,560,066 Commercial Accounts 5,290,764 9,010,997 Individual Retirement Accounts 31,240,530 31,773,566 Certificates of Deposit:

12 to 60 month maturity at rates ranging from .10% to 4.42% at December 31, 2012 52,120,225 58,588,956

3 to 6 month maturity at rates ranging from .10% to .15% at December 31, 2012 5,042,198 6,495,125

total $315,131,443 $304,013,688

Members’ Shares are the savings deposit accounts of the owners of the Credit Union. These accounts may be withdrawn at the discretion of the member according to the terms of the share account. Dividend rates are set by the Credit Union’s Board of Directors. Share ownership entitles the member to vote in the annual election ofthe Board of Directors and on other corporate matters. Irrespective of the amount of shares owned, no member has more than one vote. The National Credit Union Share Insurance Fund (NCUSIF) insures members’ shares up to $250,000.

2. Investment securitiesThe carrying value and approximate market value of the Credit Union’s Investment portfolio as of December 31, 2012 and 2011 is as follows:

december 31, 2012 december 31, 2011 Carrying Value Market Value Carrying Value Market Value

Shares in other Credit Unions $6,330,305 $6,330,305 $2,931,504 $2,931,504 U.S. Government Federal Agency Securities 57,325,053 57,782,123 44,546,779 45,061,222 Other Securities 61,820,594 62,302,498 56,197,868 56,679,816

total $125,475,952 $126,414,926 $103,676,151 $104,672,542

Barbara Bafumi Assistant Vice President, Controller

Jason Rochefort Assistant Vice President, Customer Advocacy

Bryan Woodward Assistant Vice President, Operations and IT

Albert Otto Internal Auditor

Tamara Martin Director of Mortgage Lending

Wendy McLeod Director of Indirect Lending

Louise Nestor Director of Marketing

Kathleen O’Connor Director of Consumer Lending

Audrey H. Shelton Director of Sales and Service Training

Thomas Foster Collections Manager

Melissa O’Connor Branford and Guilford Branch Manager

Frank Pomarico Wallingford Branch Manager

Edgardo Quinones Jr. North Haven Branch Manager

Gezim Stroka New Haven and Hamden Branch Manager

Fred HeimannChairman

Kevin McNamara

Michelle SilvaVice President, Human Resources

Carl J. CasperVice President, Customer Advocacy

Dave ClarkTreasurer/Secretary

Richard K. BoydVice President, Lending

Luba Grossman

Francesco ManciniPresident/CEO

Janet Hand Paul Jenkins

Mari Power

Mary Semedo

Kevin WetmoreVice Chairman

Board oF dIrectorssenIor ManageMent

ManageMent staFF

2012 coMMunIty InvolveMent hIghlIghts

Connex team members pose with a “leprechaun” at the Shamrock & Roll Road Race in March 2012. Connex was the lead sponsor of this event.

Courtney Flynn, right, of North Haven received the Nicolas G. Hackett Memorial Scholarship. This scholarship commemorates Nicolas G. Hackett, a longtime credit union volunteer who served on the credit union’s Supervisory Committee for more than 40 years. Courtney is majoring in Nursing at Salve Regina University.

2012-2013 VP of Unbanking Lauren Dufour, a senior at Quinnipiac University, represented Connex Credit Union at College Night on Broadway in September. Students from colleges in the greater New Haven area attend this annual event.

2011-2012 VP of Unbanking Chris Whalen presents a gift card to Matt DiGiovanni, who submitted the winning tip in a Connex sponsored Facebook promotion. More than 25 entries were received describing personal strategies for saving money.

2011-2012 VP of Unbanking Chris Whalen, right, surprised Hamden High School senior Rachel Dickerman when he announced her as the winner of the Connex Credit Union scholarship in a visit to Hamden High School. She now attends Emerson College in Boston.

2012-2013 VP of Unbanking Lauren Dufour met with students at the University of New Haven during a University job fair. She discussed her unique internship with Connex Credit Union.

2012 coMMunIty InvolveMent hIghlIghts

2011-2012 VP of Unbanking Chris Whalen, left, presents check to Carissa Riccio, recipient of the $2,000 Arthur Haesche Scholarship. Riccio, a North Haven High School graduate now attends Eastern Connecticut State University, majoring in Accounting. Connex awards this scholarship in honor of Arthur B. Haesche, one of the founding fathers of the credit union, to a student pursuing a degree in business.

Below is a sampling of the many charitable and community activities connex is a part of.

Mailing address P.O. Box 477

North Haven, CT 06473

Branch locationsBranford

620 West Main Street

guilford 849 Boston Post Road

hamden 2100 Dixwell Avenue

Hamden Plaza

new haven 2 Whitney Avenue

north haven 412 Washington Avenue

orange 212 Boston Post Road

wallingford 970 North Colony Road