Spero 2023 Annual Report

Table of Contents

Brian McKay President & CEO

AS A NATION, 2023 began with economic uncertainty. Several regional banks collapsed under the pressure of the high-rate market. But as we’ve done over the last 85 years, we held steady and strong. We were unwavering in providing you, our members, with solutions to secure your financial future.

Our diverse balance sheet remained solid with healthy deposit and loan growth. Our members benefited from our high-yield interest rates. We awarded over $400,000 in dividends to Kasasa Cash checking holders alone, earning a 5.00% APY – the highest checking account interest rate in the market. In total, we awarded $15.8 million in interest earnings across our checking, savings, and certificate products.

Amidst the national economic uncertainty, our sights remained laser-focused on providing digital transformation, personalized service, and community impact with excellence.

We completed our multi-year TellerLink transformation project, deploying 25 machines across all ten of our locations, making banking more convenient while still providing the personalized service you deserve. Our members conducted over 74,000 transactions through our TellerLink system in 2023!

We made getting a new loan easier by allowing members to apply directly in Online Banking. We made using your credit and debit card more convenient by letting you add your Spero credit card to your mobile wallet. We also rolled out contactless debit cards. In fact, all members will receive a new contactless debit card in the summer of 2024.

These new banking enhancements are just the beginning. I’m excited to share that in the fall, we’ll launch a new online banking platform that includes many features you have been asking for – card controls, budget/credit score monitoring, and more! We are also optimizing our call center platform so we can better serve you over the phone.

In our communities, Team Spero logged over 1,200 volunteer hours in over 100 community events. Our financial literacy outreach impacted 750 lives. We partnered with Homes of Hope, Anderson Interfaith Ministries (AIM), and Clemson University to conduct financial research programs. And we received our Community Development Financial Institution (CDFI) designation, enabling us to provide special financial programs to our neighbors in need.

The financial health of our organization positions us well for 2024. Our member service quality score of 6.77 out of 7 shows we are providing the service you expect and deserve. Our culture is thriving, evident in being named #2 in the nation as a top credit union to work for by American Banker. Thanks to our deepening community roots, we were voted the Best Credit Union in the Upstate.

At the center of it all is you, our members. Our why starts with you.

Thank you for your continued trust and loyalty. I am grateful to our Board of Directors and Supervisory Committee for being the strategic driver of the Credit Union and the voice of our members. And last but certainly not least, I am grateful for Team Spero. They make it all happen!

I appreciate you.

Mike Strickland Chairman of the Board

A Model for Success

THE FINANCIAL ENVIRONMENT OF 2023 was one of extreme volatility and unprecedented high interest rates as the Federal Reserve kept hiking rates in an attempt to control inflation. Despite the challenges, Spero Financial continued to not only thrive but to soar above our competitors. We performed the basic functions of a successful credit union by serving the lending needs of our members while providing top earning rates on their deposits.

Our success is due to the business model under which we operate, which is significantly different than that of banks. Rising interest rates have caused a significant disruption to the traditional business model of banks. This was evident in March 2023 with the failure of several regional banks, most notably Silicon Valley Bank (SVB) in California. Seeking higher investment returns from its burgeoning deposits, SVB had dramatically increased its holdings of long-term securities (bonds) since 2021. The market value of these bonds decreased significantly in 2022 and into 2023 as the Fed raised rates. Depositors began a bank run leading to the bank being placed under receivership of the FDIC on the morning of March 10.

During the year, Spero Financial’s management team made several strategic investments in the financial markets to strengthen our liquidity and soundness. Spero Financial’s business model is comprised of safe investments, and we operate on a very diverse balance sheet that allowed Spero members to benefit from top deposit rates while other members fulfilled their credit/lending needs. For example, in 2023,

• We granted over 8,069 loans (totaling $197 million) to help our members achieve their financial goals.

• 3,911 members began benefiting from our Kasasa Checking accounts - earning 5.00% APY on their checking account balance or up to $10 cash back each month! In 2023, we gave $983,000 in Kasasa rewards.

• By year end, Spero Financial grew deposits by $49.9 million (YOY 8.51%) and loans $67.6 million (YOY 13.24%).

We will continue to soar in 2024!

2024 has a lot in store for our members, as we strive to continue to deliver excellence in our digital banking experience, personalized service, and community impact. This includes members receiving new contactless debit cards in the summer, launching a new digital banking platform/app in the fall, and revealing a free credit monitoring tool next winter.

Our model for success will continue to work for the benefit of our members.

MICHAEL (MIKE) W. STRICKLAND Chairman of the Board

Frankie Nelson Chair of the Supervisory Committee

AS CHAIR of the Supervisory Committee, it is with great privilege to report another strong fiscal year for Spero Financial Federal Credit Union. As of December 31, 2023, financial outcomes reflect sound, operational stability for the organization, in conjunction with favorable quarterly internal audit reports. These measures are a result of how the management and staff of Spero Financial are unrelenting in exercising sound judgment and practices as they carry out their fiduciary responsibilities in utilizing member funds so that both members and the Credit Union can soar financially now and into the future.

Each year Spero Financial undergoes an external audit from a third-party CPA firm as an added layer of accountability. This audit measures the effectiveness of the organization’s financial management. I am pleased to report that Spero Financial has yet again received a very positive “unmodified opinion” regarding the Credit Union’s financial statements for 2023 year-end.

Even amongst the continuation of a high-inflation economic environment, the Credit Union experienced significant growth across deposits and loans. By yearend, Spero Financial grew deposits 8.51% ($49.9 million) year-over-year, paired with a loan growth of 13.24% ($67.7 million) year-over-year.

2023 Key Performance Indicators

• Net Worth Growth of 7.47%

• Assets increased to $706 million (3.01% gain over 2022)

• Loans increased to $578 million (13.24% gain over 2022)

• Deposits increased to $638 million (8.51% gain over 2022)

• 6,101 New Members joined the Credit Union

I encourage you to review the balance sheet, income statement, and other financial information included in this year’s report. You will find that Spero Financial continues to operate in a safe and sound manner, strategically focused on improving the financial lives of our members. This financial strength positions us well to soar into the future!

5-Year Growth Analysis

Statement of Income

Statement of Financial Condition

Leadership Teams

BOARD OF DIRECTORS

:

David D’Alessio · Vice President of Talent Management

Toni Davisson · Senior Vice President, Chief Financial Officer

Damon Sipe · Senior Vice President of Technology

Brian McKay · President, Chief Executive Officer

Travis Barbare · Senior Vice President, Chief Operating Officer

Jessica Baker · Executive Vice President, Chief Strategy Officer

SUPERVISORY COMMITTEE

EXECUTIVE LEADERSHIP TEAM

Back Row : Michael Cunningham, Steve Griffin · Vice Chairman, Roy Hayes · Secretary/Treasurer, Lee Brown, Hughlyn Burgess

Front Row : Bryant Harrison, Mike Strickland · Chairman, Joy Owens Not Pictured : Anthony Lawrence

Left to Right

Left to Right : Frankie Nelson · Committee Chair, Andrew Williams, Anna Marie Brock, Sheree Ramey Not Pictured : Janet Fancher

Giovannie Rivera

Since becoming a Spero member, Giovannie has seen the difference that personal attention and financial expertise can make. Reflecting on his experience, he expressed his gratitude to the Spero team for “guiding me to making good financial decisions that would set me up for success.”

When Giovannie first came to Spero, he doubted anyone could provide the help and support he needed.

His uncertainty started when he needed a car but lacked the funds to purchase one. He approached bank after bank, looking for a loan to help him buy his dream car, but none of them could help. They all wanted money down or said the car he wanted was too old to qualify for a loan.

Giovannie began to feel hopeless. When someone recommended Spero, he was hesitant to reach out. What made Spero so different?

The support Spero provided far exceeded Giovannie’s expectations. After explaining his situation, our team found an auto loan that worked for him. In the end, he was able to get an auto loan for himself!

The personalized support Giovannie received from Spero helped him move forward on his journey toward financial

freedom. And when he was always welcomed with a smile, Giovannie quickly learned he wasn’t just joining a credit union — he was joining a family.

“Spero acted like a parent to me, guiding me to making good financial decisions that would set me up for success,” he said. What started as a search for an auto loan quickly became much more. Now, Giovannie and his family can look forward to the future with hope, knowing that Spero will be with them every step of the way.

Since getting his auto loan, Giovannie has opened checking and savings accounts and acquired a Spero credit card. Thanks to these financial solutions and the personal service he’s received, Giovannie knows Spero is a credit union he can count on.

“My time with Spero has completely reframed my mindset,” he shared. “My dream is to start my own business in Anderson. Thanks to Spero, I have the confidence to chase that dream.”

2023 Impact Report

At Spero Financial, we’ve been improving financial lives in the Upstate and Midlands for over 85 years. These numbers—not just numbers, but real lives changed —make our communities greater places to live, work, and play!

HELPING OUR MEMBERS SOAR FINANCIALLY

55 mortgages ($27 million) to make members’ homebuying dreams come true

3,108 personal loans ($21 million) to fund members’ financial goals

3,580 new checking accounts to help members have easy access to their money

333,000+ member transactions supported by Spero branches

473 HELOCs ($52 million) so members could tap into the equity of their home

3,836 auto loans ($95 million) that put our members in the driver seat

738 members impacted by Spero financial wellness resources

74,000+ member transactions supported by TellerLink

EARNINGS AND PERKS FOR OUR MEMBERS

Members received 25 million points for using their credit cards

$15.8 million given back to members in interest earnings

$983,000 given back to members in Kasasa Rewards MAKING OUR COMMUNITIES GREATER PLACES TO LIVE, WORK, AND PLAY

1,247 employee volunteer hours in our communities

$266,892 donated to non-profit organizations in the markets we serve

89 community events that Spero participated in with local non-profits

23 member appreciation events hosted by Team Spero

$9,000 granted to 3 Spero members to support higher-education aspirations

Scholarship Winners

Since 2010, Spero Financial has invested over $100,000 into future generations by awarding three scholarships each year to Spero Financial members pursuing higher education. Congratulations to the 2023 Louis C. Addition College Scholarship winners.

Parker Bryant

Mikayla Jibben

Makayla Jibben is an incredibly dedicated and hardworking medical student in her final year at Gardner-Webb University. She will graduate in May and begin her doctorate in Osteopathic Medicine in July 2024. Makayla's passion for becoming a pediatric oncologist is evident from her current volunteer work at AnMed Women and Children's Hospital, where she is gaining valuable experience and making a positive impact on the community.

Makayla's professors hold her in the highest regard, recognizing her as an exceptional student who consistently exceeds expectations. Despite juggling athletics, four parttime jobs, and her education, Makayla has maintained a perfect 4.0 GPA, demonstrating her exceptional work ethic and commitment to achieving her goals. Her dedication and hard work will undoubtedly make her an outstanding doctor and a valuable asset to the medical community.

Garrett Bowen

Garrett Bowen is a student at Crescent High School who plans to attend Clemson University in the fall. Garrett's determination and passion for learning have made him stand out from his peers. His educators have described him as someone who consistently surpasses their expectations, going above and beyond to achieve academic success. Garrett's collaborative spirit and eagerness to deepen his understanding of various subjects have earned him a reputation as a highly motivated student. He is the captain of the soccer team and also serves as the kicker for the varsity football team. He has received the prestigious Highest GPA award for his outstanding academic performance. In addition to his sports and academic achievements, he actively participates in various clubs, including the Beta Club, CHS Anglers, and Palmetto Boys State, demonstrating exceptional leadership skills and dedication. He is also a passionate volunteer and actively involved with Starr Baptist Church, the Habitat ReStore, and Club Soccer for CESA.

Parker Bryant is a student at T.L. Hanna who will attend Anderson University in the fall. He is known for his exceptional leadership skills and his ability to positively impact every situation he is involved in. His educators describe him as an excellent team player who is always willing to go above and beyond to help his peers.

Parker's passion for sports is evident in his participation in the TL Hanna Track and Cross Country teams. He has achieved significant success, winning awards such as the 2023 Cross Country All-Region and 2023 3200 All-Region titles. His hard work, dedication, and perseverance have been a source of inspiration for many of his fellow athletes. In addition to sports, Parker is an active member of the Concord Baptist Youth Group and Beta Club. He is deeply committed to his community and takes pride in giving back whenever possible.

2023 Snapshots

Soaring as Spero Financial

• 50,442 Total Members

• $706 Million in Assets

• Named 2023 Best Places to Work in South Carolina (#14)

• Named 2nd (by asset size) in the Nation for Best Credit Unions to Work For

• Winner of Best Credit Union in the Upstate by Greenville News Community Choice Awards

• Top 3 Finalist for Anderson’s Best of Hometown by Anderson Independent Community Choice Awards

• Winner of the Carolinas Credit Union Foundation’s Dora Maxwell Award, Loise Herring Philosophy Award, and Desjardins Award

• Two “Best in Category” Diamond Awards by the Credit Union National Association

Employee Highlights of the Year

• President and Chief Executive Officer Brian McKay Named by Greenville Business Journal as a Top 50 Most Influential People in the Upstate

• Senior Leadership Advisor & Community Advocate Robert Wilson Received the Carolinas Credit Union Foundation Lifetime Achievement Award

• VP of Marketing Bethani Williams Named by Greenville Business Journal as a Greenville Best and Brightest under 35

Taking Care of Team Spero

• 172 employees serve the organization across 36 different departments

• 191 individuals provided with medical insurance – both employees and their families

• 26,300+ hours of paid time off was awarded

• 28 promotions and 10 transfers to roles in other departments

• 5,787 employee training hours