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2010 Annual Stockholder’s Meeting

2010 Annual Stockholder’s Meeting. June 22 , 2010. Agenda. Call to Order Chairman’s Comments Review 2009 Minutes Chairman’s Comments CFO Report Review Financial Reports Election of Board Members President’s Report Wow, Aha and a few Game Changers Adjourn. Chairman’s Comments.

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2010 Annual Stockholder’s Meeting

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  1. 2010 AnnualStockholder’sMeeting June 22, 2010

  2. Agenda • Call to Order • Chairman’s Comments • Review 2009 Minutes • Chairman’s Comments • CFO Report • Review Financial Reports • Election of Board Members • President’s Report • Wow, Aha and a few Game Changers • Adjourn

  3. Chairman’s Comments • Welcome • Review/Approval of 2009 Minutes • Introduction of the 2010 Board of Directors • Steve Searfoss, AAA CU (Vice Chair) • Jeanna Eckhardt, MI Coastal CU (Sec/Treasurer) • Ron Budzinski, First Trust CU • Randy Karnes, CU*Answers • Dave Keim, Western Districts Members CU • Glenn Kretchmer, ATL CU • Vickie Schmitzer, Frankenmuth CU • Randy Trimm, Ohio Catholic FCU

  4. Your New Partners:New Owners Since Last Year’s Meeting Michigan • Detroit Metropolitan CU(Detroit, MI) Ohio • Community Star CU (Elyria, OH) • Western CU (Columbus, OH) Represents over 43,000 new members (8.9%) added since last year

  5. Financial Reports Presented by Bob Frizzle, CFO

  6. Total Assets • Steady Growth Continues • Nothing too sexy (A/R and F/A)

  7. Total Cash • Solid Cash Position • No debt • No near-term need for more $

  8. Total Equity • Use of equity to build call center business • We should see a return to profitability • Managing by the #’s

  9. Gross Revenue • Cracking the $1M barrier! • 10x growth since 2005 • Robust, diverse revenue streams • SRS, Call Center, Audit Link, Member Reach

  10. Net Income $26K • 2007-2009 – Building businesses and infrastructure • 2010 and beyond – Reaping rewards and new investment opportunities

  11. Projected Shareholder Value • The value of a share has increased 45% since ‘2004 • Ownership value has increased from $5K to over $8K during that period • Today, CUs pay $13.5K for an ownership share Stock Book Value

  12. Board Elections This Year’s Candidates: Jeanna Eckhardt, CEO, Michigan Coastal CU Glenn Kretchmer, COO, ATL CU Randy Trimm, CEO, Ohio Catholic FCU

  13. 2010 Presidents Report Wow! Aha! and a Few Game-Changers

  14. What started as a big unknown… • Congress Passes Corporate Bailout Bill • Credit Union Journal  |  Tuesday, May 19, 2009

  15. …following 3 years of investing in our collective futures…

  16. …materialized into a huge opportunity for growth Our CUSO is presented on almost a daily basis with opportunities to make a difference for our credit unions and their members. And like you heard last year - anything is possible!

  17. “Anything Is Possible” “We are at an interesting crossroad: our marketplace has a new urgency to act, and a new recognition that anything is possible…” (excerpt from last year’s CU*Answers Annual Stockholder Meeting) For years now, people have been saying that CUSOs might be the answer to reengineering credit union designs and finding a way to break through with a collaborative scale to influence the market. At no time in my career has it felt so right for Credit Unions and CUSOs to flex their muscles and create a new vision across the board.

  18. Xtend 2.10 – A Success Story Our past year should be remembered for its Aha! moments, Wow! accomplishments and bringing game-changing services to market.

  19. From an Ownership StandpointWow! We are now 49 Strong What started in 2002 with a dozen early movers and a vision to build something different has evolved into a trusted partner of over 125 businesses 49 Owners from 8 States 543,000 Members$4.53B in Assets

  20. From a Client StandpointWow! We serve members from: We are a national presence when it comes to serving members and credit union staffs 22 States + D.C. 71 CUs with > 2 services

  21. From a Game-Changing StandpointWe are a resource pool to be leveraged • More than saying, “you can buy from us,” we are building a network where we extend our experience to those who would build it for themselves www.cuasterisk.com Watch for a September Focus Group on building businesses together

  22. Aha!  Brands (some familiar and some that are probably new to you) NSM

  23. Aha!  Some Chest Thumping 50 Press Releases in 2009 and almost half that number already in ‘10

  24. But….. As John Steinbeck once penned “The best laid plans of mice and men oft go awry.” Or a variation of those famous words in “Field of Dreams”…if you build it, they MAY NOT necessarily come.

  25. We are doing our best to debunk some “urban myths”

  26. Only for small credit unions…Only for big credit unions… 1 We cannot afford… 2 Cannot move quickly enough to help me in a pinch… 3 Members don’t want to hear from us… 4 Only important to me if we buy your services. 5 Urban MythsWhat we hear from time to time…

  27. Only for small credit unions…Only for big credit unions… 1 Urban Myths - debunkedThis is what we do…everyday • $90M partner engages us for bookkeeping, Member Reach, Call Center, and mortgage servicing…an $11M partner buys those same services • Partners > $100M average 1.7 services used…Partners < $25M average 1.6 services used • We do back office support for a $200M shop and compliance support for a $9M shop How can we help you survive and thrive?

  28. We cannot afford… 2 Urban Myths - debunkedThis is what we do…everyday • We made 500 FREE calls for 17 credit unions • $2,500 = a full year of marketing campaigns • < $5.00/day = Member messages and e-Info • $1.00/call for us to call your members • $1.15/call for us to take member calls • $8,500/year to do your daily balancing work • $5.00/day = NSM delivered to CEO every day And more to follow in 2011

  29. Cannot move quickly enough to help me in a pinch… 3 Urban Myths - debunkedThis is what we do…everyday • With 3 days notice we brought on 10 new bookkeeping clients for CU*Northwest • With 2 hour notice we started answering phones following a fire at Greater Metro CU • With 45-minute notice we started answering phones for Sangamon Schools CU • In less than an hour we had a special Member Reach message delivered following a SMiShingattack

  30. Members don’t want to hear from us… 4 Urban Myths - debunkedThis is what we do…everyday • In March we analyzed every CU*BASE credit union to determine member OPT OUT statistics. Bottom line  the % of members who opt out of hearing from you electronically is virtually the same. • If you don’t use at least a few Member Reach messages, what are you waiting for?

  31. Only important to me if we buy your services. 5 Urban Myths - debunkedThis is what we do…everyday • Over the past 36 months, our support teams have initiated project sheets for more than 200 enhancements to CU*BASE. • We are a ‘power user’ helping drive tool development that benefits the entire network.

  32. Let’s Look at Some WOW Numbers

  33. SRS by the #’s • Projected $515K business in ’10 • A team of 9 experts to support you • Project work included: • 11 CU*BASE conversions • Several mergers and 1 de-conversion • Support for all PFC vendor migrations • Holiday support for 6 CUs • Consulting engagements at two CUs Stay Tuned - 2011 will big year for ala carte services from the SRS team

  34. Member Reach by the #’s • Projected $120K business in ’10 (and that doesn’t include CU*OverDrive) • A HUGE Year of Communicating Your Value to Members: • Grew over 20%  50 clients under contract • Over 1.8M messages delivered since Jan. 1st • Projection > 3M messages in calendar 2010 • > 90K “custom” messages delivered for CUs during 1st four months of 2010 • Transitioned 60% of clients to “Advanced” level • New Try-n-Buy conversion service

  35. Audit Link by the #’s • 20 credit unions utilizing daily service • Projected $195K business in ’10 (+78%) • Keeping our eye on the ball • BSA account review +50% • Dormant account monitoring +35% • Reversal accounts monitored +29% • File maintenance reviews +60% • Wire reviews +25% • Employee audits +54% • BSA/SAR for structures +15% You will hear more about Audit Link at tomorrow’s Leadership Conference session

  36. Xtensionby the #’s • 82K calls in/out in 1st five months of ’10 • That’s over 1,000 calls per agent each month • Assisted 37 credit unions in some capacity • 16 trained agents supporting: • 6 Inbound (Branch XT) clients • 19 Member Reach Plus clients • 2 Contact Unlimited partners • ‘Live Week’ support for 8 converting CU*BASE partners (> 72K members) • 8,000 free calls made year-to-date

  37. Game-Changer: • Launched mid-2010 • This prototype for SMART messages has been turned on for 30 credit unions • Included with Member Reach Advanced

  38. Game-Changer: • Launched Jan. 2010 • 16 credit unions have engaged • Over 175,000 collateral pieces mailed through just the first 4 months in business • Did I mention it was only $2,500 per year?

  39. Game-Changer:Negative Situation Monitoring (NSM) • Launched beta in March • Our first “Dashboard” service • Gathering stats for twenty credit unions • Did I mention it was $25.00 a week?

  40. Game-Changer:A New Loan Fulfillment Center (LFC) • Launched beta May 2010 • Inbound loan application call center • Monitor MNLOAN#8 and make ‘first touch’ calls for It’s Me 247 applicants • Loan Coupon printing/delivery service • Did I mention how affordable this is?

  41. Game-Changer:Support for CU*BASE Conversions • Launched in 2007 but taken to a new level in 2010 • Services now include: • Subset of Member Reach messages • e-Info and OBC stories for three months • SRS bookkeeping for up to 90-days • Outbound pre-conversion courtesy calls • Inbound member support calls for up to two weeks “Couldn’t have done it without you” is the consensus we have heard.

  42. Game-Changer:CU*Answers Management Services (CMS) • This new juggernaut has entered the marketplace and will be partnering with Xtend more than ever in the next several years. • Current projects include: • Loan Coupons • Loan Fulfillment Center • 360-mortgage payment processing enhancements • Mortgage servicing • AuditLink contacts • Partnered consulting

  43. And a network that continues to be a Game-Changer * * * cuasterisk.com partners will be clients, vendors, and extensions of our staff in 2011 and beyond

  44. A Well Deserved Pat on the Back! Great job team!

  45. WOW indeed…So how do we continue the momentum? We are already preparing for Xtend Release 2.11

  46. Xtend release 2.11 should be a Game-changer for most of our partners… • 39 credit unions using some/all • > 125,000 letters mailed • > 200,000 Member Reach messages projected • 20,000 outbound calls projected • Inbound fulfillment for 26 CUs That is as soon as we help over three dozen partners get through the REG E Opt In process… …and speaking of Opt In

  47. 10 Potential Game-Changers A series of mini-releases throughout the year Deploy Web Chat from It’s Me 247 Expand CU*OverDrive campaign options by a factor of two Develop a Rate Watch services prototype Deploy online rewards catalog in conjunction with GIVIDENDS enhancements Design a SMART Messaging delivery service in conjunction with CU*BASE Deploy Dormancy monitoring service and other ala carte back office services Partner with a Cooperative Buying partner to develop solution for our owners Aggressively market to and deploy services for other CUSOs Expand the delivery capabilities of the Xtension Contact Center Work closely with CU*Answers Management Services as their execution partner

  48. Eating our own cooking Upping our game when it comes to marketing Xtend services; targeting CUSO partners and non-CU*BASE credit unions

  49. Walkingthe Talk • You are the ultimate judge...Are we on mission? • If not, I hope you’ll speak up right now and add your voice to figuring out how Xtend should get there. • If so, I hope you will speak up and carry that message to the rest of your peers throughout the rest of the week and in the remainder of 2010.

  50. Presentation materials will also be made available on www.xtendcu.com THANK YOU!!!

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