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Navy Federal Credit Union2018 ANNUAL REPORTP.O. Box 3000, Merrifield, VA 22119-3000 navyfederal.orgNavy Federal Credit Union is federally insured by NCUA. 2019 Navy Federal NFCU 8010 (3-19)

NAVY FEDERAL CREDIT UNIONVisionStatementBe the most preferred and trustedfinancial institution serving the militaryand their families.

2018 ANNUAL REPORTFinancial SummaryAs of December 3120172018Assets 90,565.8 96,962.4Loans Outstanding 67,287.2 75,059.2Savings, Checking, MMSAs, IRAs 45,842.8 50,626.6Share Certificates 17,164.0 19,790.9Members’ Equity 10,230.6 11,404.7Gross Income 6,025.5 6,875.3Non-Interest Expense 2,639.5 2,900.8Dividends 497.9 642.6Mortgage Loans Serviced 60,593.9 68,697.7(dollars in millions)Members20177,542,01020188,232,02211

NAVY FEDERAL CREDIT UNIONReport of theChairman and PresidentIn 2018, we had another successful year of growth and celebrated twomilestones: the addition of our 8 millionth member and the marking ofour 85th anniversary. And, we honored the past 14 years of leadershipexcellence as we bid a fond farewell to outgoing president Cutler Dawson.In January of 2019, we welcomed Mary McDuffie as the new president.Moving forward, we’ll continue to put an emphasis on a great memberexperience and find ways to improve our service—making things simpleand easy to use.Last year, we accomplished that goal by offering members more choices,greater convenience and richer rewards. We expanded our network,improved our products and services, added popular new self-serviceand security features, and kept our loan and savings rates among the best.Members responded enthusiastically, borrowing more than 75 billion.Total deposits reached a record 70.4 billion, an increase of 7.4 billion ornearly 12 percent over 2017. We also surpassed 8 million members, adding1.2 million new members in 2018, more than 200,000 of whom wereveterans and their families. And, our total assets increased 6.4 billionto 97.0 billion.2

2018 ANNUAL REPORTFor more than 85 years, our single-minded focus has been on service.Last year, we underscored our dedication to this guiding principle withthe introduction of our new theme, “Our Members Are the Mission,”because our Active Duty, retired military and all veteran members andtheir families always have, and always will, come first. 90.6 70.4 63.020172018 97.0 75.1 67.32017201820172018DepositsLoansAssets(dollars in billions)(dollars in billions)(dollars in billions)3

NAVY FEDERAL CREDIT UNIONConsumer Lending GrowthLast year, we partnered with Carfax , LLC to provide 150,000 complimentaryused car history reports to members looking for a car loan. As a result,many members avoided purchasing overvalued used cars and saved acombined 63.5 million.In addition, Navy Federal’s Business Serviceslaunched a new business loan processingand management system for an improvedand faster loan process.Enhancing Services, Convenienceand RewardsIn 2018, members borrowed 15.3 billionin consumer loans, checking lines ofcredit and private student loans, bringingour total portfolio to 19.8 billion, anincrease of 8 percent.Other highlights for the year: Vehicle loans increased 528.7 million,which represented 7% growthover 2017.“NFCU has alwaystreated me likeone of their own.”—MEMBER SINCE 20114 Our U.S. and overseas auto buyingservices combined generated 13,138loans for 332.9 million. Business services experienced growthin both total deposits and total loans,with an increase of more than 15 percentin deposits and nearly 21 percentfor loans.Credit CardsOur commitment to putting members’needs first is at the heart of everything wedo. To help more members build credit,we lowered the minimum required depositto open an nRewards Secured card from 500 to 200. And, to help members getthe most value for their travel dollars, weenhanced the Visa Signature FlagshipRewards Card,1 adding 3X rewards on alltravel purchases and a TSA PreCheck orGlobal Entry credit worth up to 100.Members opened more than a halfmillion new credit card accounts in2018. Sales increased by 15 percentfor a total of 24.5 billion overall, andoutstanding loans surpassed 17 billion,a 15 percent increase.

2018 ANNUAL REPORTMortgage and Home Equity LoansNavy Federal’s commitment to providingmembers outstanding service andcompetitive loan options helped increaseour combined mortgage and equityservicing portfolio to 71.5 billion in 2018.Mortgage: More than 56,000 membersclosed mortgage loans with us for arecord 15.3 billion. We became the11th largest retail mortgage lenderand earned the highest score onJ.D. Power’s 2018 survey for MortgageServicing Satisfaction.Equity: With home prices and consumerconfidence on the rise, members tappedinto their available equity to make homeimprovements and consolidate debt tothe tune of 1.1 billion. We closed nearly18,000 equity loans in 2018, an increaseover last year of 21 percent.Student LoansLast year, we helped 8,649 studentsmake strides toward their educationgoals at 1,342 different schools, financingmore than 100.2 million in privatestudent loans. In addition, we helped3,456 college graduates refinance andconsolidate 149.6 million in student debt,an increase over 2017 of 24 percent.Checking, Savingsand InvestmentsChecking account holders increasedto 6.2 million last year, and memberswho had both checking accounts anddirect deposit grew 13 percent to 2.7million. And, members made more than1.5 billion debit card transactions, a21 percent increase.“Nothing beatsNFCU Active DutyChecking , handsdown.”—MEMBER SINCE 1971Member investments through oursubsidiary, Navy Federal Financial Group(NFFG), reached 3.1 billion by the endof 2018, and the number of membersserved increased by 28 percent.25

NAVY FEDERAL CREDIT UNIONDigital TrendsWe added several new features to our mobile and online channelslast year, and member response was overwhelming. We introduceda new, easier-to-use version of the mobile app3 and added a numberof new self-service features.New Digital FeaturesOne of our most popular new features isZelle , a simple service that consumerscan use to send money to friends andfamily. In its first year, 538,000 membersenrolled and sent 189 million.“Navy Federalhas helped mewith so manyeveryday things.”—MEMBER SINCE 2017Another popular new feature, calledTwo-Factor Authentication, givesmembers an additional layer of security.It supplements their usernames andpasswords with a one-time code sentat sign in. By the end of the year,900,000 members enrolled.We completed 1.3 billion mobile andonline sessions last year on behalfof 5.4 million members.Other 2018 highlights: More than 378,000 new membersjoined the credit union throughdigital channels. More than half of all credit card andconsumer loan applications weresubmitted electronically. Mobile deposits continued to bethe number-one way members madetheir check deposits, accounting for48 percent of all check deposits.6

2018 ANNUAL REPORTConvenience andSimplicityMaking good on our mission of servicemeans we’re continually seeking waysto improve our products and servicesand the ways we offer them.Expanding Our NetworkTo increase members’ choice and access,we opened 20 new branches in 2018,for a total of 327 worldwide, many onor near military installations. Membersvisited our network of branches 25.4million times last year, a nearly 6 percentincrease over 2017.Supporting Our MembersThe ways we’ve supported membershave changed over the years. In 2018,we served members through 24/7telephone access to stateside memberrepresentatives, eMessages, chat,social media, alerts and notifications.Some of our highlights for lastyear include: Member Service Representativesfielded just over 34 million callsserving more than 4.5 million membersworldwide, an increase of 7 percentover 2017. And, despite this increase,members experienced the lowestaverage wait time on record.“You would have todo a great deal ofsearching to find afinancial institutionthat offered moreservices.”—MEMBER SINCE 2008 Our award-winning social mediaspecialists sent out more than 41,000responses to members on Facebookand Twitter. They averaged a responsetime of about six minutes, improvingresponse time by 25 percent (and faroutperforming industry averages).7

NAVY FEDERAL CREDIT UNIONOur Members Are the MissionEach and every one of our 8 million members has a story—hopes,dreams and goals they strive for in their lives. As a credit union servingthe military and their families, we’ve made their mission ours. It’s writtenin the decisions we make as an organization, and it’s reflected in theway we serve. We understand the unique financial needs of the militarycommunity, because many of us served, or are families of thosewho have.John A.A. LockardLockardJohnChairmanChairmanA Culture of Service“Refreshing tohave a bank thatis genuinely moreconcerned aboutits customers thananything else.”—MEMBER SINCE 2018We have a proud 85-year history of servingthose who serve and the ones who mattermost to them—their families. Our members’satisfaction remains high, which is reflectedin the high ratings they give us in surveys.In fact, we’re recognized as Best-in-Classfor Customer Experience and #1 in FullService Banking for Customer Experienceby Forrester in the 2018 US CustomerExperience Index.4 Other national awardsand recognition include: Named as Money’s Best Bank forMilitary Personnel: Best for Veterans Rated by Kiplinger as the Number OneBank for Military Personnel Ranked Number One in CustomerExperience Delivery by KPMG Earned the highest member satisfactionrating (88 out of a possible 100) in theAmerican Customer Satisfaction Index(ACSI), with the highest PerceivedQuality and Value ratings—surpassingall our competitors8Cutler DawsonDawsonCutlerPresidentPresident Earned high marks again in the 2018Javelin Trust in Banking Leaders Award Recognized as a 2018 Javelin MobileBanking Scorecard LeaderWe’re also proud that our team memberscontinue to rate us highly in nationalsurveys. We’ve been recognized for theninth time in FORTUNE Magazine’s 100Best Companies to Work For, ranked tenthin Forbes’ List of America’s Best Employers,and listed among People Magazine’s 50Companies That Care.We’re committed to providing guidanceand support for every stage of ourmembers’ financial lives. No matterthe circumstances, whether statesideor deployed, Active Duty or veterans,employees or families, we’re here forthem—to help them find the financialsolutions they need to thrive now andfor generations to come.

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NAVY FEDERAL CREDIT UNION2018 Board of DirectorsJohn A. LockardChairman of the Board10Bruce B. EngelhardtFirst Vice ChairmanEdward R. Cochrane Jr.Second Vice ChairmanCutler DawsonTreasurerKenneth R. BurnsSecretary

2018 ANNUAL REPORTAnnie B. AndrewsKirk A. FosterNeil W. T. HoggWilliam P. Mizerak11