2012 Strategic PlanHighlights

Revised 2012 Strategic Plan The LSCU’s 2012 plan and budget reflects the League’s

evolution since consolidation as well as the economic and systematic challenges credit unions continue to face.

Additionally, we continue to fine-tune the League’s structure to maximize the use of all available resources.

The “Target” icon is used throughout the plan to help identify 2012 plan priorities based on feedback from credit unions through the Member Survey and MT/policymakers at this year’s planning retreats.

2012 plan priorities will be the basis for Board meeting strategic discussions throughout the upcoming year.

2012 LSCU Plan Priorities1. Focus resources on our four core competencies (i.e. the

things we want to be really good at).2. Achieve greater legislative successes at both the state

and federal levels.3. Expand compliance training and support.4. Improve affiliation and perceived value of CUNA/League

model for each asset size class of credit unions.5. Identifying industry trends and respond accordingly (i.e.

how and what do we monitor?).6. Pursue greater collaboration and expansion of LSCU

brand outside our existing borders.7. Continue to achieve organizational efficiencies while

optimizing human capital (i.e. getting the most and best out of our existing staff).

8. Be proactive in pursuing our “Keys to Success.”

Governmental Affairs Education & Training Communications CooperativeInitiatives

Finance & Administration

Legislative Advocacy

Grassroots Advocacy

Political Action Fundraising

Regulatory Advocacy

Compliance Support & Information

Campaign Involvement Strategies

Annual Convention & Exposition (AC&E)

Conferences & Workshops

Distance Learning

LSCU Councils

Media Relations

Publications

Website

Multi & Social Media Innovations

Cooperative Brand Campaign

Membership Relations

SAS CU Development & Support

Chapter Support

Foundation

Financial Education Coordination

International Partnership

Accounting

Human Resources

Information Technology

Facilities

LSCU Core Competencies & Priorities

LSCU Core Competencies

Points of Differentiation to Gain a Competitive Advantage: Achieve legislative wins at both the state and federal

level. Build and maintain meaningful relationships with key

policymakers to the benefit of Alabama and Florida CUs as well as the entire industry.

Meet or exceed PAC fundraising goals. Elect credit union friendly candidates to public office

and hold back support from lawmakers that don’t support our issues.

Provide superior compliance support and information as part of the “Value of Affiliation.”

Department: Governmental Affairs

Core Competency: Governmental AffairsPriorities:

a) Legislative Advocacy – Develop and implement an industry-driven, proactive agenda.

b) Grassroots Advocacy – Coordinate state and federal grassroots lobbying efforts.

c) Political Action – Expand involvement among credit unions and increase overall PAC fundraising.

d) Regulatory Advocacy – Coordinate state and federal regulatory relations and issue communication.

e) Compliance Support & Information –Provide resources to assist credit unions with meeting their regulatory compliance needs.

f) Campaign Involvement –Coordinate grassroots involvement in election campaigns.

2012 LSCU Core Competencies, Priorities & Key Activities

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LSCU Core Competencies

Points of Differentiation to Gain a Competitive Advantage: Be on the cutting edge of identifying industry trends

and training needs. Provide excellent content, pricing and attendee

experience that meet the educational needs of credit unions.

Collaborating with system partners, become a recognized regional leader in education and training for credit unions.

Department: Education & Training

Core Competency: Education & Training

Priorities:a) Annual Convention & Exhibition

(AC&E) - Provide excellent content, pricing, marketing and attendee experience.

b) Conferences & Workshops –Provide excellent content, pricing, marketing and attendee experience.

c) Distance Learning – Provide excellent content, pricing, marketing and user experience.

d) LSCU Councils – Provide excellent networking and educational opportunities for credit union professionals.

2012 LSCU Core Competencies, Priorities & Key Activities

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LSCU Core Competencies

Points of Differentiation to Gain a Competitive Advantage: Be Alabama and Florida credit unions first source for

industry news and information. Harness current and emerging communication

channels to educate the media, consumers and lawmakers on the benefits of credit unions.

Continue to execute a cooperative brand campaign within our borders and expand into other states.

Department: Communications

Core Competency: CommunicationsPriorities:

a) Media Relations – Identify proactive opportunities for media coverage.

b) Publications - Produce content-rich publications that inform and educate.

c) Website – Provide a functional, high-tech and content-rich website.

d) Multi & Social Media Innovations -Use emerging technologies to better inform, educate and empower.

e) Cooperative Brand Campaign –Grow statewide image campaign.

2012 LSCU Core Competencies, Priorities & Key Activities

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LSCU Core Competencies

Points of Differentiation to a Gain Competitive Advantage: Focus on activities that reinforce credit unions’

cooperative spirit and social mission. Maintain high visibility in the field both at the chapter

level and with individual CUs. Be responsive to the needs of credit unions. Effectively tell the story of the LSCU and CUNA.

Department: Cooperative Initiatives

Core Competency : Cooperative InitiativesPriorities:

a) Membership Relations - Develop an affiliation retention and recruitment strategy with an emphasis on relationship building.

b) SAS CU Development & Support -Provide programs and services directed at the needs of small asset size credit unions.

c) Chapter Support - Provide leadership and support for chapters and chapter leaders.

d) Foundation - Provide leadership and management support for foundation.

e) Financial Education Support -Position credit unions as strong advocates for consumer financial education.

f) International Partnership - Oversee implementation and act as liaison between credit unions and WOCCU.

2012 LSCU Core Competencies, Priorities & Key Activities

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LSCU Core Competencies

Points of Differentiation to Gain a Competitive Advantage: Ensure the LSCU & Affiliates are operating efficiently. Retain our best and brightest staff.

Department: Finance & Administration

Core Competency: Finance & AdministrationPriorities:

a) Accounting - Maintain efficient and effective processes for accounting, internal controls and reporting.

b) Human Resources - Advance a positive work environment and competitive wages/benefits for staff.

c) Information Technology - Implement efficient and effective use of technology support for staff.

d) Facilities - Manage facilities and major fixed asset strategies in support of LSCU & Affiliates.

2012 LSCU Core Competencies, Priorities & Key Activities

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2012 BudgetHighlights

2012 BudgetActuals 2010 Actuals 2011 Budget ‐ 2012

Revenue 4,182,980 4,125,049 4,194,634

Cost of Sale (650,800) (724,483) (755,537)

Gross Margin 3,532,180 3,400,567 3,439,097

Personnel Expense (1,851,857) (1,830,268) (1,978,089)

Operating Expense (749,093) (831,097) (923,100)

Travel Expense (235,982) (255,200) (264,913)

Income Before Overhead 695,249 484,001 272,996

Overhead (318,481) (319,448) (203,148)

Net Income 376,768 164,553 69,848

2012 Budget Summary• Revenues expected to increase by $69.5k or 1.7%.

– 80.6% of the increase is from dues.• The 3rd year of the Alabama phase in of the consolidated

dues table.• Some increase in assets of credit unions have offset

some of the loss of dues from mergers.– 6.05% increase in Education program revenues.

• Slight increase projected for AC&E, Development Conference, LSCU Webinars and the Councils.

– Cost of Sale expected to increase by 4.29% largely from LSCU Educational events.

– LSCU Total Gross Margin is expected to increase by 1.13% from $3.4M to $3.439M.

2012 Budget Summary (Con’t)• Expenses are expected to increase by 4.12% in 2012.

– Personnel costs from 2011 to 2012 are expected to increase by 8.08%.

– This is largely a result of positions being vacant for part of 2011 and budgeted to be fully staffed in 2012.

• Education Department reorganized utilizing current League staff with outside consulting assistance provided by CUES. An actual .40 FTE decrease in 2012.

– Operating expenses will increase by 8.08% in 2012. • New creative for second year of image campaign being

paid for out of League budget.• Full-year of John McKechnie as contract federal lobbyist.• Expenses budgeted for the RNC in Tampa.

2012 Budget Summary (Con’t)• Expenses:

– Travel expenses projected to increase by 3.81%.• Cooperative Initiatives staff more on the road in 2012.

– Overhead expenses projected to decrease in 2012.• As LEVERAGE adds additional positions, LSCU

positions become a smaller % of the total number of employees, which decreases LSCU % of the total allocated overhead.

LSCU/LEVERAGE Full-Time Employees

2012 Budget 2011

LEVERAGE 53 50LSCU 21 21

Total FTE's 75 72

Savings from Consolidation

2007 2008 2009 2010 2011 2012 VARIANCE

ACTUAL ACTUAL ACTUAL ACTUAL PROJECTED BUDGET2007 Actual ‐2012 Budget

Operating Expenses 4,159,362 3,985,848 3,906,695 3,155,412 3,236,014 3,369,249 (790,113)

LSCU Operating Expenses with image campaign creative cost for 2012

2007 2008 2009 2010 2011 2012 VARIANCE

ACTUAL ACTUAL ACTUAL ACTUAL PROJECTED BUDGET2007 Actual ‐2012 Budget

Operating Expenses 4,159,362 3,985,848 3,906,695 3,155,412 3,236,014 3,259,316 (900,046)

LSCU Operating Expenses without image campaign costs

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2012 Strategic PlanHighlights

2012 LEVERAGE Plan Priorities• Increase new sales of existing products and services

within Alabama/Florida as well as outside or core market.• Focus resources on existing products with the greatest

revenue and market growth potential (i.e. Blue Ocean Strategy).

• Identifying industry trends and credit union needs; respond accordingly (i.e. sharpen our peripheral vision).

• Streamline product development and implementation process to ensure speed to market.

• Increase awareness and perceived value of LEVERAGEbrand linked to core product and service offerings.

• Selectively manufacture new products where there is a clear need and business opportunity in the marketplace.

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Manufactured Products

Value-Added & Distributed Products

Product Development

Sales Marketing

Transactional Services- Debit Cards- Credit Cards- Chargeback Services- Gift Cards- Shared Servicing

Audit and Consulting

PurchasingSolutions

Compliance Solutions

Merchant Lending

Recruiting

Value-AddedProducts- Remarketing- CU Solutions Group- Office Depot

Distributed Products- CUNA Mutual Group - NADA/Blackbook- John M. Floyd- Telecom Recovery- SecureWorks- NewGround- CUNA Strategic Services- Landrum- CBS- O’Rourke & Associates- Transworld

Develop new ideas and solutions.

Enhance or improve existing products.

Market research.

Develop product model.

Determine pricing, revenue and ROI models.

Prepare businesscase.

Identify vendors.

Perform due diligence.

Launch.

Develop sales plans and strategies.

Generate leads.

Identify areas of need.

Stimulate interest.

Diagnose needs and create proposals.

Close sales.

Sales implementation and follow-up.

Manage brand for LEVERAGE.

Develop positioning statements and marketing plans.

Promote LEVERAGE products.

Manage website content.

CORE BUSINESS UNITS

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2012 BudgetHighlights

2012 BudgetActuals 2010 Actuals 2011 Budget - 2012

Revenue 9,595,174 10,824,460 11,581,713

Cost of Sales (1,628,753) (4,290,510) (4,809,934)

Gross Margin 7,966,422 6,533,950 6,771,779

Personnel (3,999,180) (3,933,501) (4,279,436)

Operating Expenses (2,648,252) (2,079,774) (2,168,451)

Travel (265,263) (319,029) (397,579)

Income Before Overhead 1,053,726 201,647 (73,686)

Overhead 298,686 314,586 272,825

Pre-tax Income 1,352,412 516,233 199,138

Income Tax (494,233) (242,151) (82,902)

Net Income 858,179 274,082 116,236

• Revenues projected to increase in 2012 by approximately 7%.– Slight increase in debit card sales. – Sprint program revenue expected to increase $58,500.

• Increase less as CUSG decreased reimbursement per credit union member.

– CUNA Mutual revenue is projected to increase approximately 2.8%.– Revenue in 2012 budget for ComplyTrac compliance solution.– Revenue in 2012 budget for new Merchant Lending program.– For some programs revenue is projected to decrease:

• NADA, Remarketing– Ventelligence to continue to expand into other states and creating

an increase in revenue for 2012.• Cost of Sale expected to increase for 2012.

– On a Gross Margin basis, LEVERAGE is budgeted a 3.63% increase in Gross Margin.

– Plan is to increase this margin over time.

2012 Budget Summary

2012 Budget Summary (Con’t)• Expenses projected to increase by approximately 7%.

– Personnel costs up 8.8%.• Increase in health care costs.• ComplyTrac position for the full year vs. half year in

2011.– Additional position budgeted as of July 2012 if

demand for product warrants.• Merchant Lending program position added in 2012.• CU-ACE auditor position added bringing us to six

auditors in the field.• In 2011, there were several positions that were

vacant at some time during the year.

2012 Budget Summary (Con’t)– Operating expenses up 4.3%.

• Occupancy costs in Birmingham facility up 3%.– We currently have 5,200 square feet unoccupied

space in Birmingham at a loss of $134k.• Staff training cost up $39k for 2012.

– 40% of this is sales training for Sales team.• Depreciation up 3% due to new capital purchases.• Promotion costs up 14% due to marketing action plans

for ComplyTrac and Merchant Lending.– Travel to increase approximately 24.8%.

• New product rollouts.• New state implementations.• BDC presence in non-core state markets.

2012 Budget Summary (Con’t)• Strategic Plan Initiatives:

– Per 2011 strategic planning retreat, focus resources on products where we can excel:

• Ventelligence• ComplyTrac• Merchant Lending

– Outcome of these programs could have a profound impact on 2012 net income.

– Wind down of some marketing agreements as they sunset.• Set new net revenue threshold of $50k.

– Create “Innovation Team” to supplement research & development staff to scan the environment.

– Refocus sales activities and variable compensation model to match strategic plan priorities.

2012 Budget Summary (Con’t)• Small Asset Size Credit Union Voucher Program

– Each affiliated credit union under $50 million in assets will have a $500 voucher to use for any LSCU/LEVERAGE product or service.

• This increased from $400 in 2010-11.• The asset size was increased from under $30

million to under $50 million.– This is paid out of LEVERAGE funds and administered

by the Cooperative Initiatives staff.• CUBS dissolved and most of lingering costs absorbed in

2011.