Does your bank connectyour community?

OneCalifornia Community Development Banking Report }2008 Year End

TM

B A N K

We connect.

OneCalifornia Bank is a dynamic combination of social philanthropy and social entrepreneurship distinguished by a corporate structure unique among federally chartered financial institutions. In this report, we take a look at this innovative structure, how it works to realize the mission as envisioned by OneCalifornia’s founders, and achievements of the first 16 months.

OneCalifornia fits naturally with a new class of enterprises that join efforts among the private, nonprofit and government sectors. These enterprises measure their worth in triple bottom lines. Known as hybrids, social enterprises, for-benefit or fourth sector,* they address what President Obama defined in his inaugural speech as a “new era of responsibility.”

A FDIC-insured Community Development BankOneCalifornia Bank, FSB, integrates its social mission with environmental and business sustainability to produce both social benefits and sustainable profits. The Bank’s mission is to improve economic opportunity for low- to moderate-income communities throughout California. Founded with an Empowering Vision The Bank began operating as a federally-chartered thrift in June 2007 with $22.5 million in patient capital provided by Tom Steyer and Kathryn Taylor, social philanthropists who believe strongly in the use of capital

and financial literacy as the “freeing and empowering agents” for change in low-wealth communities. Kat and Tom retain mission focus and control, but will take no economic benefit or repayment ever from their investment. Here’s how it works:

OneCalifornia Bank has two holding companies:

OneCalifornia BanCorp & OneCalifornia Foundation

OneCal BanCorp, a mid-tier holding com-pany, owns 100% of the common stock of the Bank. OneCal BanCorp issued two classes of stock to Tom and Kat: $1 million of Class A vot-ing shares and $21.5 million of Class B non-vot-ing economic shares with Kat Taylor owning 51% of total shares issued. The Class B stock carries dividend rights when and should OneCal Bank decide to declare a dividend. This structure still allows a vehicle for later-stage capital rounds.

OneCalifornia Foundation, a senior holding company, was created by Tom and Kat as a nonprofit 501(c)(3) entity to support the Bank in meeting its triple bottom line. This is accomplished in a variety of ways, including performing research and development on products, social outcome measures, marketing, community support, strategic alliances with community based organizations and providing credit enhancements.

Tom and Kat donated 100% of their Class B holdings to OneCalifornia Foundation. By definition, the Foundation is also a federal thrift holding company be-cause it owns more than 25% of a class of stock of a bank holding company. The Foundation maintains the rights to the economic benefits of the Bank.

Founders’ Further Gifts to the FoundationTom and Kat also donated 100% of their reim-bursement of the Bank’s pre-opening expenses, $2.4 million, for Foundation operating expenses and further Bank capital needs. In autumn of 2008, they donated approximately $26 million of their ownership interest in Farallon Capital Management. The proceeds from this gift will be used over time to fund the mission of both the Bank and the Foundation.

A Brief History & Overview of Operations The OneCal organizing team studied the socially-responsible ShoreBank and Nobel Peace Prize winner Dr. Muhammad Yunus’ Grameen Bank and examined community development banks, thrifts and credit unions. The team innovated the distinct corporate structure and developed a focused business model for the Bank. The team decided the support of local businesses and non-profits would provide a more solid basis for neigh-borhood stabilization and economic growth.

Having begun operations in Oakland in June 2007 in temporary offices, the Bank opened headquarters on Webster Street in September 2007 and the Foundation opened offices next door. OneCal is capitalizing on its unique structure with innovative projects and products.

The Bank provides commercial loan and deposit products and services delivered by experienced re-lationship-focused bankers to businesses, profes-

sional firms and nonprofit organizations. The Bank also offers robust cash management services normally found at much larger regional banks. The Bank serves unbanked and under-banked indi-viduals through strategic alliances with organiza-tions and businesses that bank at OneCal.

The Bank stresses financial literacy across its client base and works with the OneCalifornia Foundation and other community-based organizations in delivering programs to targeted audiences.

TM

B A N K

Becoming OneCalifornia: Uniquely Structured For-Benefit

On the cover: Highlights of OneCalifornia’s first 16 months at 1438 Webster Street in Oakland — September 2007 through December 2008.

BANKING ON

ONE SUCCESS

AT A TIME

Below: At OneCalifornia Bank’s opening reception in September 2007, the crowd enjoys listening to a lively rendition of “I Hope You Bank,” sung by OneCalifornia co-founder Kat Taylor.

TM

Cover, clockwise from top: 5th graders at OneCal’s March 2008 Chabot Experience; October 2007 Rebuilding Oakland Together homeowners and OneCal volunteers; OneCal staff this past September; Robert Wilkins (left), Executive Director of East Bay YMCA, and Michael Bush, President, The MattMar Group, at OneCal’s “Let’s Stay Together” celebration at Fox Theater with performances by Al Green and Michael Bush, January 2009; September 2008 opening of the Iu Mien Buddhist Temple; merchant Temra Costa (right) of Community Alliance with Family Farmers at May 2008 Oakland Indie Awards. 2

The Founders maintain

mission focus and control, but will take no economic

benefit or repayment

ever from their

investment.

* “Fourth sector” refers to a new paradigm in organizational design which blends social and environmental aims with business approaches using best practices and innovative models from three traditional sectors: business, nonprofit and government.

Realizing the Mission: Successful Joint Efforts of the Bank, Foundation & Partners

OneCal SAFE

Working with 24 community-based organizations to provide fair and transparent day-to-day banking products to the unbanked and under-banked who complete financial literacy classes with OneCalFoundation.

Acorn to Oaks Program

Working with San Antonio CDC, the Annie E. Casey Foundation and Making Connections Oakland to provide savings accounts to children in the San Antonio Head Start Program.

Oakland Indie Awards

Sponsoring & managing annual event to celebrate the social and environmental impact of

Oakland’s independent businesses and artists to focus attention on local sustainability.

Wall Street Wizards Checking/Savings

Provided free checking and savings accounts for inner-city high school students enrolled in

Wall Street Wizards, which offers students a strong fundamental understanding of the

financial markets and stock investing.

OneCal Community Connects

Bringing speakers and events to the Oakland Community. Presentations by Geoffrey Canada of Harlem Children’s

Zone were attended by 400 Bay Area community leaders.

Cestas Populares Lending Program

Partnered with Mission Asset Fund for development and roll out of first-of-kind

program to help members of an ethnic community in creating credit

histories with reporting agencies.

Chabot Space & Science Center Experience

Partnering with Chabot Space & Science Center and local businesses to sponsor a field day for inner-city students. 79 in 2008—5% of all Oakland public school 5th graders. Goal for February 2009 Experience: 150 Transportation, learning programs & lunch provided.

Oakland Unwrapped

Developing and hosting of Internet commerce site for local small business merchants & artists. 100+ partipants.

Rebuilding Together Oakland

Sponsored a residential rehabilitation in East Oakland for RTO, including materials provision and two weekends of volunteer time by OneCal staff & friends.

Staff & Board Outreach

Providing time for lectures, programs and panel discussions at community events focused on local econommic issues,

community development, how to obtain credit, etc.

Financial Literacy Training

Designed & delivered training for inner-city high school graduates attending college under the East Bay College Fund program.

“Bank on Oakland”

Working with City of Oakland on their program to open up access to bank depository accounts.

Subprime Crisis Strategies

Developed early-on strategies to address homeowners on a pre-foreclosure basis.

Mission-Related Deposits

Developed innovative uses of deposits for funding of savings and lending programs

These programs

forcommunity

&projects

with partners

were initiated

by OneCal Bank

& Foundation.

Left: Perla Cantu (center), a Mills College student and East Bay College Fund Scholar, mentors 5th graders from Oakland Public Schools on a OneCal-sponsored field trip to Chabot Space & Science Center, March 2008. Here the students testing their marshmallow and toothpick structure on an earthquake table.

Below: Experience on the Green, an event at the Oakland Museum of California, co-sponsored by OneCal in September 2008.

Oakland Unwrapped merchant Numi Tea

at Oakland Indie Awards, May 2008.

3

Alan and Ray Dones of SUDA on the rooftop solar installation of Alameda County Social Services

Headquarters at Thomas Berkeley Square. OneCal Bank financed the solar panels and installation

—the largest in downton Oakland.

Capital

The Bank operates well above the levels that banking regulators have deemed well capitalized.

Mission-related Lending

71% of our loans are to women & minority-owned businesses, nonprofit organizations and businesses located in low-wealth communities.

Establishing Banking Relationships: Financing What Works for Community

The lending and deposit gathering activites of OneCal Bank have established important banking relationships with many key organi-zations and businesses which have an impact on or provide needed services to the community.

A Brief Recap of OneCal Bank Relationships:

Financing, depository and cash management services for:

}Numerous faith-based organizations.

}Transitional housing and workforce development for formerly incarcerated men.

}A major religious-affiliated foundation which provides benefit programs for mentally-challenged individuals.

}A major institution for science education which provides programs for schools and families and inspires a shaping of the future through science.

Financing for:

}A minority-owned contractor and one of the largest commercial solar installations in the City of Oakland.

}Housing and programs for a nonprofit which provides housing and programs for individuals undergoing drug rehabilitation.

}Local, privately-owned business which is one of the largest employers of women and minorities.

}The first Iu Mien Buddhist Temple in the U.S. and the adjacent cultural center.

}One of the largest Northern California minority-owned fast food franchises.

}Affordable-housing development.

}Acquisition of a new multi-ethnic facility for a community foundation located in the San Antonio neighborhood, working with the Northern California Community Loan Fund (non-bank CDFI Lender).

}A four-year technical college.

}A women minority doctor to establish her new practice.

}A woman and minority business owner to expand her business at the Oakland Airport.

Depository services for:

}Numerous large prominent affordable-housing developers.

}A large community foundation. OneCal Bank and the community foundation are exploring other programs for joint sponsorship/development/financing.

}A private foundation that provides scholarships for East Bay public high school student from low-income families to attend college.

}Numerous community-based organizations.

}Labor-based organizations.

Building the Balance Sheet

4

OneCal Bank has steadily gained traction in building its balance sheet.

Deposits: $32.4 million

53% to Nonprofit Organizations

30% to Small Business

17% to Green Business

30%

17%

53%

51% from Businesses

28% from Nonprofits

21% from Individuals

28%

21%

51%

}Nonprofits $12,912,000

}Small business $7,308,000

}Green business $4,141,000

}Businesses $16,523,000

}Nonprofits $9,072,000

}Individuals $6,804,000

The portfolio at a glance December 31, 2008:

Loans Outstanding: $24.4 million

Financial Literacy: Innovation, Collaboration & Community

Cestas Populares, an innovative project of the Mission Asset Fund (MAF) in San Francisco and OneCal Bank, is bringing traditional informal lend-ing circles into formalized modern banking. People who have long been accountable to one another are establishing credit histories and opening up their op-portunities for lower-cost financial services. “Cestas Populares bridges two worlds—the banking world and an informal social practice based in trust,” says José Quiñonez, Executive Director of MAF.

Throughout Latin America and in immigrant communities in the U.S., lending circles may be called Cestas, Tandas or Sans. Bonded by trust, circle mem-bers participate in a cycle of lending and borrowing. At a monthly meeting around a kitchen table six people may each contribute $100. One person borrows the $600 that month and everyone eventually gets a turn at re-ceiving. Loans are repaid by the monthly contributions of each participant in the group. Groups set the contri-bution amount according to their comfort level and determine the loan order, perhaps by drawing num-bered slips of paper from a basket.

A study by Social Compact found that 44% of all families in San Francisco’s Mission District have no credit histories. In informal lending, borrowers who repay faithfully aren’t establishing credit scores, because this lending is not formally reported into the credit bureaus. By having their good credit history reported, people can avoid high-cost, predatory lending.

Now, rather than lay dollars on a kitchen table, Cestas Populares participants contribute through check-ing accounts at banks of their choice. OneCal Bank debits the accounts through ACH (Automated Clear-ing House), an electronic network for U.S. financial transactions. Loan payments are reported and cash flows to MAF. MAF makes electronic deposits to the accounts of the next borrowers.

Groups meet at homes or at MAF, which facilitates group dynamics and provides education about credit scores and other financial literacy. The MAF/OneCal part-nership enables lending circles to thrive in the best of both worlds: retaining the trust of the informal practice while gaining new access to a broader array of financial services and capital. Members choose how to use the loans— for bills, repairs, paying down high-rate credit.

“Many people feel locked out of the financial system,” Quiñonez says. “This program provides incentive for participants to open bank accounts. And it provides a way to build and improve credit history. Credit scores have morphed into something more than just to deter-mine credit worthiness. People, nowadays, need a good credit score even to get an apartment.” It may take year-long participation in Cestas Populares to real-ize anticipated results, but participants can continue to enjoy their monthly gatherings and build social capital, while gaining better understanding of the credit market. Learn more: www.MissionAssetFund.org

Because the practice of saving money doesn’t come easily for all families and needs to be learned, Acorns to Oaks starts the habit young. This inventive and unique program of OneCal Foundation, OneCal Bank, San Antonio CDC, Annie E. Casey Foundation, San Antonio Neighborhood Network and Making Connec-tions Oakland inspires parents participating with San Antonio Head Start to save for their children’s future.

OneCal Foundation will match up to $450 of the savings and provide financial literacy edu-cation. Families attend workshops about basic banking services, creating budgets, understanding credit reports and using credit. As of December 2008, 32 families have committed to saving for their children’s future through this program. OneCalifornia is proud and happy to help these families make change count for a better future.

Visit the Acorns to Oaks partners: www.sacdc.org www.aecf.org www.sannoakland.org www.onecalbank.com www.onecalfoundation.org

Oakland Unwrapped! is OneCalifornia’s Online Marketplace for local businesses and artists. It now offers more than 100 stores. Site visitors tripled from October to December 2008.

This means more easy ways for our community members to support the local economy and more traffic to the local sellers. Items on Unwrapped! Marketplace include kids toys and clothes, locally-designed clothing, books from independent sellers, housewares and decor, Fair Trade items, jewelry, fine art, chocolate, wine, coffee, tickets to a variety of cultural venues, art and dance classes and much more!

One of our new sellers is Mangosteen, a purveyor of Fair Trade imports and handmade jewelry. Mangosteen was launched by Oakland resident Gabrielle Lessard, an attorney, community development leader, jewelry designer and photographer. Gabrielle started Mangosteen to share the wonderful things she discovers when traveling, and to support communities and causes in the regions where she finds these goods. Mangosteen offers clothing, housewares, jewelry, bags and accessories, most of which pro-vides income to survivors of human trafficking, to young women in their home villages and to Tibetan Buddist Nuns living as refugees in India. Meet Gabrielle at www.mangosteenoakland.com.

Support local businesses: www.OaklandUnwrapped.org.

Helping People Build & Improve Credit Histories

Helping Families Save

Growing local, sustainable business

Above: Prospective first-time homebuyers attend a workshop at The Unity Council’s Home Ownership Center (HOC), which provides bilingual training for participants to improve their budget and credit profiles, shop for a mortgage loan and maintain their home and finances after purchase. OneCal partners with HOC by presenting information about banking services and IDAs (Individual Development Accounts), which help people save through matching grants provided by a variety of sources, including government and private sector.

Financial Literacy, through presentations at meetings, tutorials or personal and online training, is integrated into other OneCal project and programs, such as Cestas Populares, Acorns to Oaks and Oakland Unwrapped!, all profiled on this page.

Below: Gabrielle Lessard , owner of Mangosteen, takes a break on her travels where she looks for Fair Trade imports. She sells the unique products through OneCaliifornia’s Oakland Unwrapped Online Marketplace.

5

In this Community Development Banking report for Year End 2008, we look back at the last 16 months of the OneCalifornia effort and share with you some of our key highlights.

We thank all of our clients for the support they have shown by banking with us, and we thank our friends in the community for their continuing efforts to spread the word about our Bank and the efforts of the whole OneCal Family.

As we have grown our loans and deposits, we’ve provided a consistent high level of service focused on “Community Street,” making sure that it’s not lost in the current turmoil of Wall Street versus Main Street.

We greatly appreciate and count on your further support of the OneCal mission in 2009. Here are three ways to participate:

1. If you have a full banking relationship with us, please refer your friends, other business owners and professionals to us. 2. If you have a partial banking relationship with us, please consider expanding it and also tell others. 3. If you do not yet have a banking relationship with OneCal, now is the time to consider For-Benefit Banking. Please call or visit the Bank.

Together we can make OneCalifornia a successful agent for improved economic opportunities in stronger, sustainable communities.

Wishing you health, fortitude and good fortune in the coming year.

Jeffrey CheungPresident & CEO, OneCalifornia Bank JCheung@OneCalBank.com u510.550.8408

Looking Ahead to For-Benefit Banking in the New Year....

FIRST CLASS MAILU.S. POSTAGE PAIDOAKLAND, CAPERMIT NO. 332

Banking on One Success at a TimeOneCalifornia Bank, FSB1438 Webster Street, Suite 100Oakland, CA 94612

OneCalifornia Bank, FSBwww.OneCalBank.comPhone 510.550.8400

1438 Webster Street, Suite 100Oakland, CA 94612

OneCalifornia Foundation www.OneCalFoundation.org

Phone 510.663.2253 1438 Webster Street, Suite 101

Oakland, CA 94612 Salvador MenjívarExecutive Director

Bank Hours M– Th 9 am – 4 pm

F 9am – 5 pm

CDFI Certified Bank

©20

09 O

neCa

lifor

nia Ba

nk

Member FDIC EQUAL HOUSING LENDERPrint

ed on

100%

recy

cled p

aper

Your deposits fuel OneCal’s mission.

Ask us about CDARS®, the Certificate of Deposit Account Registry Service. Now you can

invest up to $50 million, be eligible for FDIC insurance on

every dollar, and enjoy working with just one bank—OneCal!

Call Norma SaavedraSenior Vice President

Depository Relationship Officer NSaavedra@OneCalBank.com

u510.550.8405

TM

COMMUNITYC O N N E C T S

Photo above: OneCalifornia leaders meeting at the Full Circle Annual Forum in November 2008 with Nobel Peace Prize winner and Grameen Bank Director Dr. Muhammad Yunus (center), (from left) OneCal Foundation Executive Director Salvador Menjívar, Founders Kat Taylor and Tom Steyer, and OneCal Bank President & CEO Jeff Cheung.