Letter to Shareholders

Dear Shareholders and Friends,

2007 and 2008 will long be remembered as an extremely challenging period for the financial services industry. The "subprime crisis" turmoil in the credit markets severely restricted credit availability. In spite of these challenges, Clearinghouse CDFI finished 2007 with another strong year of profitable lending effecting positive changes in the low-income communities we serve.

Our annual lending volume remained strong within the three primary areas of our business: Core lending for community development, Single Family mortgage banking putting first-time home buyers into housing, and New Markets Tax Credits for community development using investor funds. Combined, we loaned over $92 million to 150 borrowers. Our combined total asset size increased to $232 million and this growth has positioned us to take advantage of new and increased lending opportunities in 2008 and beyond.

Our consolidated 2007 pre-tax profit was over $1.4 million. For the third consecutive year a dividend was paid to all "Class A" shareholders. Clearinghouse CDFI continues to be 100% self-sufficient and have one of the highest self-sufficiency ratings among all CDFIs in the nation.

We were honored to be a finalist in the 2007 Wachovia NEXT award recognizing innovation, impact and vision within the CDFI industry. This achievement was celebrated with our peers at the Opportunity Finance Network conference where we finished second among all lenders in the "large CDFI" category.

We continued our commitment to financing "unbankable" projects in 2007 benefiting low-income families and underserved communities throughout the state. We funded nine affordable housing loans totaling $11.5 million creating or preserving 75 units of housing. We continue to be the only lender in California lending to receiverships to resolve some of the most problematic housing situations imaginable.

Last year we opened our first branch office in Yuba City, serving central and northern California. Our second location and increased staffing has enabled us to more effectively respond to unmet credit needs throughout the entire state.

We wish to thank our hard-working Board of Directors and Communities for their tireless effort in 2007 on behalf of the low income and distressed communities we serve. We also want to thank you, our shareholders and community partners, for enabling us to change lives on loan at a time.

Sincerely,

Douglas J. Bystry President/CEO	Alan Orechwa Chairman of the Board