In a year characterized by great uncertainty in the financial marketplace, the CEFCU “difference” was more apparent than ever. While the American economy struggled under teetering global trade arrangements, Wall Street tremors, and a year-end government shutdown, your Credit Union was a bastion of strength and stability . . . growing by leaps and bounds . . . offering unsurpassed safety in cyberspace . . . and always operating in the best interest of its members.

By every financial measure, we demonstrated the most robust performance, attracting $63 million in new deposits, helping hundreds of borrowers secure low-cost loans (including $104 million in real estate loans), and opening 1,606 new accounts — all without the help of mergers or adding new employee groups. The bottom line of this achievement was the payment of more than $24 million in dividends to our member/owners, topped by another $650,000 “Loyalty Bonus” at year’s end.

In short, in a year when instability and change were the national norm, CEFCU continued its unwavering success as a unique financial institution dedicated to a transparent, member-centric business plan that all members can believe in — whatever challenges lie ahead.

AN UNBROKEN CHAIN OF SUCCESS SINCE 1950

BOARD OF DIRECTORS (Sitting L to R): Secretary DLORAH GONZALES, Retired, Director of Employment and Employee Services, Caltech; Treasurer RICH HARRIS, President/CEO, CEFCU; Vice Chair ANN MARTIN, Associate General Counsel, Caltech; (Standing L to R): RICHARD O’TOOLE, Retired, Executive Manager, Office of Legislative Affairs, JPL; STEVE PROIA, Retired, CFO/Director for Business Operations, JPL; Chairman GARY GRAY, Leased Facilities Administrator, JPL; MIKE MIRANDA, Division Administrator for Biology & Biological Engineering, Caltech; WILLIS CHAPMAN, Assistant Director for JPL Operational Strategy and Excellence, JPL; JOHN PATTERSON, Senior Finance Analyst for the County of Los Angeles, Treasurer & Tax Collector.

CHAIRMAN & PRESIDENT’S REPORT:

ROCK SOLID SAFETY & SECURITY

Every year, it is our pleasure when we are able to report how the past year exceeded all others, and 2018 was no exception. But before we recap our record-setting numbers, we’d like to recount one of our proudest moments in 2018. It was the achievement of the highest-ever member satisfaction score in our annual member survey: 98.8%! This is what we continually strive for, and our success in 2018 is part of a long tradition of combining exceptional financial value with unsurpassed service. By focusing on meeting the needs of our unique, exclusive membership — and delivering only those products and services that we do best — we enjoy unparalleled strength, security and stability, year after year, even in the most uncertain economic climates. In fact, in stark contrast to the wobbly financial markets of 2018, CEFCU’s strength and safety were exemplary in the industry. Assets climbed to almost $1.7 billion. Loans swelled by 10.65% to more than $483.7 million. Member accounts grew to 36,860. Shares increased to over $1.5 billion (growing by more than $63 million). And our Net Worth rose over 5% to reach $168.4 million. All this, along with prudent cost management, enabled us to pay some of the highest dividends in the nation for federally-insured liquid savings in 2018, adding a year-end 50-basis-point bonus dividend for the month of December.

REACHING NEW HEIGHTS OF OPPORTUNITY Of course, sharing our profits involved a lot more than just paying high dividends. Our consistently low loan rates played an equal role in providing outstanding value, and total loan balances grew by more than $46 million. Most importantly, as always, all members were afforded the same low loan rate — regardless of their credit score — when they qualified for a loan with us. So they were sure of getting our best rate possible. Real estate lending was again our leading loan product in 2018. We funded nearly $51 million in new First Trust Deed loans, offering lower points as well as competitive rates by servicing all our real estate loans in-house. We opened more doors for first-time buyers, too, by introducing low down payment options with Private Mortgage Insurance (PMI). Available on both fixed- and adjustable-rate loans, PMI allows our borrowers to purchase or refinance a home with as little as 5% down. CEFCU’s entirely fee-free Home Equity Lines of Credit (both Traditional and Interest-Only) proved extremely competitive, as well, with low variable rates and no points. More than $48.2 million of credit was extended, bringing total outstanding HELOC balances to $73.8 million. Auto loans also offered new opportunities to make it more affordable to purchase a vehicle, and generated more than $31.1 million in new and pre-owned vehicle loans. Payment Saver, a lease-look-alike program, offered members an innovative way to cut their monthly payments. And once again, in 2018, CEFCU said “thank you” to its existing Mastercard® cardholders with a reduced fixed-rate promotion launched in November 2017. Cardholders enjoyed a discounted APR of just 3.99% every time they used their CEFCU Platinum Mastercard prior to July 19, 2018. By year end, credit card accounts increased to over 10,600.

YOUR LOCK ON SAFETY IN CYBERSPACE Realistically facing the increasing risk of cybercrime in today’s world is an ongoing priority at CEFCU. So, as always, while our cost containment measures allowed CEFCU to maintain its competitive edge, they did not curtail investments in technology. Whether we were streamlining internal operations or enhancing member service, we always implemented behind-the-scene platforms to better manage risk and provide an extra layer of security against fraud. In 2018, technology was leveraged to expand member access to Credit Union offerings. Now it is easier than ever to apply for a loan, make check deposits with your mobile device, transfer funds between CEFCU and external accounts, and review account activity and Mastercard usage. In fact, eBranch and Mobile Access usage hit all-time highs in 2018, with more than 18,000 digital members. Once again, one of the most popular features of eBranch was External Accounts Funds Transfer – the transfer of funds to and from your accounts at CEFCU and other financial institutions. In 2018, $156 million was moved this way, and we added the ability to make same-day inbound external transfers. Our Mobile App was enhanced to include eStatements (with a responsive design), quick access for multiple accounts on smartphones using fingerprint and facial recognition technology, and the ability to update personal information. And Mastercard SmartControls™ were introduced to allow CEFCU Platinum Mastercard cardholders to set up alerts and controls for their card.

UPHOLDING A TRADITION OF PERSONAL SERVICE No matter how sophisticated our technology, or how strong and solid our performance, we never overlook the importance of good “old fashioned” personal service. As one member recounted last year, “This is the most personalized member service! Caltech is one of the best universities in the world and I am happy to know its Credit Union hires such extraordinary people!” As we enter 2019, we are committed to continuing this level of service and dedication to our members’ financial well-being. After all, we never forget: We work for you.

(Left) RICHARD HARRIS President/Treasurer GARY GRAY Chairman, Board of Directors

NET WORTH(Year end, in millions of dollars)(Year end, in millions of dollars)

Net Worth excludes unrealized gains/losses on investment securities.

ASSETS

SHARES

LOANS

REAL ESTATE LOANS(Year end, in millions of dollars)

ASSETS, SHARES & LOANS

STATEMENTS

FINANCIAL CONDITION December 31, 2018 2017 ASSETS Loans, net of allowance for loan losses $ 481,509,021 $ 434,659,376 Cash on hand and demand accounts 52,148,563 44,236,844 Investments, net 1,124,709,142 1,113,412,361 Accrued income 4,130,052 4,030,816 Fixed assets, net 11,282,708 10,913,779 Other assets 1,456,354 1,658,796

$1,675,235,840 $1,608,911,972 LIABILITIES AND MEMBERS' EQUITY Accounts payable and accrued expenses $ 2,334,002 $ 2,548,180 Members’ shares 1,509,340,312 1,446,086,598 Capital, net 163,561,526 160,277,194

$1,675,235,840 $1,608,911,972 INCOME AND EXPENSE For the years ended December 31, 2018 2017 INTEREST INCOME Interest on loans $ 17,703,026 $ 16,013,661 Interest on investments 29,527,524 27,154,972

$ 47,230,550 $ 43,168,633

COST OF FUNDS Interest on borrowed funds 1,416,833 4,018,139 Members’ dividends 24,505,440 15,685,496 Net interest income $ 21,308,277 $ 23,464,998 Provision for loan loss expense $ -0- $ -0- Other operating income $ 1,335,244 $ 1,359,926 Other non-operating income (expense) 988,019 263,265

$ 2,323,263 $ 1,623,191 OPERATING EXPENSES Compensation $ 6,318,038 $ 5,915,924 Employee benefits 2,423,102 2,146,321 Education and conference 351,890 442,685 Association dues 107,626 88,766 Office occupancy 578,805 594,263 Office operations 2,061,335 1,941,448 Marketing and promotion 411,729 414,944 Loan servicing 993,523 832,464 Professional and outside services 1,317,391 1,329,381 NCUA operating fee 390,711 317,770 Miscellaneous 11,294 9,454

$ 14,965,444 $ 14,033,420 NET INCOME $ 8,666,096 $ 11,054,769

The 2018 Statements above are unaudited. An independent, certified opinion audit is currently in process.

SUPERVISORY COMMITTEE REPORT:

YOUR ASSURANCE OF INTEGRITY & STABILITY

The Supervisory Committee is an audit committee composed of three Credit Union members who are appointed by the Board of Directors. Our primary responsibility is to ensure that member funds and interests are protected. In pursuit of this goal, the Supervisory Committee’s activities include: participation in the monthly Board of Directors’ meetings; bi-monthly meetings of the Supervisory Committee to review financial performance and overall financial health of the Credit Union; and periodic audits of accounts, policies, procedures and internal controls. To assist in our review of the Credit Union and in accordance with regulatory requirements, the Supervisory Committee engaged the independent accounting firm of Richards & Associates, CPAs, to perform the annual certified audits. An opinion audit was completed in 2018 for the year of 2017. The 2018 audit is currently in process. The Committee has also engaged the accounting firm of Turner, Warren, Hwang & Conrad, CPAs, to provide the internal audit function on a regular ongoing basis. In addition to these reviews, the National Credit Union Administration (NCUA) performs a regulatory examination annually. The results of all reviews to date give us confidence that the Credit Union is in compliance with applicable regulations, safeguarding members’ assets, and following policies and procedures approved by the Credit Union Board of Directors.

MISSION STATEMENT — CEFCU provides superior value with unsurpassed service through selected financial products while maintaining our tradition of stability, security, and trust. CORE VALUES MEMBERS FIRST — We always place the best interests and welfare of our members first. FINANCIAL STRENGTH — We never compromise the financial strength and security of the organization. ETHICS — We conduct all activities with honesty and integrity. IMPORTANCE OF PEOPLE — We promote the well-being of our members, volunteers, and employees.

SUPERVISORY COMMITTEE (L to R) THERESA SLOWSKEI, WALTER BOYD, LAURICE BALIAN, Chair

EQUAL HOUSINGLENDER

LA CAÑADA OFFICE 528 Foothill Boulevard P.O. Box 11001 La Cañada Flintridge, CA 91012-6001 800/592-3328 • 818/952-4444 REAL ESTATE LOAN CENTER 801 Foothill Boulevard P.O. Box 11001 La Cañada Flintridge, CA 91012-6001 800/592-3328 ext. 404 JPL OFFICE 4800 Oak Grove Drive Building 291 Pasadena, CA 91109 818/354-3280 CAMPUS OFFICE 1200 East California Boulevard Pasadena, CA 91125 CIT 100-63 626/395-6300 ATM LOCATIONS La Cañada Office Caltech Campus (2 Locations) Chandler Dining Hall Keith Spalding Building The Huntington Library, Art Collections, and Botanical Gardens JPL (2 Locations) Building 303 Building 291 WEBSITE www.cefcu.org