ANNUAL REPORTFiscal Year Ending March 31, 2017

California Coast Credit Union has been serving its members’ best interest for 88 years and is proud to be the credit union of choice for over 155,000 members. We’re a true credit union embracing the philosophy of people helping people—providing the best possible rates and offering a wide array of services.

Our service is friendly, our branches are welcoming and the member experience is truly enjoyable. In fact, our members give us exceptional ratings each year for member service. It is with great pride that we give back to our community by providing local high school and college students with financial education and scholarships, raising funds for Rady Children’s Hospital, the San Diego Humane Society and so much more. Cal Coast employees are passionate about our members’ financial well-being and are dedicated to improving the lives of those in our communities.

Today, California Coast offers 24 branches in San Diego and Riverside counties, competitive deposit rates, low loan rates, state-of-the-art technology, mobile banking and many additional convenient services. Members have access wherever they live, work or travel through Cal Coast Online, a shared branch network of more than 5,000 locations, as well as more than 30,000 surcharge-free ATMs nationwide.

Serving our members’ best interest.. . past, present and future.

“I can’t recommend this credit union enough to people! I had been a member of a bank, but after a few run-ins with hidden fees and other restrictions I had had enough and decided to switch. Walked into the branch and was immediately seen by a staff member. I opened two checking accounts and a savings account with absolutely no hassle! They even printed me a debit card on the spot! I also set up a great deal on a car loan at the same time. The whole process took maybe 15 mins. The staff was all VERY friendly and the services CCCU provides is just what I want - ATM locations everywhere (more than banks), no hidden fees, and mobile/online banking. If you’ve had a bad experience at a big bank and are thinking of switching to a credit union look no further!”

— Matt R., Yelp Review

Brand IdealImprove the lives of people in our community by helping them attain financial success and independence.

MissionThe reason we exist is to promote our members’ financial prosperity while continuously delivering exceptional, caring service.

President’s Report

California Coast Credit Union is pleased to be the credit union of choice for over 155,000 members in San Diego and Riverside counties. Member satisfaction is always a top priority and our members have consistently given us high marks for customer service and satisfaction, year after year.

On solid financial ground with over $2.3 billion in assets, our current financial standing indicates strong performance and risk management practices. In addition, California Coast remains well capitalized with excellent loan quality, which is a key measure of our strength. It provides safety for our members and allows us to invest in secure systems and branch locations that enhance member experience.

California Coast continues to add new branches to serve our members. We opened our newest branch in the East Village area of downtown San Diego. This is the first credit union serving the East Village community just a few doors down from our long-time preferred partner, SDG&E. In late 2016, we opened our fourth branch in Southern Riverside County – we are now the only credit union serving the growing city of Menifee. We look forward to opening additional branches to provide greater member convenience.

We are especially proud of the difference California Coast makes in the communities we serve. Our values-based brand and culture, which was a significant expansion of our commitment to give back to our communities through involvement with charities and movements that support youth, education and the health and care of people and animals, provided wonderful

results again this year. We deepened our relationship with our communities by engaging our employees to become even more involved and their participation has been outstanding and rewarding. As part of these efforts, we established the non-profit Cal Coast Cares Foundation, which provides deserving students and teachers with scholarships and grants.

In an effort to continue to offer California Coast members a truly exceptional experience, we recently launched new technology, including a new personal financial management tool and account aggregator, Coast Money Manager. We’re also introducing enhanced security features that will enable members to control their debit and credit cards online. Plus, members will soon enjoy a streamlined mobile banking experience that provides greater ease of use.

We appreciate our members’ trust in us to provide value they won’t find anywhere else – from real savings, to financial know-how, to a richer life. Our members can continue to count on us to embrace the latest proven technological advances, provide an exceptional member experience and go the extra mile for the communities we serve.

Respectfully submitted,

Todd M. Lane President/CEO

It is with great pride that I reflect upon the accomplishments that define the past year for California Coast Credit Union. Our financial growth and strength, as measured by asset, loan, and membership growth, speaks for itself. Clearly those numbers show that California Coast is serving our members well. A not-for-profit and member-driven organization like ours cannot experience such strong financial growth without an equally strong commitment to serving the best interests of our members.

Where I believe California Coast surpasses all other local financial institutions is in our commitment to our values-based brand ideal, which is to improve the lives of our members and people in our community by helping them attain financial success and independence. We accomplish this by providing free financial education that helps enhance teens’ and adults’ financial health. We’re also currently developing webinars that will help us expand the reach and impact of our financial education services.

California Coast is also second to none in our dedication to giving back to the communities we serve. We’ve developed a number of partnerships with local non-profits, schools, colleges, and other organizations that share our values –partnerships that are more than just a handshake and a

check. It’s a commitment to work together to improve the lives of members and others in our community.

In the past year, our team members volunteered thousands of hours of their time to community service. From collaborating with San Diego County’s Office of Education in collecting 23,000 pairs of socks for homeless students to Cal Coast President & CEO Todd Lane’s commitment to chairing this year’s Light the Night Walk in support of the Leukemia & Lymphoma Society, California Coast “walks the talk” in giving back to our communities.

I’m very proud of the success that California Coast experienced this past year – both financially and in helping to enhance the lives of our members and others in our community. On behalf of the Board of Directors, I look forward to working with our members and community partners to build upon these successes in the year ahead.

Respectfully submitted,

Dr. Barbara Brooks Board of Directors Chair

Chairman’s Report

Chief Financial Officer’s Report Member Deposits and Loan Portfolios

The Statement of Financial Condition as of March 31, 2017 reflects 11.2% growth in assets which ended the fiscal year at $2.33 billion, a $234 million increase over the prior year. Most of the credit union’s assets are in Loans to Members and most of the liabilities are in the form of Members’ Deposit Accounts.

Total Members’ Equity (generally understood to represent reserves) amounted to $257 million, reflecting a 6.7% increase ($16 million) over last year. The credit union’s ratio of net equity-to-assets ended at 11.11% versus 11.51% one year ago. This greatly exceeds the regulatory definition of “well capitalized” which is 7.0%. The equity ratio declined slightly because of the fast asset growth.

Members’ deposits provide the source of liquidity for making loans to members. One metric used for measuring how much is being loaned out is the loan-to-deposit ratio. As of the same time last year, that ratio was 80.2% but by March 31, 2017, it had climbed up to 85.6% as more of the credit union members turned to Cal Coast to meet their borrowing needs. For the period ended March 31, 2017, Net Loans increased 19.3% ($284 million), Member Deposits increased 9.0% ($164 million) and $50 million in Non-member Deposits were received from the State of California. Even with the increased lending activity, the credit union’s liquidity position remained strong. Strong credit quality of the loan portfolio was reflected in low loan delinquencies and very low loan net charge-offs.

For the fiscal year ended March 31, 2017, Net Interest Income was at $58.7 million before the Provision for Loan Losses. The Provision for Loan Losses expense totaled $2.0 million, bringing Net Interest Income (also known as Net Interest Margin) to $56.7 million. Gross revenue totaled $88 million for the year which was $4 million higher than the previous fiscal year.

Non-interest Income decreased by $1.8 million as there were declines related to gains on sale of mortgage loans that were partially offset by an increase in Interchange Income. Non-interest Expense was $6.3 million higher than the previous year. Costs rose as two new branches were added and large costs were incurred related to mandatory issuance of EMV (“chip”) debit and credit cards. Fraud losses, particularly from debit and credit card fraud, saw increases over the prior years. Remaining expense categories were held in check as the credit union continued to focus on expense control in the midst of rapid growth in member loans and deposits.

Net Income for the period ending March 31, 2017 was $17.5 million (0.79% return on assets) compared to Net Income of $21.4 million for the prior fiscal year. The decrease in Net Income was largely the result of increased expenses outpacing the increased Net Interest Income.

The credit union continues to diligently manage operating expenses and growth. Contributing positive factors included the slowly strengthening economy with low unemployment, low inflation and high demand for auto loans. Demand for home loans slowed considerably during the year.

The combination of strong reserves, wise lending and investment practices, and emphasis on member financial education, has well positioned our credit union to continue as a safe harbor of financial services for all of its members.

Respectfully submitted,

Christina Lethlean Chief Financial Officer

Asset, Deposit and Net Loan Growth

Checking 23%

Chief Financial Officer’s Report Member Deposits and Loan Portfolios

Asset, Deposit and Net Loan Growth

Deposits Loans

California Coast Credit Union experienced significant organic growth over the last four years. From March 2013 to March 2017, total assets increased 30%, from $1.79 billion at the end of fiscal year 2013 to $2.33 billion at the end of fiscal year 2017. This growth was driven by increases in total deposit balances, which grew 30% during this time frame, led by increases in Money Market (+47%), Checking (+37%) and Savings accounts (+33%) and combined with increases in non-member deposit balances (+100%). Loan balances increased 101% from March 2013 to March 2017, with significant growth in Direct and Indirect Vehicle loans (+267%), Business Real Estate loans (+61%), Consumer Real Estate loans (+34%) and Credit Card loans (+33%).

All data as of March 31.

Non-member Deposits 4%

Credit Cards 4%

Loan Deferred Fees and Costs 1%

Other Consumer Loans 2%

Savings 23% Consumer

Real Estate Fixed 25%

IRAs 5%

Business Real Estate

Non-residential 15%

Vehicle Loans 45%

Certificates 17%

Money Market Accounts

28%

Consumer Real Estate

Variable 8%

Deposits (in Billions)

$2.06$1.68$1.59

201720152013

Assets

deposits

Assets (in Billions)

201720152013Assets

deposits

$1.79 $1.91$2.33

201720152013

Net Loans (in Billions)

Assets

deposits

$1.27$0.87

$1.75

Checking 23%

AS OF

ASSETS March 31, 2016 March 31, 2017

Cash and Cash Equivalents $ 161,988,000 $ 146,395,000Deposits in Other Financial Institutions 11,223,000 7,476,000Securities - Available for Sale 354,888,000 335,246,000Securities - Held to Maturity 21,369,000 7,894,000Other Investments 14,642,000 14,600,000Loans Held for Sale 293,000 784,000Loans, Net 1,466,048,000 1,749,591,000Accrued Interest Receivable 4,675,000 5,105,000Foreclosed Assets 178,000 –Premises and Equipment, Net 27,233,000 28,609,000National Credit Union Share Insurance Fund Deposit 16,572,000 17,882,000Goodwill 3,168,000 3,168,000Other Assets 11,983,000 11,313,000

TOTAL ASSETS $ 2,094,260,000 $ 2,328,063,000

LIABILITIES AND MEMBERS’ EQUITYLiabilities Members’ Deposit Accounts $ 1,816,783,000 $ 1,980,717,000 Non-member Deposits 25,027,000 75,084,000 Accrued Expenses and Other Liabilities 11,052,000 14,767,000

Total Liabilities 1,852,862,000 2,070,568,000

Members’ Equity Regular Reserves 78,754,000 78,754,000 Undivided Earnings 162,343,000 179,835,000 Accumulated Other Comprehensive Income (Loss) 301,000 (1,094,000)

Total Members’ Equity 241,398,000 257,495,000

TOTAL LIABILITIES AND MEMBERS’ EQUITY $ 2,094,260,000 $ 2,328,063,000

FISCAL YEAR ENDED

INTEREST INCOME March 31, 2016 March 31, 2017

Loans $ 52,124,000 $ 56,592,000 Investments and Cash Equivalents 4,282,000 5,758,000

Total Interest Income 56,406,000 62,350,000

INTEREST EXPENSEMembers’ Deposit Accounts 2,929,000 3,454,000 Non-member Deposits 40,000 231,000

Total Interest Expense 2,969,000 3,685,000

Net Interest Income 53,437,000 58,665,000

Provision for Loan Losses 1,015,000 1,995,000

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 52,422,000 56,670,000

NON-INTEREST INCOMEService Charges and Fees 10,506,000 10,482,000Interchange Income 10,701,000 11,295,000Other Non-interest Income 6,076,000 3,699,000

Total Non-interest Income 27,283,000 25,476,000

NON-INTEREST EXPENSE Employee Compensation and Benefits 32,088,000 34,860,000Office Occupancy 6,011,000 6,096,000Office Operations 14,683,000 16,476,000Other Operating Expenses 5,524,000 7,222,000

Total Non-interest Expense 58,306,000 64,654,000

NET INCOME $ 21,399,000 $ 17,492,000

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“This year I got smart and joined a credit union. I’m going to be honest...I didn’t expect it to be any different from the bank I

was at. Wow. I work in customer service. So, I don’t know how else to say this: there’s customer service and then there’s the

customer service I received from California Coast Credit Union…JOIN CALIFORNIA COAST CREDIT UNION RIGHT NOW.

Don’t wait years like I did for this great service.”

— Eleanor M., Yelp Review

The Supervisory Committee represents the membership of California Coast Credit Union and is responsible for overseeing the audit function. The Committee is also charged with documenting the verification of member accounts periodically in accordance with the credit union’s bylaws. To fulfill these responsibilities, the Supervisory Committee engaged the independent audit firm of CliftonLarsonAllen to perform the verification of member accounts as of December 31, 2016, and to perform the financial statement audit for the period ending March 31, 2017.

It is the opinion of CliftonLarsonAllen that the consolidated financial statements present fairly, in all material respects, the financial condition of California Coast Credit Union and its subsidiary as of March 31, 2017, and the results of the operations and cash flows for the year conform to generally accepted accounting principles. As part of the audit of the financial statements, a confirmation of members’ accounts, as of December 31, 2016, was performed in accordance with the requirement of the California Department of Business Oversight and generally accepted auditing standards.

Supervisory Committee’s Report

The Supervisory Committee is also responsible for overseeing the internal audit function. The Committee selects and coordinates the audits of key areas and regularly meets to review audit findings, and to ensure the continued strengthening of internal controls. As a result of these audits, the established strong processes and controls of California Coast continue to be improved in 2017.

On behalf of the Committee, I would like to thank the California Coast management and Board of Directors for their leadership and cooperation.

Respectfully submitted,

Warren Ruis Supervisory Committee Chair

Community PartnershipsCal Coast in the CommunityCalifornia Coast Credit Union is proud of our long-standing tradition of giving back and fostering community well-being throughout San Diego and Riverside counties.

This year, our team of dedicated staff supported the San Diego County Office of Education in collecting more than 23,000 pairs of socks for homeless students in San Diego County in our “Warm Their Soles” sock drive. Many of our Cal Coast staff, family members and friends have joined the credit union in hosting blood drives and participating in walks, free medical screenings and various other community events throughout the region to support local non-profits, schools and charitable organizations that share our mission to help improve lives in our community.

Cal Coast continues to develop new partnerships and strengthen existing ones. Existing partnerships that we continue to build upon include San Diego State University where we provided scholarships for students, hosted 25 free financial workshops, sponsored the Aztec Dance Marathon for Rady Children’s Hospital and much more. We were also very active in our partnership with the San Diego Humane Society, the Leukemia & Lymphoma Society, MANA San Diego, local PTAs and many other worthy organizations.

We are also excited to build upon our partnership with the San Diego Gulls, the Aztec Men’s Basketball team and the 14-time championship winning San Diego Sockers team.

We are proud of the collaborative partnerships we have developed with non-profits, schools, colleges and other organizations that share our values to transform lives in our communities. Together, we have accomplished more than any of us could have on our own.

Some of the community partners that we have worked with in the community throughout the past year include:

“Our continued partnership with California Coast Credit Union has yielded many triumphs on behalf of

animals in need, but there’s still much to be done. We’ve made a commitment to provide a second chance

to every healthy and treatable animal in San Diego County, and with continued support from community

partners like Cal Coast, we’ll be able to continue to do just that. We’re so grateful for their generosity and

commitment to the animals in our community.”

— Alex Mares, Assistant Director of Philanthropy, San Diego Humane Society

Community Partnerships

Saving lives today.Improving life tomorrow.

Looking BackIt was a great year for California Coast Credit Union. The credit union continues to expand our community outreach efforts and offer programs that promote fiscal soundness.

Last year, Cal Coast celebrated the grand opening of our new full-service branch in the thriving town of Menifee in Riverside County, where we are currently the only credit union in the city. In fall 2016, the Santee Branch was remodeled, and branch staff are now assisting members at their newly designed teller counter and offering Saturday hours. In early 2017, Cal Coast opened our East Village - Downtown San Diego Branch, where local business leaders, community partners and residents welcomed us to the neighborhood.

In an effort to remain competitive in our evolving technological landscape, Cal Coast was pleased to launch Coast Money Manager, an online money management tool that provides convenient and personalized service for our members, and recently upgraded Apple Pay for debit card holders and bill pay in Cal Coast Online to a new modern look with easier navigation. Additional technological advances include enhancements to our Cal Coast Apple and Android mobile banking apps.

Looking AheadEnhancing the member experience is California Coast’s foremost priority. This member-first approach aligns with our values-based brand ideal to make a difference in people’s lives.

Exciting things are on the horizon. Cal Coast is looking forward to opening a new branch in Otay Ranch later this year, to better serve our members in the South Bay. Part of providing an exceptional member experience means being accessible, so we plan to add even more branches next year. We also strive to provide you with the latest in technology—we will soon be streamlining our online loan and new account application process, as well as upgrading our mobile banking app to include travel notifications and the ability to report lost or stolen cards. We’re also exploring additional opportunities with other mobile wallet solutions.

In staying true to our roots as a credit union founded by teachers, we remain committed to supporting the educational community and enhancing the financial education we offer to students and adults throughout the community. Cal Coast plans to expand our Financial Education Centers to assist students at local colleges and universities. We are also increasing access to financial education by way of webinars and other online tools and services.

Comments, questions and feedback are always welcome and appreciated. Please don’t hesitate to give us a call at (877) 495-1600 or stop by your local branch. Your suggestions provide us with opportunities to better serve your best interest.

Accomplishments and Opportunities

We’re in a neighborh ood near you!25 branches, 60 shared branches and 600 fee-free ATMs in San Diego and Riverside counties with 30,000 ATMs nationwide.

Chula Vista 386 East H Street, Suite 213

Clairemont 4265 Genesee Avenue

Downtown San Diego 440 Beech Street

East Village – Downtown San Diego 777 J Street

El Cajon 898 Jackman Street

Encinitas 429 Santa Fe Drive

Escondido 962 West Valley Parkway

Hillcrest 1060 University Avenue, Suite A101

Kearny Mesa 4285 Ruffin Road

La Mesa 8002 La Mesa Boulevard

Menifee 30015 Haun Road

Mira Mesa 8220 Mira Mesa Boulevard, Suite D

Murrieta 24716 Madison Avenue

Murrieta 40230 Murrieta Hot Springs Road

National City 1704 Sweetwater Road

Oceanside 3485 Marron Road

Otay Ranch Coming in 2017

Poway 13616 Poway Road, Suite 200

San Marcos 140 Knoll Road

Santee 9808 Mission Gorge Road, Suite A

Scripps Ranch 9825 Mira Mesa Boulevard

SDSU Campus in the Student Union

Solar Turbines 2200 Pacific Highway, Building 8 (restricted access)

Temecula 32170 Temecula Parkway, Building C

University Heights 4470 Park Boulevard

If you would like a copy of the accompanying notes, which are an integral part of these financial statements, call (858) 495-1600. 17-277 PUB 07/17

Get Social with us!

calcoastcu.org | (877) 495-1600