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Management Discussion and Analysis Introduction ........................................................................................................................................................ 1

2017 Economic Environment ............................................................................................................................ 1

Performance Highlights ..................................................................................................................................... 2

2018 Outlook ..................................................................................................................................................... 2

Lines of Business Performance ........................................................................................................................ 2

Risk Management ............................................................................................................................................. 3

Compensation Discussion and Analysis ........................................................................................................... 4

Board of Directors Compensation ................................................................................................................. 4

Executive Compensation ............................................................................................................................. 10

Introduction BlueShore Financial (the “Credit Union”) is a boutique financial institution providing a full range of personal and business banking, wealth management, insurance and commercial lending solutions. The Credit Union has 12 branches across Greater Vancouver and the Sea-to-Sky Corridor and administers over $5.0 billion in assets. As one of Canada’s Best Small and Medium Employers for seven consecutive years, the Credit Union is proud of an organizational culture that is client-focused, results-driven, supportive, and inclusive. The Management Discussion and Analysis contains information designed to provide a more complete understanding of the Credit Union and its financial and operating performance. This discussion is intended to complement audited consolidated financial statements and should be read in conjunction with those financial statements.

2017 Economic Environment

The Canadian economy experienced the strongest six-month start to a calendar year in 15 years. Canada’s economic growth of 3.0%1 is expected to lead the G-7 countries. Provincially, only Alberta outpaced British Columbia’s strong growth in 2017, as a result of the turnaround in the energy sector.

South of the border, the U.S. Federal Reserve Board tightened monetary conditions in 2017, following through with three rates hikes to a target range of 1.25% to 1.5%, and shrinking its balance sheet. In 2017, the Bank of Canada introduced two rate hikes in July and September in response to strong data in the first half of the year, thereby increasing the overnight rate from 0.5% to 1.0%. The overnight lending rate increased again on January 17, 2018, to 1.25%. The national unemployment rate fell to a historically low level due to strong employment gains across industries and regions. With the economy considered to be operating close to capacity, inflation has moved closer to the central bank’s 2% target.

1 Source: Bank of Canada’s Monetary Policy Report, January 2018

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Performance Highlights BlueShore Financial’s Assets Under Administration, including Wealth Management assets, surpassed $5 billion in 2017, adding $644 million (an increase of 14.2%) to end the year at $5.2 billion (2016, $4.5 billion). Balance Sheet Assets increased by $486 million to $4.0 billion (2016, $3.5 billion). Total Loans grew $403 million (an increase of 13.2%) and Total Deposits rose by $412 million (an increase of 13.4%).

Net Interest Margin exceeded the prior year’s performance by another impressive year of double-digit loan growth. The housing market in Metro Vancouver rebounded from the softening effects of the August 2016 foreign buyers’ tax initiative, especially in condos and townhouses, in the second quarter of 2017. As a result, loan growth was strongest in the second and third quarters. Although BlueShore Financial slowed the pace of growth in the fourth quarter, demand for residential loans continued with multi-family housing unit sales volume picking up ahead of the new uninsured mortgage stress test rules, applying to federally regulated financial institutions from January 2018 onwards. Non-Interest Income also exceeded the previous year, with industry leading Wealth Management results benefiting from double-digit growth and a $5.3 million one-time gain on sale of the Marine Drive branch property.

Non-Interest Expenses were well managed but exceeded the prior year, mainly due to higher allowances for loan losses, regulatory costs in line with deposit growth, and budgeted additional staff to advance strategy and support client services.

Net Operating Income (NOI) was $23.8 million2 (2016, $12.6 million), making 2017 our highest grossing profitable year. Return on Retained Earnings (RORE) was 15.6% (2016, 9.1%) and Return on Average Assets (ROAA) was 62 bps (2016, 37 bps).

2018 Outlook The combination of fiscal spending, lower taxes and higher wages should push the U.S. economy forward in 2018. A gradual but consistent raising of the federal funds rate is predicted in anticipation of building wage and price pressures. If tax reform boosts the economy more than expected, further hikes may occur. For Canada, potential new trade agreements with the U.S. and the threat of tariff protection on Canadian exports introduce significant uncertainty for the Canadian economic outlook. In the absence of major disruptions, a modest level of growth is anticipated for 2018.

BlueShore Financial has set its 2018 targets to recognize the changes continuing to unfold in the year ahead. Rising interest rates and more stringent lending rules are expected to cool consumer spending as well as housing market and home building activity. The slower real estate market is expected to dampen demand for loans to some degree, but the Credit Union is nevertheless budgeting for steady growth in both loans and deposits. Our Wealth Management and Insurance contributions are also targeted to grow steadily in 2018 and a new Financial Spa® is planned for the Kerrisdale neighbourhood of Vancouver in 2018. Our strong balance sheet reflects very healthy liquidity, a solid capital base, and outstanding asset quality.

Lines of Business Performance

Core Banking 2017 was another strong year both financially and for client results. Deposits and residential loan growth exceeded aggressive growth targets. Results from our external 2017 Client Experience and Benchmark research demonstrated that BlueShore Financial continues to outperform the competition in key areas. BlueShore is committed to providing an exceptional banking experience with customized solutions and personal, proactive service – all served up in a boutique Financial Spa® experience.

2 Includes $5.3 million related to the gain on the sale of Marine Drive property in March 2017

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BlueShore Leasing The BlueShore Leasing division provides lease financing to businesses in BC and, on a select basis, Alberta and Ontario. The division primarily leases equipment for clients in manufacturing, construction, transportation, warehousing, and related industries. The portfolio is divided between transportation and construction equipment financed under BlueShore Transport Finance Ltd. and all other equipment types financed through BlueShore Leasing Ltd. BlueShore Strata Ltd. also provides strata loans to post construction strata facilities for common property upgrades. The division strives to maintain a diverse portfolio, broadly based over multiple industries and equipment types. This helps diversify risk due to cyclical downturns in industry sectors. At the end of 2017, the total portfolio investment balance was $81 million (2016, $77 million).

Wealth Management The Wealth Management business grew considerably in 2017 with overall asset growth of 16.4% (2016, 15.9%). Assets Under Administration at the end of 2017 exceeded $915 million (2016, $786 million). This growth included net sales of $75 million (2016, $65 million), generated by client asset consolidation and new accounts. The insurance business line continues to grow at a steady pace with a well-developed pipeline and exceptional fourth quarter results.

Business Group The Business Group serves and provides expert advice to entrepreneurs, incorporated businesses, partnerships, clubs and associations, and self-employed individuals. Products include demand and term deposits, operating loans, commercial mortgages, insurance, cash, and wealth management.

Real Estate Lending Group (Commercial) The BlueShore Financial Real Estate Lending Group comprises an experienced group of individuals who source, underwrite, fund and administer commercial mortgages primarily in the Lower Mainland. The group has underwritten over $1.7 billion in new loans over the past five years. Commercial mortgage financing includes income producing properties such as retail, office, and industrial. The Group also manages a construction portfolio, which finances single-family homes, townhomes, apartment buildings, and multi-family properties. At the end of 2017, the total portfolio investment balance grew by 12.6% over the year to $1.1 billion.

Risk Management

Risk Framework An enterprise wide risk management framework is in place and is regularly reviewed by management through its Management Risk Committee (MRC). The MRC oversees all aspects of risk at BlueShore Financial. At the core of the enterprise-wide risk management framework is the Risk Appetite Framework. This document sets the organization’s willingness to accept certain types of risk. The Board reviews the Risk Appetite Framework annually, and has identified the Credit Union’s exposure to a number of key risks. The MRC ensures that each risk is properly analyzed, with accompanying mitigating controls attached to ensure all risks are managed to the appropriate level as defined in the Risk Appetite Framework. In certain areas of risk, especially where specialist knowledge is required, management will relay information on risks to a Board committee to ensure proper governance. For example, the Investment and Loan Committee is responsible for risks such as liquidity, credit and capital. A prudent risk management framework is critical to ensuring BlueShore Financial’s long-term sustainability. At BlueShore Financial, we have a set of tools to help us manage risk, with both the Board and Management playing key roles to ensure we get it right.

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Board Oversight The Credit Union’s Board of Directors has overall responsibility for the oversight of the Credit Union’s risk management framework. The Board has established committees to oversee and manage the Credit Union’s risks.

Management Responsibility Management’s responsibility is to identify and analyze the risks faced by the Credit Union and to monitor adherence to established risk limits. Risk management policies and controls are reviewed regularly to reflect changes in market conditions, product and service offerings, portfolio performance and economic trends.

Compensation Discussion and Analysis

Board of Directors Compensation

Director Background

Allan Achtemichuk Position Chair Background Allan is a Chartered Professional Accountant and spent 20

years working with KPMG Consulting helping clients in a wide variety of businesses and industries to improve business practices and enhance performance. In addition, Allan has solid experience in the financial, investor relations and information technology areas in the private and public sector, and clearly understands the distinct roles of board and management with respect to governance and operations. Allan resides in North Vancouver.

Tenure April 2010 - Present Current Term 2016-2019

Committees Investment & Loan

Peter Leitch Position Vice-Chair Background Peter is the President of North Shore Studios and Mammoth

Studios and Chair of the Motion Picture Production Industry Association of BC. He holds a Bachelor of Commerce degree from UBC and is a Chartered Professional Accountant. Peter is a former Chair of the North Vancouver Chamber of Commerce and a former director of the BC Chamber of Commerce. He has also served on Canada Revenue Agency's Small Business Advisory Committee and Film Advisory Committee. Peter has been honoured with a fellowship by the Institute of Chartered Professional Accountants of BC and an honorary doctorate degree from Capilano University. Peter resides in North Vancouver.

Tenure January 2011 - Present Current Term 2015-2018

Committees Audit (Chair) Human Resources & Compensation

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Brian Atkins Position Director Background Brian is a Chartered Professional Accountant and a retired

partner with KPMG Chartered Accountants. While an active partner with KPMG, he was responsible for their Greater Vancouver Financial Services practice. For over 20 years, he provided audit, accounting and advisory services primarily to credit unions and other financial institutions including banks, investment dealers and investment fund managers. Since retiring from KPMG, Brian continues to be active in the business community and currently is a member on two boards of directors in addition to BlueShore. Brian is a resident of the North Shore.

Tenure April 2008 – April 2017 Committees Audit

Investment & Loan Committee Nominations & Election (Chair 2016/17)

Dave Davenport Position Director Background Dave Davenport has been a Director since 2008 and served as

Chair of the Board from 2011 to 2017. For the last 25 years, Dave has built successful retail businesses in the Sea to Sky corridor as both a senior manager and owner. He has an MBA and BA in Economics. Dave presently serves as Chair of the Whistler Legacy Society. His past board experience includes Chair of the Whistler Chamber of Commerce and Vice Chair of Tourism Whistler. Dave has been a member of BlueShore Financial since 1987 and resides in Whistler.

Tenure April 2008 – Present Current Term 2015-2018 Committees Human Resources & Compensation

Governance & Conduct Review Investment & Loan

Rod Dewar Position Director Background Rod has extensive corporate governance experience. During

his career, Rod has held CEO, COO, and Senior Vice-President positions in the transportation and financial services sectors; including most recently, six years as the CEO of a $1.3 billion credit union. He has extensive experience in operations, as well as compensation structures, marketing, technology development and deployment, and strategy. He currently serves on a number of boards including Northwest & Ethical Investments, Victoria Airport Authority and BC Life & Casualty Company as Vice-Chair. He is also past chair of Credential Financial Inc. Rod has been active in his community as Chair of the Victoria Hospitals Foundation, a member of the Royal Rhodes University School of Leadership Studies Advisory Council and as a fundraiser for the Canadian Cancer Society. Rod was born and raised in North Vancouver and currently resides in Victoria.

Tenure April 2017 – Present Current Term 2017-2020 Committees Audit

Investment & Loan

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Yuri Fulmer Position Director Background Yuri is the Chairman of Fulmer Capital Partners, a private

equity and venture capital firm focused on small and mid-cap investing. Companies in the diverse portfolio have, on numerous occasions, been named to the Profit 500 Fastest Growing Companies in Canada. Active in the community, he is Chair of United Way Centraide Canada, a director of the BC Achievement Foundation, the BC Ferry Authority and the Vancouver Fireworks Festival Society. Yuri was a recipient of the BC Community Achievement Award in 2010, the Spirit of Vancouver Award in 2011 and the Queen's Diamond Jubilee Medal in 2012. Citing his “dynamic entrepreneurship and committed volunteerism”, he was awarded the Order of British Columbia in 2010, the Province’s highest honour. Yuri resides in West Vancouver.

Tenure April 2011 - Present Current Term 2017-2020

Committees Human Resources & Compensation (Chair) Nominations & Election

Gordon Janzen Position Director Background Gordon has a proven track record of creating and leading digital

transformation initiatives and driving rapid business growth. He is currently the Director, Digital Marketing and eCommerce at Western Union Business Solutions as well as Co-founder and a director of Elastic Path Software. As President and Chief Operating Officer of Elastic Path for nearly a decade, he oversaw all operations, helped lead debt and equity financings, and was involved in growing the firm into a major player in digital ecommerce. Gordon was also a Co-founder and President of Apparent Networks (now AppNeta), and has served on the boards of Easter Seals and other non-profit firms. Gordon holds a Bachelor of Commerce degree from the University of British Columbia. Gordon resides in North Vancouver

Tenure April 2017 – Present Current Term 2017-2020 Committees Governance & Conduct Review

Human Resources & Compensation Julie McGill Position Director Background Julie is a Chartered Professional Accountant and a Chartered

Business Evaluator. She is currently Managing Partner with Fulmer Capital Partners, a private equity and venture capital firm focused on small and mid-cap investing. Previously, Julie was a Director with CAI Capital Management Co., and was also a Vice-President at Ernst & Young LLP in Vancouver. Through her work advising and investing in various companies she has developed a broad spectrum of financial, operational, governance and mergers & acquisition skills. She is Chair of Central City Foundation and a Director of the Schmeelk Foundation. She holds a Bachelor of Commerce degree from

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McGill University and is a member of the BC Association of Women in Finance. Julie resides in Vancouver.

Tenure April 2016 - Present Current Term 2016-2019

Committees Audit Investment & Loan (Chair)

Justin Webb Position Director Background Justin's senior leadership experience in large organizations

includes knowledge of structure, compensation, motivation and recruitment. He has a deep understanding of technology opportunities and specific applications, and has spent the last 15 years applying technology to business solutions, both for customers and for internal business processes. He is currently Vice-President, BC Operations for ISM Canada and resides in North Vancouver.

Tenure April 2006 – April 2018 Committees Audit

Nominations & Election (Chair) Victoria Withers Position Director Background With her extensive business background, Victoria brings years

of board governance experience to BlueShore Financial. A senior executive at IBM Canada for over 30 years, Victoria held the position of General Manager, Western Canada and upon retirement formed VLW Solutions. At VLW Solutions, she provides consulting services to assist organizations in the development and implementation of technology solutions. Victoria holds a Bachelor of Commerce from McGill University. Victoria resides in West Vancouver.

Tenure January 2013 - Present Current Term 2016-2019 Committees Governance & Conduct Review (Chair)

Nominations & Election

Director Remuneration Philosophy BlueShore Financial recognizes that corporate governance is a key ingredient to our organization’s success. Therefore, there is a need to attract and retain the best possible directors and remunerate them commensurate with their responsibilities, accountabilities and expectations. Accordingly, BlueShore Financial’s director remuneration will:

� Be set at such a level to be able to attract and retain the kind of experience and expertise that our owners (members) and regulators expect for a financial institution operating in a complex and challenging environment.

� Recognize the workload and exposure to financial, reputational and legal risks. � Recognize the different workloads associated with Committee Members, Committee Chairs, the Vice-

Chair of the Board and Chair of the Board. � Be in line with our comparator group, which includes like sized credit unions in Greater Vancouver;

publicly listed companies with revenues up to $100MM annually; and other comparable co-operative organizations.

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� Be reviewed biennially by the Governance & Conduct Review Committee of the Board to ensure it adequately compensates directors for their responsibility and accountability and undergo a third party facilitated review before materially changing. The committee may review the policy more frequently on an as needed basis.

� Be reported annually in our Annual Report. In addition, the Remuneration Philosophy, Policy and actual remuneration of each director for the preceding year will be published on our website, along with other pertinent information (e.g., director attendance).

Director Remuneration Policy Annual Honorariums Responsibility Honorarium(1) All Directors $28,500 per annumBoard Chair $23,200 per annumBoard Vice Chair $ 5,800 per annumAudit Committee Chair $ 5,800 per annumHR & Compensation Chair $ 4,225 per annumInvestment & Loan Chair $ 4,225 per annumGovernance & Conduct Review Chair $ 3,175 per annumNominations & Election Chair $ 3,175 per annumCommittee Member $ 1,850 per annum

(1) Honorariums are cumulative

Per Diem Payments Per diems are not normally paid as the honorarium is intended to compensate for all director work, including meeting preparation and attendance and the substantial interaction of the directors with management and other directors in between meetings. A Committee Chair may request approval by the Board Chair for additional compensation in the form of per diems for committee members for significant extraordinary hours that may be required over and above normal expectations of the committee based on their terms of reference. A per diem will be paid to a director for attending regulatory required courses and approved conferences. Duration Per Diem Amount Up to 3 hours $325 More than 3 hours $530

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2017 Board of Directors Attendance and Remuneration The Board of Directors meets at least once per quarter for a regular all-day Board meeting or more often as required to fulfill their responsibilities, plus directors attend a two-day Strategic Planning Session during the year. In 2017, the Board met seven times. The Board is supported by five committees of the Board that also meet at least quarterly throughout the year or more often as required to fulfill their responsibilities.

Director Board Meetings Attended

Committee Meetings Attended

Director Compensation

Paid 2017

Education Expenses

Misc. Expenses

Achtemichuk, Allan Board Chair Investment & Loan

7 of 7 7 of 7 $53,190.46 $2,804.69 $285.20

Atkins, Brian (Jan. – April 2017) Audit Investment & Loan Nominations & Election (Chair)

2 of 2 3 of 3 $11,444.42 0 176.18

Davenport, Dave Governance & Conduct Review HR & Compensation Investment & Loan

7 of 7 9 of 11 $40,752.77 0 $264.72

Dewar, Rod Audit Investment & Loan

4 of 7 5 of 7 $22,544.94 $670.00 $3,090.60

Fulmer, Yuri HR & Compensation (Chair) Nominations & Election

6 of 7 10 of 11 $36,620.14 0 0

Janzen, Gordon HR & Compensation Governance & Conduct Review

5 of 5 6 of 6 $23,074.94 $1,244.80 $61.00

Leitch, Peter Board Vice-Chair Audit (Chair) HR & Compensation

7 of 7 10 of 10 $44,229.46 $2,082.39 $92.46

McGill, Julie Audit Investment & Loan (Chair)

7 of 7 9 of 9 $37,463.17 $2,305.00 0

Webb, Justin Audit Nominations & Election (Chair)

6 of 7 11 of 12 $34,629.62 0 0

Withers, Victoria Governance & Conduct Review (Chair) Nominations & Election

7 of 7 10 of 10 $38,266.03 $1,269.75 $305.30

Director Compensation includes per diems and technology allowance. Education Expenses include conference attendance and associated costs. Director Miscellaneous Expenses include parking, lunch/coffee meetings, mileage and travel and accommodation expenses for Directors residing outside of BlueShore Financial’s trading area.

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Executive Compensation Executive Background Chris Catliff, President and CEO Chris’ hands-on style and action-oriented vision are the driving forces behind BlueShore Financial’s growth and success. A veteran of the financial services industry, he has devoted his career to building better credit unions through customer relationship technology and knowledge management. Since joining BlueShore Financial as CEO in 2000, he has led a successful rebranding, technological innovation and strong organic growth, including a quintupling of Assets Under Administration. Chris has broad experience in leading and developing financial institutions through an emphasis on market niches, innovative service, engaged employees, and premium client experience. Previously, Chris held executive positions at Vancity and Citizens Bank where his responsibilities included corporate affairs, credit, treasury, technology, branches and strategy. He has served on over 30 boards including Credential Financial Inc., the CUMIS Group, Canadian Northern Shield Insurance, Pacifica Mortgage Investment Corp. and the Filene Research Council. He holds a Master’s degree from UBC, the ICD.D designation from the Institute of Corporate Directors and Director qualifications from the Canadian Securities Institute. Richard Butterworth, Chief Financial Officer (CFO) Richard joined BlueShore Financial as CFO in 2017, and is responsible for leading the organization’s finance, treasury, and group businesses (Commercial Lending, Credit, Broker Services, BlueShore Capital Corp. and Leasing). He has over 25 years of business experience in finance and shared services, operations, sales and client management across a number of industry sectors, including financial services, residential real estate services, travel management services, and professional services (audit). Prior to joining BlueShore, Richard was the COO Canada and EVP North America at Hogg Robinson Group, the EVP Canadian Operations at Brookfield Global Relocation Services, and most recently CEO and Ultimate Designated Person (UDP) at Wolverton Securities. Richard grew up in the U.K., and became a member of the Institute of Chartered Accountants in England and Wales, and holds a B.A. Honours in Accounting and Finance from Liverpool John Moores University. Additionally, he has successfully completed the Partners, Directors and Senior Officers (PDO) course with the Canadian Securities Institute. Fred Cook, Chief Information Officer With more than 20 years of senior management experience, Fred provides strategic direction to the Information Technology Solutions, Corporate Business Solutions, and Facilities departments. He leads the planning, design and implementation of technology solutions and standards, helping to position BlueShore Financial as a credible innovator in the financial services marketplace. Fred also oversees the development and evolution of BlueShore Financial’s innovative Financial Spa branch design concept. The integration of technology, administrative processes and facility design concepts ensures BlueShore Financial’s signature client experience. Fred currently serves on the Central 1 Technology Committee and leads the Temenos-Microsoft Global Peer Group. Fred is a past Director and Board Chair of FICANEX (The Exchange ATM Network) and is currently serving on the FICANEX Technology Advisory Committee. He previously served on the HP Canada Executive Advisory Board. Fred has also been a blog contributor for Bank Systems and Technology and served on their Readers Advisory Board. Fred and BlueShore’s Technology Department have been recognized for their innovative work in a number of enterprise business software applications areas.

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Marni Johnson, Senior Vice President, HR and Corporate Affairs With experience in several industries and over 25 years in financial services, Marni provides overall leadership and strategic direction in the areas of human resources and corporate affairs. She is responsible for ensuring a highly competent, engaged and productive workforce, and for creating corporate and internal communication strategies to maximize employee commitment and achieve corporate goals. She also oversees BlueShore’s processes and framework for governance, strategic planning, legislative affairs, and corporate social responsibility. Marni is currently a Trustee of the BC Credit Union Employees' Pension and Benefits plans and serves on the boards of the Chartered Professionals in Human Resources of British Columbia and Yukon (CPHR BC and YK), and Chor Leoni Men's Choir. Marni holds an MBA from the Schulich School of Business (York University), a Bachelor of Science (Mathematics and Economics) from the University of Toronto and the designation of Chartered Professional in Human Resources. William (Bill) Keen, Chief Financial Officer (CFO) (Retired June 2017) Bill is responsible for leading BlueShore Financial's finance, treasury and administration operations as well as group businesses (Commercial Lending, Credit, Broker Services, BlueShore Capital Corp. and Leasing). Prior to joining BlueShore Financial, Bill was the Executive Vice President and Chief Operating Officer at Northstar Trade Finance. He has also worked as a Corporate Finance Partner at Goepel Shields & Partners Inc (Investment Bank), as CFO and Senior Vice President, Finance at Surrey Metro Savings Credit Union (Coast Capital Savings' predecessor) and in a number of senior management positions in a large multinational mining and industrial group in South Africa. Bill obtained his FCA from the Institute of Chartered Accountants in England and Wales, his MBA from the University of The Witwatersrand in South Africa and his Canadian Securities Course with Honours from the Canadian Securities Institute. He also holds the designation ICD.D from the Institute of Corporate Directors and was named BC CFO of the Year in 2012 by Business in Vancouver. Bill serves on a number of corporate and not-for-profit boards. Reg Marrinier, Senior Vice President, Retail and Business Banking Reg oversees BlueShore Financial's branches, Solution Centre operations, Marketing, Business Group and Wealth Management. He provides leadership, coaching and mentoring to help his team achieve both business and personal development goals. His over 20 years of experience in the financial industry has been instrumental in developing BlueShore Financial’s retail banking and investment growth, as the organization works to proactively meet clients' needs. Reg is active in various not-for-profit organizations including the Futurpreneur Mentoring Program, BC Children's Hospital and the Royal Canadian Marine Search and Rescue. Doug Smith, Senior Vice President, Governance (Retired December 2017) Doug has been in the banking business for 30 years. He joined BlueShore Financial in 1992 and has over that time led all of our lines of businesses including branches, commercial division, insurance subsidiary, wealth management services and many head office departments. As Senior Vice President, Governance, Doug acts as BlueShore Financial's chief governance officer, oversees the Credit Union’s enterprise wide risk management processes and leads our processes to ensure we execute on our strategy. He also oversees legal affairs, BlueShore Financial's real estate portfolio and is the executive sponsor of the organization's corporate social responsibility initiatives. Doug sits on a number of BlueShore Financial's subsidiary company boards. He has also served the boards of the Canadian Cancer Society, Multiple Sclerosis Society and Business Advisory Board of Capilano University. He is a past chair of the North Vancouver Chamber of Commerce, past chair of the BC Chamber of Commerce, served on the board of the Canadian Chamber of Commerce and was deeply involved in the Vancouver 2010 Olympics. Doug has a B.A. (Economics), is a graduate of the School of Banking at the University of Colorado, a graduate of the Institute of Corporate Directors from the University of Toronto and Simon Fraser University, and has been awarded the Queen Elizabeth II Diamond Jubilee medal for his many contributions to the community over the years.

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Executive Compensation Governance BlueShore Financial’s executive compensation is overseen by the Human Resource and Compensation Committee (HRCC) of the Board of Directors. The HRCC makes recommendations to the Board about:

• The CEO’s total compensation philosophy • Total compensation for the CEO • Structure and plan design for key elements on compensation • Total compensation for the CEO based on performance

The HRCC also reviews, and approves as appropriate, the CEO’s recommended structure and plan design for material elements of compensation for the other executives. The Human Resource and Compensation Committee retains independent compensation expertise to provide advice on the elements, structure and amount of executive compensation.

Executive Compensation Philosophy BlueShore Financial’s compensation strategy is linked to business strategy. It rewards the behaviours and performance that will make BlueShore Financial successful. A focus on objectivity and transparency ensures our compensation programs are aligned with outcomes. BlueShore Financial provides total compensation that:

• Attracts and retains top executive talent • Rewards the achievement of short- and long-term results that support BlueShore Financial’s strategy • Encourages an appropriate level of risk

Industry Positioning and Comparator Groups BlueShore Financial considers competitiveness in the context of “total compensation”, which includes all material elements of base salary, incentives and benefits (including insured benefits, vacation, perquisites and retirement savings programs). The executive compensation comparator group is drawn from the Canadian financial sector. The composition of the comparator group is based on selected financial services organizations that together represent a marketplace where BlueShore Financial would potentially compete for executive talent. These organizations are primarily credit unions and banks, with relevant adjustments for size of the organization and scope of the respective executive roles. The comparator group excludes the following sub-sectors because BlueShore Financial is unlikely to compete there for executive talent: real estate; independent wealth management firms; insurance companies; financial services associations; and regulators. BlueShore Financial targets total executive compensation at the dollar value of total compensation at P50 (median of the market) compared to the above comparator groups, recognizing when reviewing the two comparator groups that there are differences in compensation practices and structures between credit unions and the publicly-traded financial services organizations, and BlueShore’s specific position relative to each group will vary.

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Chief Executive Officer Performance and Pay Review Pay-for-performance is a key element of BlueShore Financial’s executive compensation philosophy. In addition to base salary, the CEO’s compensation program includes cash incentive programs that tie pay to performance on both short- and long-term goals. Consistent with the strategy, BlueShore Financial has adopted increased weight on at-risk pay vs. base pay. The Board reserves the right to apply informed judgment to reduce or increase the amount of the CEO’s incentive payouts.

Components of CEO Compensation Base Salary The CEO’s base salary was $399,037 for 2017. Short-Term Incentive Program The CEO participates in a Short-Term Incentive (STI) program that rewards performance against pre- defined objectives. This is the same program that most other employees participate in – our Performance Rewards Program. Payments under the STI plan are contingent on achieving a threshold level of performance. Target payout (for achieving all objectives set by the Board) is 45% of base salary; and maximum payout (for exceeding all objectives to the performance levels set by the Board) is 90% of base salary. For 2017 performance, the CEO’s STI is $331,082, which represents 83% of base salary. Long-Term Incentive Program The CEO participates in a Long-Term Incentive (LTI) program intended to align his interests with the long-term strategy of the organization. LTI payouts are made every year as part of a rolling three-year plan. Each year, specific measures and targets are established for each of the next three years. These are tracked annually, with payments under the LTI plan contingent on achieving a threshold level of performance. Target payout per year (for achieving all objectives set by the Board) is 55% of base salary, and maximum payout (for exceeding all objectives set by the Board) is 110% of base salary. The payout each year is for one year, based on the average performance of the previous three years. For performance in 2015, 2016 and 2017, the CEO’s LTI payout is $348,811, which represents 87% of base salary. Benefits and Perquisites The CEO participates in the same benefits plan as all other employees. BlueShore Financial offers a flexible benefits program where employees choose the level of coverage that meets their needs. Coverage includes provincial medical, extended health, dental, accident insurance, life insurance, and employee and family assistance. The CEO participates in the same short-term disability insurance as other employees. This plan is employee funded. The CEO has a long-term disability insurance plan that is employer funded. Any benefits received if the CEO should become disabled are taxable. The CEO has critical illness insurance coverage that is employer funded. The CEO participates in an annual preventive health assessment. This is both a benefit to him and a risk-management strategy for the organization. The CEO receives perquisites such as a car allowance, car insurance and club/fitness membership dues. These perquisites are approximately $25,000 total, which is approximately 6.3% of his base salary.

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Retirement Income Programs The CEO participates in a Defined Contribution Supplemental Executive Retirement Program (SERP). He receives 12.5% of his prior year earnings (base salary plus STI) contributed to his pension each year. The amount of SERP contribution earned for 2017 was $91,410. The CEO also has a Defined Benefit Individual Pension Program (IPP) to allow him to receive retirement income in a tax efficient manner. The CEO is personally responsible for funding the contributions related to his past service; the contribution for current service is effected through a transfer of funds from the CEO’s SERP. Termination Benefits The CEO’s employment contract stipulates that if his employment is terminated for cause, no notice, salary, bonuses or benefits are owed to him. If his employment is terminated without cause, there is a 24-month severance package (including salary, bonus and benefits) owed to him. Summary Compensation Table – CEO The following table presents target total cash compensation for BlueShore Financial’s CEO for 2017 at target levels of performance.

Target Compensation for performance at target

Year Salary Short-Term Incentive

Long-Term Incentive

Total Cash Compensation

Chief Executive Officer

2017 $399,037 $179,567 $219,470 $798,074

The following table presents actual total cash compensation for BlueShore Financial’s CEO for actual 2017 performance. Short-Term Incentive and Long-Term Incentive payouts are above target, because the CEO exceeded objectives set by the Board.

Actual Compensation based on actual performance

Year Salary Short- Term Incentive

Long- Term Incentive

Total Cash Compensation

Chief Executive Officer 2017 $399,037 $331,082 $348,811 $1,078,930

CEO Performance in 2017 Mr. Catliff has consistently exceeded very challenging objectives and proven himself an exceptional leader. He was recognized as a 2017 BC CEO Award winner by Business in Vancouver/MacKay CEO Forums. He was selected for the award based on his significant contributions to BlueShore Financial's vision and strategy, financial performance, people development, innovation, and social responsibility. In 2017, he led a team that achieved excellent results, including a 15.6% Return on Retained Earnings and industry-leading organic growth of 14.2% in Assets under Administration, to $5.2 billion, with a compound annual growth rate of 12.9% over the past five years. The Credit Union grew its loans by $403 million, or 13.2% while maintaining high loan quality and achieving a delinquency rate near zero. It also experienced market-leading wealth management performance in investment products and insurance revenues. In 2017, BlueShore was #64 on Business In Vancouver’s top 100 list of most profitable companies in BC. Mr. Catliff’s strong leadership is also reflected in a nationally recognized, award-winning corporate culture. Employee

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engagement remained at the all-time high achieved in 2016 and the organization was named a Best Small and Medium Employer in Canada for the seventh consecutive year (one of only two organizations to achieve this honour). Mr. Catliff has led the growing awareness of BlueShore Financial’s distinctive and premium brand and he and the organization were profiled in numerous local and national print, online and broadcast media. Client ratings of BlueShore Financial’s service continue to dramatically outpace the offerings of competitive financial institutions, evidence that the Credit Union’s differentiated strategy is succeeding.

Other Compensation Policies and Practices The Board approves ranges for base salaries and bonuses for executives, and the CEO has the discretion to set base salaries and bonus targets within those ranges. The CEO must seek the Board’s approval for compensation outside of the range. On an annual basis, the CEO proposes executive compensation adjustments to the Human Resources and Compensation Committee for approval, with rationale based on performance and market data. The compensation, benefits and perquisite packages received by executives are consistent in form with that of the CEO, although the specific amounts differ. Salaries, STI targets and LTI targets are set based on the median of the market for total compensation (base, incentives and benefits) within the comparator group. STI or LTI payments are based on achievement of pre-established performance targets. Any STI or LTI payments are contingent on Board approval. In addition to the compensation philosophy for executive roles, BlueShore Financial has an employee compensation philosophy. Job rate (base salary for a fully competent performer) and Performance Rewards Program target incentives are set based on the median of the market. Our comparator group includes financial services for roles that are specific to that industry and the general market in BC for other roles that are non-industry specific. A key tenet is that BlueShore Financial believes in providing wages that are not only market-competitive but also ensure a reasonable standard of living for all employees. Two different compensation surveys are used to evaluate the competitiveness of salary ranges against the BC market. As with executives, we target the median of the market for base salary ranges, with differences by individual based on performance and tenure. All employees participate in the corporate Performance Rewards Program, except those with individually- based/commission incentive plans. Payouts are annual, based on performance against predefined corporate, team and individual goals. Target payout percentages are set to the median of the market. Payouts vary based on performance against corporate, team and individual results. Corporate targets are the same for all employees including executives, and are set and approved by the Board. Employees also receive a competitive benefits package that includes provincial medical, extended health insurance, dental insurance, employee and family assistance, life insurance, accidental death and dismemberment insurance, tuition and educational assistance. Short-term and long-term disability insurances are employee funded. BlueShore Financial provides a Defined Benefit (DB) pension plan to employees through the BC Credit Union Employees’ Defined Benefit Pension Plan (a multi-employer plan). The notes to the Annual Financial Statements describe the health and funding level of the pension plan. New employees who are eligible to join the pension plan may choose the DB plan or a Defined Contribution (DC) plan where the organization contributes 4% of the employee’s earnings to the plan and will match employee contributions on a 50% matching basis up to an additional 2%.