TRANSPARENCY POLICY

Beneficial State Bank is committed to being ethically transparent in all aspects of our

operation. We support a voluntary, full disclosure policy and provide ongoing open

access and communication to internal and external audiences on important

organizational information. This information includes our purpose, goals, governance

structure, and environmental impacts.

2014 Beneficial Banking

Annual Report

Benefit to All, Harm to None

Each year, we celebrate you -- our citizen bank customers -- as the original and most important

"crowdfunders." You haven't often been recognized as such but that's what you are! Banks are allowed

to recruit deposits promising FDIC protection along with the prevailing interest rate. We then take those

deposits and lend them out to borrowers. Of course, we must always have enough liquidity to return

deposits when they are needed by you, but your "idle cash" is working hard when you don't need it.

And those borrowers, at least in our case, fulfill a reciprocal role in crowd funding by creating the new

economy -- one that is fully-inclusive, racially just and environmentally sound. Bank crowd funding is

especially powerful in the economy due to the leverage it enjoys -- we are allowed to collect about $9 of

deposits for every $1 of equity we bring to this social enterprise.

We believe therefore that banks should compete for your deposits on the basis of their impact, not just

on the interest they pay. So what are we offering you, as evidenced in this Annual Beneficial Banking

Report? First, we make sure that your deposit funding is going toward loans that provide benefit to all,

harm to none. We keep at least 75% of loan dollars outstanding in the hands of transformative sectors

of the new economy. We also warrant that the remaining dollars are not lent to contra-mission

activities. While all banks produce some benefit, this "harm to none" distinguishes a small segment of

banks from all others, those of us not willing to fund ecological disaster or human misery.

Second, we recruit both seasoned values-driven banking talent as well as promising young people to

learn the crafts of underwriting, engagement, and data driven analysis. All of those skill sets are

essential to running a bank that is accountable to its "crowd" and borrowers, positively impactful

through prudent lending, and protective of the FDIC insurance fund that enables those depositors to

entrust their savings to us in the first place. Increasingly, we need also to adopt technological advances

that allow our banks to better fulfill mission.

Lastly, we mandate our banks to reveal the full measure of their activities. Through chronic

assessments like those we do for BCorp, GABV, JUST, and our annual internal GHG/landfill/water

footprint analysis, we strive for corporate practices that are assuredly sustainable and just. Of course,

we can always improve but we target better results each round and "better is good." Data collection

also allows us to internalize the objectives of our communities and stakeholders and drive toward

fulfillment of them. This year, to our output metrics, we will add eight new outcome measurements that

will evidence how many units of affordable housing, kilowatts of renewable energy, and living wage

jobs your crowdfunding has maintained or created, plus more.

So beneficial depositors and borrowers, arise to take your rightful place in the making of the new

economy! We are not even kidding. We all now have a bank model that is reliably profitable, producing

to the benefit of all and harm to none, and changing the banking system. At this stage of our evolution,

we may be still small and incapable, yet, of replacing the dominant actors among banks. But by

awakening depositors to realize that their choices matter, we can first migrate deposit capital to the

beneficial banking model. Then, by trying to "pay for performance," we can attract the highest

performing borrowers in the new economy. And throughout, we can recruit the brightest human capital

to a new banking system that realizes our collective vision.

That's what we call beneficial banking and you deserve nothing less.

Best,

Kat Taylor & Tom Steyer

Co-Chairs, Beneficial State Bancorp

Mission

Our mission mandates that we produce social justice and environmental well-being at the same time

that we are economically sustainable.

Vision

A banking industry that is fair to the person with the least bargaining power; Provides access to

financial services for all our communities, particularly the traditionally underserved; Results in the long-

term prosperity of responsible consumers; Promotes financial system stability; and Contributes to the

sustainability of the environmental commons. We call this vision beneficial banking.

Theory of Change

Beneficial State Bank is a triple bottom-line financial institution that believes money should serve

people, not the other way around. We institutionalized our values of trust, justice and empowerment by

giving 100% of the economic rights of our bank to our foundation which is governed in the public

interest and can only reinvest bank profits, when distributed, back into robust community living and the

environment that sustains us all. We believe that a far better world isn’t only possible, it’s being built

right now by inspired people everywhere. So we’re building a better future with our customers by

building a better banking system: Beneficial Banking.

We offer our customers a new kind of bank and the tools they need to build something beautiful. Our

commercial loans, transactional services and financial assistance are made to serve those who are

creating a better world. The future we’re creating together will strengthen our local communities,

improve quality of life for each of us, and be reflected in widespread gains in social equity and

environmental renewal. Our ultimate goal is nothing short of changing the banking system by

migrating deposit, equity and human capital to a better, beneficial bank model.

The Beneficial State Family

The Beneficial Bank Family includes Beneficial State Bank, covered by this Annual Report, and our

aligned bank sibling, Albina Community Bank (ACB). Albina Community Bank’s 2014 results and bank

leadership can be found here and our consolidated bancorp call report here. Our leadership, serving on

the Beneficial State Bank, Beneficial Bancorp, and Beneficial State Foundation boards having our

undying gratitude, are profiled here.

Our New Brand

In 2014 we rebranded in order to find a name and logo that reflected our vision, mission and

commitment to our triple-bottom line. We have selected "Beneficial State Bank" because of the multiple

meanings it has in support of those aims.

• We are striving to be an institution that is truly beneficial to the clients we serve and the

environment upon which we all depend.

• By providing "beneficial capital," we're change agents in the transformative sectors we've

decided to focus on.

• Beneficial State means being beneficial to whichever of the three states we're operating in but

it also refers to us and our clients being in a beneficial state of mind, wherever we are.

We decided upon "build something beautiful" for a simple but emotional and effective tagline to call to

action our lending clients and depositors alike, to build they communities we all desire to see.

Financial Resiliency

We’re happy to be proving the model that a Beneficial Bank can grow and be reliably profitable (and not

at the expense of our stakeholders)!

In 2014:

• Profits of approximately $1.9 million or 6% return on equity

• Loans grew by 18%

• Asset size is $366 million

• Over 4,000 depositors

• Over 500 borrowers

• High Credit Quality on all indicators

Our Financial Statements

• Balance Sheet

• Income Statement

• Key Ratios

How We Stack Up

• Curated Analysis

• CDBA Analysis

Mission-Driven Lending & Products

Business and Nonprofit Lending

Our customers are our heroes! Our 4000+ deposit clients

are the crowd-funders that help us make loans to

businesses and nonprofit lending clients in the areas below.

Together, we build affordable homes for low income families, create clean, renewable energy from the

wind, sun, water and waste, help nonprofit organizations serve those in need, provide spaces for art,

educate our youth, support social entrepreneurs, grow and distribute healthy food, build businesses

owned by workers, and so much more!

Here’s a snapshot of where the money went in 2014:

Learn more about our sectors:

• Affordable Housing, Multi-family and Neighborhood Stabilization

• Sustainable Food, Fisheries and Agriculture

• Low-Income Community Economic Development

• Clean Tech, Green Energy and Green Chemistry

• Women and Minority Owned Businesses

• Other Mission Lending

• Other Commercial and Industrial

2012-2014 Renewable / Clean Energy

We’ve done a deep dive into our renewable energy lending from 2012-2014 and are excited to share

the results. The following numbers show the energy production and environmental impact of our

borrowers during the 2012-2014.

Spectrum of Fair & Transparent Credit Products for Citizens

Personal Builder Loan offers a responsible, new way to borrow quickly, easily, and safely.

In January we launched the Personal Builder Loan, a consumer loan offered in partnership with

LendUp Technologies. Lendup is an innovative consumer lender who shares completely our mission of

making responsible financial services available to all our communities, particularly the traditionally

underserved.

Learn more: Press Release | Apply Here

Movement Building & Community Engagement

We’re all in this together, and in order to change an industry, everyone needs to be inspired and

involved. We have a wonderful staff including a dedicated team of community engagement

professionals who connect with and spread the word about the power and importance of banking that

benefits all people and the planet.

Our community engagement team develops programs and events to connect, educate, inspire and

support the social enterprises and nonprofits in our communities who are working to build a better

world.

In order to migrate the banking system to all benefit, no harm, we need to tend a new garden. Inside

and out of the bank, we support a new ecosystem for beneficial banking.

Some of the essential plantings include speaking at events and conferences, large and small, as well

as hosting and co-hosting events such as:

• Money on a Mission (Portland, Seattle)

• Oakland Indie Awards

• B Corp events such as BLD: B Corp Leadership Development day and the Champions

Retreat

• Locally Inspired

In addition to hosting events, we also connect and engage with our mission-driven community by:

• Sponsoring nonprofit organizations

• Offering our branch locations for nonprofit and social enterprise events

Beneficial Banking Internship Program

To help build the pipeline for the next generation of leaders, Beneficial State is proud to offer an

intensive summer internship program that provides valuable work and learning experience to high-

caliber students interested in beneficial banking, community economic development and responsible

financial services.Interns work on challenging Bank and Foundation projects, complete deliverables

designed to contribute to their educational and career development, and present to Beneficial State’s

staff and senior leadership team at the end of the program.

Interns also participate in the Beneficial Banking Curriculum & Speaker Series, which includes

workshops led by experts in the fields of community banking, investing, and responsible finance and

site visits for interns to see the work in action. Past interns have joined the Beneficial State team after

graduation and leveraged their rich internship experience into careers in financial services and a variety

of industries. Learn more here.

Beneficial Banking Scorecards and Metrics Development

At Beneficial State we are serious about measuring our impact and using this measurement to

continually increase our positive impact on the community. Our work includes evaluating each borrower

and the purpose of each loan to determine the likely social and environmental impact of the loans, as

well as potential concerns for any counter mission activities. In order to better track this data and to

gather the richest data possible, we are building more robust MIS systems, editing our loan

applications, and developing interview protocols.

These efforts are helping to develop outcome metrics that show the on-the-ground impact our loans are

having. Two of these metrics – kilowatt hours of renewable energy financed, and C02 emissions

reductions – are being revealed in this report for the first time. Others, such as number of units of

affordable housing, are in the works and will be publicized soon.

In addition to this internal metrics work, we participate in voluntary industry assessments and

scorecards, such as the Global Alliance for Banking on Values (GABV) scorecard, in which we

evaluate what percentage of our loans are Triple Bottom Line and what percent are Real Economy,

meaning that they directly support businesses doing real, tangible work in the community, rather than a

purely financial transactions such as purchasing and reselling other loans in whole or in part. In 2014,

our scorecard revealed that 70% of our assets were in the Real Economy and 76% of our assets were

Triple Bottom Line, according to GABV definitions.

We also participate in the National Community Investment Fund (NCIF) BankImpact dashboard report.

In the 2014 report, Beneficial State Bank had a Development Deposit Intensity (DDI) of 50%, compared

to the national average of 40%, indicating that a higher proportion of our bank’s branches are in low-

and moderate-income census tracts. Our Development Lending Intensity was higher at 58%. Finally

our Mission Intensity score -- the extent to which our loans meet our social and environmental mission

was 96.1%.

We find these external scorecards and the work it takes to complete them very informative and

valuable in helping us not only benchmark against others, but to deepen and broaden our own thinking

about how to measure our impact.

Sponsorships

From day one, Beneficial State has been committed to supporting our community above and beyond its

lending by providing sponsorships to 501(c)(3) nonprofit organizations each year. Historically we have

provided the equivalent of 10% or more of Beneficial State Bank’s profits. That’s ten times the U.S.

average corporate giving of less than 1% (.76%). In 2014, we provided $156,900 in sponsorships to

community organizations. Learn more about our sponsorships here.

Awards

In 2014, we were honored as a Best for the World and Best for

Communities by B Corporation. The ‘B Corp Best for Communities’

list honors 86 businesses that earned a community impact score in

the top 10% of all Certified B Corporations of their size on the B

Impact Assessment, a rigorous and comprehensive assessment of a

company's impact on its workers, community, and the environment.

We are proud to be members of and/or certified by the following ecosystem partners:

B Corporation

We are proud to be one of a few financial institution certified as a B Corporation. B Corps are

sustainably minded companies that care about doing good, as much as earning a profit. We are also

thrilled to offer the first-ever, B Corporation Affinity Credit Card that will be available this Fall.

Community Development Bankers Association (CDBA)

Community Development Bankers Association (CDBA) is the national trade association of the

community development bank sector. They are the voice and champion of banks and thrifts with a

mission of serving low and moderate income communities. CDBA educates policymakers, regulators,

legislators and the general public on the importance of Community Development Banks. They spread

understanding of the unique circumstances our banks operate under and the special needs of our

institutions. CDBA leads the growth and development of our sector, building healthy institutions with the

capacity to promote access to capital and financial services in distressed and underserved

communities.

Community Development Financial Institution (CDFI)

Fewer than 2% of U.S. banks are certified as Community Development Financial Institutions (CDFIs)

and we’re proud to be one of them! CDFIs are specialized financial institutions that work in

economically distressed target markets and have community development as a primary mission. CDFIs

are certified by the US Department of the Treasury. Learn more about how CDFIs benefit our

communities here.

Global Alliance for Banking on Values (GABV)

The GABV is an independent network of banks using finance to deliver sustainable development for

underserved people, communities and the environment.

Inner City Advisors (ICA)

ICA works tirelessly with entrepreneurs, advisors, employees and sponsors to create a more equitable

and impactful economic ecosystem in the Bay Area. Their unique approach has developed many

amazing companies who have created good jobs for local residents.

JUST

The International Living Future Institute’s™ JUST™ program is a voluntary disclosure program and tool

for all types and sizes of organizations. JUST is, quite simply, a call to social justice action.

National Community Investment Fund (NCIF)

NCIF is the largest investor in the mission-oriented banking industry, with investments in 15% of all

certified CDFI Banks. NCIF has $228 million of assets under management, including $206 million in

New Markets Tax Credit allocations. They invest capital and facilitate the flow of funds from investors to

banks. As an impact investor, NCIF pursues a triple bottom line strategy that maximizes social,

environmental, and financial returns.

Social Venture Network

SVN works to create a just, humane and sustainable world by:

Supporting and promoting innovative entrepreneurs and business leaders who contribute to the well-

being of their employees, customers, investors, communities and the environment

Fostering strong connections and collaborations among business leaders and entrepreneurs that lead

to groundbreaking solutions to social, economic and environmental problems

Contributing to an ecosystem that enhances and supports these solutions and promotes a just

sustainable economy

Beneficial Corporate Practices

Green on the Inside

Beneficial State has a Green Team that drives our sustainability efforts. The mission of the green team

is to: 1) reduce our consumption of energy, natural resources, and materials; and 2) reduce

contributions to greenhouse gas emissions, air and water pollution, and landfills. Some of our key

green programs and elements are:

Staff Engagement

Beneficial State employees engage in education and action campaigns to reduce waste and energy

usage reduction at work and home. In 2014 staff participated in the Eco-Challenge by Northwest Earth

Institute, helping us implement new behaviors to reduce waste, energy and water usage.

Green Business Certifications

We seek to green certify all of our bank locations and we’re making great progress! We are green

certified in Oakland and Greenest certified in Seattle. In Sacramento, we’re in a LEED Gold certified

building, and we are in the process of getting certification for both Portland and our newest location,

Santa Rosa, CA.

Reducing our Greenhouse Gas Emissions

At Beneficial State Bank we hire a 3rd party to audit and report on our sustainability. This report tracks

our greenhouse gas (GHG) emissions and sources, and we use this information to target ways to

reduce our emissions.

We are reporting our data through 2013, as our sustainability report results are completed near the end

of the following year. We are in the process of calculating our 2014 results.

Total emissions increased just over 17% from 2012 to 2013, due mostly to an increase in the size of

the workforce by 17%. However, GHG emissions per FTE continued to decrease, from 5.2 metric

tons/FTE (2012) to 5.0 metric tons/FTE (2013). This is represents a 4% decrease from 2012, and a

27% decrease from 2011.

Reducing our Greenhouse Gas Emissions

At Beneficial State Bank we hire a 3rd party to audit and report on our sustainability. This report tracks

our greenhouse gas (GHG) emissions and sources, and we use this information to target ways to

reduce our emissions.

We are reporting our data through 2013, as our sustainability report results are completed near the end

of the following year. We are in the process of calculating our 2014 results.

Total emissions increased just over 17% from 2012 to 2013, due mostly to an increase in the size of

the workforce by 17%. However, GHG emissions per FTE continued to decrease, from 5.2 metric

tons/FTE (2012) to 5.0 metric tons/FTE (2013). This is represents a 4% decrease from 2012, and a

27% decrease from 2011.

Being Carbon Balanced (Balancing Out the Rest)

In addition to tracking, reporting, and targeting reduction of our GHG emissions, we purchase carbon

offsets for these emissions. We are proud investors of 728 mT CO2 equivalent emissions reductions

from the California Improved Forest Management Project in Arcata, CA to balance out 2 years of

emissions.

Supporting Employees in their Community Work

Volunteering

We believe community volunteering is an investment in a community and its peoples. Volunteering

provides valuable community services and strengthens a community in many ways such as supporting

families, improving schools, supporting youth, and beautifying the community. Community volunteering

is an important measure of the civic health of a community, a state, and a nation. Bank employees are

given thirty-two (32) hours of paid volunteer time per calendar year for a volunteer opportunity of their

own choosing.

Matching Donations

All employees have the opportunity to receive up to $250 annually to match money he/she donates to a

qualifying 501(c)3 charitable/nonprofit organization of his/her choice.

Beneficial Employment

Living Wage Policy

Our salary administration philosophy is to attract and retain a workforce committed to achieving both

corporate and personal goals by implementing a compensation program which is inclusive of the Living

wage standard.

Gender & Ethnicity

We are committed to ensure gender and ethnic diversity inclusiveness within our workforce. The overall

goal is to treat men and women equally in all aspects of life and work. More specifically, the goal is to

have a workforce that is gender balanced in all job classifications and at all levels, with women being

given the same opportunities for recruitment, hiring, training, promotion and leadership positions as are

presented to men. Gender diversity (and gender equality) refers not only to having relatively equal

numbers of employees of both genders in the organization but, most importantly, to having women, as

well as men, in senior leadership, executive and board positions. We strive to have a workforce that is

as ethnically and racially diverse as the community, region or state in which we serve.