January 2012

The Federal Reserve has signaled that they intend to keep short term rates at or near zero through 2013 and possibly longer.  Based on that statement it appears that we will be in this historically low interest rate environment for at least a few more years.  Nationally, decreasing home values continued to be a drag on the economy during 2011.  Fortunately home values in the Yakima, Ellensburg, and Tri-Cities areas remained relatively stable over the past year and we were able to continue lending with confidence throughout our branch network. We originated 678 mortgage and consumer loans totaling $122 million during 2011 with 40% of that total in construction loans.  Yakima Federal continues to be one of the only portfolio lenders in our branch network area, meaning we hold and service all of the loans that we originate.  Assets grew by over four percent during the year and we remained the eighth largest FDIC insured financial institution headquartered in the state.  At year’s end our capital to assets ratio stood at 19.00% and our ratio of liquid assets to total assets was over 55%, both considerably exceeding regulatory requirements.  On the deposit side of the business, our customers again showed great confidence in Yakima Federal by increasing their deposits by nearly $40 million in the Association during 2011. For the past 106 years we have successfully adhered to our original mission statement of promoting thrift and home ownership.  As we look forward to 2012 and our 107 year anniversary, I would like to sincerely thank you, our loyal customers for your continued patronage.

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- Mike Gilmore
President & CEO