ANNUAL REPORT 2019

Realizing Dreams 2019 ANNUAL REPORT

A MESSAGE FROM THE BOARD CHAIR

I’m pleased to report that Xceed Financial Credit Union global consciousness in 2020 — spurring what we hope ended 2019 in solid financial condition, with total assets will be substantive and lasting change — long-time Xceed of nearly $885 million and a very healthy net worth ratio members know this is an area where our Credit Union of 10.8%. Our loan/deposit ratio of 98% reflects Xceed’s has long been a leader and role model among financial continuing commitment to meeting our member’s institutions. Xceed has for decades proactively worked borrowing needs. Member satisfaction continued to be to enhance our workforce and volunteer leadership with a major strength, as we reached 95% Satisfied/Very people from diverse backgrounds and perspectives. Satisfied on a goal of 88% on our member surveys. We are also proud of how we have used our industry platforms to help other credit unions recognize and take Nonetheless, it was an extremely challenging year from action to address our industry’s shortcomings. a financial performance perspective, with three interest rate cuts by the Fed which negatively impacted the Credit This authentic commitment to being a force for good Union’s net margin and overall profitability. However, in our members’ lives and our communities is one of Xceed’s continued focus on expense control resulted the defining differences between member-owned, in drop in non-interest expense of $4.5 million thereby cooperative financial institutions like ours and for-profit offsetting the impact of the declining interest rate banks. On behalf of your volunteer Board of Directors, I environment. Although lower than budget, we’re very want to thank you for your support of these ideals and pleased to report net income of $1.9 million for the year reiterate our unwavering commitment to decision-making given the difficult challenges faced in 2019. and governance that put your interests at the center of everything your Credit Union does. Looking back on 2019, with a perspective influenced by events of 2020, I’d like to share a few words about RONI CRICHTON diversity, equity and inclusion. While a series of tragedies Board Chair brought these issues to the forefront of national and

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A MESSAGE FROM THE PRESIDENT & CHIEF EXECUTIVE

Like a lot of our SEG business partners, Xceed operates limited-time Xclusive Money Market Account (XMMA). with a playbook that is a guide for associates at all levels One of our most spectacularly successful products in to reference when interacting with members, prioritizing recent memory, the XMMA combined flexibility with very projects, and deciding where to allocate member attractive dividends, growing members’ nest eggs and resources. Right at the top of that playbook is this simple helping the Credit Union to surpass our deposit growth statement of our core purpose – why we exist: goal.

“We exist to serve our members’ financial Another way we worked to respond to your needs and needs and help them realize their dreams.” keep you at the center of everything we do was the new member survey program we adopted in 2019. This new With that mind, our frontline associates are trained to program is proving to be more efficient in delivering your be engaged and expert in focusing first on a member’s feedback about your experiences with us, enabling us to goals and hopes for the future; only then can they offer respond more quickly to issues and trends, and drive the their best guidance on the Xceed products and services priorities that matter most to you. that can best help transform the member’s dreams into reality. That same member-centric perspective infuses As you look through this annual report and some of the management-level decisions about everything from new highlights for Xceed in 2019, I hope you are proud of products, promotions and technology, to the work we do your choice to join the Credit Union. It is truly our honor to enhance members’ experience with their Credit Union. to serve your financial needs, and help you realize your dreams. It was fitting, then, to select Realizing Dreams as the theme for 2019’s annual report. The year brought loan TERESA Y. FREEBORN programs and promotions to help members realize President & Chief Executive their dreams of home ownership, get into their dream ride, and finance all sorts of other aspirations. It also brought great savings opportunities, including the

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SUPERVISORY COMMITTEE REPORT

The Supervisory Committee, a group of appointed volunteers, is primarily responsible for overseeing the overall safety and soundness of Xceed Financial, as well as the Credit Union’s adherence to operating policies and procedures. Each year, we reaffirm our commitment to ensuring that your credit union is financially stable and maintains the highest member service standards possible.

The Supervisory Committee annually conducts a number of on-site audits of Financial Centers and other Credit Union areas. Additionally, we review member account records to verify their accuracy and oversee the audit performed by our independent auditing firm, Crowe LLP, Certified Public Accountants. As a result of these combined efforts, I am proud to report that Xceed Financial Credit Union and its assets remain financially sound and secure.

GRETCHEN G. VALENTINE Supervisory Committee Chair

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CONVENIENT DAY-TO-DAY BANKING High-value accounts that help you realize your dreams faster.

No doubt about it. Day-to-day money habits – things IRA Promotional Share Certificates: When Tax Day like saving consistently, making a budget and keeping was on the horizon, we were there to help members to it – are key to reaching both big and small financial reduce their tax bite and save more for retirement goals. So, throughout 2019, we helped members with a nine month promotional IRA share certificate tackle the goals that will enable them to realize their offering a market-leading 2.50% APY. dreams by adding to our outstanding checking and savings account lineup with great new accounts and Signature Checking: We made our premier, dividend- promotions. It was all about making savings grow earning checking account even more appealing by faster and money go farther. offering auto loan rate discounts and increased share certificate dividend rates to members who took Xclusive Money Market Accounts: Money Market advantage of our Signature Checking promotion. Accounts offer a flexible way to save, combining easy access to your money with a higher dividend rate. Visa® Rewards & Promotions: The Xceed Visa® is In the spring, we dreamed up a pretty fantastic new one convenient piece of plastic, with rewards that promotional product – the Xclusive Money Market make it the perfect card for daily spending and major Account – with a hard-to-beat rate of up to 2.25% APY purchases. We made it an even more attractive that was locked in through mid-2020. The account was choice with popular promotions like the Visa® Super a spectacular success, and it wasn’t long before we Bowl Sweepstakes, double rewards points on various knew we needed to let members saving for retirement purchase categories, and generous statement credits in on the same great deal by creating the Xclusive IRA during key spending seasons like the holidays. Money Market Account!

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A LOAN FOR EVERY DREAM Affordable financing that brings all your dreams within reach.

Whether it’s a first home, a new car, a vacation-of- a new 5/5 ARM (adjustable rate mortgage) which was a-lifetime, or something else entirely, most of us very popular. need to take out loans for the major purchases and experiences that make our dreams. With great rates Holiday Gifts for Members: If there’s ever a time we and our comprehensive lineup of home, auto and can all use a break financially, it’s the holidays! To help personal loans, Xceed’s knowledgeable associates members take advantage of all the best year-end deals, helped members at every stage of life secure the right we offered special “gifts” in the form of rate discounts loans for their individual needs. on auto and personal loans, and credits toward closing costs on mortgages. And for those in the mood for Help with Home Loans: Shopping for a first home holiday saving, we offered a dividend rate boost on can be intimidating, so throughout the year we hosted share certificates. “Meet the Experts” events at our Financial Centers to enable members to get their mortgage loan questions Cruise into Savings: Xceed has helped countless answered while also getting acquainted with respected members get into a first car or dream car, with low- realtors in their area. We also helped more members rate loans on new and used vehicles. This year, we achieve home ownership through government helped many members negotiate their best deal by programs such as FHA, WISH and HomeReady. preapproving them in advance so they knew exactly how much they could afford to spend. And, for New 5/5 ARM Loan: We want to make sure every members who were happy with their vehicle, but not member who is in the market for a new home loan their payment, we came through with great deals on or refinance can find exactly what they need at their auto refinancing. Credit Union, so we’re always looking for ways to improve our mortgage product line. In 2019, we added

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XCEED WEALTH MANAGEMENT GROUP Working toward your dreams.

Your dreams are as unique as you are, so your Xceed Company which greatly expanded our ability to meet the big questions that often arise with major life Wealth Management Group Financial Consultant clients’ wealth and estate planning needs. In addition milestones. We also shared our deep experience with takes the time to understand what makes you tick. to helping clients choose which type of trust might Xerox-specific plans at a special retirement seminar That helps us zero in on what you want your money work best for them, and effectively manage their trusts just for Xerox employees. to achieve, now and in the future, so we can tailor our in life, we’re also able to provide access to prudent advice and investment strategies to help keep you trustees who can manage a client’s financial affairs Social Media Engagement: With Xceed Wealth on track for success. Members love our personalized when they pass away or are no longer able to do so on Management Group’s fresh new Facebook, Twitter and approach to everything from insurance and investment their own. LinkedIn pages, clients gained easy and convenient management, to wealth planning, estate planning and ways to stay up to date on our upcoming financial cash management. In 2019, that helped us grow our Retirement Planning and Financial Education: Our education workshops and webinars. This year, clients advisory business by 38% and grow our assets under Financial Consultants are proud to work with both who engaged with us on social media also had access management by $20 million. experienced investors and younger people just starting to a continual stream of helpful posts featuring timely to think about retirement and other major financial financial tips and techniques to help them reach their Trust Services: We embarked on an exciting new goals. So, throughout the year, we hosted financial retirement and investment goals. partnership with Affinity Trusts and Members Trust workshops aimed at helping clients get answers to

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. The information provided by the Retirement Results Team is not intended to be the primary basis for your investment decision. Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Xceed Financial Credit Union and Xceed Wealth Management Group are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Xceed Wealth Management Group, and may also be employees of Xceed Financial Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Xceed Financial Credit Union or Xceed Wealth Management Group. Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Credit Union Guaranteed Not Credit Union Deposits or Obligations May Lose Value

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COLLABORATING WITH BUSINESS PARTNERS Your dream job, with awesome benefits.

It’s often when they first take a job with an Xceed in the market for a new checking account or share it even more rewarding for you to share all the great business partner (a.k.a. SEG or select employer certificate, a home mortgage or auto loan, we were benefits of Xceed membership. Throughout the year, group) that our members learn just how much their there to sweeten the deal with cash rewards, dividend both the member and the co-worker or friend they new employer cares about employees’ well-being. rate bumps, reduced costs, and interest rate discounts. referred were eligible to pocket up to $200 each in That’s because a benefit package that includes bonus cash! Xceed membership can go a long way toward helping More Convenience: Realogy and Wyndham are among employees dial down financial stress, and make real Xceed’s largest SEGs, and in 2019, we stepped up Xerox and Xceed: We’ve had a special relationship progress toward achieving financial goals. Hello, to make banking with us even more convenient for with Xerox and its employees for decades, but we dream home! their workers. Responding to feedback from these never take that relationship for granted. This past companies’ leaders, we greatly expanded our presence year, we were especially honored to be the Silver Special Perks for Employees: In 2019, we partnered and the services offered at the Xceed Financial Sponsor of the XLA (Xerox Leadership Association) with several SEGs — from ADT to Xerox – to offer a Center in Parsippany, New Jersey which is near both 2019 Leadership Professional Development Event. range of special, limited-time perks and bonuses to companies’ headquarters. their employees. The response was so positive, we also offered those same great deals to members in Extraordinary Banking is Worth Sharing: The key communities such as Rochester, New York and referral program we rolled out in 2018 was such a El Segundo, California, too! Whether members were hit, we decided to continue it on into 2019 and make

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EASY & CONVENIENT ACCOUNT ACCESS So you can spend your time on the things that matter most.

When you’re pursuing your dreams, the last thing you Free Visitor Wi-Fi: Nobody likes to burn up their want is friction slowing you down. So, we made it a device’s data plan, so we were delighted to roll out priority in 2019 to do a deep dive on your experience free Wi-Fi for members visiting any of our Xceed with us, eliminate points of friction, and make it easier Financial Centers. than ever to access your accounts and do more with your Credit Union. Here are just a few examples. Financial Education at Your Fingertips: Expert Xceed associates are always happy to offer savvy 24/7 Access to Your Money: As much as we advice on managing your money, but sometimes you love engaging with members in our Financial just want to tap your device for the answers you need. Centers, you’ve let us know you want to do most of To make sure you’re always covered, we kept our By your banking with us digitally. So, our tech gurus the Numbers blog and social media pages fresh and continually rolled out tweaks and enhancements to relevant with great savings tips, budgeting tools, and improve your digital experience. And, of course, we easy-to-use calculators. continued to offer unsurpassed access to your cash through our nationwide network of more than 80,000 Streamlining Processes: “Less paper, please.” We surcharge-free ATMs. heard you, and took the opportunity to improve our processes, from simplifying our membership Keeping ATMs Updated: You’ve also told us you’re application and slashing our trust account application not actually using cash so much anymore, but when from five pages to two, to making it easier to open you visit an ATM, you want it to be equipped with the new accounts online. latest, greatest tech. We helped make that happen by upgrading our ATM fleet. Bonus point: we negotiated a killer deal on the new machines, so they’re cheaper to operate and keep technologically current!

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ENGAGING WITH OUR COMMUNITIES Dreams grow where communities are strong.

We at Xceed take pride in being a deeply engaged in ROC Tech Conference: Sponsored by our friends at Los Angeles Street Festival: Taking place in Xceed’s the communities where we do business. Here are just the Greater Rochester Chamber of Commerce, this own backyard, the annual Los Angeles Street Festival some of the ways we collaborated with other leading major local event drew nearly 500 tech professionals is a popular sports, entertainment and food event organizations and institutions to help members’ to the Floreano Convention Center. Xceed’s that draws more than 20,000 people in the Silicon neighborhoods thrive. sponsorship gave us an opportunity to support and Beach area of Southern California. As a major engage with the businesses that are making Rochester sponsor, we were able to showcase our deep roots Rochester Red Wings: It just wouldn’t be summer and the Finger Lakes region a technology hub. in the community and share with attendees how we in Rochester without Red Wings baseball! Our help members locally and nationwide to realize their sponsorship of this much-loved minor league team Xceed Health & Lifestyle Expo: We were thrilled dreams. allowed us offer special discounts to members, to host our very own Health & Lifestyle Expo, promote Credit Union membership onsite, and host fun featuring a range of health-oriented vendors, food, activities for fans during home games. and fun contests in the parking lot of our El Segundo headquarters. More than 300 people from nearby Seneca Park Zoo: From the zoo’s annual Zoobilation SEGs and neighboring businesses, as well as Xceed fundraising gala to its ZooBrew happy hour events that associates, attended and learned more about Xceed — raise funds for elephant conservation, we were proud a different kind of financial institution that truly cares to continue our longtime support for this much-loved about their well-being. Rochester institution. As part of our sponsorship, members also received entry and concession discounts when using their Xceed debit or credit card.

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SHARING THE DREAM Charitable activities that improve lives.

Xceed has always been all-in with the credit union Children’s Miracle Network Hospitals: Xceed and Bite of Reality: Not everybody gets schooled at home ethos of “people helping people.” In 2019, we our associates continued to be big supporters of our on financial basics, but we know that financial literacy supported a range of charitable activities and causes industry’s charity of choice, Children’s Miracle Network is crucial for individuals and families to realize all sorts that matter to our members. Hospitals, participating in fundraising activities of dreams. So, we joined our fellow credit unions in throughout the year, including the CHOC Walk at sponsoring the Richard Myles Johnson Foundation American Heart Association: We love our partnership Disneyland where we raised close to $3,000. Golf Tournament, which raised more than $50,000 to with the American Heart Association Rochester fund the Foundation’s signature Bite of Reality youth Heart Walk & Run! This year, around a dozen Xceed Pirate Toy Fund: This beloved nonprofit program financial education program. associates participated in the event while associates provides holiday toys to low income children in the nationwide helped to raise more than $4,000 for Rochester area. We continued our longtime financial the cause through Wear Red Day, bake sales and support, with associates also volunteering at events, Valentine’s Day Grams. and members dropping off new, unwrapped toys in the collection bins set up at our Financial Centers. Danielle Downey Credit Union Golf Classic: The Rochester area has been hosting women’s professional Romeo Doty Scholarships: A college education can be golf for decades, and the beautiful Brook-Lea Country just what a young person needs to realize their career Club was again the site of the tournament that honors dreams. In 2019, as in years past, Xceed awarded Danielle Downey, Rochester’s most successful female $1,000 scholarships to promising students pursuing golfer. Xceed was honored to be a part of this event, higher education through our Romeo Doty Scholarship which raises funds for the Pluta Cancer Center. program and Chairman’s Xcellence Scholarship program.

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FINANCIALSFINANCIALS 2019 Financial Statements 2019 Financial Statements

CONSOLIDATEDCONSOLIDATED STATEMENT STATEMENT OF OF FINANCIAL FINANCIAL CONDITION CONDITION CONSOLIDATEDCONSOLIDATED STATEMENT STATEMENT OF OF INCOME INCOME AsAs of of December December 31, 31, 2019 2019 ForFor the the year year ending ending December December 31, 31, 2019 2019

ASSETS INTEREST INCOME Net Loans $ 6 9 8 ,437 ,887 Total Interest on Loans $ 31 ,432 ,821 Cash 62 ,358 ,387 Total Interest on Investments 2 ,184 ,187 Investments 48 ,890 ,203 TOTAL INTEREST INCOME 33 ,617 ,008 Other Assets 74 ,607 ,141 TOTAL ASSETS $ 8 8 4 ,293 ,618 INTEREST EXPENSE Total Dividends on Members’ Shares 5 ,760 ,663 LIABILITIES & EQUITY Other Interest Expense 1 ,815 ,622 LIABILITIES TOTAL INTEREST EXPENSE $ 7 ,576 ,285 Members’ Shares $ 720 ,520 ,854 Notes Payable 65 ,500 ,000 NET INTEREST INCOME 26 ,040 ,723 Other Liabilities 3 ,050 ,046 PROVISION FOR LOAN LOSSES 1 , 1 80,000 2019 FINANCIAL STATEMENTS 2019 FINANCIAL STATEMENTS TOTAL LIABILITIES 789 ,070 ,900 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 24 ,860 ,723 MEMBERS’ EQUITY 95 ,222 ,718 TOTAL LIABILITIES & EQUITY $ 884 ,293 ,618 TOTAL NON-INTEREST INCOME 9 ,825 ,926

TOTAL NON-INTEREST EXPENSE $ 32 ,825 ,297

NET INCOME $ 1 ,861 ,352

ForFor the the independent independent auditor’s auditor’s report report and and opinion, opinion, please please contact contact us us at: at: 800.XFCU.222 800.XFCU.222 XFCU.ORG InsuredInsured by by NCUA. NCUA. 12 2019 ANNUAL REPORT

LEADERSHIP

BOARD OF DIRECTORS

Roni Crichton Judy Novak Dea Benson John Buttrill Spence Leslie Dennis Ruffner Gretchen Valentine

OTHER VOLUNTEERS

Mark Cunningham Don Rory Heather Smith Raleigh Steinbach

EXECUTIVE MANAGEMENT TEAM

Teresa Freeborn Michael Sacher Marquis Boochee Fabiana Burkett Bertha Gascon Kelly Ritchey-Davoren 13 2019 ANNUAL REPORT

LEADERSHIP & COMMITTEES

BOARD OF DIRECTORS FINANCE & INVESTMENT COMMITTEE

• Roni Crichton, Chair • Judy Novak, Chair • Judy Novak, Vice Chair • Dea Benson • Dea Benson, Secretary • John Buttrill • John Buttrill • Spence Leslie • Spence Leslie • Dennis Ruffner • Dennis Rufner • Gretchen Valentine NOMINATING COMMITTEE

EXECUTIVE COMMITTEE • Spence Leslie • Judy Novak • Roni Crichton, Chair • Gretchen Valentine • Judy Novak, Vice Chair • Dea Benson, Secretary

SUPERVISORY COMMITTEE

• Gretchen Valentine, Chair • Mark Cunningham • Don Rory • Heather Smith • Raleigh Steinbach

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BUSINESS PARTNERS

• ADT Security • Isaac Heating & Air Conditioning • Alorica • Jewish Home of Harrisburg • Aramark • Jewish Home of Rochester • Atkore • Johnson Controls • Avis/Budget • Longwood Management • Builders Exchange of Rochester • Mallinckrodt Pharmaceuticals • Centinela Freeman Regional Medical Center • Medtronic (Covidien) • Chubb • nVent • Comfort Windows & Doors • Optimax • Conduent • Pentair • Costco Wholesale • Raytec Group • Crosbie Brownlie • Realogy • Deerfield Realty • Securitas • Desser Tire & Rubber Company • Silicon Valley Community Foundation • Dixon Schwabl • St. Ann’s Community • DoubleTree Hilton Hotel • Stokes, Visca & Company • Federation of Catholic Teachers • Sysco Harrisburg • Friendly Home • TE Connectivity • Germino & MacKay • Travelodge Hotel • Global Imaging Systems, Inc. (GIS) • Tyco International • Heraeus Metal Processing, Inc. • Unified Physician Management • Hillcrest Country Club • U.S.P.S. Harrisburg • HITCO Carbon Composites, Inc. • U.S.P.S. Rochester • Ingram Micro • Wyndham Worldwide • Innovative Solutions • Xerox

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