A presentation on

Small Asset Size Credit Union Forum

October 13, 2010Call-in Information: 800.791.2345,

access code: 13177#

Today’s Agenda

• Welcoming Remarks Patrick La Pine– Update on LSCU – Board Planning/Renewed Commitment to SAS CU Program

• Importance of Strategic Planning Laura Vann• Resources

– CUNA Research & Statistics Adena Whitman– Alabama Profile & Florida Profile Jeanie Henson– Maximizing the Custom Performance Report David LeNoir– High Performing Credit Unions Amber Tynan

• SAS Toolkit Laura Vann/Adena Whitman• Initiatives Account David LeNoir• Compliance Update Scott Morris• Other Topics/Questions

– NCUA Town Hall Meetings

THE IMPORTANCE OF STRATEGIC PLANNING

What is Strategic Planning?

• Strategic planning is the process of determining a credit union’s long-term goals and then identifying the best approach of achieving those goals.

• The strategic planning process answers three key questions:– Where are we today?– Where do we want to be in the future?– What should we be focused on today so we’ll be where we want to be in

the future?

Why is Strategic Planning Important?

• Examiners look at a credit union’s strategic plan and business plan as part of their analysis of strategic risk in the exam process

• Strategic risk is the current and prospective risk to earnings or capital arising from adverse business decisions, improper implementation of decisions, or lack of responsiveness to industry changes

• Strategic risk is a function of the compatibility of a credit union’s strategic goals, the business strategies developed to achieve those goals, and the quality of implementation

• The tangible and intangible resources needed to carry out business strategies include communication channels, operating systems, delivery networks, monitoring systems, and managerial capacities and capabilities

Questions to Address in Strategic Planning

• Other key questions that are addressed as part of the strategic planning process are:– What is our mission?– Who are our members?– What do our members value?– What are our results?– What is our plan?

Outcomes of Strategic Planning

• Develop long-term strategies, short-term strategies and tactics that will ensure goal achievement

• Develop the foundation for the strategic business plan, a document that outlines exactly how the credit union will achieve its long-term goals

• Align growth plans with budget– Any goals should fit within the credit union’s established budget– Impact of proposed goals on key financial performance ratios should

also be considered

Development of Strategic Business Plan

• Strategic business plan will include the following elements:– Executive Summary– Management and Volunteer Structure– Market Analysis– Growth Plans– Marketing Plan– Operating Strategies– Risk Management– Financial Goals

STRATEGIC PLANNING RESOURCES

CUNA Resources – CU Data & Statistics

• CU Data & Statistics– Monthly Credit Union Estimates [PDF]

The Monthly Credit Union Estimates is generated from credit unions who volunteer to submit a brief summary of monthly financial information.

– Credit Union Reports– Annual Credit Union Data– U.S. Credit Union Profile - Second Quarter 2010 (June 2, 2010)

CUNA Resources – CU Data & Statistics

• Credit Union Statistics - Members Only– Recent CU Trends (10-year; Detailed Overview) – Bankruptcy: State-by-state overview [PDF] – State-by-State Credit Union Financial Summary [PDF] (December 2009) – State by State Bank/CU Overviews– State by State Member Business Lending Estimates– Asset Quality Trends [PDF] or spreadsheet [XLS] (December 2009) – Asset Quality Trends by State [PDF] or spreadsheet [XLS] (December

2009) – "Underserved" Census Tracts: State-by-state

CUNA Resources – CU Data & Statistics

• CU vs. Bank Comparisons– State by State Member Business Lending Profiles– Congressional District Level Credit Union Member Benefits– Frequently Requested CU/Bank Comparisons [PDF] – Commercial Banks & Credit Unions: Facts, Fallacies, and Recent

Trends [PDF] – State by State Credit Union Member Benefits

Alabama and Florida Profiles

• Quarterly economic profiles prepared by LSCU regulatory compliance staff members

• Provides economic and financial data pertinent to Alabama and Florida– Profile prepared for each state

• Sent to credit unions via email and also available in the Governmental Affairs section of the LSCU website (this data is password protected)– Research & Economic Data

Alabama and Florida Profiles

• Profiles contain information and charts on various economic indicators and other data important to credit union strategic planning– Unemployment rates– Real estate prices– Delinquent loans to loans– Net charge-offs– Return on average assets

• Profiles include quarterly snapshot comparing credit union asset groups

• Profiles also compare key ratios in state over past five years

Alabama and Florida Profiles

• Excellent tool to use in strategic planning process• Use in conjunction with your credit union’s Custom

Performance Report to develop the foundation for your strategic plan and business plan

Maximizing the Custom Performance Report

• 35+ page financial analysis document provided quarterly for each credit union (upon the release of the NCUA call report data)

• Provides insight and due-diligence into a credit union’s financial performance

• Customized and individualized for each credit union.• Highlights key performance areas in a way that can be

reviewed in a single Board meeting• Provided FREE of charge to each affiliated credit union

HIGH PERFORMING CREDIT UNIONS

High Performing Credit Unions

• Concept of high performing credit unions developed by credit union consultant Tony Ward-Smith

• Direct correlation between members use of credit union accounts and net earnings

• Credit unions that consistently do more business with members are able to do more for members

High Performing Credit Union Characteristics

• An average of just 2.5 accounts per member is the first requirement for achieving high performance status– Share– Checking– Certificates of Deposit– IRAs– Money Market Accounts– Credit Cards– New/Used Auto Loans– 1st Mortgages– Other Real Estate Loans– Consumer Loans/Unsecured Loans

High Performing Credit Union Characteristics

• Account balances indicate utilization. High performing credit unions must simply show average combined (deposits and credit) account balances of $4,746 per member, the 2009 national average

• High performing credit unions must have positive net earnings

High Performing Credit Unions

• Through FREE resource available at www.ward-smith.com, credit unions can run comparisons between their credit union and any other credit union in the U.S.– Data comes from NCUA 5300 Call Reports– Credit unions are grouped by number of members and state

• Comparisons look at member usage of products and services only– Only ratio compared is ROAA

• Great resource to use in conjunction with your Custom Performance Report– Valuable in developing growth benchmarks for products and services

SAS TOOLKIT

SAS Toolkit

• The Small Asset Size Credit Union Toolkit is a valuable, ever- expanding resource containing budget, business plan, financial education and financial projection templates, questionnaires, sample presentations, and best practices studies.– BSA Risk Assessment Resources– Branch Set-up Checklist– Financial Projections/Budgeting Template– Business Plan Template– OFAC Match– REAL Solutions Payday Loan Alternative Toolkit– Tools to Promote Direct Deposit

SAS INITIATIVES ACCOUNT

SAS CU Initiatives Account

• Available to affiliated credit unions under $35 million in assets• $400 account in your name• Can be used to purchase any LSCU or League Service Corp.

(LEVERAGE) product or service• Must be used before the end of 2010

SAS CU Initiatives Account

• Possible uses of initiatives account:– LSCU Education and Training Events

• Development Conference• BSA Training

– STAR/MERIT/VAP Modules – LSCU Strategic Planning Sessions – LSCU Service Corp. Products

• Gift Card program• Audits• Ventelligence

REGULATORY COMPLIANCE UPDATE

Regulatory Compliance Update

• Update on NCUA Town Hall Meeting on October 12th

– Corporate Stabilization

• Review of regulatory and compliance issues affecting small asset size credit unions– Important compliance dates to remember

• Compliance Helpline– Delivers compliance advice, information and recommendations– Provides authoritative, definitive and accurate information to assist in

the day-to-day operations of credit unions

• Online Compliance Manual– Federal, Alabama and Florida-specific content– Checklists for compliance– Direct links to laws and regulations– Frequently asked questions

• Compliance Calendar– Regulatory Compliance Effective Dates– Operational Compliance Event Dates

• Model Polices

Questions?

31

LSCU Contact Information:Alabama-based Staff:

Laura Vann, Vice President of Cooperative InitiativesEmail: laura.vann@lscu.coopExtension: 2181Cell: 205.747.8675

Adena Whitman, Director of Member RelationsEmail: adena.whitman@lscu.coopExtension: 2134Cell: 205.887.1446

David LeNoir, Member Relations SpecialistEmail: david.lenoir@lscu.coopExtension: 2158Cell: 251.656.6408

Florida-based Staff:

Jeanie Henson, Member Relations SpecialistEmail: jeanie.henson@lscu.coopExtension: 1038Cell: 850.212.9059

Amber Tynan, Member Relations Specialist Email: amber.tynan@lscu.coopExtension: 1154Cell: 850.345.8352

LSCU Toll-Free Number: 1-866-231-0545

Patrick La Pine, President/CEOEmail: patrick.lapine@lscu.coopExtension: 1002Cell: 850.212.3160

Cassandra Grayson, Association Services Chief of StaffEmail: cassandra.grayson@lscu.coopExtension: 1004Cell: 850.345.1454

LSCU SAS CU Forum October 13, 2010