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CUSC of Alabama Board Meeting

CUSC Of Alabama Board Meeting AGENDA

December 13, 2012 - LSCU Offices

I. CALL TO ORDER II. CONSENT AGENDA A. Adoption of Minutes B. Treasurer's Report 1. September and October 2012 Statements C. Management Report D. 2012 Strategic Plan E. Informational Items III. BUSINESS A. Election of Officers B. Brand Campaign Results C. 2013 Strategic Plan D. 2013 Proposed Budget E. Cash Banking Update F. Dashboard Reporting Template IV. ADJOURMENT V. EXECUTIVE SESSION

I.

CALL TO ORDER

II.

ADOPTION/APPROVAL OF CONSENT AGENDA

A.

MINUTES

For:

BOARD OF DIRECTORS MEETING

Location:

LSCU Offices

Date:

October 17, 2012

OF ALABAMA

MEETING AGENDA CALL TO ORDER AND ROLL CALL The Board of Directors Meeting of CU Service Centers, Inc. was called to order by Chairman Patrick La Pine on Wednesday, October 17, 2012 at 9:00 a.m. in the library of the LSCU Birmingham office.

Mr. La Pine asked Mrs. Tameka Dukes to call roll.

The following Directors were in attendance at the meeting: Ms. Linda Cencula, CEO, AL Telco CU Mr. Heath Harrell, CEO, Guardian CU Mr. Patrick La Pine, CEO, LSCU Mr. Merrill Mann, CEO, APCO CU Mr. Ned McHenry, CEO, AL State Employees CU Mr. Steve Nix, CEO, First Educators CU Mr. Shane Nobbley, CEO, Family Security CU Mr. Joe McGee, CEO, Legacy Community CU Mr. Monte Hill, CEO, Family Savings CU, attended the meeting by phone.

CONSENT AGENDA Mr. La Pine stated the Consent Agenda contained the minutes of the August 16, 2012 CUSC, Inc. Board Meeting and the Treasurer’s report accompanied with the July and August 2012 financial statements.

Motion was made by Mr. Steve Nix and seconded by Ms. Linda Cencula to approve the Consent Agenda as presented.

MANAGEMENT REPORT Mr. Patrick La Pine stated that the 20th Annual Meeting is fastly approaching and it should have great attendance. He reported that over 300 attendees have registered for the Leadership Development Conference with majority of the attendees with Alabama credit unions. He also stated that with having so many attendees CUSC of Alabama should have a record high number of attendees at the Annual Meeting. Mrs. Dukes stated that invites were sent to 60 nonparticipating credit unions to attend the Annual Meeting in conjunction with the Leadership Development Conference.

Mrs. Dukes stated that Birmingham Police CU was live and transactions were going well for their members. She also stated the signed agreement has been received from Five Star CU and they plan to be live by the end of January 2013.

With Birmingham Police CU and Five Star CU joining the network that will bring our participating credit unions to 53.

However, by the end of January with Milestone CU and Alabama Credit Union merging it will bring the number of Issuer credit union in Alabama back to 52.

Mrs. Dukes also stated that two communications have been sent to participating credit unions regarding the policy changes effective January 1st. The Alabama network will remove all in-state policies and procedures and strictly follow the CO-OP Shared Branching Network rules.

She stated training continues with participating credit unions. The Central Alabama training has been scheduled for November 27th and she asked that every credit union sends staff. The training will discuss the upcoming changes with the policies and procedures for shared branching.

OF ALABAMA Mrs. Dukes stated that CO-OP Shared Branching will be hosting a sales forum in late October and management will be attending. The forum will give an updated on many products and also discuss the future of shared branching while focusing on pricing and the overall 2013 plans.

BUSINESS Update on 2012 Strategic & Marketing Plan Mr. Scott Morgan explained that management continues to make great progress with growing the network. He stated that when comparing August 2011 and August 2012 transactions the Alabama network is up by 30% with transactions. Also, income is up by 17%when comparing August 2011 and August 2012.

Mr. Morgan stated that Alabama continues to do a great job of marketing to credit unions and now it is time to focus on increasing marketing to the credit union members. CUSC of Alabama plans to help credit unions market and educate their members through a shared branching video. He stated that the video will be presented at the Annual Meeting. The video link will be sent to credit unions to use in their lobbies and on social network sites.

Cash Banking Product Mr. Morgan briefly discussed the Cash Banking product. He stated that there was an issue that has come up with the platform. He stated that we cannot move forward until the legal issues with the platform are resolved or a new platform is created. He hopes that the platform issue will be resolved before year end. He stated that he will keep the board updated.

Demographic Mapping Mr. Morgan updated the board on the demographic mapping. He stated that of the 51 credit unions 16 have not sent their member address information after numerous requests. He asked the board help to contact the 16 credit unions to request and explain why the addresses are needed. Mr. Morgan explained how important it is to have all participating credit unions to send this information so the mapping data can be accurate to use during the sales process with nonparticipants.

There was continued discussion about the demographic mapping project.

Outlet Approval Motion made by Mr. Merrill Mann and seconded by Mr. Shane Nobbley to approve the outlet equest for one location: Heritage South CU at 2825 Moody Parkway in Moody, AL. Remaining 2012 Board Meetings Mr. La Pine updated the Directors with the remaining board meeting dates and locations.

Mr. Morgan brought up about the Investment policy that is in place. He asked the Directors thoughts about the level of risks with CUSC of Alabama investments. There was brief discussion about Members Trust Investments and CUSC of Alabama. The Directors stated that we need to continue to research all investment options and discuss further. Mr. Morgan that he will schedule a meeting with a representative of Members Trust and the board to further discuss the options available.

UNFINISHED BUSINESS There was no unfinished business.

ADJOURNMENT The meeting adjourned at 9:55 a.m.

Respectfully submitted, Steve Nix, Secretary Tameka Dukes, Recording Secretary

B.

TREASURER’S REPORT

CUSC OF ALABAMA TREASURER’S REPORT Executive Summary October 31, 2012

Income Statement CUSC of Alabama has produced operating results that have exceeded budget through October 31, 2012. Year to date revenues are at $465,708 as compared to a budget of $449,707, which is tracking $16,001 or 3.6% ahead of budget. Average monthly transaction volume for 2012 is tracking 22% higher than for the monthly average in 2011. Year to date expenses of $150,417 were lower than budget and produced a $20,916 positive variance to budget. The positive revenue and expense results produced a solid year to date Net Income after Taxes of $264,904 as compared to a budget of $204,851.

For the months of September and October, revenue of $417,425 and $465,708 were a combined ($270) lower than budget. Total expenses for September and October tracked 11.84% lower than budget largely a result of lower than budgeted travel, meetings expense and management costs.

This produced a Net Income after taxes for September and October of $20,125 and $30,652 respectively which was favorable to budget by a combined $1,175.

CUSC of Alabama ‐ Components of Net Income as of October 31, 2012 450

YTD Actual, YTD Budget & Positive Variance to Budget (in $thousands) 417

404

400 350 300

267

250

234

233

200

179

171 150

150 100

55

54

50 13

21

34

33

21

0 Revenue

YTD Actual Results

Expenses

YTD Budget

Earnings Before Income Tax

Income Tax

Net Income

Positive Variance Compared to Budget

Balance Sheet CUSC of Alabama ended October with $3,682,941 in assets with 97.7% of these assets in Cash and, Short-term Investments. Since October 31 of 2011, assets for the corporation have increased by 5.3%.

Overall, the balance sheet presents a healthy picture. Total equity is in excess of $3,597,531, an increase of $158,111 from October 2011. Current assets exceed $3,682,941 while current liabilities are approximately $85,410 producing a current ratio of 43.12. As of the end of October, CUSC of Alabama has recorded a 7.2% Return on Assets.

Balance Sheet October 31, 2012

Current Assets Cash Operating Cash Short Term Investments

1,565,077 2,033,000

Total Cash Accounts Receivable

3,598,077 63,114

Total Accounts Receivable Prepaid Expense Prepaid Insurance Prepaid Other

63,114

3,267 18,483

Total Prepaid Expense Net Fixed Assets

21,750 0

Total Net Fixed Assets

0

Total Assets

$3,682,941

LIABILITIES & EQUITY Accounts Payable Dividends and Patronage Rebate Payable Accrued Expenses CU Service Corp. Invoices Federal Income Tax Payable State Income Tax Payable

20,091 0 939 32,798 23,829 7,753

Total Liabilities Equity Common Stock Paid in Capital RETAINED EARNINGS Net Gain (Loss) Curent Year Total Equity Total Liabilities & Equity

85,410

67 3,349,933 (17,373) 264,904 3,597,531 $3,682,941

Income Statement For the Ten Months Ending October 31, 2012 M-T-D Actual OPERATING INCOME Non-Investor Fees Licensed Service Centers Interest Income Other Income Patronage Rebates Operating Income

M-T-D Budget

Budget Variance

Y-T-D Actual

Y-T-D Budget

Budget Variance

588 15,478 (81) 16 0 16,001

Annual Budget

1,211 46,397 675 0 0 48,283

1,100 44,000 567 0 0 45,667

111 2,397 108 0 0 2,616

11,528 448,578 5,586 16 0 465,708

10,940 433,100 5,667 0 0 449,707

13,140 521,600 6,800 0 (130,141) 411,399

0 0

650 650

650 650

266 266

3,350 3,350

3,084 3,084

3,750 3,750

Total Travel

494 66 375 935

300 150 250 700

(194) 84 (125) (235)

2,080 431 1,129 3,640

3,400 1,500 2,500 7,400

1,320 1,069 1,371 3,760

4,000 1,800 3,000 8,800

Outside Services Legal Services Data Processing CPA Services Management Service Fees Reports/Records Management Insurance/Bonds/O&S Other Outside Services Total Outside Services

500 67 1,241 6,458 671 351 166 9,454

500 250 1,350 7,000 950 350 300 10,700

0 183 109 542 279 (1) 134 1,246

5,000 672 12,431 65,748 9,412 3,197 1,795 98,255

5,000 2,500 13,500 70,000 12,000 3,500 4,400 110,900

0 1,828 1,069 4,252 2,588 303 2,605 12,645

6,000 3,000 16,200 84,000 13,900 4,200 5,000 132,300

Communications Telephone Postage Total Communications

145 146 291

200 300 500

55 154 209

1,487 1,229 2,716

2,000 3,000 5,000

513 1,771 2,284

2,400 3,600 6,000

Advertising & Promotions Advertising & Marketing Total Advertising & Promotion

1,200 1,200

700 700

(500) (500)

30,672 30,672

32,450 32,450

1,778 1,778

34,150 34,150

Furniture & Equipment Furniture & Equipment Depr.

Equipment/Lease Rental Personal Property Tax Software Fees & Maintenance Total Furniture & Equipment

78 271 0 1,195 1,544

110 275 200 0 585

32 4 200 (1,195) (959)

838 2,715 43 1,195 4,791

1,100 2,750 200 1,078 5,128

262 35 157 (117) 337

1,320 3,300 200 1,076 5,896

Total Facilities

69 299 368

100 300 400

31 1 32

686 2,993 3,679

1,000 2,992 3,992

314 (1) 313

1,200 3,592 4,792

Materials & Supplies Operating Supplies Total Materials & Supplies

98 98

150 150

52 52

1,730 1,730

1,500 1,500

(230) (230)

1,800 1,800

Programs & Conferences Meetings & Conferences Total Programs & Conferences

39 39

0 0

(39) (39)

8,594 8,594

11,000 11,000

2,406 2,406

15,500 15,500

Miscellaneous Donations Total Miscellaneous

0 0

0 0

0 0

10,000 10,000

5,000 5,000

(5,000) (5,000)

5,000 5,000

Taxes & Fees Misc. Taxes & Fees Federal Income Taxes State Income Taxes Total Taxes & Fees

0 2,931 771 3,702

0 4,536 1,057 5,593

0 1,605 286 1,891

4,204 24,501 7,756 36,461

3,200 45,362 10,574 59,136

(1,004) 20,861 2,818 22,675

3,200 54,434 12,689 70,323

Total Operating Expenses

17,631

19,978

2,347

200,804

244,856

44,052

288,311

Net Income

30,652

25,689

4,963

264,904

204,851

60,053

123,088

OPERATING EXPENSE Training User/Outlet Training Total Training Travel Travel & Lodging Meals & Entertainment Variable Auto Costs

Facilities Insurance/POP Rent

Credit Union Service Centers, Inc. Balance Sheet September 30, 2012

Current Assets Cash Operating Cash Short Term Investments

1,534,206 2,033,000

Total Cash Accounts Receivable

3,567,206 56,679 56,679

Total Accounts Receivable Prepaid Expense Prepaid Insurance Prepaid Other

3,687 19,724

Total Prepaid Expense Net Fixed Assets

23,411 78

Total Net Fixed Assets

78

Total Assets

$3,647,374

LIABILITIES & EQUITY Accounts Payable Dividends and Patronage Rebate Payable Accrued Expenses CU Service Corp. Invoices Federal Income Tax Payable State Income Tax Payable

16,500 0 982 35,135 20,898 6,982

Total Liabilities Equity Common Stock Paid in Capital RETAINED EARNINGS Net Gain (Loss) Curent Year Total Equity Total Liabilities & Equity

80,497

67 3,349,933 (17,373) 234,250 3,566,877 $3,647,374

Income Statement For the Nine Months Ending September 30, 2012

M-T-D Actual OPERATING INCOME Non-Investor Fees Licensed Service Centers Interest Income Other Income Patronage Rebates Operating Income

M-T-D Budget

Budget Variance

1,059 40,531 691 0 0 42,281

1,100 43,500 567 0 0 45,167

0 0

200 200

Total Travel

135 14 114 263

300 150 250 700

Outside Services Legal Services Data Processing CPA Services Management Service Fees Reports/Records Management Insurance/Bonds/O&S Other Outside Services Total Outside Services

500 67 1,241 6,457 671 351 218 9,505

500 250 1,350 7,000 950 350 1,000 11,400

Communications Telephone Postage Total Communications

145 247 392

(41) (2,969) 124 0 0 (2,886)

Y-T-D Actual

Y-T-D Budget

Budget Variance

477 13,082 (190) 16 0 13,385

Annual Budget

10,317 402,182 4,910 16 0 417,425

9,840 389,100 5,100 0 0 404,040

13,140 521,600 6,800 0 (130,141) 411,399

200 200

266 266

2,700 2,700

2,434 2,434

3,750 3,750

165 136 136 437

1,586 366 754 2,706

3,100 1,350 2,250 6,700

1,514 984 1,496 3,994

4,000 1,800 3,000 8,800

0 183 109 543 279 (1) 782 1,895

4,500 605 11,190 59,291 8,742 2,846 1,629 88,803

4,500 2,250 12,150 63,000 11,050 3,150 4,100 100,200

0 1,645 960 3,709 2,308 304 2,471 11,397

6,000 3,000 16,200 84,000 13,900 4,200 5,000 132,300

200 300 500

55 53 108

1,341 1,084 2,425

1,800 2,700 4,500

459 1,616 2,075

2,400 3,600 6,000

0 0

850 850

850 850

29,472 29,472

31,750 31,750

2,278 2,278

34,150 34,150

78 271 0 0 0 349

110 275 0 0 1,076 1,461

32 4 0 0 1,076 1,112

760 2,443 0 43 0 3,246

990 2,475 0 0 1,076 4,541

230 32 0 (43) 1,076 1,295

1,320 3,300 0 200 1,076 5,896

Total Facilities

69 299 368

100 300 400

31 1 32

617 2,694 3,311

900 2,692 3,592

283 (2) 281

1,200 3,592 4,792

Materials & Supplies Operating Supplies Total Materials & Supplies

77 77

150 150

73 73

1,632 1,632

1,350 1,350

(282) (282)

1,800 1,800

Programs & Conferences Meetings & Conferences Total Programs & Conferences

2,500 2,500

0 0

(2,500) (2,500)

8,556 8,556

11,000 11,000

2,444 2,444

15,500 15,500

Miscellaneous Donations Total Miscellaneous

5,000 5,000

0 0

(5,000) (5,000)

10,000 10,000

5,000 5,000

(5,000) (5,000)

5,000 5,000

Taxes & Fees Misc. Taxes & Fees Deferred Tax Expense Federal Income Taxes State Income Taxes Total Taxes & Fees

0 0 2,931 771 3,702

0 0 4,536 1,057 5,593

0 0 1,605 286 1,891

4,204 0 21,570 6,984 32,758

3,200 0 40,825 9,517 53,542

(1,004) 0 19,255 2,533 20,784

3,200 0 54,434 12,689 70,323

Total Operating Expenses

22,156

21,254

(902)

183,175

224,875

41,700

288,311

Net Income

20,125

23,913

(3,788)

234,250

179,165

55,085

123,088

OPERATING EXPENSE Training User/Outlet Training Total Training Travel Travel & Lodging Meals & Entertainment Variable Auto Costs

Advertising & Promotions Advertising & Marketing Total Advertising & Promotion Furniture & Equipment Furniture & Equipment Depr.

Equipment/Lease Rental Equipment Install./ Maint.

Personal Property Tax Software Fees & Maintenance Total Furniture & Equipment Facilities Insurance/POP Rent

C.

MANAGEMENT REPORT

To:

CUSC, Inc. Board of Directors

From:

Tameka Dukes

Date:

October 17, 2012

Subject:

Management Report

Network Development The Business Development staff and management continues to visit with nonparticipating credit unions to discuss shared branching in hopes that shared branching is a part of their budgeting plan for 2013. Birmingham Police CU were trained in September and came live as an Issuer on October 1st. This brings the total number Issuers on the AL network to 52 participating credit unions.

Milestone CU and Alabama CU will merge effective January 31, 2013. There is not a clear understanding if Milestones Fultondale outlet location will remain at this time.

The first round of notices regarding the new policy changes (in-state check policy/offline policy) taking effect on January 1, 2013 were sent at the end of August. The changes have been well received so far. Management will continue to send notifications of the changes as the date nears.

CUSC Issuer/Acquirer training continues within participating credit unions. There have been numerous on-site trainings at credit unions. The Central Alabama training is tentatively scheduled for November 27th with more details to come at a later date.

All CUSC Investors should have received the 20th Annual Meeting notices at the beginning of October. Also, invites have been sent to 25 non-participating credit unions inviting them to the CUSC Annual meeting so they can hear the progress of the CUSC of Alabama network over the last year.

CO-OP Shared Branching Update CO-OP Shared Branching will be holding a two-day Business Development Forum on Monday, October 22nd - 23rd. Management will go to represent the Alabama Network.

In this forum CO-OP plans to give an update on many products and also discuss the future of Shared Branching while focusing on pricing and the overall 2013 plans.

D.

2012 STRATEGIC PLAN

2012 Objectives • Provide Alabama credit unions with an efficient and costeffective delivery network for transactional member services.

• Grow the number of issuer credit unions on the network.

• Grow the number of transactions performed by participating credit unions in the network.

• Investigate new sources of revenue for the corporation and participating credit unions.

Market Opportunity • Many credit unions in Alabama do not know the value of shared branching.

• Shared branching can be an additional layer for a credit union’s disaster plan.

• There are 83 Alabama credit unions and 300 branches that are not currently participating in the shared branching network.

• Cost to build branches or obtain branches is increasing.

Market Opportunity Where Outlets Are Needed: • Birmingham – Forestdale/Adamsville & Leeds/Moody & Huffman • Jasper – between Forestdale & Jasper • Auburn • Between Birmingham & Tuscaloosa *The demographic research will identify additional gaps based on current participation within the state.

2012 Strategies

Operations Priorities

Key Activities

Progress Update

Product Mix

Research and develop new transactional products and services.

In discussion with New Market Partners on revenue flows and contracts for the Cash Banking product.

Pricing

Continue to examine pricing of a shared branch transaction to ensure transaction cost remains competitive.

Discussed at the planning session. Bd. Approved increase in patronage rebate & decreased outlet pricing by .10 cents effective January 2013.

Certification Reimbursement

Examine opportunities to reimburse users for certification fees to join the network.

In discussion w/ CO-OP SB about possibly waiving set-up fees and some monthly costs. The offers would come with a deadline for the credit union to join the network.

Operations (Con’t) Priorities Training & Support

Key Activities Review current training and look for ways to improve delivery to network credit unions. Utilize webinars for training both Issuers & Acquirers.

Progress Update Completed Central AL training class (November). Completed South AL (July) training class.

Management is currently setting up webinar trainings.

Expand delivery of onsite training to network credit unions.

User Survey

Create and disseminate a yearly user survey to gauge user satisfaction with the network.

The survey has been created and will be sent out by the end of December 2012.

Outlets

Target new outlet locations in areas where service gaps exist.

Data collection maps to be completed & given to credit unions by end 1st quarter 2013.

Utilize demographic analysis to assist with outlet placement.

Marketing Priorities

Key Activities

Progress Update

Sponsorships

Look for opportunities to exhibit at League and other system partner events.

CUSC sponsored Disaster Recovery in Montgomery in April.

Also exhibited at the LSCU Convention & also exhibited & sponsored breakfast at LDC in November.

Credit Union Member Awareness

Assist credit unions in educating members about shared branching and provide key information to members.

Created a video for credit unions to use in lobby & social networks.

Investigating ways we can be a partner in the education process of members.

Sales Kit & Brochures

Create sales kit that includes general information to join the Alabama network as Issuer/Acquirer.

Sales folder & brochure has been developed to leave with non-participating credit unions on sales meetings/visits.

Design brochures for CU’s that can be placed in new member packets.

Sales Priorities Network Growth

Key Activities Develop an aggressive outreach plan to attract non-participating credit unions onto the network.

Progress Update Plan is almost complete. As soon as the maps are available, the planned outlet targets will be included in the plan.

Utilize demographic data as a sales tool for increased credit union participation.

Conservation

Complete a network business review with each user on a yearly basis.

Review information is being compiled for each participant.

Non-User Contacts

Visit ¼ of non-users on a quarterly basis.

CU Visits sof far for 4th qtr • Marvel City • US Pipe EFCU • Bessemer • Birmingham Police CU • Infirmary CU • Progressive FCU • Mobile.

• Five Star CU • IAM CU • McIntosh • NUCOR • Chattahoochee FCU.

Work with Leverage sales team to target new participants.

Sales Training

Conduct two training sessions each year on shared branching with Leverage sales staff to facilitate sales process.

Staff has completed one training session and the other is scheduled later in the month of December

Structure & Governance Priorities

Key Activities

Progress Update

Resources

Develop a chart of Leverage resource assignments for performance of CUSC activities by end of 1st quarter.

LEVERAGE resources chart has been developed.

Consolidation

Research the advantages and disadvantages of consolidating CUSC with the Florida Credit Union Shared Services (FCUSS).

FCUSS has decided to proceed with hiring a replacement CEO.

2012 Key Performance Measures

2012 Key Performance Measures (KPMs) Goals

Target

Actual

Outlet Growth

10 New Outlets

Total of 9 outlets approved for 2012.

New Issuers

4 New Issuers

Five Star CU will be live 1st quarter of 2013.

B’ham Police CU is live.

Working with Chattahoochee, Blue Flame, Infirmary CU, Progressive FCU to add them to the network.

Transactions

895,000 financial transactions processed by the network.

As of the end of October, 897,000 financial transaction have been processed by the network.

Pricing Strategy Review

Complete by beginning of 4th Quarter.

Discussed with the board at the Board Planning Session. The board voted to reduce the cost of the acquirer transaction by .10.

2012 Key Performance Measures (KPMs) Goals

Target

Actual

Outlet Income

Increase outlet income by 5%

As of the end of October, revenue has increased by 7%

User Data Mapping

Complete and disseminate demographic map data to network users by end of 4th Quarter

Management is currently geocoding the most recent data received from participants

Conservation

Complete network review visit with each user by end 4th Quarter

CUSC has reviews scheduled for December to complete process.

Sales Plan

Complete sales plan.

Management has been working with LEVERAGE sales staff to create plan.

E.

INFORMATIONAL ITEMS

2013 Meeting Dates All meetings are at the LSCU offices in Birmingham and begin at 9:00am (except the Annual Meeting) •

Thursday, February 21st

•

Friday, April 26th

•

Thursday, June 6th

•

Tuesday, August 13th

•

Thursday, October 24th

•

Annual Meeting - Friday, November 8th at 7:30am in conjunction with the LSCU Leadership Development Conference in Point Clear

•

Tuesday, December 10th

III. BUSINESS

A.

ELECTION OF OFFICERS

Board Election Results The following board members were re-elected at the Annual Meeting to serve three-year terms: • Linda Cencula, Alabama Telco CU • Heath Harrell, Guardian CU • Ned McHenry, Alabama State ECU

Current CUSC of Alabama Officers

• Patrick La Pine, Chairman • Linda Cencula, Vice Chair • Shane Nobbley, Treasurer • Steve Nix, Secretary

B.

BRAND CAMPAIGN RESULTS

Cooperative Image Campaign Results • • • •

This year, the campaign ran from mid-June to late August.

113 credit unions participated, included 34 new contributors. $1.25 million was raised from CUs for media buys.

Post-campaign consumer survey shows solid gains.

– AL/FL CUs have seen credit union awareness collectively rise from 23% to 50%.

• Additionally, the campaign’s online behavioral targeting ads produced 105,000 click-thrus, utilizing YouTube marketing brought more than 96,000 views of the TV ad, and Facebook produced 12,000 click-thrus.

• During this same timeframe, AL/FL CUs have collectively gained 195,000 new members and $3.6 billion in assets.

A Closer Look at the Numbers Alabama: • 29% Pre-campaign awareness in August, 2011 • 35% Post-campaign awareness following wave one in September, 2011 • 59% Post-campaign awareness following wave two in August, 2012 Florida: • 19% Pre-campaign awareness in August, 2011 • 26% Post-campaign awareness following wave one in September, 2011 • 41% Post-campaign awareness following wave two in August, 2012

C.

2013 STRATEGIC PLAN

2013 Plan Priorities • Continue to provide credit union support for all shared branching needs.

• Continue to provide Alabama credit unions with an efficient and cost-effective delivery network for transactional member services.

• Grow the number of issuer credit unions on the network.

• Grow the number of transactions performed by participating credit unions in the network.

• Investigate new sources of revenue for the corporation and participating credit unions.

Market Opportunity

• Many credit unions in Alabama do not know the value of shared branching.

• Shared branching can be an additional layer for a credit union’s disaster plan.

• Costs to build, obtain and operate branches are increasing.

Market Opportunity (continued)

• • • • • •

Where Outlets Are Needed: Birmingham – Forestdale/Adamsville & Leeds/Moody & Huffman Jasper – between Forestdale & Jasper Auburn Between Birmingham & Tuscaloosa * Guntersville * Selma *

* From the 2011 CUSC participants survey **Demographic project will assist in identifying additional gaps in service.

2013 Strategies

Operations Priorities Product Mix

Key Activities Research and develop new transactional products and services.

Participant Audits Audit participant website and location for adherence to network standards and guidelines.

Certification Reimbursement

Examine opportunities to reimburse or waive certification fees to join the network.

Progress Update

Operations (Continued) Priorities

Key Activities

Training & Support

Expand delivery of onsite training to network credit unions. Utilizing webinars and online (interactive) training modules so training is easily accessible for credit unions.

Cash Banking

Complete business plan and obtain approval from board. Implement product.

Outlets

Target new outlet locations in areas where service gaps exist and utilize demographic analysis to assist with outlet placement.

Vision & Mission Statement

Create Vision and Mission statement for AL Network by end of 1st Qtr.

Progress Update

Marketing Priorities

Key Activities

Sponsorships

Look for opportunities to exhibit at League, chapter, and other system partner events. (i.e. LSCU AC&E, LSCU Leadership Development Conference, Corporate America Annual Meeting)

Credit Union Member Awareness

Assist credit unions in educating tellers & members about shared branching.

Focus on awareness to credit union members.

Marketing Material

Make available the latest marketing materials to all participating & nonparticipating credit unions.

Progress Update

Sales Priorities

Key Activities

Network Growth

Work with LEVERAGE sales staff to target non-participating credit unions.

Conservation

Complete a network business review with each user on a yearly basis.

Sales Training

Conduct two training sessions each year on shared branching with Leverage sales staff to facilitate sales process.

Progress Update

Sales (continued) Priorities

Key Activities

User Data Mapping

Complete and disseminate demographic map data to network users by end of 1st Qtr.

Sales Plan

Complete sales plan for adding new participants by end 1st Qtr.

Progress Update

2013 Key Performance Measures (KPMs) Goals

2013 Target

Outlet Growth

10 New Outlets

New Issuers

6 New Issuers

Transactions

Increase financial transactions processed by the network by 10%.

(1,115,000 for 2013)

2013 Actual/Update

D.

2013 Proposed Budget

2013 Strategic Priorities 1. Increase transaction volumes by 10%.

2. Increase participants in the CUSC network by 6.

3. Increase awareness and value of the CUSC of Alabama brand.

4. Aid participants in marketing shared branching to their members.

5. Research additional products to add to the CUSC product mix.

2013 Budget Summary Net Income • Net income after tax and patronage rebates for the network is forecasted to decrease by ($32,883) . Largely due to reduced transaction pricing and a proposed half-time administrative position.

Revenues • Total revenue for the network will decrease in 2013 by ($13,148) or 3.8%.

• The network charge for an acquirer transaction was reduced by 20% starting in 2013.

• CUSC transactions are forecasted to increase in 2013. The projection includes some possible growth in transactions from additional participants and some anticipated organic growth planned for 2013.

• Lower patronage rebates in 2013. Due to lower net income.

2013 Budget Summary (continued) Expenses 2013 expenses are forecasted to increase $19,736 or 8.2% over 2012 projected.

•

• •

•

Management Services – expenses are forecasted to increase by $25,780 in 2013 as a part of a proposed half-time administrative position.

– The proposed primary duties for the new position follow the 2013 budget slides.

Rent, Data Processing, Equipment/Lease – to increase by a combined $6,825 as a part of a proposed half-time administrative position.

Training – training expenses are forecasted to increase by $7,740 in 2013.

– Increased training sessions per the 2013 Strategic Plan and the network is additionally investigating a training module to assist with on-line training.

Postage – postage is expected to increase by $1,352 – Additional mail outs in 2013 as a part of the marketing initiatives.

Proposed Budget 2011

2012 Projected

Budget 2013

Revenue

407,564

341,664

328,516

Training

1,787 3,776 113,252 4,028 46,706 24,715 877 4,378 0 28,464

1,000 5,660 118,150 3,259 33,450 9,951 2,075 9,125 10,000 49,662

5,100 9,300 143,930 4,400 32,700 15,200 3,300 10,000 11,700 26,438

99,331

66,448

Travel Outside Services Communications Marketing Asset Management Material & Supplies Meetings & Confereces Miscellaneous Taxes

Net Income

179,581

Three-year Comparative - Revenues REVENUE SOURCES Non-Investor Fees

2011

2012

2013

ACTUAL

PROJECTED

BUDGET

12,556

13,834

14,850

505,944

538,294

438,399

Interest Income

4,874

6,703

8,220

Other Income

6,853

19

0

Licensed Service Center Fees

Patronage Rebates Total Revenue

122,661 407,566

217,186 341,664

132,953 328,516

Three-year Comparative - Expenses 2011

2012 Projected

Budget 2013

Training Travel Outside Services Communications Marketing Asset Management Material & Supplies Meetings & Confereces Miscellaneous Taxes

1,787 3,776 113,252 4,028 46,706 24,715 877 4,378 0 28,464

1,000 5,660 118,150 3,259 33,450 9,951 2,075 9,125 10,000 49,662

5,100 9,300 143,930 4,400 32,700 15,200 3,300 10,000 11,700 26,438

Total Expenses

227,983

242,332

262,068

Patronage Rebate/Dividend Synopsis 2012 Projected 2013 Budget Patronage Rebates

217,186

132,953

NIBT

144,790

88,636

Income Tax

45,459

22,188

Net Income

99,331

66,447

Total Stockholder Dividend

36,198

22,159

540

331

Stockholder Dividend per share

Equity Projected 2012

Budget 2013

Common Stock & Additional Paid in Capital

3,350,000

3,350,000

Stockholder's Equity

3,395,761

3,440,049

Equity as % of Initial Capital

101.37%

102.69%

New Position – Half-Time Admin.

Primary Functions: Help control shared branching Issuers/Acquirers to provide quality service to shared branching members and participating credit unions. Insure adherence to all established policies and procedures by all Service Center Issuers/Acquirers. Assist Manager in any needed duties.

Major Duties and Responsibilities: • Develop and maintain a proper professional relationship with all participating credit unions.

• Assist Manager with completing/scheduling to perform new and old outlet audits, when needed.

• Assist with providing monthly operational training to participating credit union personnel, as needed.

(Webinars/Conference Call Training) • Provide monthly/quarterly transaction reports to the Manager.

• Assist the Accounting Department reports and invoicing issues, as needed.

• Assist with support of operational and accounting issues with participating credit unions with shared branching transactions.

• Assist with demographic analysis mapping and marketing efforts for CUSC of AL. • General Office Support – support calls, support emails, completing paperwork for credit unions joining the network (Issuers/Acquirers), getting timely communications out to credit unions, preparing materials for training classes/conferences, etc.

• Perform other duties as needed.

E.

CASH BANKING UPDATE

CASH BANKING • •

• • • •

Received approval from NCUA for concept and use of CUSC of Alabama as a CUSO per NCUA Reg, 714.

New Market Partners (Cash Banking System provider) and it’s technology platform provider dissolved partnership.

New Market Partners obtained a new platform provider.

Conference calls began again about the product.

CUSC management and New Market partners are working out contract details and money flow.

Once these details are complete, the business plan can be completed and submitted to the board.

E.

DASHBOARD REPORTING TEMPLATE

140

120

Jan‐12

Jan-12

Jan-12

117

2010

Feb‐12

Feb-12

Feb-12 Mar‐12

Mar-12

Mar-12

125

2011

Apr‐12

Apr-12

Apr-12 May‐12

Actual

May-12

May-12

1,565.1 2,033.0 84.9 3,682.9 0.0 3,682.9

Accounts Payable Accrued Current Liab Current Liabilities Non-Current Liab Total Liabilities

Total Equity Total Liab & Equity

Jun‐12

Jun-12 Jul‐12

Jun-12 Jul-12

Jul-12

OPERATING REVENUE

52.9 32.5 85.4 0.0 85.4

OPERATING EXPENSE

3,597.5 3,682.9

NUMBER OF OUTLETS

131

Training Travel Outside Services Communications Advertising & Marketing Furniture & Equipment Facilities Materials & Supplies Meetings & Conferences Donations Total Expense

100

Taxes

2012

52,000

50,000

48,000

38,000 Aug‐12 Sep‐12

400,000

350,000

250,000

100,000

Aug-12

Aug-12 Sep-12

Sep-12 Oct-12

ACQUIRER TRANSACTIONS

170,000 31-Jan-12 2-Feb-12 4-Feb-12 6-Feb-12 8-Feb-12 10-Feb-12 12-Feb-12 14-Feb-12 16-Feb-12 18-Feb-12 20-Feb-12 22-Feb-12 24-Feb-12 26-Feb-12 28-Feb-12 1-Mar-12 3-Mar-12 5-Mar-12 7-Mar-12 9-Mar-12 11-Mar-12 13-Mar-12 15-Mar-12 17-Mar-12 19-Mar-12 21-Mar-12 23-Mar-12 25-Mar-12 27-Mar-12 29-Mar-12 31-Mar-12 2-Apr-12 4-Apr-12 6-Apr-12 8-Apr-12 10-Apr-12 12-Apr-12 14-Apr-12 16-Apr-12 18-Apr-12 20-Apr-12 22-Apr-12 24-Apr-12 26-Apr-12 28-Apr-12 30-Apr-12 2-May-12 4-May-12 6-May-12 8-May-12 10-May-12 12-May-12 14-May-12 16-May-12 18-May-12 20-May-12 22-May-12 24-May-12 26-May-12 28-May-12 30-May-12 1-Jun-12 3-Jun-12 5-Jun-12 7-Jun-12 9-Jun-12 11-Jun-12 13-Jun-12 15-Jun-12 17-Jun-12 19-Jun-12 21-Jun-12 23-Jun-12 25-Jun-12 27-Jun-12 29-Jun-12 1-Jul-12 3-Jul-12 5-Jul-12 7-Jul-12 9-Jul-12 11-Jul-12 13-Jul-12 15-Jul-12 17-Jul-12 19-Jul-12 21-Jul-12 23-Jul-12 25-Jul-12 27-Jul-12 29-Jul-12 31-Jul-12 2-Aug-12 4-Aug-12 6-Aug-12 8-Aug-12 10-Aug-12 12-Aug-12 14-Aug-12 16-Aug-12 18-Aug-12 20-Aug-12 22-Aug-12 24-Aug-12 26-Aug-12 28-Aug-12 30-Aug-12 1-Sep-12 3-Sep-12 5-Sep-12 7-Sep-12 9-Sep-12 11-Sep-12 13-Sep-12 15-Sep-12 17-Sep-12 19-Sep-12 21-Sep-12 23-Sep-12 25-Sep-12 27-Sep-12 29-Sep-12 1-Oct-12 3-Oct-12 5-Oct-12 7-Oct-12 9-Oct-12 11-Oct-12 13-Oct-12 15-Oct-12 17-Oct-12 19-Oct-12 21-Oct-12 23-Oct-12 25-Oct-12 27-Oct-12 29-Oct-12 31-Oct-12

Balance Sheet (in $ thousands) Cash Short-term Investments Other Current Assets Current Assets Fixed Assets Total Assets

Net Income 31-Jan-12 2-Feb-12 4-Feb-12 6-Feb-12 8-Feb-12 10-Feb-12 12-Feb-12 14-Feb-12 16-Feb-12 18-Feb-12 20-Feb-12 22-Feb-12 24-Feb-12 26-Feb-12 28-Feb-12 1-Mar-12 3-Mar-12 5-Mar-12 7-Mar-12 9-Mar-12 11-Mar-12 13-Mar-12 15-Mar-12 17-Mar-12 19-Mar-12 21-Mar-12 23-Mar-12 25-Mar-12 27-Mar-12 29-Mar-12 31-Mar-12 2-Apr-12 4-Apr-12 6-Apr-12 8-Apr-12 10-Apr-12 12-Apr-12 14-Apr-12 16-Apr-12 18-Apr-12 20-Apr-12 22-Apr-12 24-Apr-12 26-Apr-12 28-Apr-12 30-Apr-12 2-May-12 4-May-12 6-May-12 8-May-12 10-May-12 12-May-12 14-May-12 16-May-12 18-May-12 20-May-12 22-May-12 24-May-12 26-May-12 28-May-12 30-May-12 1-Jun-12 3-Jun-12 5-Jun-12 7-Jun-12 9-Jun-12 11-Jun-12 13-Jun-12 15-Jun-12 17-Jun-12 19-Jun-12 21-Jun-12 23-Jun-12 25-Jun-12 27-Jun-12 29-Jun-12 1-Jul-12 3-Jul-12 5-Jul-12 7-Jul-12 9-Jul-12 11-Jul-12 13-Jul-12 15-Jul-12 17-Jul-12 19-Jul-12 21-Jul-12 23-Jul-12 25-Jul-12 27-Jul-12 29-Jul-12 31-Jul-12 2-Aug-12 4-Aug-12 6-Aug-12 8-Aug-12 10-Aug-12 12-Aug-12 14-Aug-12 16-Aug-12 18-Aug-12 20-Aug-12 22-Aug-12 24-Aug-12 26-Aug-12 28-Aug-12 30-Aug-12 1-Sep-12 3-Sep-12 5-Sep-12 7-Sep-12 9-Sep-12 11-Sep-12 13-Sep-12 15-Sep-12 17-Sep-12 19-Sep-12 21-Sep-12 23-Sep-12 25-Sep-12 27-Sep-12 29-Sep-12 1-Oct-12 3-Oct-12 5-Oct-12 7-Oct-12 9-Oct-12 11-Oct-12 13-Oct-12 15-Oct-12 17-Oct-12 19-Oct-12 21-Oct-12 23-Oct-12 25-Oct-12 27-Oct-12 29-Oct-12 31-Oct-12

CUSC of Alabama Dashboard January 31, 2012

40,000

48,283

10,000 0

195,000

190,000

185,000

180,000

175,000

170,000

165,000

155,000

150,000

140,000

46,000 46,000

44,000 44,000

42,000 42,000

40,000 40,000

Oct‐12

500,000 280,000

450,000 260,000

200,000 140,000

150,000 120,000

Jan-12 Feb-12

150,000

Participants

October 31, 2012

60,000

Revenues Income Statement M‐T‐D Actual M‐T‐D Budget Budget Variance

50,000

Revenues REVENUES

Budget Actual

TOTAL TRANSACTIONS

Mar-12 Apr-12

ALABAMA CREDIT UNIONS

200,000

190,000

180,000

160,000

71

140,000

51

130,000

120,000

110,000

100,000

Oct-12

Non-Participants May-12

Y‐T‐D Actual Y‐T‐D Budget Budget Variance

30,000

20,000

45,667 2,616 465,708 449,707 16,001

0 650 935 700 9,454 10,700 291 500 1,200 700 1,544Revenues 585 368 400 98 150 39 0 0 0 650 581 1,958 250 (500) (959) 32 52 (39) 0 266 3,640 98,255 2,716 30,672 4,791 3,679 1,730 8,594 10,000 3,350 7,400 110,900 5,000 32,450 Expenses 5,128 3,992 1,500 11,000 5,000 3,084 3,558 9,503 1,967 1,778 337 313 (230) 2,406 (5,000)

160,000

145,000

13,929 14,385 2,025 164,343 185,720 17,716

3,702 5,593 20,498 36,461 59,136 18,893

30,652

25,689

4,963 264,904 204,851 60,053

NET INCOME

NET INCOME

52,000

50,000

48,000

38,000 Jan‐12 Feb‐12 Mar‐12 Apr‐12 May‐12 Jun‐12

Jun-12

Jul‐12 Aug‐12 Sep‐12 Oct‐12

Budget

ISSUER TRANSACTIONS

240,000

220,000

300,000 200,000

180,000

160,000

100,000

Jul-12 Aug-12 Sep-12 Oct-12

A link to the CUSC video has been emailed to participating CU's following the annual meeting.

NETWORK NOTES

IV. ADJOURNMENT

V.

EXECUTIVE SESSION