43rd Annual Meeting Questions, April 6, 2006

The following questions were deposited at our branches before the Annual Meeting.

Q1: Why are interest rates so low on savings and draft accounts?

A1: For the past several years, interest rates have been at historically low levels because of general economic conditions. That trend started to change in 2005 when short-term interest rates began to rise. Savings rates increased four times in 2005 and twice, so far, in 2006. However, I believe our savings rates should show greater returns to our members as the year progresses.

Q2: Why is there no HVFCU ATM in or near the Poughkeepsie Galleria?

A2: A surcharge free ATM is inside the Target Store at the Galleria. ATMs are located at 9 Mall, just a short distance south of the Galleria.

Q3: Why will you not go north? We need you.

Q4: Move to RH/Red Hook.

Q5: Will you consider opening a branch in the Dover Plains/Pawling/Amenia area? Please.

Q6: We need a credit union in Highland, NY.

Q7: When are we getting a branch in Ulster County? I’ve been waiting over 4 years.

A3-7: There are several areas under consideration for branches in Dutchess, Ulster, and Orange counties. However, we cannot provide a date for any openings. Our planning will continue and we will notify you when construction plans have been completed.

Q8: Credit card protection attach an email address to each customer’s card. When any charges are made via Internet the customer is sent an email from the bank and must approve before charges are made.

A8: In our investigation of your statement we are not able to find this service available. It is not offered by either MasterCard or Visa.

Q9: Suggestion – Institute online savings accounts like HSBC or ING Direct.

A9: HVFCU does offer access to our savings accounts online through Internet Banking.

Q10: Would it be possible to consider a couple of adult college grants (none high school)?

A10: We have no plans to offer adult college grants. A change in our practice of providing scholarships to graduating high school seniors would not be in the best interest of our total membership.

Q11: Who designed your parking lot? Poor design – too crowded and not laid out well. Too bad you spent money on it. (This question comes from the Newburgh branch)

A11: HVFCU is aware of the congestion in our current Newburgh parking lot. Construction will begin later this year to correct the problem.

Q12: Please make the marking on the “Back” driveway at the New Windsor office more distinct!

A12: The parking lot at the Newburgh branch was repainted on March 18, 2006 to make them more distinct.

Q13: What are you/is being done re: parking lot situation & volume of customers in relation to size of bank, etc? (from the Newburgh branch)

A13: HVFCU is aware of the congestion in our current Newburgh parking lot. Plans are now underway to begin construction later this year on a new and expanded branch facility next to our existing branch. This facility will offer improved parking and traffic flow.

Q14: Why do I have to confer with a HVFCU rep to simply transfer my matured CD to my S1 account?

A14: It is not necessary to confer with an HVFCU representative. You may provide us with your instructions by mail, over the telephone, by fax or in a secure email through our website.

Q15: Wachovia has a feature where they can text-message your account balance to your cell phone on a daily basis. Can HVFCU do this?

A15: HVFCU provides text messaging of account balances through CUAlerts. You may access this free service through Internet Banking.

Q16: Can you simplify the deposit slips. I find them confusing.

A16: Current deposit slips are designed to give members the option to select from a number of different accounts. Staff will be happy to help you if you need assistance completing a deposit slip.

Q17: Why, when someone asks a question at the meeting & your answer is “we will look into it,” you never print your findings? (This question relates to requesting a branch in Highland.)

A17: We have been looking into new branch locations throughout Dutchess, Ulster, and Orange Counties. Highland is an area in which we are now concentrating, but we cannot give you a target date for construction.

Q18: Any chance of ATM in b/708 accepting a check deposit without requiring an envelope?

A18: We do not currently have plans to upgrade the machine in building 708 because of cost and usage, but will keep your suggestion in mind for further review.

Q19: Can you build an ATM in Middletown, so I don’t have to keep giving the other banks 1.75 to 2.00 of my money?

A19: You may access 8 surcharge-free ATMs in Middletown at no charge. A list is available on our website or by calling the Information Center.

Q20: Who decided to buy 3 flat screen TV’s for the Hyde Park branch?

A20: In order to save costs and better communicate with members, credit union management made the decision to replace an outdated video display system at Hyde Park.

Q21: How about offering CD certificates at a higher special rate to people who have been loyal customers over the years? (You offer them to “new money” customers.)

Q22: Sometimes you have special promotional CDs that specifies “new money” only I feel that penalizes your loyal customers. How about opening it up to all?

A21, A22: Our Certificate Account rates, as our savings rates, are set based on the credit union’s ability to pay. However, at times credit union rates are established to satisfy a special need, but within the credit union’s ability to pay.

Q23: I believe NCUA insured accounts should exceed $100,000 (this is so low). Is this a possibility In the near future?

A23: The National Credit Union Administration (NCUA) sets the standard maximum share insurance amount at $100,000. Recent legislation approved increasing that coverage for inflation every five years starting in 2010. On April 1, 2006 coverage for IRA accounts was increased by the NCUA from $100,000 to $250,000.

Q24: Why did the item Loan Servicing (income statement) go up by 70% last year? What is loan servicing?

A24: Loan servicing represents the cost for HVFCU to offer and support its consumer, real estate, and business lending products. The 53% increase experienced in 2005 can primarily be attributed to tremendous growth in our indirect auto and home equity portfolios. In the case of our home equity loans/lines, HVFCU absorbs 100% of the closing costs including attorney fees, credit reports, title insurance, as well as recording and appraisal fees.

Q25: Why do I have to roll coins I bring in? Why don’t you have coin counters? It seems you only want my money on your terms.

A25: We do ask that coins be rolled as a courtesy to members waiting in line behind you. We will have a coin counting machine available by the end of October 2006.

Q26: Why was I not called when my ATM card was closed due to corrupt transaction from outside source?

A26: The credit union always attempts to call members when fraud takes place, but is not always able to make telephone contact before blocking cards to prevent a loss.

Q27: Why the doubling of the reserves from Doubtful Accounts this year?

A27: Our Provision for loan losses expense increased by 80% in 2005. This line item is a function of loan balance and loss experience. 18.9% loan growth during the year coupled with a requirement to reserve 1% on all outstanding indirect loan balances increased our provision for loan loss reserves. Additionally, bankruptcy reform in the fourth quarter led to an increase in charged-off loans by members.

Q28: Can you simplify the checking a/c statements # of deposits. Example # ATMs $ # POS $ to help bal. checking?

A28: We do not have plans to change our checking statements.

Q29: Would it be possible to install mirrors at the far (distal) top side of the drive up ATMs so that as the member drives up to the ATM the far backside of the booth is visible if anyone should be there?

A29: The credit union is always interested in improving security and we will investigate your suggestion to determine feasibility.

Q30: Why penalty on partial w/d from CD same as w/d on total amt. Unforeseen circumstances often require needed cash. Other banks don’t.

A30: Any withdrawal from a certificate (other than interest that has been paid to the account) breaks the certificate and results in a penalty. If withdrawals are permitted from a certificate account, it is no longer considered a certificate account and would no longer warrant a higher yield.

Q31: Girls at Fishkill Branch need round O circle above their heads – to be an open skylight!

A31: We have no plans to install skylights at our Dutchess Mall branch.

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    PO Box 1071, Poughkeepsie, NY 12602-1071
    ph: 845.463.3011 / 800.468.3011

    Routing Number : 221979363
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