Leadership Team Leadership Team Leadership

Patelco President and Chief Executive Officer, Erin Mendez (center) with the Board of Directors and Supervisory Committee. L to R: Robert A. McCormish, Trevor Thomas, Sharon Wilson, Peter Hanelt, Race Chen, Jeff Parks, Tracey Scott, Jesse Rivera, Erin Mendez, Garick Zillgitt, Colleen Cabey, Lonnie Barish, Vickie Rath, John Rubino,and Debbie Chaw. Not pictured: Gerald Upson. Board of Directors 2016 Peter Hanelt Vickie Rath Jesse Rivera Tracey Scott Chairman First Vice Chair/ Second Vice Chair Secretary Treasurer Annual Report Business Consultant Segal Consulting Housing Executive CPA American Ratings Corporation

Colleen Cabey Race Chen Jeff Parks Gerald Upson Director Director Director Director Attorney at Law Consultant RPM Mortgage Tax Consultant

Garick Zillgitt John Rubino Director Director Emeritus Executive Walgreens (retired)

Supervisory Committee Executive Team

Debbie Chaw Erin Mendez Kevin Landel Chairperson President Senior Vice President Cal State East Bay Chief Executive Officer Chief Information Officer

Lonnie Barish Trevor Thomas Chris Allen Susan Makris WellSpring Pharma OpenX Senior Vice President Senior Vice President Services Chief Risk Officer Chief Human Resources Sharon Wilson Officer Robert A. McCormish Macquarie Aircraft Deborah Colby TeamCo Advisors, LLC Leasing Services Senior Vice President Melissa Morgan Planning & Member Senior Vice President Experience Chief Retail Officer

Sue Gruber Senior Vice President Chief Financial Officer Federally Insured By NCUA

2016 ANNUAL REPORT To Our Members Our To Board Chairman’s report President and CEO’s report President & CEO’s Report & CEO’s President

As much as we’re proud of 2016’s progress, long-term financial health. That’s why we’re In 2016, we reaffirmed our mission to build found that, on average, Patelco provided you there’s one thing that remains the same: continuing to introduce new self-service options, the financial health and well-being of you, our financial benefits of $181 per member or $344 supporting your journey to building financial to streamline our applications and our service members. Now more than ever, we are dedicated per household over banking institutions. We are health and well-being. processes, and to offer you excellent rates. Our to offering you products and services that help proud to serve you and make a difference in your rates — combined with your sound decisions — you live your financial life better. financial well-being, and we thank you for your The Board of Directors’ role is to assure we fulfill help you save significantly compared with area continued loyalty. Building financial health is about achieving financial our vision: to be the preeminent that banks. freedom, the freedom from worry about money. Moving forward, our focus remains on fueling empowers you to achieve financial freedom. How It’s about making sure you have the financial hope and opportunity for a lifetime of financial do we do that? By listening, by cooperating with In 2017, I look forward to a year of even greater structure you need today, tomorrow, and in the well-being. This year, we will introduce our new each other, and by empowering you. empowerment. Our vision will guide us this year future – so you can live comfortably and enjoy platform, Patelco Online. This and into the future, as we work together to build your life. While we cannot eliminate all financial modernization of the way you conduct banking When we listen to you, we learn about your up financial well-being for you and your family. concerns, we endeavor to help you find a place will include all the key features you enjoy today, unique financial opportunities and challenges. that’s comfortable for you and your family. plus an easy-to-use interface, new money And when we listen to each other as team management tools, and enhanced security. members, we discover more ways to help you In 2016, we invested in our members’ financial meet these opportunities and challenges. All of health by providing a special 5-year Share Our team is currently undergoing training and us – from our branches to our investment group Peter Hanelt Certificate well above market rates; we continued using this platform so that we are prepared to be to our call center – cooperate each day to help Chairman – Board of Directors our Money Market Select account that offers by your side as you navigate and enhance the way you access superior financial tools that improve great rates on lower balances so all members can you interact with us online. And we continue to your well-being. We also seek opportunities to participate in better earnings; we revamped our be committed to providing you exceptional talk to you and build your financial knowledge. overdraft process to decrease the total number and share rates. of fees charged; and we continued to provide Armed with superior financial tools and the low rates on our loan products (mortgage, Thank you for allowing us to be a part of your knowledge to use them, you can make financially auto, personal, and debt consolidation) for our lives and entrusting us to do the right thing for you, our team, and our communities – now and sound actions today that contribute to your Member Benefits borrowers’ better payment management. as compared to in the future. We also made a major debit and California banks transition. Moving to the Mastercard platform allowed us to funnel significant savings into our $ 350 300 new and much-enhanced Patelco Rewards 250 Program. You benefit from the Program’s increased s 200 Erin Mendez 150 rewards, plus enjoy some of the lowest credit card

Dollar President & 100 balance rates in the nation — making our cards far 50 Chief Executive Officer 0 more valuable than many large institutions’ cards. $15,307,224 $23,508,441 $38,693,653 $54,810,643 2013 2014 2015 2016 While this switch was not without its issues and Total Benefits Per Member Per Household Our received mixed reviews, I truly appreciated your Our To be the preeminent Source: Credit Union National Association feedback and patience during the transition vision (although trying at times for you). We learned from mission To build our members’ credit union that empowers this experience, and are dedicated to improving our members to achieve our execution and delivery to you going forward. financial health and financial freedom. well-being. In 2016, a membership benefits survey conducted by Credit Union National Association (CUNA)

1 2016 ANNUAL REPORT ANNUAL REPORT 2016 2 We will empower you to… Community involvement

Manage your day-to-day financial life MANAGE EFFECTIVELY simply, comfortably, and securely. Member Focus Member Community Focus Community Be resilient to life’s ups and downs by guiding you to BE RESILIENT save diligently and borrow responsibly.

Seize opportunities to strengthen your financial SEIZE OPPORTUNITIES future by inspiring you to plan purposefully. $200,000 $12,700 + 3,300 To support healthy children in our Pounds of food RISE UP Achieve financial freedom. community To nourish families in our neighborhoods

We donate to Children’s Miracle Network We donate to local community food banks to to support local hospitals, and to Bernal fight hunger and provide healthy family nutrition. Building financial health and well-being is a To empower you to be resilient to life’s ups Community Park to support youth sports. journey with many stepping stones along the and downs, we help you save more with an way – and we’re committed to going on that industry-beating Money Market Select account. journey with you. We embody this commitment Our credit cards also have highly competitive in the Patelco Promise: to fuel hope and interest rates: according to the Credit Union opportunity by empowering you to live your National Association, our 2016 credit card rates best financial life. were over 7% lower on average than California banks’ rates. To empower you to manage your day-to-day finances effectively, we offer services including To empower you to seize opportunities to text and email alerts that keep you on top of your strengthen your financial future, we offer money. We also offer an overdraft line of credit access to BALANCE Financial Fitness and other to help you avoid paying NSF fees. And in 2017, financial education programs. In 2017 we’re we’ll debut Patelco Online, our all-new and introducing Patelco Insurance Services to help $30,000 + 100 Hours 1,215 People much-improved online banking platform. you better protect and plan for your family. To provide affordable housing in Benefitted from our financial These tools empower you to rise up to achieve our area literacy programs financial freedom. We extend these promises We support financial literacy to empower people to you and your family, and we’re dedicated We donate funds and volunteer hours to to improve their financial health, including giving to being with you through 2017 and on your Habitat for Humanity to build homes for people courses at local colleges. entire journey! who could not otherwise afford housing.

Our Patelco Sports Complex at Bernal Community Park promise Since opening in October 2016, the Patelco Sports Complex at Bernal Community Park in Pleasanton has To fuel hope and hosted over 800 games for more than 50 youth sports clubs. As a supporter of children’s health we want opportunity for lifelong to provide space for youth to develop healthy habits. The Patelco Sports Complex also encourages our financial well-being. community’s youth to develop teamwork – a core value of our credit union.

3 2016 ANNUAL REPORT ANNUAL REPORT 2016 4 Supervisory Committee Chair’s report 2016 Consolidated Financial Statements For Year Ending 12/31/2016 (In thousands) The Supervisory Committee provides valuable the independent audit firm of Moss Adams, LLP oversight in monitoring Patelco Credit Union’s to perform an audit of Patelco’s consolidated Statement of Financial Condition Statement of Income financial safety and soundness, ensuring the financial statements for the year ending December Assets Interest Income safeguarding of its assets, and overseeing Patelco’s 31, 2016. The results of this audit are reflected in Cash and cash equivalents $ 366,228 Interest on to members $ 131,077 compliance with various financial and regulatory their independent auditor’s report, which appears Investments Interest on investments and cash equivalents 22,042 requirements. In fulfilling these responsibilities, in the Annual Report, and the Committee is Available-for-sale 1,351,434 153,119 the Committee holds quarterly meetings to review in agreement with its conclusions. We wish to Other 22,966 Interest Expense Internal Audit reports, examinations by regulatory express our appreciation to the Board of Directors, Financial & Income Statements Financial & Income Credit & Financial Management Credit Loans to members, net 3,589,538 Dividends on members’ shares $ 29,917 agencies, as well as other third party reports on management, and staff for their continued support. Accrued interest receivable 13,427 Borrowings 1,379 internal controls. The Committee also participates 31,296 in meetings with the Board of Directors, and Property and equipment, net 9,368 reviews the Credit Union’s monthly financial Net Interest Income 121,823 Share insurance deposit 43,408 reports. In addition, the Committee appointed Debbie Chaw Chairperson – Supervisory Committee Goodwill and intangibles 24,410 Provision for Loan Losses 8,725 Other assets 42,776 Total Assets $ 5,463,555 Net Interest Income After Provision for Loan Losses 113,098

Liabilities and Equity Key performance figures Non-Interest Income 45,114 Liabilities

ASSETS NET WORTH Members’ shares $ 4,747,051 Non-Interest Expenses Assets increased further to $5.46 billion in 2016 Net worth has been increasing over the past 6 years Borrrowings 80,000 Accrued expenses and other liabilities 61,270 Salaries and benefits $ 59,708 $ 5,500 $ 600 Operations 31,049 5,000 Total liabilities 4,888,321 4,500 500 Loan servicing 8,885 4,000 Occupancy 9,304 3,500 400 3,000 108,946 300 Equity 2,500 2,000 200 Retained earnings 601,269 Net Income $ 49,266

1,500 (millions) Worth Net Total Assets Assets (millions) Total Accumulated other comprehensive loss (26,035) 1,000 100 500 Total equity 575,234 0 0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Total Liabilities and Equity $ 5,463,555

NET CHARGE-OFFS AND DELINQUENCIES TOTAL MEMBERSHIP Asset quality has dramatically improved Membership is growing at an increasing pace $ 80 300 Independent auditor’s report 70 295 60 290 50 285 At the request of the Supervisory Committee, Moss present fairly, in all material aspects, the consolidated 40 280 Millions Adams, certified public accountants, has performed an financial position of Patelco Credit Union and 30 Thousands 275 20 270 audit of Patelco’s consolidated financial statements as Subsidiaries as of December 31, 2016, and the results of 10 0 265 of and for the year ending December 31, 2016. In their their operations for the year then ended, in accordance 2011 2012 2013 2014 2015 2016 260 255 opinion, the consolidated financial statements above with U.S. generally accepted accounting principles.. Delinquencies $ Net Charge-Offs $ 2011 2012 2013 2014 2015 2016

PATELCO’S SUPERIOR VALUE

Patelco Points Rewards: better than banking Patelco Points Rewards Chase Sapphire Citi ThankYou® World Mastercard® Preferred® Preferred We’re proud of our financial performance. Here’s something else we’re proud of: improving your Patelco credit Annual fee $0 $95 $0 card performance. Moving to the Mastercard platform has allowed us to funnel significant savings into our new and APR starts at 8.65% 16.49% 14.24% much-enhanced Patelco Rewards Program. You benefit fromincreased rewards and some of the nation’s lowest Balance transfer fee 0% 5% 3% credit card balance rates – making our cards more valuable than many large institutions’ cards. Gas and grocery 2 points / $ 1 point / $ 1 point / $

Information current as of April 7, 2017.

5 2016 ANNUAL REPORT ANNUAL REPORT 2016 6