TOGETHER WITH OUR MEMBERSBuilding a Brighter Future

OUR 2019 YEAR IN REVIEW

AS YOUR TRUSTED ADVISOR WE ARE BETTER TOGETHER

In good times and challenging ones, it’s a privilege to stand behind school employees

and their families to help them build a secure future. Acting as our Members’ trusted advisor,

we are able to serve with both empathy and expertise, providing World-Class Personal

Service focused on your individual needs, guidance you can count on, and highly competitive

financial products and services to help improve your financial life.

A MESSAGE FROM YOUR CHAIRMAN AND PRESIDENT

How we fulfill this is illustrated by Member stories like Maria H. A Member since 1983, Maria needed a new car, but was worried that her financial circumstances would make it difficult to be approved for an auto loan. Her friends and family kept encouraging her to turn to us for help. She was not only approved for a loan, but says the Credit Union was able to save her a year of payments. “Even when I thought I wouldn’t be able to do anything given my situation, SchoolsFirst FCU was there,” she says. “I will never go anywhere else.”

Peter S. and Rhiannon L. are both school employees. While they were excited about purchasing a new home, they knew it would come with new expenses too. We helped with a personal loan to help them manage extra expenses and provide a cushion for their family. A Member since 2014, Peter also takes advantage of the Summer Saver account to manage his money during the summer months, and refinanced his auto loan with us because of the competitive rates. Peter appreciates that the Credit Union is Member owned and always puts Members first. “I feel more confident

MARCY GOWDY CHAIRMAN

MEMBERSHIPSIN THOUSANDS

628.1

’14 ’15 ’16 ’17 ’18 ’19

672.9 731.8 793.6862.9

936.2

’14 ’15 ’16 ’17 ’18 ’19

CAPITALDOLLARS IN MILLIONS

$1,310$1,406

$1,511$1,630

$1,793$1,985

OPERATING EXPENSE RATIO

2.07%2.10% 2.09%

2.14%2.19%

2.13%

’14 ’15 ’16 ’17 ’18 ’19

BILL CHENEY PRESIDENT/CEO

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that they have the interests of their Members at heart,” Peter says. Staying true to our mission and the credit union philosophy of “people helping people” led to record growth in 2019. This past year, we welcomed nearly 96,000 new Members—the most to join in a single year—ending the year more than 936,000 Members strong. We also had a record year for helping Members with their lending needs, including purchasing or refinancing their homes and cars, financing personal loans, or getting new credit cards. And, we helped many Members reduce or eliminate debt.

We also launched our partnership with GreenPath Financial Wellness, giving Members access to certified financial counselors for expert coaching on topics including budgeting, debt management and understanding credit scores. In addition, more Members than ever turned to us to help plan and save for their future with the guidance of our financial and retirement advisors.1 Last year, more than 185,000 Members actively contributed to their retirement and other investments and our assets under management exceeded $2.75 billion.1

“Even when I thought I wouldn’t be able

to do anything given my situation,

SchoolsFirst FCU was there. I will never

go anywhere else.”

Maria H. Member since 1983

GROWING FINANCIALLY STRONGER FOR OUR MEMBERSHIPOur Credit Union surpassed $16.7 billion in assets with a healthy capital ratio of 11.39%, meaning we have the reserves put aside to help weather unforeseen difficulties and remain financially strong. This financial strength is due to you, our Members, and your active participation in our products and willingness to share the value of Membership with your family and other school employees. As a not-for-profit financial cooperative, our financial strength allows us to offer low to no fees and competitive rates for loans and savings. According to a recent report from the Credit Union National Association (CUNA), SchoolsFirst FCU provided more than an estimated $206 million in direct financial benefits to Members in 2019, resulting in a savings of $482 for every Member household. For Member households active in more products and services, the annual benefit grew to $1,824.2, 3, 4

WE MAKE MANAGING YOUR MONEY CONVENIENT AND EASYWe added Apple, Google and Samsung Pay to our debit cards, giving Members another secure way to transact on their accounts. In addition, we opened three new branches in Whittier, San Clemente and Menifee. It’s exciting to be part of these communities, serving Members close to where they live and work. We continued to improve our digital channels, including Mobile Banking where 54% of our Members actively enjoy 24/7 access to perform their everyday transactions.

BUILDING STRONGER COMMUNITIESOur commitment to the communities we serve has been an important part of SchoolsFirst FCU since our founding, and that tradition continued in 2019. Together, with Members and our team, we have volunteered and made donations to support educational and credit union movement charities. In 2019, we donated more than $3.2 million to schools, colleges, the Children’s Miracle Network, and CUAid among others. This includes nearly $500,000 in grants to teachers for classroom assistance and projects, and scholarships for aspiring students in our local communities.

During our annual give-back event, our teammembers worked side-by-side to assemble water filtration systems,

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prosthetic hands, and uniform and classroom supply kits for local and global charities. We also understand the importance of preparing our youth to be smart about money. Teammembers enthusiastically volunteered their time to help provide financial education to more than 20,000 students.

A STRONGER TOMORROW FOR CALIFORNIA SCHOOL EMPLOYEESEarly last year, we announced our intent to merge with Schools Financial Credit Union, a successful Sacramento-based credit union with a founding story similar to ours and a shared commitment to service and the educational community. By joining together, we knew we could better serve school employees and their families throughout California. Our regulators approved the merger and Schools Financial Credit Union Members overwhelming approved it with a 94% positive vote. We legally became one Credit Union on January 1, 2020, welcoming nearly 160,000 Members and 300 teammembers to our family. We are working to integrate our products and services later in 2020.

We owe our success to you, our loyal Members. As we look to the future, please know that our purpose and commitment to the financial well-being of every Member has never been stronger. Thank you for letting us be part of your story.

With deep gratitude,

Marcy Gowdy Chairman of the Board

Bill Cheney President/CEO

“I feel more confident that they have

the interests of their Members at heart.”

Peter S. and Rhiannon L. Members since 2014 and 2001

1. Securities sold, advisory services are offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with SchoolsFirst FCU to make securities available to Members. Not NCUA/NCUSIF/FDIC insured, may lose value, no financial institution guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty states of the United States of America. Trust services provided by Members Trust Company, a federal thrift regulated by the Office of the Comptroller. Trust and Investment products are not federally insured, are not obligations of or guaranteed by the credit union or any affiliated entity, involve investment risks, including the possible loss of principal. 2. 2019 Credit Union National Association (CUNA) Membership Benefits Report for SchoolsFirst FCU. Source: Datatrac, NCUA, and CUNA. 3. 2.1 credit union Members per household. 4. A “Member household that participated in more products and services” is assumed to have a $30,000, 60-month new auto loan, a classic credit card with an average balance of $5,000, a $200,000, 30-year fixed rate mortgage (a 30-year fixed rate mortgage is replaced with a 5-year adjustable rate mortgage if it yields a greater benefit as it is assumed more in demand), $5,000 in an interest-bearing checking account, $10,000 in a one-year certificate account, and $2,500 in a money market account. Average amounts provided by CUNA Member Benefits Report.

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OUR PRODUCTS AND SERVICESServing school employees and their families throughout California

ACCESS ANYTIME, ANYWHERE

WE OPENED THREE NEW BRANCHES TO BETTER

SERVE OUR MEMBERS IN

ATMS WHEN YOU NEED THEM, WHERE YOU NEED THEM

MEMBERS CAN ACCESS MORE THAN

28,000fee-free ATMs in the CO-OP network.

MAKING DEBIT CARD TRANSACTIONS

EASY AND MORE SECURE.

IN 2019 WE LAUNCHED

By Forbes and Best Credit Union in Orange County,

by OC Register’s Best of OC, and LA Times OC Readers’ Choice.

THANKS TO OUR MEMBERSWE WERE RECOGNIZED AS

SAN CLEMENTE

WHITTIER

MENIFEE

ACCESS ANYTIME, ANYWHERE

MORE THAN

509,000Members use Mobile Banking for their everyday transactions.

BEST CREDIT UNIONIN CALIFORNIA

WE WELCOMED 95,665NEW MEMBERS INTO THE CREDIT UNION FAMILY

IN 2019,

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In 2019, we launched our partnership with GreenPath to help Members with debt, savings, building credit and planning for the future.

HELPING MORE MEMBERS THAN EVER TAKE THE NEXT STEP IN THEIR FINANCIAL JOURNEY WITH LOANS TO FIT THEIR NEEDS

38,005Members have a home loan or a home equity loan with the

Credit Union. In 2019, 4,820 Members purchased or refinanced their home.2

99,725Members have personal loans with the Credit Union. In 2019, 59,152 Members received personal loans to consolidate

debt and help with important purchases.2

173,227Members have auto loans with the

Credit Union. In 2019, 68,187 Members purchased or refinanced a vehicle.2

22,184Members met with Financial

Advisors to talk about their investments and

retirement.1

330Workshops hosted to educate

Members on their savings, investments, trusts and school district

retirement options.1

94,339Members visited Extra Credit,

our financial education blog in 2019.

GUIDING MEMBERS WITH THE RIGHT FINANCIAL ADVICE WHEN THEY NEED IT

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EMPOWERING MEMBERS TO SAVE FOR THE FUTURE

SAVING MEMBERS MONEY AND MAKING THEIR LIVES EASIER

4,435Members took advantage of our hassle-free car buying services.

4,090Members participated in the Home

Advantage Program, saving a total of $1,414,801.3

17,489 SchoolsFirst Insurance Services

policies protected Members’ automobiles, homes, and other

personal property.4

32,860Members have College Saver

accounts where they are saving for their children’s future.

185,000Members actively contributed

to their retirement or other investments.1

77,800Members participated in our

Savings Certificates.

SUPPORTING OUR SCHOOL EMPLOYEE MEMBERS

WITH UNIQUE PRODUCTS TO MEET THEIR NEEDS

201,192school employee Members

participated in Summer Saver and 6,076 participated in Paycheck Planner to help

cover the summer months when they don’t receive a paycheck.

22,365classified school employee Members received Uniform

Loans to help purchase uniforms and equipment or other special

gear to successfully do their jobs.

1. Securities sold, advisory services are offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with SchoolsFirst FCU to make securities available to Members. Not NCUA/NCUSIF/FDIC insured, may lose value, no financial institution guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty states of the United States of America. Trust services provided by Members Trust Company, a federal thrift regulated by the Office of the Comptroller. Trust and Investment products are not federally insured, are not obligations of or guaranteed by the credit union or any affiliated entity, involve investment risks, including the possible loss of principal. 2. All loans subject to approval. 3. Rebate payment is made by First Team Real Estate or HomeSmart Evergreen Realty and is credited to your benefit at the close of transaction. Purchase price must be greater than $150,000 after all credit adjustments. All rebates are subject to limitations, lender guidelines, and other requirements. Certain properties may not be eligible for rebates. Rebate is 20% for purchase only of a residential property in California. Rebate is 25% for a residential property sale and purchase in California. In order to receive the 25% rebates, the home sale and purchase transactions must take place within six months of each other. Please consult a qualified tax professional for advice on tax implications from receiving a rebate. First Team Real Estate and HomeSmart Evergreen Realty are not affiliated with SchoolsFirst FCU. 4. CA Insurance License 0I19344.

12,960Members received Classroom Supply Loans to help provide

students with educational material that they wouldn’t

have otherwise.

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OUR MEMBER’S STORY Dr. Sheela H. | College Department Chair | Member since 2014

Dr. Sheela H. first met SchoolsFirst FCU in 2014 when a colleague insisted she come in

for help with some financial challenges she was going through. Sheela was skeptical that

the Credit Union could do much for her based on past experiences with other financial

institutions, but her friend insisted.

“SchoolsFirst FCU has changed my life.

At a time when I was at my lowest

point, they really came through for me.”

to that my credit score was great, and they decided to take a chance on me.”

The home refinances allowed Sheela to lower her interest rates and save much needed funds to send her three children to college. She has since been able to take advantage of many other resources available through the Credit Union to help her achieve both personal and financial goals.

“Since then I’ve been able to purchase a car. All of my loans are with SchoolsFirst FCU. The car loan, the teacher loan, the computer loan, all of the above,” she says.

One of her biggest personal goals was to earn her doctorate degree, and she says SchoolsFirst FCU helped her get there. “Some of the ways the Credit Union helped me achieve the goal of earning my doctorate was to allow me the resources to be able to pay off debt. I’ve used practically all the resources they offer here, and they helped me achieve that dream,” she says.

Sheela has also been able to help her three children graduate college debt free, and she says the Credit Union has played a big role in helping her teach them how to live financially responsible lives.

“For my kids to be a part of SchoolsFirst, a trusted financial institution, is remarkable,” she says. “I allowed my children to develop a relationship with SchoolsFirst on their own, and so now it’s just second nature for them.”

Sheela says in the six years since she joined SchoolsFirst FCU she feels as though her life has transformed in the best way possible. Her credit score has gone up 200 points in that time and she feels more financially secure than ever.

“She was the one actually who drove me to the branch—I was forced to go inside! And, that’s where that relationship actually began,” says Sheela.

Sheela came into the Credit Union that day hoping to refinance two properties and see what her options were for a car loan. She was even more skeptical that she could get the help she needed because her credit score had taken a dip, but she was surprised with the individual care she received.

“When I joined, my credit score was in the fives, and that was something that was a shock for me because I’ve always had an 800 credit score. But due to life circumstances beyond my control, my credit score dropped,” says Sheela.

“SchoolsFirst looked at my history and could see that prior

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OUR COMMUNITY IMPACT You are part of the credit union difference

GIVING BACK TO THE COMMUNITIES WHERE OUR MEMBERS LIVE AND WORK

SOCIAL RESPONSIBILITY IS ONE OF THE FOUNDING PRINCIPLES OF THE CREDIT UNION MOVEMENT

CMN IS A CHARITY CREDIT UNIONS SUPPORT ACROSS THE UNITED STATES.

$344,734

WITH THE SUPPORT OF OUR MEMBERS AND TEAM, WE GAVE MORE THAN

IN CHARITABLE DONATIONS TO HELP OUR COMMUNITIES

GROW STRONGER AND THRIVE.

$3.2 MILLION

IN 2019 OUR MEMBERS AND TEAMMEMBERS HELPED RAISE

To support children receiving treatment at Children’s Hospital of Los Angeles, Children’s Hospital of Orange County, and

Rady Children’s Hospital San Diego.

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Bite of Reality is a hands on money management

simulation we take on the road to educate students about

making smart money decisions.

IN 2019

OUR TEAMMEMBERS VOLUNTEERED TO HELP MORE THAN

3,000STUDENTS

BITE OF REALITY EVENTS .

37AT

PROVIDING SUPPORT FOR FUTURE GENERATIONS

$346,000+in scholarship funds were donated to deserving students to continue

their education.

14,000+school supplies were generously

donated by Members and our team and distributed to schools in need.

HELPING MEMBERS IN THEIR TIME OF NEED

IN 2019, WE REACHED OUT TO MORE THAN

8,421when they were impacted by a natural disaster, offering financial assistance in their time of need.

MEMBERS

TOGETHER,WE HELP OUR MEMBERS AND COMMUNITIES THRIVE.

20,000+students participated in our

financial education workshops and presentations.

$147,000+with our Members’ generous support,

Education Foundation for Orange County Schools awarded grants to

local teachers.

GIVING BACK TO THE EDUCATIONAL COMMUNITY

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FINANCIAL STATEMENT Our Membership makes us strong

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITIONAs of December 31, 2019 and 2018 (in thousands of dollars)

ASSETS 2019 2018

Cash and cash equivalents $982,837 $745,740

Investments, available-for-sale, at fair value 1,232,997 1,274,572

Investments, held-to-maturity, at amortized cost 3,655,086 3,766,099

Other investments, at fair value 51,585 70,958

Loans held for sale, at fair value 103,956 7,310

Loans, net 9,960,174 8,696,934

Accrued interest receivable 47,742 43,751

National Credit Union Share Insurance Fund (NCUSIF) deposit 134,111 125,826

Property and equipment, net 150,543 96,053

Other assets 442,691 379,040

TOTAL ASSETS $16,761,722 $15,206,283

LIABILITIES AND MEMBERS’ EQUITY

Liabilities

Members’ shares $14,398,270 $12,976,128

Accrued expenses and other liabilities 209,218 196,940

Borrowed funds 245,000 305,000

14,852,488 13,478,068

Members’ equity

Retained earnings 1,913,224 1,731,767

Accumulated other comprehensive loss (3,990) (3,552)

1,909,234 1,728,215

TOTAL LIABILITIES AND MEMBERS’ EQUITY $16,761,722 $15,206,283

Capital ratio 11.39% 11.37%

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CONDENSED CONSOLIDATED STATEMENTS OF INCOMEFor the Years Ended December 31, 2019 and 2018 (in thousands of dollars)

INTEREST INCOME 2019 2018

Loans $456,904 $384,643

Investments and cash deposits at financial institutions 127,360 113,535

TOTAL INTEREST INCOME 584,264 498,178

INTEREST EXPENSE

Members’ shares 138,247 96,926

Borrowed funds 6,965 7,912

TOTAL INTEREST EXPENSE 145,212 104,838

Net interest income 439,052 393,340

Provision for loan losses 56,300 42,100

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 382,752 351,240

NON-INTEREST INCOME

Member fees 33,995 28,790

Card interchange and ATM fees 54,762 62,982

Gain on sale of investments and loans, net 14,821 4,143

Other non-interest income 35,106 35,185

TOTAL NON-INTEREST INCOME 138,684 131,100

NON-INTEREST EXPENSE

Salaries and benefits 202,048 179,150

Operations and other administrative expenses 119,287 127,544

Occupancy 18,644 15,950

TOTAL NON-INTEREST EXPENSE 339,979 322,644

NET INCOME 181,457 159,696

Other comprehensive loss (438) (709)

TOTAL COMPREHENSIVE INCOME $181,019 $158,987

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BOARD AND SUPERVISORY COMMITTEE Advocating on behalf of every Member

SUPERVISORY COMMITTEE REPORTThe Supervisory Committee is responsible for monitoring the financial safety and soundness of SchoolsFirst Federal Credit Union and its compliance with various financial and regulatory requirements.

In fulfilling these responsibilities, the Committee engaged Moss Adams LLP to perform the annual financial statement audit for the year ended December 31, 2019. The Committee held quarterly meetings to review, among other things, internal audit reports, internal controls and risk management processes, and examinations by regulatory agencies. In the opinion of the Committee, SchoolsFirst Federal Credit Union has operated in a financially sound manner and, in all material respects, in accordance with applicable federal and state regulations.

Paul Burkart Chairman, Supervisory Committee

Paul Burkart, Ted Alejandre, Paul Reed top row, left to right;

Claudette Dain, Karen Cant bottom row, left to right

BOARD OF DIRECTORSYour volunteer Board of Directors’ commitment, advice and leadership help make our Members’ lives better.

Eric Padget, Matthew Schulenberg, Adam O'Connor, Andy Plumley, Dr. Marc Ecker, Greg Marchant, John Didion, top row, left to right;

Marcy Gowdy (Chairman), Lynn April Hartline, Renee Hendrick, Kristine Wetzel bottom row, left to right

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