2012 Elections: Implications for Credit Unions?

1. 2012 Elections: Implications for Credit Unions? Richard Gose, SVP Political Affairs Bill Hampel, Chief Economist Mike Schenk, VP Economics & Statistics Ryan Donovan, SVP Legislative Affairs (Moderator)

2. Part I. Getting to Know You

3. Q1. What is the asset size of your credit union? < $50 million $50 – 249 million $250 - $999 million > $1 billion

5. Q2. Thinking about your own finance condition, are you better or worse off than you were four years ago? Much better Better About the same Worse Much worse

6. Consumer ConfidenceConference Board

7. Q3. Looking back, how have the last four yours affected your credit union? • They were devastating, we are far from recovering • Pretty bad, but we're mostly back • We really weren't hurt at all

8. Credit Union Loan Losses

9. Credit Union Net IncomeTo Average Assets

10. Net Capital to Assets

11. Q4. With Which Political Party Do You Most Closely Align? Republican Party Democratic Party Other Party I’m an independent

12. Voting Behavior CEO / BOD Survey Q. 29/16

13. Q5. Where do you stand on Social Issues? Very Conservative Conservative Middle of the Road Progressive Very progressive

14. Q6. Where do you stand on Fiscal / Budget issues? Very Conservative Conservative Middle of the Road Liberal Very Liberal

15. Q7. Do you approve or disapprove of the job the President is doing? Strongly Approve Approve Neither Approve nor disapprove Disapprove Strongly disapprove

16. 2012 Election Out Look Presidential: • OBAMA APPROVAL AVERAGE: 48% • HISTORIC COMPARISONS (June 7): • Bush 41 at this point: 37% Lost • Clinton at this point: 58%Won • Bush 43 at this point: 49% Won • Reagan at this point: 55% Won • Carter at this point: 32% Lost

17. Q8. Do you approve or disapprove of the job Congress is doing? Strongly Approve Approve Neither Approve nor disapprove Disapprove Strongly disapprove

18. CONGRESS: JOB RATING** Approve 17% Disapprove 79% ** Gallup, June 7-10

19. Q9. If the Presidential election were held today, for whom would you vote? Obama Romney Other Don’t Know

20. Latest Polling

21. Electoral Count

22. Q10. Not thinking about your member of Congress, which party would be more effective running Congress? Republican Party Democratic Party Split Control (one party controlling the House; the other party controlling the Senate)

23. Which Party Best Represents Views On Issues voter Survey Q03

24. Q11. Who do you think will win the Presidential Election in November? Obama Romney Other Don’t Know

25. Q12. Does the economy have a greater effect on election results or do election result have a greater effect on the economy? Economy has a greater effect on elections Election has a greater effect on economy Both about the same There is no relationship between the economy and the elections

26. Most Important Issue voter Survey **In 2011 the issue was listed as the war in Iraq and Afghanistan Q02

27. The Economy and Elections • No incumbent has been re-elected with an unemployment rate was above 8% since Franklin Roosevelt in 1936. • 15 of the past 16 elections have been predicted by the following model: Incumbent party victory is inversely related to the change in the unemployment rate during the second quarter of the election year. March: 8.2% April: 8.1% May: 8.2%

28. Unemployment Rates and RecessionsPercent of the Labor Force

29. Part II. What’s Happened Here?

30. Q13. How would you describe the local economy where you live? Mired in recession Plodding along, but not robust Booming!

31. Gross Domestic ProductQuarterly Changes at Annual Rates, Real 2012, 2013 Forecasts 2001 Recession

32. Real GDP Since 1978

33. Q14. The deficit in the current budget is 1.3 trillion dollars. As far as you are concerned, how important is it to reduce the size of the federal budget deficit? Extremely Important Very Important Somewhat Important Not Very Important Not Important At All

34. Reducing Budget Deficit is Important voter Survey This year the federal government will spend $1.3 trillion more than it collects in taxes. How important is it to reduce the size of the federal budget deficit? * Q58, Q59

35. Q15. Which of the following ways is the best way to address the Federal budget deficit? Only spending cuts More spending cuts than tax increases Equal spending cuts and tax increases More tax increases than spending cuts Only tax increases

36. Spending Cuts vs. Tax Increases voter Survey Which of the following is the best way to address the Fed. Budget deficit? * Q60

37. Q16. With the budget deficit at 1.3 trillion dollars, and the unemployment rate at 8.2%. Which is more important right now? Reducing the size of the Federal budget deficit, even if that raises the employment rate Taking measures to reduce unemployment, even if that increases the deficit Do nothing and hope for the best. Don’t know.

38. Voters Prefer Stimulating Economic Growth & Reducing Unemployment voter Survey * Q58, Q59

39. Q17. Who do you blame for the state of the economy? The bankers The Europeans The President The former President The Congress We have no one to blame but ourselves

40. Part III. Storm Clouds on the Horizon or Light at the End of the Tunnel?

41. Q18. Has Bank Transfer Day & follow-on activities resulted in any significant membership growth at your CU? Yes – we’ve seen significant, “above-normal” gains in membership No – things seem pretty normal around here No – but things aren’t “normal” - there are a bunch of hippies camped out in the park across the street!! Actually, we’ve been experiencing membership declines

42. Slide from Mike

43. Q19. What is your outlook for the national economy three years from now? It will look pretty much like today's economy It will be much stronger It will be weaker than today's economy

44. Slides from Mike

45. Q20. What do you think the inflation rate will average over the next five years? Deflation – Less than zero Low Inflation – 0% to 2% Moderate Inflation - 2% to 4% Hyper Inflation - Over 4%

46. Slide from Mike • Can we get this from either future markets, or yields on TIPS?

47. Q21. When will the Fed raise its Fed Funds interest rate target? Later this year Sometime in 2013 Duh! Sometime in 2014 – that’s what the Fed promised! Not until 2020 – can you say “Japan”?

48. Interest RatesSince 2006

49. Q22. Is the U.S. economy headed for another Recession in the next year? Yes – highly probable No – it’s unlikely Not sure/don't know/can't tell Ask Angela Merkel!

50. Slide(s) from Mike