2021 Valley First Annual Report by valleyfirst

2021

ANNUAL REPORT

Thank you for your membership with Valley First Credit Union. We’ve highlighted in this report many of the achievements our organization realized in 2021. But none of them are possible without the support of our members. Valley First aims to be a partner for you and provide the tools needed for financial success for our members, our communities and local businesses.

BOARD CHAIRPERSON’S MESSAGE Coming out of the trying year 2020 proved to be, 2021 wasn’t without its own challenges, but it was an opportunity to enhance the amazing connections we continue to form in our communities. And supporting those closest to us is still our main focus. Our organization certainly contributes monetary resources to community-minded organizations in the Central Valley. In fact, contributions for 2021 totaled $180,000. But for me, and my fellow board members, the true value comes from the work it takes to earn the ability to contribute in these ways, the time our credit union team members give during working hours and from their own personal lives and the heartfelt connections our leaders form to identify where our efforts are most needed. Our teams volunteered the equivalent of 76 work days in 2021 as an example of this commitment.

According to Credit Union National Association’s Annual Member Benefit Report, the loans rates in each category they track nationally were lower at Valley First than they were at competing California banks and credit unions. And our savings rates for Retirement, Certificate and Money Market accounts were all higher. Those items are where the real, tangible benefit for our members comes in. I’m proud to serve this organization and I would like to thank my fellow volunteer board members for their support, continuing hard work and the gift of your time.

We also really hang our hats on the supplemental resources we provide to all members. Features like our educational offerings and financial tools are what set us apart from others.”

We also really hang our hats on the supplemental resources we provide to all members. Checking accounts and auto loans are important and a vital piece of what we do at Valley First. But features like our educational offerings and financial tools are what set us apart from others.

And finally, thank you to all our members for your support of this organization.

More than 3,700 members were assisted with our financial education tools and resources in 2021. We also assisted 5,639 members secure financing for reliable transportation and 205 buy a home for their families. Our auto refinance program saved members who refinanced in 2021 more than $148 million dollars collectively over the life of their loan!

Chris Peterson Valley First Credit Union Board Chairperson

VALLEY FIRST CREDIT UNION ANNUAL REPORT | Page 3

Banking Banking With With A A Purpose Purpose

Look into your crystal ball: how will leadership change in the future, and what’s going to influence those changes?

PRESIDENT & CEO’S MESSAGE

Kathryn Davis President & CEO Valley First Credit Union

What is the Future of Leadership? Most leaders would love to have access to a crystal ball. Knowing the successes and challenges ahead could certainly help in more effective planning, fine-tuned budgeting and precise results. As we know, this just isn’t the case. But when presented with the question: Look into your crystal ball: how will leadership change it the future and what’s going to influence those changes?” it is a thought-provoking exercise that allows us to consider the impact we can have. First, I absolutely see emotional intelligence as being a requirement for future leaders versus just a niceto-have. People are looking for leaders to be transparent, honest, inspirational and authentic and their ability to handle their interpersonal and professional relationships in a way that allows for those traits to come through will be necessary. Gone are the days of changes happening behind closed doors. And that need to be more out in front of an organization and communicating more thoroughly puts emotional intelligence at the forefront. The “why” will be critical for future leaders to not just explain, but also create inclusion around the “why”

and ensure other leaders are just as dedicated as the person at the top. We recently re-did our annual strategic plan and I spent an equal amount of time explaining the “why” and spending time directly with employees and leaders so they could be part of the process, as we did on the actual work. Future leaders will have to be strong multitaskers and have broader knowledge than leaders of yesterday. They can’t operate in a silo and will need to be connectors and bring people together. The ability to innovate and stay out of ahead of what is happening in one’s industry will be another part of that multitasking requirement – we can’t just focus on the here and now, we need to be thinking about tomorrow and perhaps more importantly, fiveplus years out also. I think organizations will ultimately be flatter in the future, so the modern-day leader is not someone who is detached from the business operations, but rather is a member of the team and also contributing directly. For me, I’m high on collaboration and wouldn’t think twice about meeting with any member of our team, regardless of

their place in the org chart. I also consider myself a working member of many teams and try to directly fill in where the gaps are. We’ve recently had a vacancy in our leadership role over Risk Management. I had that entire team report to me directly while there was a gap so I could get closer to the work and truly understand our organization’s risk needs now and in the future. The positive changes we’re seeing in diversity, equity and inclusion at the highest levels are some of the biggest reasons we’ll see effective leadership change. Leaders will be far more representative of the communities and groups their organization serves. I also think the modern workforce is expecting a different work experience and therefore it will require leaders to deliver on that, whether it be diversity, work-life balance, benefits or anything else. Especially if you are leading a growing organization, you’ll have to meet the needs of your internal customer first, your employees! We don’t have access to a crystal ball but we as leaders we do need to have the foresight to know and anticipate what’s coming to help our organizations succeed.

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EQUAL HOUSING

OPPORTUNITY EQUAL HOUSING

OPPORTUNITY

HOW SHE LEADS 2021

Our annual meeting and annual report get “How She Leads” feature in the Business Journal produced at a time in the year where it feels like we’ve fully cruised past the end of the previous year we’re meant to be reporting on. So, I do always Service – I’m proud to report that service remained at the forefront of our work and 92% of our members enjoy the opportunity to stop and reflect on where indicate they are Satisfied or Very Satisfied with our we are now, but also where we’ve been. service. On top of delivering exceptional service, we Just to name a few, here are the things that also handled a record amount of business in 2021

were highlights to me in 2021:

Community Connections – We are more connected than ever to the people in the communities we serve. Our team members continue to volunteer their time and efforts to better the world around them and I’m proud of all our contributions. Another way we truly connect with our community is as the official financial assistance partner of Volt Institute. The students who graduate from their programs realize higher incomes and create better futures for themselves and their families. We’re proud to be one piece of their success stories. Tangible Financial Benefit – In the financial world numbers are certainly at the forefront of our daily lives. They’re not the only important measurement but they certainly do help paint a picture. We gifted $25,000 during our annual Happy Holipays event where we surprise members in need during the holiday season.

CDFI Opportunities – The year 2021 will always stand out for me as the year we finally earned our Community Development Financial Institution designation. This opportunity represents the future to me and the work we can do to help our most underserved areas where financing opportunities are not always available. The future remains to be seen on exactly the impact we’ll have, but our efforts are well underway. Expansion – 2021 also ended with an expansion of our community charter. We now are able to serve those who are in Sacramento and Kern Counties. The Central Valley is not only our home, but it’s a community we understand well. We are local lenders, problem solvers, community advocates. We are so excited to now also include Sacramento and Kern Counties as part of our community.

We also gave back $207,000 in Purple Checking rewards throughout 2021. 5800 members are using our SavvyMoney tool to better understand and manage their credit scores. This is a free service and across the board in each credit tier, our members scores’ are improving. Credit Union National Association, via its Annual Member Benefits Report, estimates that Valley First Credit Union provided $12,667,005 in direct financial Kathryn J. Davis, CCE benefits to its 71,625 members during the twelve months ending December 2021. President & CEO VALLEY FIRST CREDIT UNION ANNUAL REPORT | Page 4

The pages of our annual report help recognize and celebrate all of these 2021 highlights. Thank you to all our members, employees and leaders for your dedication to Valley First. Here’s to continued organizational and personal financial health in 2022!

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SUPERVISORY COMMITTEE REPORT

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The Supervisory Committee is a group of volunteers who are elected by the members to ensure the management of Valley First Credit Union follows the guidelines and procedures set forth by the regulatory agencies that govern Credit Union operations. The Committee is responsible for ensuring the financial records of the Credit Union fairly and accurately reflect its financial position and operating results. The Supervisory Committee is also responsible for overseeing the accurate and timely reporting of the Credit Union’s financial status and monitoring the effectiveness of the internal controls to protect Credit Union resources.

Included in this responsibility is also the review of member account records to verify their accuracy and oversee the audit performed by our independent auditing firm, Moss Adams, Certified Public Accountants. Based on our review and the result of our independent auditors’ efforts, the Supervisory Committee believes the Credit Union has maintained accurate and timely accounting records and applied the policies and procedures established by the Board of Directors.

Kashmir Gill Valley First Credit Union Supervisory Committee Chairperson Contributions from Valley First team members for the West Modesto Community Collaborative annual Thanksgiving Food Drive

VALLEY FIRST CREDIT UNION ANNUAL REPORT | Page 5

TREASURER’S MESSAGE I am proud to report that Valley First Credit Union experienced another solid financial year in 2021. A few highlights from the year include: ■ Total assets increased by $125.7 million, resulting in year-end assets of $895 million. ■ Total Shares increased by $118 million to $808 million. This increase was seen in all categories but was driven mainly by increases of $56 million in regular shares and $16 million in share drafts. ■ Total loans increased by $39 million from the prior year as a result of being able to help more members with their lending needs. Paycheck Protection Program balances decreased by $12 million due to loan forgiveness by the federal government.

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■ The Net Worth ratio decreased from 9.26% in 2020 to 8.87% in 2021. ■ Based on the National Credit Union Administration (NCUA) benchmarks, we remain categorized as a “well capitalized” Credit Union. As we look toward the future, I am confident our organization will continue to utilize our financial strength to help our members and continue our goals around banking with a purpose.

■ The Credit Union had net income of $8.2 million, which was a $2.6 million increase from the prior year. ■ Return on Assets improved from 0.81% in 2020 to 0.98% in 2021.

Based on the National Credit Union Administration (NCUA) benchmarks, we remain categorized as a “well capitalized” Credit Union.”

VALLEY FIRST CREDIT UNION ANNUAL REPORT | Page 6

Pat Dodd Valley First Credit Union Board Treasurer

FINANCIALS

Valley First Credit Union Statement of Condition For the Period Ending: December 31, 2021

Assets

Valley First Credit Union Income Statement For the Period Ending: December 31, 2021

Income

Loans (net)

$ 529,532,574

Cash

$ 179,193,241

Investments

$ 127,700,406

Fixed Assets

$ 13,233,886

Other Assets

$ 45,544,059 TOTAL ASSETS

$ 895,204,166

YTD Loan Interest Income YTD Investment Income

$ 736,706

TOTAL YTD INTEREST INCOME

Dividends to Members

Accounts Payable

TOTAL YTD INTEREST EXPENSE

YTD NET INTEREST INCOME AFTER PROVISION

$ 1,424,153

Other Liabilities

$ 8,144,638 TOTAL LIABILITIES

$ 75,383,762

Equity Acquired In Merger

$ 4,012,496

Reserves & Undivided Earnings

$ -1,313,178

TOTAL EQUITY

$ 1,275,415

$ 781,096 $ 21,608,767

$ 9,568,791

Equity Retained Earnings

$ 23,665,278

$ 1,275,415

YTD Loan Loss Provision

Liabilities

$ 22,928,572

YTD Net Gain on Sale of Investments

$ 136,926

YTD Asset Sale (Gain)/Loss

$ (71,915)

YTD Non Interest Income TOTAL YTD NON INTEREST INCOME

$ 9,767,294 $ 9,832,305

$ 78,083,080

Expenses YTD General & Admin Exp

$ 23,287,337

TOTAL EXPENSES

$ 23,287,337

YTD NET INCOME

$ 8,153,735

VALLEY FIRST CREDIT UNION ANNUAL REPORT | Page 7

2021 Highlights Member Benefits

Member Financial Health

One way we can impact our members is the actual tangible financial benefit of our products and services. Some highlights from 2021 include:

In addition to monetary savings, we offered many other opportunities for our members to improve their financial lives.

Helped

5,639

Reached

3,718

members fund reliable transportation

members with financial education sessions

Helped

205 members buy a home for their families

Contributed

$25,000 to members during our celebration

Total Dividends Paid to Members

$1,275,240

$148,271,509 saved for members in the auto refinance program

Total Auto Refinance Bonus Cash Back Reward Dollars

$207,000

$157,466

2021 Highlights CONT.

Community Contributions Community impact is vital for Valley First and we make contributions in many ways.

Contributed

$180,000 to the communities we serve Our teams volunteered the equivalent of

76 work days

Added new branch locations in Turlock and Modesto

92%

Member Satisfaction

Paycheck Protection Loan Dollars Forgiven

$12,200,238

Our employees received

9,283 hours in educational opportunities to ensure our members’ needs are met

Developed or enhanced

of our products and services

The communities of Ceres and Turlock, along with the readers of 209 Magazine, voted Valley First “Best Credit Union” in 2021.

THANK YOU

for voting Valley First Credit Union Best Credit Union!

Our Fresno and Clovis teams supported many non-profits in our Southern region, including Habitat for Humanity and the Fresno Bulldog Pantry VALLEY FIRST CREDIT UNION ANNUAL REPORT | Page 10

ADDITIONAL 2021 HIGHIGHTS After 18 months of applications, year-end 2021 marked when we finally received our Community Development Financial Institution (CDFI) certification from the United States Department of the Treasury, making Valley First the largest CDFI to be headquartered in the Central Valley. This designation represents a strategic shift in Valley First’s vision to bring more funding resources to our community. The true impact of this work is getting under way now and we’re excited about the possibilities.

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New Products & Expanded Services We introduced or improved more than 25 different products/services to better meet our members’ needs. Highlights include: ■ SavvyMoney Financial Tools ■ Purple Checking with Cash Back Rewards ■ New Business Accounts Including Impact Checking for Non-Profit Organizations ■ Autobooks Business Financial Management Tool

We also added two new branch locations in Turlock and Modesto. These state-of-the-art branches offer members extended convenience and access options with Valley First. Our investment in digital services also continued through 2021 to continue to keep pace with the needs of our members and the demands of our online world.

and many more! CURRENT FIELD OF IES MEMBERSHIP COUNT NAL FIELD PROPOSED ADDITIO ES OF MEMBERSHIP COUNTI Branch Locations

SACRAMENTO COUNTY

ATM Locations

CALAVERAS COUNTY

TUOLUMNE COUNTY

SAN JOAQUIN COUNTY Oakdale Branch Tracy Branch

Sisk Rd Branch

J Street Branch Ceres Branch Turlock Branch

In 2021 we also received approval to begin welcoming members who live, work, worship or attend school in both Kern and Sacramento Counties.

MARIPOSA COUNTY

STANISLAUS COUNTY MADERA COUNTY

MERCED COUNTY

Clovis Branch Fresno Branch

FRESNO COUNTY

TULARE COUNTY KINGS COUNTY

KERN COUNTY

VALLEY FIRST CREDIT UNION ANNUAL REPORT | Page 11

LEADERSHIP

BOARD OF DIRECTORS MEMBERS Chris Peterson Chairperson

Fred Cruz Vice Chairperson

Pat Dodd Treasurer

Patricia Gillihan Secretary

Tom Kane Director

John Schneider Director

Wes Hall Director Emeritus

Gary Hall Director

SUPERVISORY COMMITTEE MEMBERS Kashmir Gill Chairperson

Donna Riley Secretary

Tamra Spade Committee Member

Duke Leffler Committee Member

Sarah McDonald Committee Member

SENIOR MANAGEMENT Kathryn Davis President & CEO

Paul Emanuels Vice President of Lending

Todd McCoy CFO

Byron Miller Vice President of Technology

Chris Hewitt Vice President of Operations & Digital Strategy

Chris Braun Vice President of Payments

Courtnay Lynch Vice President of People & Culture