2012 LSCU Annual Report

Annual Report

ACCELERATED PERFORMANCE

2012 LSCU Annual Report League of Southeastern

Credit Unions & Affiliates

2012

President's Message In the three years that the League of Southeastern Credit Union & Affiliates (LSCU) has been operating both legally and structurally, I’m most proud that we have been able to keep our promises of consolidation and work hard every day to maintain our momentum.

The name of this annual report is “Accelerated Performance.” This is a spin-off of our Annual Convention and Exposition theme of “Accelerate Your Performance.” For the LSCU & Affiliates, keeping the promises of consolidation has allowed us to offer a wide array of products and services, as well as raise the profile of our Alabama and Florida credit unions, while operating efficiently.

Late last year, we informed credit unions of our intent to offer a 10-percent dues rebate to affiliated credit unions in 2013. This was the first time either state had ever been offered a dues rebate. This was made possible because we have streamlined our operations through consolidation. Additionally, LEVERAGE, the LSCU Service Corporation, had a very strong year. When our credit unions do business with LEVERAGE, it has a direct correlation to the level and quality of services the League can offer. When the League is successful, we want our credit unions to share in that success.

One of the major projects the League and the Southeastern Credit Union Foundation took on last year was the “Leave Behind” project in conjunction with the Republican National Convention in Tampa. The $300,000 therapeutic playground at All Children’s Hospital in St. Petersburg is one of only a handful in the country. Credit unions and system partners in Alabama, Florida, and across the country, contributed to the project, as well as the League and LEVERAGE. Ann Romney, wife of republican presidential nominee Mitt Romney, attended the ribbon cutting. The media coverage was phenomenal as CNN and CBS attended, as did local Tampa media.

The second wave of the LSCU Image Campaign saw credit union participation rise to a total of 113 credit unions providing financial support to this collaborative effort. The campaign was also franchised to the Connecticut and Mississippi Leagues. The Image Campaign saw more people view the www.betternameforbanking.com website, click through the online ads, and view the ads on YouTube. Alabama credit unions continue to show record membership and asset growth since the campaign began, while Florida is on record asset growth and showing sustained, positive membership gains for the first time in years.

These are just three of the many examples of how the League has worked on your behalf and with you in 2012. Our dedicated and professional staff continues to make it a top priority to meet with credit unions face-to-face and find ways to assist you. We have averaged more than 600 visits per year with credit unions since 2011. As you read this annual report, I hope you will notice that the LSCU & Affiliates is working hard to ensure that you have “Accelerated Performance” in 2013 and beyond.

Sincerely,

Patrick La Pine, CCE, CUDE President/CEO League of Southeastern Credit Unions & Affiliates

Chairman’s Message As chairman of the League of Southeastern Credit Unions & Affiliates (LSCU), I want to personally thank you for your continued membership and support. State leagues from across the country continue to follow our consolidation model as they look to the future and how to best serve their state’s credit unions. However, from a micro view, our 6.4 million credit union members in Alabama and Florida look to us as a viable alternative to the for-profit banks. We need to continue to provide the level of service they have come to expect from their local credit unions.

That means having an effective state and federal trade association to advocate for us and provide innovative ideas to help us serve our growing membership. The League continues to have an operational efficiency that is realizing significant savings through consolidation. In 2012, the League ended the year with $331,000 increase in net assets, while LEVERAGE retained earnings increased by $759,000. These figures include a $100,000 dividend from LEVERAGE to the LSCU in 2012. This helped enable your dues rebate in the first quarter of 2013.

The League’s efficiencies are very important to the long-term sustainability of the LSCU & Affiliates. We are able to not only grow the cushion the League needs in case of economic difficulty, but to reinvest some of that money back into services for your credit union such as our enhanced advocacy efforts. It also helps pay for the creative for the Cooperative Image Campaign so all of the money raised by credit unions stays in their individual markets for ad buys. That is why we are able to offer expanded compliance support like PolicyPro and Rate Map as values of membership through League InfoSight, as well as offering a $500 voucher program for our credit unions under $50 million in assets.

I want to thank my colleagues on the LSCU & Affiliates board for their service to the credit union community and the support that they have shown me during my first year as chairman.

These outstanding individuals freely give their time to not only help direct the League and LEVERAGE, the LSCU Service Corporation, but to also look into the future for our movement in Alabama and Florida. I would also like to thank Patrick La Pine, the president/CEO of the LSCU & Affiliates and his exceptional staff for their hard work and commitment toward the success of the credit union movement.

As you read this annual report, it not only shows some of the League’s accomplishments for credit unions, but it also shows that the League is on financially solid ground and growing.

Let us continue to work together and keep that collaborative spirit alive. We are a shining example to credit unions and leagues across the country.

Sincerely,

Mary Ott Wood, CCUE Chairman, League of Southeastern Credit Unions & Affiliates President/CEO, Florida West Coast Credit Union

LSCU Board of Directors Executive Committee

Mary Ott Wood,* CCUE, chairman Florida West Coast CU

Steve Swofford,* chair-elect Alabama CU

Tina Williams, vice-chair Mobile Educators CU

Brent Lister, secretary First Florida CU

Alvin J. Cowans, CCUE, treasurer McCoy FCU (FL)

Joe McGee, past chair Legacy Community FCU (AL)

Sharon Downing Alabama River CU

Marie Ferngren Hialeah Municipal E FCU (FL)

Tropical Financial CU (FL)

Leianne Harden Florida Customs FCU

Jeanette Keller Blue Flame CU (AL)

Pat Mason* Sun Credit Union (FL)

2012 Annual Report

Board Members

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Anice Prosser, SPHR, CCUE Envision CU (FL)

Linda Walker Riverdale CU (AL)

Bob Steensma* Five Star CU (AL)

Ron Summerall* Alabama Teachers CU

* Also on the LEVERAGE Board of Directors

LEVERAGE Board of Directors

Members First CU of Florida

Joe Melbourne, Treasurer CFE FCU (FL)

Family Security CU (AL)

2012 Annual Report

Listerhill Employees CU (AL)

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Accelerated Performance Whether it is the progress of our governmental affairs efforts or the development of innovative products and services, the League is here to support its members and industry partners through its actions and efforts.

Following is how we have accelerated our performance in 2012, so we can provide the products and services that assist you, our members, to perform at a higher level.

Accelerated Efficient & Effective Use of Operational Resources • Consolidation efficiencies resulted in more than $1 million in realized savings. Much of that was reinvested back to credit unions through enhanced service offerings.

• Through consolidation efficiencies and LEVERAGE’s success in 2012, the League was able to distribute the first ever 10-percent dues rebate back to its members in 2013.

Accelerated Advocacy Efforts on Both State & Federal Levels • Expanded Governmental Affairs team to eight, which includes legislative directors for both states, grassroots and political action coordinators for both states, compliance training and information positions in both states, and state and federal contract lobbyists.

• Increased efforts to build relationships with federal delegation by making bimonthly trips to Washington, D.C. to lobby federal issues agenda. A federal lobbyist was added in Washington to maintain an LSCU presence between League visits.

• Increased support for the federal issues agenda in 2012:

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• • • • •

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11 House Co-Sponsors for Member Business Lending 20 House Co-Sponsors for Exam Fairness 2 House Co-Sponsors for Supplemental Capital 8 House Co-Sponsors for ATM Disclosure 4 Senate Co-Sponsors for ATM Disclosure

• Hosted, along with CUNA, a reception at GTE Financial FCU during the 2012 Republican National Convention in Tampa. The reception was attended by state and federal lawmakers, including Alabama Lieutenant Governor Kay Ivey.

• Initiated the grassroots advocacy strategy guide, the LSCU PLAN to Win, and an online grassroots advocacy center, the LSCU Action Center, which made contacting elected officials easier than ever.

First Florida CEO Brent Lister (right) talks to Rep. Doc Renuart (R-Ponte Vedra Beach) during the LSCU Florida State GAC.

Alabama and Florida credit unions brought small business owners to meet lawmakers in November. Two of the business owners (center & right) meet with Rep. Spencer Bachus (R-AL).

Credit unions meet with CFPB Director Richard Cordray in Washington, D.C. as part of the LSCU Hike the Hill.

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2011 LSCU Disaster Preparedness Workshop

Rep. Jo Bonner (R-AL) was a keynote speaker at the Leadership Development Conference. He also spent time talking to attendees.

2012 Annual Report

Matz spoke at the AC&E giving credit unions an opportunity to speak directly with her.

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Accelerated CU Relationships to Ensure All Needs Are Met • Maintained strong relationships with member credit unions with more than 600 face-to-face meetings with Alabama and Florida credit unions by League staff.

• Small asset size (SAS) workshops in Alabama and Florida and regular visits

by Cooperative Initiatives staff provided SAS credit unions the support they needed to thrive with strategic planning, board planning, and the development of business plans.

• $60,000 was offered through voucher program for credit unions under $50 million for use toward an LSCU, LEVERAGE, or CUNA product or service.

This was a $15,000 increase from 2011, and we expanded the asset size of the credit unions to include $50 million and under, up from the $35 million asset category.

• Chapter support, such as the Chapter Leaders Conference, helped to develop and implement plans for chapters and chapter leaders.

• A Philosophy in Action program was developed—similar to the National Credit Union Foundation’s (NCUF) Credit Union Development Education (CUDE) program—to help members be leaders in their communities.

Accelerated Educational Opportunities for All CU Disciplines • More than 3,200 credit union staff and volunteers were trained at LSCU conferences and workshops that include the AC&E, Leadership Development Conference, Supervisory Conference, Disaster Recovery Conference, Bank Secrecy Act workshops, and Regulatory Compliance workshops.

• More than 830 educational webinar participants from Alabama and Florida credit unions were trained through more than a 100 webinars.

• LSCU AC&E provided more than 1,000 attendees access to top industry speakers, relevant education sessions, and more than 130 exhibiting companies.

• Since 2010, the LSCU has provided 500 educational, compliance, and operational training opportunities for credit unions.

2012 Annual Report

In 2012, the League developed a comprehensive schedule of training sessions and events based on the shared data gathered from evaluations during 2011 meetings, credit union feedback, and survey responses focusing on your requests for educational opportunities.

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Accelerated Communications to Ensure CUs & the Public Were Informed • Publications such as Signal, the quarterly magazine, the Director’s Resource, a quarterly newsletter for volunteers, and eSignal, a weekly eNewsletter, provided credit union staff and volunteers the most up-to-date industry information.

• Multimedia videos and audio podcasts allowed members to view information and news in the format that was best suited for them with close to 6,000 views of videos/podcasts from the CUNA GAC, LSCU AC&E, the State GACs, and more.

• 74,400 clicks on the LSCU website reinforced that the website is a great information resource for members.

• 7.3 million readers, viewers, and listeners were reached through the LSCU proactive media relations.

In addition, the League website received a Hermes Platinum Award (the highest available) in the Website Overall/Association category, as did Signal in the Publications/Magazine category.

Accelerated Cooperative Efforts Across Both States to Educate Consumers on the Uniqueness of CUs • A total of 113 credit unions (12 more than 2011) raised $1.2 million for the LSCU Cooperative Image Campaign in 2012. Media buys included television, radio, billboard, and online, in 14 media markets across Alabama and Florida.

• Research results showed a 27 percent increase of credit union awareness in Alabama and Florida in the two years of the campaign run.

2012 Annual Report

• 195,000 new members for Alabama and Florida credit unions since the Cooperative Image Campaign began in the third quarter of 2011. This is a 118,000 increase from the previous four quarters.

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• $3.6 billion in assets have been added by Alabama and Florida credit unions since the Cooperative Image Campaign began in the third quarter of 2011. This is a $1.4 billion increase from previous four quarters.

To date, the LSCU Cooperative Image Campaign creative has been used by four different states, providing extra money to put back into the campaign.

The next campaign run will be in September 2013.

The President’s Quarterly Report was a new video introduced in 2012.

LSCU Cooperative Image Campaign debuted a new TV ad in 2012.

2012 Annual Report

Better Name for Banking creative was also run in Connecticut and Mississippi.

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NCUA Region III Director Herb Yolles (left) and Alabama Credit Union Administrator Larry Morgan (center)speak at the Alabama State GAC.

Florida Office of Financial Regulations Bureau Chief for Credit Unions Bruce Ricca held an open discussion at the Florida State GAC.

2012 Annual Report

The LSCU distributed state profiles specific to Alabama and Florida. These reports provide great information and data that can be utilized in a credit union’s business decision process.

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Accelerated Relationships Between CUs & Regulators • Understood the growing concern credit unions have with the Consumer Financial Protection Bureau (CFPB) and made it a priority to actively engage the agency. In 2012 the LSCU and member credit unions met with the CFPB in Birmingham, Miami, and Washington, D.C. CFPB Director Richard Cordray was present at two of the meetings to discuss issues of importance with Alabama and Florida credit unions.

• Put credit unions in front of their state and federal regulators throughout the year. In 2012, NCUA Chairman Debbie Matz spoke at the AC&E. NCUA Region III Director Herb Yolles regularly spoke at the AC&E, the Leadership Development Conference, and the State GACs. Alabama and Florida state regulators spoke at the AC&E and the State GACs, as well as facilitated meetings in the ACUA and OFR offices. This has opened up the line of communication between credit unions and their regulators.

Accelerated Regulatory & Compliance Resources • 26 regulatory and compliance training sessions were provided across Alabama and Florida to ensure credit union staff received required training.

• The League offered member credit unions two new free tools, RateMap and CU Policy Pro, through League InfoSight. These tools help credit unions monitor rates in their area, as well as have access to more than 200 model policies written specifically for credit unions.

• Distribution of quarterly Custom Performance Reports (CPR) to credit unions provided a snapshot of how credit unions are performing in the economy, as well as how they are performing on a state and regional basis.

• Quarterly compliance conference calls kept credit unions informed of the latest regulations.

• Compliance information was accessible to credit unions online at their fingertips. More than 32,000 visits to InfoSight were made from Alabama and Florida credit unions. InfoSight is a rich regulatory and compliance tool that is a value of affiliation.

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Accelerated Philanthropic Efforts through the Southeastern Credit Union Foundation (SECUF) • Raised $300,000 from credit unions in Alabama, Florida, and across the country for a therapeutic playground at All Children’s Hospital in St. Petersburg, Florida.

The project was in conjunction with the Republican National Convention to illustrate the credit union difference.

• More than $44,000 was awarded in professional development grants to 40 credit union employees and volunteer leaders to attend the CUNA GAC, AC&E, Supervisory Committee Conference, CUNA Lending School, and more in 2012.

• Piloted a 12-week college internship program, placing interns at three small asset-sized credit unions, providing a learning environment for college students. The SECUF plans to fund 10 paid college internships in 2013.

• $21,000 in scholarships were awarded to 15 highschool seniors to assist them with tuition, books, or room and board.

2012 Annual Report

Accelerated Streamlined Solutions to Assist in Maximizing Operational Bottom Line

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Purchased Credit Union Vendor Management (CUVM), along with Mountain West Credit Union Association and the Michigan Credit Union League.

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Reduced credit union operational expenses by more than $500,000 through improved buying strategies and ePurchasing events.

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Partnered with VINtek for electronic title services. Forty-one Florida credit unions signed up in 2012 as electronic titles are mandatory starting in 2013.

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Saved credit unions on the Office Depot program more than $1 million on office and machine supplies, furniture, and more.

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Generated credit union non-interest income of more than $1 million through the Sprint Membership Program.

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Three LEVERAGE Audit Consultants received certifications, CUCE and BSACS, in 2012 to further enhance their audit knowledge.

LEVERAGE continues to research best-in-class and cost-effective solutions to benefit credit union bottom lines and assist in positioning it to be competitive in the financial services marketplace.

Credit union volunteers spent a day building the therapeutic playground in St. Petersburg.

Ann Romney, the wife of Republican presidential candidate Mitt Romney, helped cut the ribbon on the new therapeutic playground and spoke at the event.

2012 Annual Report

SECUF provided Secure First CU in Birmingham with a mobile branch following a tornado in January.

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League of Southeastern Credit Unions, Inc. & Affiliates December 31, 2012 Combined Statement of Financial Position & Activities include: League of Southeastern Credit Unions LEVERAGE, The LSCU Service Corporation Southeastern Credit Union Foundation Alabama Credit Union Legislative Action Committee (ACULAC) Florida Credit Union Political Action Committee (Florida CUPAC) LSCU Federal Political Action Committee (LSCU FedPAC)

Combined Statement of Financial Position December 31,

2012

Assets Current Assets Cash and Cash Equivalents

$

6,777,627

Donor Restricted Cash

547,569

Cash Held for Others

754,425

Short-Term Investments

4,855,714

Accounts Receivable

2,115,960

Inventory

12,940

Prepaid Expenses

169,622

Total Current Assets

15,233,857

Property and Equipment - Net Other Assets

1,742,137

Investments in Stock

670,320

Intangible Assets

150,000

Deferred Income Taxes

30,829

Other Assets

147,240

Total Other Assets

998,389

Total Assets

$

17,974,383

$

1,348,729

Liabilities and Net Assets Current Liabilities Accounts Payable and Accrued Expenses Deferred Revenue

1,088,542

Other Liabilities

752,688

Total Current Liabilities

3,189,959

Long-Term Liabilities Accrued Leave

73,724

Other Liabilities

368,906

CU Vote Defense Fund

453,846

Deferred Income Taxes

0

Total Long-Term Liabilities

896,476

Total Liabilities

4,086,435

Net Assets 12,742,400

Temporarily Restricted

487,569

Permanently Restricted

657,979

Total Net Assets Total Liabilities and Net Assets

13,887,948 $

17,974,383

2012 Annual Report

Unrestricted

14

Combined Statement of Activities

2012 Annual Report

Year ended December 31,

15

2012

Unrestricted revenue Sales $7,390,336 Commissions and Promotional Fees 3,710,723 Dues 3,143,758 Convention Income 656,866 Schools and Conferences 406,510 PAC Contributions 376,002 Other Contributions 277,323 Other 109,407 Management Fees 171,862 Servicing Fees 145,264 Net Assets Released from Restrictions 8,000 Total Unrestricted Revenues 16,396,051 Unrestricted Expenses Program Service: Financial Management and Processing Services 5,508,473 Business Development 3,056,314 Government Affairs 1,362,132 Educational Programs 1,242,927 Meetings, Committees and Convention 521,199 Foundation 495,729 Political Contributions 417,139 Member Communications 342,688 Shared Facilities Management 208,049 Mortgage Support Services 68,220 Personnel Services 24,605 Supporting services: General and Administrative 2,076,948 Total Unrestricted Expenses 15,324,423 Change in Unrestricted Net Assets Before Other Unrestricted Income (loss), Income Taxes and Transfer 1,071,628

Combined Statement of Activities (continued) Year ended December 31,

2012

Other Unrestricted Income (loss) Equity in Earnings of Subsidiary

$

3,321

Interest

33,217

Total Unrestricted Other Income (loss)

36,538

Change in Unrestricted Net Assets Before Income Taxes and Transfer

1,108,166

Income Tax BeneďŹ t (expense)

(212,192)

Change in Net Assets

895,974

Unrestricted Net Assets, Beginning of Year, as Previously Reported

Prior Period Adjustment

11,846,426 0

Unrestricted Net assets, Beginning of Year, as Restated

11,846,426

Unrestricted Net Assets, End of Year

12,742,400

Temporarily Restricted Contributions

0

Net Assets Released From Restrictions

(8,000)

Change in Temporarily Restricted Net Assets

(8,000)

Temporarily Restricted Net Assets, Beginning of Year

495,569

Temporarily Restricted Net Assets, End of Year

487,569

Permanently Restricted Net assets, End of Year

657,979

Total Net Assets, End of Year

$

13,887,948

2012 Annual Report 16

League of Southeastern Credit Unions & Affiliates

Birmingham Office 22 Inverness Center Parkway, Suite 200 Birmingham, Alabama 35242 Tallahassee Office 3773 Commonwealth Boulevard Tallahassee, Florida 32303 www.lscu.coop 866.231.0545 LeagueofSoutheasternCreditUnions @LeagueofSECUs