/Dec-2011%20Board%20Packet

CU SERVICE CENTERS, INC. BOARD OF DIRECTORS MEETING THURSDAY, DECEMBER 8, 2011 LSCU OFFICES AGENDA I. CALL TO ORDER - ROLL CALL II. CONSENT AGENDA A. Adoption of Minutes B. Treasurer's Report 1. October Statements III. MANAGEMENT REPORT IV. BUSINESS A. Update on 2011 Strategic & Marketing Plan B. Proposed CUSC 2012 Budget & 2012 Proposed Strategic Plan C. 2012 Board Meeting Dates (All meetings are 9am - 11am CST) 1. February 23rd - LSCU Office 2. April 4th - Montgomery (in conjunction with LSCU State GAC) 3. June 28th - LSCU Office 4. August 16th - Board Planning Retreat @ Ross Bridge (8 am - 5 pm) 5. October 3rd - LSCU Office 6. November 9th - CUSC 20th Annual Meeting - Point Clear (in conjunction with LSCU Development Conference) 7. December 13th - LSCU Office D. Outlet Approval 1. Family Security CU - 1 location 2002 Gunter Avenue - Guntersville, AL 35976 2. Riverdale CU - 2 locations 198 Highland Avenue - Selma, AL 36701 601 County Road 78 - Selma, AL 36703 V. UNFINISHED BUSINESS A. Update on new product - Cash Banking VI. ADJOURNMENT

CU SERVICE CENTERS, INC. BOARD OF DIRECTORS MEETING THURSDAY, OCTOBER 27, 2011 ABRIDGED MINUTES 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 at 9:10 a.m. in the library of the LSCU Birmingham office on Thursday, October 27, 2011.

The following Directors were in attendance at the meeting: Ms. Linda Cencula, CEO, AL Telco CU Mr. Monte Hill, CEO, Family Savings CU Mr. Patrick La Pine, CEO, LSCU Mr. Merrill Mann, CEO, APCO CU Mr. Ned McHenry, CEO, AL State ECU Mr. Shane Nobbley, CEO, Family Security CU The following Directors were unavailable for the meeting: Mr. Heath Harrell, CEO, Guardian CU Mr. Joe McGee, CEO, Legacy Community FCU Mr. Steve Nix, CEO, First Educators CU CONSENT AGENDA The Consent Agenda contained the minutes of the August 11 th, 2011 meeting as well as financials for months ending July, August and September 2011.

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

MANAGEMENT REPORT Mrs. Dukes reported that Riverdale Credit Union in Selma, AL would be opening their main office as an outlet location the 1st quarter of 2012. She stated that Energen Credit Union would like to open their Homewood and Montgomery locations as outlets by year-end.

She noted that Birmingham Police CU had expressed an interested in joining the Alabama network.

She also stated that Coosa Pines FCU would be relocating their Chelsea branch in November 2011 and flyers and signs had been posted in the existing location to notify members of the change.

She reported that discussions with TVA Credit Union and Azalea City Credit Union were on-going. Mrs. Dukes said she had been busy during 2 nd and 3rd quarter of the year with training; however those requests had slowed down at this point.

She stated that Alabama marketing kits had been delivered to 34 participating credit unions and were seemingly well received.

She provided a CO-OP shared branching update. She said that in September CO-OP Financial Services announced a letter of intent to combine operations with the Financial Service Centers Cooperative, Inc. (FSCC) had been signed. The combination of these two entities should serve to unify shared branching services, provide an extensive expansion of outlets for credit union members, as well as provide greater efficiencies in branding, technology and administrative costs that can be redirected to offer more competitive pricing and enhanced patron dividends for network participants. She noted that between the two organizations, they represented 1,700 credit unions nationwide, providing 4,300 physical branch locations available to members, plus 2,200 Vcom® kiosk locations at 7-Eleven stores.

She stated that staff would keep the Directors updated as this proposed consolidation progressed.

Mr. La Pine said as credit union users there shouldn’t be that much of a difference as it relates to operations.

BUSINESS Update on Strategic & Marketing Plan Mrs. Dukes discussed market opportunity for the network.

She also provided an update on all applicable areas of accomplishment in the Strategic Plan and noted that the marketing kits would be placed on the website for their use. She reported on the KPMs (Key Performance Measures) and noted the updates/progress in each area was noted in “red” in their materials.

There was brief discussion regarding potential users of the network.

CUSC Patronage Dividend Mr. Scott Morgan discussed various options for paying a patronage dividend.

There was considerable discussion regarding the various options offered as well as a discussion regarding dividends and remaining shares of stocks the corporation still maintained.

Discussion continued with Mr. La Pine stating that plans were being discussed to schedule a planning session for CUSC Directors in 2012 and perhaps this could be discussed further.

Discussion continued.

Motion was made by Mr. Merrill Mann and seconded by Mr. Ned McHenry that management be authorized to proceed with the payment option of 40%/10%, with 40% in patronage dividends and 10% standard dividend.

Mr. Morgan explained the process of computing and steps involved, noting checks would be delivered by the end of February 2012.

Results of CUSC Participant Survey Mr. Morgan reported a 41% response rate on the CUSC participant survey which was a very good indicator, especially for the first year. He stated that we would be doing an annual survey. He proceeded with a presentation of the results of the survey.

Outlet Approval Motion made by Mr. Merrill Mann and seconded by Ms. Linda Cencula to approve outlet requests for two locations of Energen Credit Union, their office on West Oxmoor Road in B’ham and one on Chestnut Street in Montgomery.

Mr. Morgan asked the Board’s pleasure as it related to outlet requests being placed in the Consent Agenda.

It was discussed and decided to continue to vote on each location as requested.

Next Board Meeting The next CUSC Board of Directors meeting is scheduled for Thursday, December 8, 2011 with the proposed 2012 budget and updated strategic plan on the agenda. It was stated that Board meeting dates for 2012 would also be provided at that meeting.

Management asked if there was any interest in changing the meetings to four in-person meetings and two call-in meetings.

After discussion, it was decided that the meeting schedule would remain the same for 2012 and the scheduling of meetings could be discussed further, possibly at the 2012 Planning Session.

Also discussed was the time and location for the CUSC Annual Meeting, noting that the previous two years’ meeting struggled with attendance.

Mr. La Pine stated that since this meeting involved Alabama credit unions, management was giving consideration to holding this meeting in conjunction with the Development Conference in 2012.

Mr. La Pine discussed a potential vendor/service that management had previewed and would continue discussions with them in order to determine if the product/service could be brought to CUSC, Inc. The company is New Market Partners and they offer cash-checking for consumers. He talked about the Gen Y market that was not utilizing the services of credit unions and how this product seemingly was a perfect fit for that market.

He said this service was a unique and value-added product for credit unions which could prove to be profitable.

He stated that management would continue to complete due diligence and would return with more information at the next board meeting.

Mr. Morgan presented slides with information gathered as to where the younger generation was conducting their financial business, and surprisingly neither banks nor credit unions were getting there business, but retailers such as Target, Wal-Mart and others.

He said further statistics showed that 23% of credit union members were utilizing these retailers for financial services as well.

He reiterated that more information would be presented at the December Board meeting.

There was brief discussion regarding the service as well as the information presented.

UNFINISHED BUSINESS There was no unfinished business.

ADJOURNMENT Motion made by Mr. Ned McHenry and seconded by Mr. Merrill Mann to adjourn the meeting.

The meeting adjourned at 11:40 a.m.

Respectfully submitted,

Teresa Gray, Recording Secretary For Steve Nix, Secretary

CUSC of Alabama Executive Summary of October 2011 Operations As of the end of October 31, 2011, CUSC of Alabama had assets totaling $3,497,266.

Cash and Cash Equivalents of $3,431,577 comprise most of the assets. We are still working with Corporate America on getting the SimpliCD program setup. We have completed all the paperwork and are waiting for them to actually implement it for us.

Based on preliminary projections for year-end 2012 and using the patronage rebate program approved at the last board meeting, patronage rebates are expected to be around $128k and total shareholder dividends around $32k.

Revenue for October was $44,554 as compared to a budget of $47,405. This resulted in a negative revenue budget variance for October of $2,850. Year-to-date revenue is tracking at $435,772 as compared to a budget of $456,275, resulting in a negative year-to-date budget variance of ($20,503) or (4.5%) while year-to-date total operating expense are tracking $77,916 or 30% below budget.

Total outside services expense for October was $4,359 below budget and year-to-date these expenses are tracking $60,536 below budget and additionally Total Travel costs are also tracking much lower than budget. Largely responsible for these variances was a vacant position at the management company and a reduction in the amount that the management company is billing for these services.

Advertising expenses for October were $358 as compared to a budget of $5,028 resulting in a positive budget variance of $4,670 for October. Year-to-date marketing expenses are tracking $4,394 lower than budget. Most of the marketing initiatives planned for 2012 have been implemented and marketing expenses should come in under budget for 2012.

In October, CUSC began accruing for the Federal and State income taxes that will be due for 2012 based on the patronage program approved at the last board meeting.

CUSC of Alabama recorded net income for October of $25,567 as compared to a budgeted net income of $22,257, which was $3,310 higher than budget. Year-to-date, CUSC of Alabama has exceeded budgeted net income by $57,413.

Respectfully submitted, G. Scott Morgan SR VP, Finance & Administration League of Southeastern Credit Unions & Affiliates

Credit Union Service Centers, Inc. Balance Sheet October 31, 2011

Page: 1

Current Assets Cash Regions Bank Corporate America C U

$27,726.40 3,403,850.72 -----------------------------

Total Cash Accounts Receivable C.U. & Outlet Receivables Deferred Tax Deferred Tax Allowance

3,431,577.12

59,075.23 23,160.34 (23,160.34) -----------------------------

Total Accounts Receivable Prepaid Expense Prepaid Insurance Prepaid Other

59,075.23

2,979.32 2,616.22 -----------------------------

Total Prepaid Expense Fixed Assets Furniture & Equipment Furniture & Equipment Depr.

5,595.54

6,395.06 (5,377.11) -----------------------------

Total Fixed Assets

1,017.95

Investment in Affiliate ------------------------Total Assets

3,497,265.84 ==============

Credit Union Service Centers, Inc. Balance Sheet October 31, 2011

Page: 2

LIABILITIES & EQUITY Accounts Payable Accrued Expenses CU Service Corp. Invoices Other Payable Federal Income Tax Payable State Income Tax Payable

$0.00 32,849.84 18,503.79 3,062.00 3,835.00 -----------------------------

Total Accounts Payable Equity Common Stock Paid in Capital RETAINED EARNINGS Net Gain (Loss)

58,250.63

67.00 3,349,933.00 (166,288.67) 255,303.88 -----------------------------

Credit Union Service Centers, Inc. Income Statement For the Ten Months Ending October 31, 2011 October Actual OPERATING INCOME Non-Investor Fees Licensed Service Centers Interest Income Other Income Operating Income

October Budget

YTD Actual

YTD Budget

1,086.30 1,100.00 10,323.80 10,325.00 43,126.00 45,600.00 414,403.50 438,900.00 342.25 705.00 4,192.98 7,050.00 0.00 0.00 6,852.00 0.00 ----------------------------- ------------------------------- ------------------------- --------------------44,554.55 47,405.00 435,772.28 456,275.00

OPERATING EXPENSE ----------------------------- ------------------------------- ------------------------- --------------------Benefits Group Insurance Total Benefits Training User/Outlet Training Total Training Travel Travel & Lodging Meals & Entertainment Variable Auto Costs Total Travel Outside Services Legal Services Data Processing CPA Services Management Service Fees Reports/Records Management Insurance/Bonds/O&S Other Outside Services Total Outside Services Communications Telephone Postage

Total Communications Advertising & Promotions Advertising & Marketing Total Advertising & Promotion

0.00 0.00 948.67 0.00 ----------------------------- ------------------------------- ------------------------- --------------------0.00 0.00 948.67 0.00

0.00 650.00 1,787.62 3,350.00 ----------------------------- ------------------------------- ------------------------- --------------------0.00 650.00 1,787.62 3,350.00

0.00 670.00 1,543.53 6,700.00 0.00 420.00 450.90 4,200.00 32.00 570.00 1,151.17 5,700.00 ----------------------------- ------------------------------- ------------------------- --------------------32.00 1,660.00 3,145.60 16,600.00

500.00 500.00 5,000.00 5,000.00 229.19 230.00 2,686.23 2,300.00 1,308.11 2,000.00 12,790.53 20,000.00 7,150.95 10,570.18 56,507.68 105,701.80 879.65 950.00 8,383.21 11,500.00 304.00 345.00 3,061.52 3,450.00 164.07 300.00 1,985.43 3,000.00 ----------------------------- ------------------------------- ------------------------- --------------------10,535.97 14,895.18 90,414.60 150,951.80

180.14 182.19

200.00 370.00

1,263.00 2,181.08

2,000.00 3,700.00

----------------------------- ------------------------------- ------------------------- --------------------362.33 570.00 3,444.08 5,700.00

357.98 5,027.50 45,743.85 50,137.50 ----------------------------- ------------------------------- ------------------------- --------------------357.98 5,027.50 45,743.85 50,137.50

Furniture & Equipment Furniture & Equipment Depr.

Equipment/Lease Rental Personal Property Tax Software Fees & Maintenance Total Furniture & Equipment Facilities Insurance/POP Rent Total Facilities Materials & Supplies Operating Supplies Total Materials & Supplies Programs & Conferences Meetings & Conferences Total Programs & Conferences Miscellaneous Gain/Loss on Sale of Assets Total Miscellaneous Taxes & Fees Misc. Taxes & Fees Deferred Tax Expense Federal Income Taxes State Income Taxes Total Taxes & Fees Total Operating Expenses Net Income

99.40 80.00 993.91 800.00 826.75 827.00 8,267.50 8,270.00 (1,111.67) 130.00 192.85 1,300.00 0.00 135.00 1,075.50 945.00 ----------------------------- ------------------------------- ------------------------- --------------------(185.52) 1,172.00 10,529.76 11,315.00

68.42 150.00 1,149.68 1,500.00 822.75 823.00 8,227.50 8,230.00 ----------------------------- ------------------------------- ------------------------- --------------------891.17 973.00 9,377.18 9,730.00

68.48 200.00 539.74 2,000.00 ----------------------------- ------------------------------- ------------------------- --------------------68.48 200.00 539.74 2,000.00

28.02 0.00 4,278.44 8,600.00 ----------------------------- ------------------------------- ------------------------- --------------------28.02 0.00 4,278.44 8,600.00

0.00 0.00 0.00 0.00 ----------------------------- ------------------------------- ------------------------- --------------------0.00 0.00 0.00 0.00

0.00 0.00 3,062.00 3,835.00 ----------------------------6,897.00 ----------------------------18,987.43 ----------------------------25,567.12 ================

0.00 0.00 0.00 0.00 ------------------------------0.00 ------------------------------25,147.68 ------------------------------22,257.32 =================

3,361.86 0.00 3,062.00 3,835.00 ------------------------10,258.86 ------------------------180,468.40 ------------------------255,303.88 ==============

0.00 0.00 0.00 0.00 --------------------0.00 --------------------258,384.30 --------------------197,890.70 ============

TO: CUSC, Inc. Board of Directors FROM: Tameka Dukes REF: Management Report DATE: December 8, 2011 Network Development Management continues on-going conversations with all interested credit unions to join the Alabama shared branching network as both Issuers and Acquirers. Riverdale has received Board approval to open their Selma location as an acquirer. CO-OP Shared Branching and the credit unions data processor plan to do testing during the month of December.

Management will be asking for one new outlet approval for Family Security CU's Guntersville location. This location will be the only location within Guntersville area. This should have a positive impact to the Alabama network. Also, 2 new outlet approvals for Riverdale CU's two Selma locations.

Coosa Pines FCU's Chelsea location relocated and open the doors to their new location on Monday, November 21st. An audit has been performed and the address should be changed

by CO-OP Shared Branching in December.

CO-OP Shared Branching Update The CO-OP Think 12 conference registration is now open to all. Think 12 will be at Boca Raton Resort & Club in Boca Raton, FL April 29 - May 2, 2012. Please visit CO-OPThink.org for details.