A Year ofXtraordinaryMoments

2018 ANNUAL REPORT

INSURED BY NCUA

2

2018 ANNUAL REPORT

A MESSAGE FROM THE BOARD CHAIR I am very pleased to report that 2018 was another good year for Xceed Financial Credit Union. We maintained our fve-star “superior” rating from Bauer Financial, which is the highest grade awarded by this independent evaluator of fnancial institutions. We continued to improve our fnancial foundation by producing $1.8 million of net income, which increased our net worth ratio to 10.5%. That is an improvement of .5% over 2017, and keeps us solidly in the category of well-capitalized credit unions.

With this strong fnancial base, members can be confdent investing their savings with Xceed or looking to us for loans to buy or refnance a home, get into a new car, or fnance all kinds of major purchases.

In 2018, we also took a hard look at the Credit Union’s physical footprint as part of our ongoing commitment to ensure Xceed stays responsive to member needs and preferences. What we found is that over time, several of our once-vibrant Financial Centers had seen dramatic drops in transaction volume. Meanwhile,

usage of Xceed Online, the Xceed Mobile app, and the Xceed Xperience Center video banking have skyrocketed. In response to this changing member behavior, we closed several brick and mortar facilities and redirected resources toward digital channels to better serve our members nationwide. At the same time, member satisfaction continues to rise as we reached a new high of 94.2% of members reporting they are either satisfed or very satisfed with Xceed!

In 2019, you can expect to see even more improvements to our digital banking options and fnancial products and services. As Xceed continues to grow and evolve, we will continue to be focused on the best interests of our member-owners. On behalf of your volunteer Board of Directors, thank you for the confdence you have placed in us to represent you and guide your Credit Union.

JOHN BUTTRILL Board Chair

3

2018 ANNUAL REPORT

A MESSAGE FROM THE PRESIDENT & CHIEF EXECUTIVE

Xtraordinary Moments is more than the theme for this year’s annual report. It was, in fact, the theme for all of 2018 as we celebrated countless member success stories that were facilitated by Xceed Financial. You, our loyal members, inspire us every day to do our best to help you realize your dreams, and I hope the member testimonials we’ve shared this year inspired you to set and reach new fnancial goals of your own.

Throughout 2018, we examined and re-evaluated our product lineup and made some major improvements to help your money work harder and go further. We took advantage of rising interest rates to offer attractive new dividend rates on share certifcates and Money Market accounts so you can reach your savings goals faster.

2018 was also the right time to rethink our checking account offerings. I’m absolutely convinced that we never go wrong listening to members, and we incorporated your feedback into an all-new checking account lineup that now includes the perfect account for every member. Our premium Signature Checking account offers loads of high-value perks, plus increased dividends on balances, while our Simplicity Checking account is perfect for those who just want the basics, with no monthly account fee

and plenty of convenience. And, our retooled Access Checking account is now the ideal option for both youth members and those looking to rebuild their fnancial record.

We also listened carefully to your feedback about how you want to bank with us, launching an all-new website that makes it easier to learn about our products and choose what’s best for your fnancial situation. We also rolled out all-new platforms for Xceed Online banking and the Xceed Mobile app that feature lots of new functionality — there were some glitches up front, but member input helped us make key tweaks and changes to ensure you now have a digital banking experience that is second to none!

Xceed Financial is your credit union, and we never forget that, so thank you for your membership and for giving us the opportunity to serve you. This annual report shares just a few of 2018’s highlights, and I hope you’ll reach out to us if there’s any way we can help to create more Xtraordinary Moments for you in 2019.

TERESA Y. FREEBORN President & Chief Executive

4

2018 ANNUAL REPORT

SUPERVISORY COMMITTEE REPORT The Supervisory Committee, a group of appointed volunteers, is primarily responsible for overseeing the overall safety and soundness of Xceed Financial, as well as the Credit Union’s adherence to operating policies and procedures. Each year, we reaffrm our commitment to ensuring that your credit union is fnancially stable and maintains the highest member service standards possible.

The Supervisory Committee conducts a number of on-site audits of Financial Centers and other Credit Union areas. Additionally, we review member account records to verify their accuracy and oversee the audit performed by our independent auditing frm, Crowe LLP, Certifed Public Accountants. As a result of these combined efforts, I am proud to report that Xceed Financial Credit Union and its assets remain fnancially sound and secure.

GRETCHEN G. VALENTINE Supervisory Committee Chair

account that’s right for every member’s situation — from students to corporate executives — with unsurpassed convenience. We listened to you, and so far, you’ve let us know you think these are some pretty extraordinary checking accounts!

Signature Checking: Our premier checking account lets you earn a competitive rate on your balances while enjoying special perks like loan discounts, no Xceed fees for all ATM withdrawals, the Xceed Platinum Visa® Debit Card with Identity Theft Protection, roadside assistance, and cash back rebates on debit card purchases.

2018 ANNUAL REPORT

CHECKING ACCOUNTS FOR EVERY MEMBER

5

The roll-out of our all-new checking account lineup was defnitely a highlight of 2018! We want to be every Xceed member’s primary fnancial institution, and we know that means we have to offer a checking

Simplicity Checking: This account is, well, simple! It’s a great choice if you just want an easy option to make purchases and manage your money, with no monthly account fee.

Access Checking: First checking account? Starting over to get your fnancial life back on track? This account provides convenient tools and features to help boost money management skills or rebuild a banking record.

Convenient Access to Your Money: Whatever checking account you choose, with Xceed you have access to top-fight digital banking options and more than 80,000 surcharge-free ATMs. That’s more ATM locations than the top 10 big banks combined!

Only the best foryour everyday banking.

SAVING UP FOR XTRAORDINARY MOMENTS

Xceed members have always been able to count on their credit union for a full range of savings options to make their money work harder, and in 2018 we pulled out the stops to give you more reasons than ever to invest your money with us.

Higher Rates on Certifcates: As the Federal Reserve let interest rates rise a bit in 2018, it gave us the fexibility we needed to make our share certifcates and IRA certifcates an even better deal for members looking for safe, guaranteed returns on their money. In addition to boosting rates on the full range of certifcate terms — from six months on up through 60 months — we offered several special promotional certifcates at market-leading rates.

More Attractive Money Market Accounts: A Money Market account is a great option if you want to earn more on your money than a regular savings or checking account, while keeping easy access to your funds when you need them. This year, we made sure these accounts stayed super-competitive by raising dividend rates not once, but twice!

Minor Savings Accounts: It’s never too soon to begin introducing children to basic principles of money management. To help get them started, Xceed offered a $50 match on a new Minor Savings account for a child under the age of 1 with an initial deposit of $50.

Better rates mean you reach

your goals faster.

2018 ANNUAL REPORT

6

7

2018 ANNUAL REPORT

FIRST HOMES TO DREAM HOMES Mortgages for every member’s needs and budget.

In keeping with our commitment to being our members’ true fnancial partner, we do a lot more than just provide fnancing to members considering a home purchase. Though interest rates crept up in 2018, they were still at historic lows and we were with our members every step of the way as they realized their dreams of homeownership.

Competitive Loans in Every Price Range: As a nationwide credit union, we know the ins and outs of homebuying in all 50 states. In 2018, we expanded our mortgage lineup with a super-competitive 15-year fxed loan for those who want to pay off their home faster, and a new jumbo loan with zero points that’s a great deal for members in high-cost areas.

In the Loop on Your Loan: In 2018, we deployed a new system that informs members about each step of their mortgage loan process by text and email, and also keeps their real estate agents in the loop — helping to smooth the process and dial down the stress of buying a home.

WISH Grants: We were thrilled to begin offering members access to the federal government’s WISH program, which offers grant money of up to $15,000 toward the purchase of a frst home. It was so well-received that we applied for and received an increase in program funds to enable even more Xceed members to beneft.

Xceed Home Search Rewards: In the spring of 2018, we enhanced our website with this fantastic resource for home buyers (and sellers), giving members free online access to a nationwide MLS to fnd homes, making it easy to locate an experienced real estate agent and receive cash back rewards!

Homebuyer Mixers: It can be intimidating to make a purchase as big as a home, so we helped members get better acquainted with the process by hosting mixers at Xceed Financial Centers where they could connect with real estate agents, home inspectors, and other professionals involved with buying a home.

“I have one regret in my search

for a lender, that I didn’t start with

Xceed. I would tell anyone looking

to finance the purchase of a home,

or to refinance their existing home(s),

to call Xceed first.”

DAVID B., member since 2015

8

2018 ANNUAL REPORT

YEP, WE’VE GOT A LOAN FOR THAT. Low rates bring more Xtraordinary Moments within reach.

Over the years, Xceed has helped countless members to realize dreams as individual as they are. Like that time, a while back, when we helped Bob B. purchase a Caproni Vizzola sailplane and he went on to set a speed record in it! Whether your own Xtraordinary Moment is a record-breaker like Bob’s or simply a wonderful memory maker, Xceed has an auto loan, credit card, or personal loan to help make it happen.

Picture the Possibilities: Throughout 2018, we looked for ways to help members get more from their Xceed membership, including encouraging them to picture the possibilities that a new car, credit card, or personal loan could bring. Taking advantage of these offers couldn’t be easier, as we issued thousands of pre-approvals — members simply clicked through to accept their emailed offers.

No-Fee Balance Transfers: We started the year by helping members who may have incurred high-cost holiday credit card debt by offering them the chance to reduce their monthly payment and pay down their debt. Members who took advantage of the offer incurred no fee when they transferred their balances to an Xceed Visa® and enjoyed a low 4.99% APR for 12 months.

Visa® Rewards: Throughout 2018, members earned extra rewards — as in 5x rewards points — when they used their Xceed Visa® Credit Card for different types of purchases. Meanwhile, our “Spend & Get” campaign encouraged members with inactive credit cards to use their Xceed Visa to earn up to $150 in bonus cash, just for using their cards!

Business Loans for Entrepreneurs: While most of our members work for or are retired from one of our employer group partners, Xceed also serves a growing number of entrepreneurs who turn to us when they need loans to grow their business or purchase an investment property. Our competitive terms, personal service, and quick turnaround made us such a popular choice that we surpassed our goal for the year, funding $31.8 million in member business loans.

Congratulations to Xceed members

Victor and Krystal N. on financing

their new Tesla Model 3 with Xceed,

and on their soon-to-be

addition to the family!

XCEED WEALTH MANAGEMENT GROUP

Not NCUA Insured No Credit Union Guarantee May Lose Value Not Obligations of the Credit Union

The Financial Consultants at Xceed Wealth Management Group are registered representatives with and securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affliates. Xceed Financial Federal Credit Union and Xceed Wealth Management Group are registered

2018 ANNUAL REPORT

In the same way that an Xceed Personal Banker has your back when it comes to managing your money day-to-day, an Xceed Wealth Management Group Financial Consultant is your fnancial advocate for the longer-term — offering help with a range of services, from insurance and investment management, to wealth planning, estate planning, and cash management.

Your Success is Our Success: Our experienced Financial Consultants take the time to understand what you want out of life — for yourself and for your family — and employ a comprehensive planning approach that takes into account the potential for unexpected events and life changes to impact your future. That collaborative approach, where your best interest comes frst, enabled Xceed Wealth Management to add more than 165 new accounts in 2018 alone!

Retirement Planning: What should I know about my pension? What are the tax implications of early 401(k) withdrawals? Members who attended one of the 2018 retirement planning seminars led by our Financial Consultants got answers to all of these questions, and more.

broker/dealers and are not affliated with LPL Financial.

Complimentary Consultations: Whether you’re a veteran investor or just starting out, our knowledgeable Financial Consultants can help with investment services tailored to your individual goals. Throughout the year, they met with members in person, over the phone, and via secure video chat — planning, consulting, and sometimes just offering a second opinion on an existing investment portfolio.

Social Media Engagement: In 2018, we brought Xceed Wealth Management Group clients even more ways to engage with us by creating new social media pages on Facebook and LinkedIn. The Facebook page, especially, offers timely fnancial tips and the latest information about upcoming fnancial education opportunities.

Planning for a lifetime of

XtraordinaryMoments.

XCEED@WORK

In today’s tight labor market, employers are challenged to recruit and retain the top talent they need to succeed and reach their goals. Offering Xceed Financial Credit Union membership to their employees gives our business partners an edge, rounding out their benefts packages with meaningful benefts that support productivity and workforce satisfaction.

Xtraordinary Banking Is Worth Sharing: In 2018, we made Xceed membership even more rewarding when we initiated an incentive program that rewards new members with a $100 bonus when they open a new membership with direct deposit. Member response was so positive that we soon took the program up a notch, including a referral component whereby existing Xceed members who referred co-workers (and others) for membership also pocketed a $100 bonus!

2018 ANNUAL REPORT

Partnering with Xerox: Xerox has been one of Xceed’s largest business partners since the Beatles were charting hits… and selling vinyl records! We share a special relationship, and we were honored to continue our support for many of the company’s diversity groups.

Heal the Bay: Xceed is a proud partner of Heal the Bay, one of Southern California’s most important environmental advocacy organizations, serving as their workplace credit union and offering Xceed membership to their other supporters. In 2018, we deepened that relationship, including hosting a special “Heal the Bay Day” at our El Segundo Financial Center.

There When You Need Us: When some of our business partners announced layoffs and made changes that impacted employees’ fnances, we reached out to members who might be affected — inviting them to meet with Xceed Wealth Management Group to review their retirement options or sit down with an Xceed Personal Banker to discuss their fnancial options.

Welcome Hillcrest Country Club: We were delighted that one of the Los Angeles area’s most prestigious clubs signed on as an Xceed employer group partner in 2018.

Employers, employees —everyone wins.

11

2018 ANNUAL REPORT

XCEED IN THE COMMUNITY Making a difference and helping communities to thrive.

Though we’re a full-service, nationwide fnancial institution, we still fully embrace the “people helping people” philosophy that makes not-for-proft credit unions so different from big banks. That means we’re always looking for ways to make a difference in our communities and support the causes that matter most to our members. Here are just a few of the ways we did that in 2018.

American Heart Association: If you live in the Rochester area, you know that Xceed has been a pillar in that community for decades. In 2018, we renewed our major sponsorship of the local American Heart Association chapter, kicking off the year’s partnership with participation in the AHA’s Heart Walk and Run. Associates and members also raised funds and wore red to raise awareness for women’s health on Go Red for Women Day in February. Altogether, our efforts brought in nearly $7,500 in donations, far surpassing our $5,000 goal!

Pirate Toy Fund: The holiday season in Rochester is so much brighter for low-income families thanks to the Pirate Toy Fund, and we were pleased to increase our involvement with this important local charity. From the fun and festive Carousel Derby fundraiser to the very popular Christie Simonetti Classic golf tournament benefting the Pirate Toy Fund, Xceed was there with toy donation bins in our

Financial Centers and associate volunteers helping at events and raising money for the cause.

Children’s Miracle Network Hospitals: Associates at all levels of Xceed are big supporters of Children’s Miracle Network Hospitals, our industry’s charity of choice. Xceed’s President and Chief Executive Teresa Freeborn serves on the Credit Unions for Kids Wine Auction Executive Committee, which raised approximately $1 million for CMN in 2018. A team of Xceed associates were also the top contributors to the Credit Union SACTOWN Run, raising more than $11,000 and surpassing our goal of $10,000.

Seneca Park Zoo: Like Xceed, the Zoo is a mainstay of the Rochester community, supported for many years by us and other area businesses. We stepped up our support in 2018 by participating in several of the Zoo’s major annual fundraisers, including the Jungle Jog 5K Run & Walk and Seneca Park Zoo Brew.

Romeo Doty Scholarships: Each year, Xceed awards $1,000 scholarships to promising high school seniors through our long-standing Romeo Doty Scholarship program and newer Chairman’s Xcellence Scholarship program. As of 2018, the Credit Union has provided a total of over $140,000 to help young members pursue higher education.

Altogether, our efforts

brought in nearly

$7,500 in donations for

the American

Heart Association,

far surpassing our

$5,000 goal!

TECHNOLOGY THAT’S SEAMLESS AND SECURE

Our tech gurus are always out there exploring the next new thing, to make sure our members have all of the best tools for accessing their Xceed accounts and managing their fnancial lives. In 2018, we really focused on making sure members have a secure and seamless experience with us, whether doing their banking in person at an Xceed Financial Center or through one of our digital options.

Xceed Online Banking and Xceed Mobile App: Rolled out in the fall of 2018, with key enhancements during the winter, the all-new Xceed Online and Xceed Mobile app offer all the tools you need to manage your accounts and pay bills, conveniently and effciently.

xfcu.org: In 2018, we also launched an all-new website with a fresh new look and feel, and improved navigation that makes it easier than ever for members to compare accounts and rates, access fnancial education tools, and contact us to open accounts.

Xceed Xperience Center: In 2018, members really warmed up to the personal touch and convenience of video banking. Through their desktop and mobile devices, members opened hundreds of accounts and applied for millions of dollars in consumer loans.

Free Wi-Fi: We know that you always want to be connected, so this year we began offering free Wi-Fi access to visitors to our El Segundo Financial Center.

Automation to Improve Service: We were also active behind the scenes to automate a host of processes. From e-sign and fllable forms for loan documents to electronic loan disclosures and automated loan approvals, these improvements are reducing costs, increasing effciency, speeding up service, and helping us to be more responsive to members.

Faster, easier, andmore convenient.

2018 ANNUAL REPORT

12

13

2018 ANNUAL REPORT

FINANCIALS 2018 Financial Statements

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION As of December 31, 2018

ASSETS Net Loans $ 753,253,008 Cash 47,431 ,346 Investments 24,264,4 1 1 Other Assets 64,977, 1 5 9

TOTAL ASSETS $ 889,925,924

LIABILITIES & EQUITY LIABILITIES Members’ Shares $ 721,255,408 Notes Payable 65,500,000 Other Liabilities 1 0 , 1 57,793

TOTAL LIABILITIES 796,9 13, 2 0 1

MEMBERS’ EQUITY 93,012,723

TOTAL LIABILITIES & EQUITY $ 889,925,924

CONSOLIDATED STATEMENT OF INCOME For the year ending December 31, 2018

INTEREST INCOME Interest on Loans $ 32,165,329 Interest on Investments 1,564,462

TOTAL INTEREST INCOME 33,729,79 1

INTEREST EXPENSE Dividends on Members’ Shares 4,062,653 Other Interest Expense 1,352,609

TOTAL INTEREST EXPENSE 5,415,262

NET INTEREST INCOME 28,314,529 PROVISION FOR LOAN LOSSES 1,163,000

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 27, 1 5 1 ,529

TOTAL NON-INTEREST INCOME 11 ,986,742

TOTAL NON-INTEREST EXPENSE 37,345,440

NET INCOME $ 1,792,831

For the independent auditor’s report and opinion, please contact us at 800.XFCU.222. INSURED BY NCUA

14

2018 ANNUAL REPORT

LEADERSHIP

BOARD OF DIRECTORS

John Buttrill Roni Crichton Dea Benson Spence Leslie Judy Novak Dennis Ruffner Gretchen Valentine

OTHER VOLUNTEERS

Mark Cunningham Don Rory Heather Smith Raleigh Steinbach

SENIOR MANAGEMENT TEAM

Teresa Freeborn Michael Sacher Fabiana Burkett Bertha Gascon Marquis Boochee Todd Helmerson Kelly Ritchey-Davoren

15

2018 ANNUAL REPORT

COMMITTEES

BOARD OF DIRECTORS FINANCE & INVESTMENT COMMITTEE

John Buttrill, Chair Roni Crichton, Vice Chair Dea Benson, Secretary Spence Leslie Judy Novak Dennis Ruffner Gretchen Valentine

EXECUTIVE COMMITTEE

John Buttrill, Chair Roni Crichton, Vice Chair Dea Benson, Secretary

SUPERVISORY COMMITTEE

Gretchen Valentine, Chair Mark Cunningham Don Rory Heather Smith Raleigh Steinbach

Spence Leslie, Chair Dea Benson Roni Crichton Judy Novak Dennis Ruffner

NOMINATING COMMITTEE

Roni Crichton, Chair Dea Benson Dennis Ruffner

OTHER VOLUNTEERS

Mark Cunningham Don Rory Heather Smith Raleigh Steinbach

16

2018 ANNUAL REPORT

BUSINESS PARTNERS

ADT Security Alorica Aramark Atkore Avis/Budget Builders Exchange of Rochester Centinela Freeman Regional Medical Center Chubb Comfort Windows & Doors Conduent Costco Wholesale Crosbie Brownlie Deerfeld Realty Desser Tire & Rubber Company Dixon Schwabl DoubleTree Hilton Hotel Federation of Catholic Teachers Friendly Home Germino & MacKay Global Imaging Systems, Inc. (GIS) Heraeus Metal Processing, Inc. Hillcrest Country Club HITCO Carbon Composites, Inc. Ingram Micro Innovative Solutions

Isaac Heating & Air Conditioning Jewish Home of Harrisburg Jewish Home of Rochester Johnson Controls Longwood Management Mallinckrodt Pharmaceuticals Medtronic (Covidien) nVent Optimax Pentair Raytec Group Realogy Securitas Silicon Valley Community Foundation St. Ann’s Community Stokes, Visca & Company Sysco Harrisburg TE Connectivity Travelodge Hotel Tyco International Unifed Physician Management U.S.P.S. Harrisburg U.S.P.S. Rochester Wyndham Worldwide Xerox

XFCU.ORG 800.XFCU.222