HMMM…..

1. HMMM….. STUFF TO THINK ABOUT!

2. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME

3. Sustainability People Leadership Entrepreneurship Innovation Hmmm….. Trends Strategy Marketing/Brand

4. PEOPLE • Tomorrow’s Workforce • Flexible • Multi-Functional • Value Oriented • Does the credit union business model reflect the attributes of your staff?

5. HR IN THE FUTURE • Business Focused • Strategic In Nature • Data Centric • Analytical Skills • Aligned

6. People Are The Difference • Necessity vs Difference • Transaction vs Relationships • Create Experiences • Think WOMP

7. SUSTAINABILITY • A non-negotiable requirement • Balance Sheet vs. Income Statement • Using the “Coop” model to leverage shared value • Is the credit union biz model a 5 yr., 10 yr., or longer (or shorter) solution?

8. AVOID A “SIX-PACK” OF MISTAKES • 900 lb. Gorillas Eat 800 lb. Gorillas • Relationships Matter • Stop Believing Your Own Press Releases • Expense Mgmt. On Steroids • Board Independence Is Essential • Grow Market Share…Never Be Satisfied

9. HMMM…STUFF TO THINK ABOUT • Supply Chain Efficiency Is Difficult To Achieve & Cost-cutting Kills The Culture & Brand • As A Result…Revenue Production Is Essential • What Is “The On-Margin” versus “Off-Margin”

10. COMMON PRIORITIES TO BUSINESS • Access To Capital • Reasonable & Certainty of Taxes • Certainty & Efficient Regulation • WITHOUT…Fewer Companies Drive Fewer Jobs

11. THE NEW PRICING PARADIGM? • The Social Network Has Hit Its Stride • In The Past , Biz Made The Decision on Pricing • Now… • Consumers • Government • Media • Consumer Financial Protection Board (CFPB)

12. SUSTAINABILITY IN THE LONG TERM • Retain existing members and attract new members to optimize revenue and achieve scale. • Develop new offers that quickly result in a profitable return on investment - ROI • Increase productivity and employee accountability in order to optimize work performance to achieve greater scale specific to labor costs. • Enhance cross-functionality to minimize hiring. • Improve member service and risk mitigation processes to optimize efficiency and reduce operating expense.

13. SUSTAINABILITY IN THE LONG TERM • Enterprise-wide focus on critical mass to best utilize capital and human resources. • Insure operating expense as % of asset remains efficient in growth. • Work diligently to grow loan activity to increase Net Interest Margin and Top-Line Revenue. • Net loan spreads and funding mix should reflect risk tolerance while maintaining profitability that exceeds investment opportunities. • Continue expansion of payment systems and transaction processing as a means by which to grow non-interest income.

14. INNOVATION • Cultural paradigm • Re-ignites growth curve • Create energy and change minds • Using this “destructive force” to better your credit union’s competitive position?

15. Innovation Map Energy “Tossin’ It Around” Does It Stick? Ramp It Up Execution Time

16. Great BIG Ideas To INNOVATE • People Before Profit • Stakeholder Value Provides Brand Boost • Service On Steroids • Opportunities To Grow The Biz V. Don’t Be Satisfied With Satisfied VI. Speed…A Competitive Advantage

17. THREE CATEGORIES OF CUS • Winners • Survivors • Losers The Risk Of The Unknown Becomes A Big Problem For Many Credit Unions What Business’ Didn’t Exist 15 Years Ago?

18. The Ultimate Goal A Leap In Value Rapidly Earns Buzz & Loyalty… And Dare We Say Growth

19. Biz Plan Disruption Innovate G R O W T H V A L U E Disruption Window Disruption Disruption = Competition, Legislation, Regulation, Financial, Macro Economy

20. HMMM…STUFF TO THINK ABOUT • Innovation is more necessary than nice. Immediate ROI usually works against innovation.

21. THE “ALCHEMY” OF GROWTH • CUs need 3 different “Horizons of Investment” • Current…Today’s cash flow (up to 12 months) • Near Term…Today’s revenue + tomorrow’s cash flow • (12 -36 months) • Future…Options on investment beyond the current horizon ( 36+ months)

22. THINKING LONGER TERM • Horizon 3 • Horizon 2 • Horizon 1 • Time Future Growth R & D/Cap. Exp. (36 – 72 Months) Today’s Revenue & Tomorrow’s Cash Flow (12 – 36 Months) Today’s Cash Flow (0 – 12 Months)

23. HMMM…STUFF TO THINK ABOUT • We need “functional & planned obsolescence” in our products that creates a new buzz. “Product driven” companies do this . • Think P & G…New & Improved • Think Auto Industry…New model years

24. P&G AND CAR COMPANY MENTALITY • Keep the product fresh and compelling • Planned obsolescence assists in achieving product differentiation

25. HMMM…STUFF TO THINK ABOUT • Ask staff to uncover member needs that leads to innovation which creates elasticity for your products because they’ll be better and more economical. As a result, your product penetration improves, your members are dazzled, the brand is strengthened, loyalty increases, sales grow, profits grow and you increase & create more jobs.

26. CREATE “REAL GROWTH” • Create new categories or sub-categories for which competitors are not considered

27. MARKETING/BRAND • Be significant in your members’ lives • Life Stages; Life Styles; Lifetime • You must be more than service • Member participation and collaboration co-create brands & build bonds with the membership.

28. WHAT ABOUT THE CURVES WITHIN THE CURVE

29. WHAT CURVES ARE HIDDEN BELOW THE FANCIAL “WHAT’S BEHIND THE “S” W CURVE • Check Your Market Relevance • Check Your Distinctive Capabilities • Check Your Strength of Talent

30. STRIVE FOR “PSYCHIC PIZZA” • Compare CU to a “stellar industry” (not banks) • Design to “head off” the problem • Turn up all of the “unpleasants” that member encounters

31. HMMM…STUFF TO THINK ABOUT • Members who have a problem with your CU instantly become more sensitive to the prices you charge, the rates you pay, the convenience you offer, etc. etc.

32. STRATEGIES TO AVOID MEMBER ISSUES • Pro-active Education: (warn the member about the problems they may encounter) • Have a Flexible Response: (across all channels) describing why you do what you do • Aggressively Seek & Solicit Complaints: (once you have education & channels of “why” in place)

33. THE REAL PROBLEM WITH MEMBER SERVICE • Inertia leads to complacency within the organization which results in member boredom which leads to member & credit union taking each other for granted

34. MAXIMIZE PROFITS Service Member Sales Marketing Interconnectedness Is Key Understand Your Costs Of Acquisition

35. ENTERPRISE WIDE UNDERSTANDING • Have a unified picture of what the member experience should look like

36. Normative Affective Cognitive Loyalty/Brand Integration Hard to imitate Hard to deliver Most meaningful “Lifers” Emotional/Spiritual/ “The Thing To do” Make it Personal Both functional & emotional …benefits are readily visible Easy to Deliver Easy to Lose Easy to Imitate

37. TRENDS • Economic Dilemmas • Increasing Regulation • Changing Members • Get your handle around the impact of emerging trends that will effect your credit union over the next decade.

38. PARADIGMS FOR THE DECADE… • Is Our Wealth Formula OK? • Is This X & Y’s Life Event…Delayed Purchases, etc.? • Will Pricing Elasticity Increase? • Emerging Tech Trends? • Marketing The Ol’ Fashioned Way? • Branch Paradox…Is It Real? • Strategic Planning Is Not An Event? • Risk Management Changed Forever?

39. THREE CONCERNS OF MEMBERS • What lessons did we learn from the financial crisis • Federal deficits and what needs to be done • The current unemployment situation

40. WHAT DID CREDIT UNIONS LEARN ? • Misguided Comfort • Misunderstood Risk • Short-Term Choices

41. WHAT CUS CAN LEARN FROM THE FED DEFICIT • Raise income • Gain operating efficiency (Note: Not “cut” expenses) • Control future expenses

42. WHAT CUS CAN EXPECT FROM UNEMPLOYMENT • Monetary & fiscal policies aren’t helping • Housing isn’t leading the recovery • Households are retrenching • Uncertainty weighs on business decisions • The “hour-glass” of jobs

43. AMERICA’S WORKFORCE High-Skill High-Pay Middle Class Low-Skill Low-Pay Base Is Largest @ 15/1%

44. RICH GET RICHER $180,810 95th Percentile Largest Gap Since Keeping Records - 1967 9X $20,000 20th percentile

45. JOB PICTURE • High • 8.3% • Unemployment • Low • Less Greater GDP (2011) +1.7% Projected @ 2.5% Annualized 1st Qtr. 2012 GDP @ 4% GDP

47. STRATEGY • Agility and nimble • Quickly adapt • Anticipate and Lead change • Develop deep differentiating capabilities that enables the credit union to separate from competition and “shape-shift” as the market changes.

48. Two TYPES of Profit • Good • Bad • Know The Difference????? • The Wrong Choice Kills The Brand

49. LEADERSHIP • Tap into “Values Behaviors” • Understand the myths & cultural norms that are cultural drivers • New, flexible, fluid management systems • Be visionary, be smart, empowering and supporting of a great “talent pool.”

50. THREE (3) THREATS TO THE BUSINESS PLAN • Imitation…Creates Cognitive Loyalty • Operational Slack…Productivity Inefficiency • Substitution…Products That Reduce Our Value