1. The economic downturn and U.S. CUs October, 2013 Bill Cheney President/CEO Credit Union Natl. Assn. (CUNA) bcheney@cuna.coop @BillCheney

2. TODAYS TOPICS How credit unions continued to serve in downturn Overall impact of downturn on credit unions Where we are today2 3. CU PERFORMANCE IN DOWNTURN 70% Credit union/co-op advantages Focus on service (not profits) Countercyclical lending role65.8%60% 50% 40% 30% 20% 10%0% -10% -20%-13.5%Business loan growth, 2007-12 Credit UnionsBanks 4. CU PERFORMANCE IN DOWNTURN 20%17.0%18.0%15% 10% 5%10.0%7.9%6.2%3.3%5.1%6.5%0% -5%-1.9%-10%-4.3% -9.3%-15%Business loan growth, by year 2007-12 Credit UnionsBanks-1.6% 5. CU PERFORMANCE IN DOWNTURN Why did credit unions outperform banks? Management incentives induce lower risk Lower risk subjects operations to less volatility resulting in continuing lending (banks curtailed lending, due to damaged balance sheets)1.2% 1.0%0.99%0.8%0.61% 0.6% 0.4% 0.2%0.0%Average annual net charge-off rates, 1992-12 Credit UnionsBanksCredit union standard deviation: 0.22%; bank standard deviation: 0.62%5 6. CU PERFORMANCE IN DOWNTURN Why did credit unions outperform banks? Management incentives induce lower risk Lower risk subjects operations to less volatility resulting in continuing lending (banks curtailed lending, due to damaged balance sheets)2008, 18. 0%20.0% 18.0% 16.0% 14.0%12.0%2007, 11 %10.0% 8.0% 6.0%4.0% 2.0% 0.0%1st mortgage loans, growth at CUs6 7. CU PERFORMANCE IN DOWNTURN Membership growth Blunder by Bank of America; imposed fee on debit card use Consumers rebelled; widespread dissatisfaction with big banks Social media triggers Bank Transfer Day7 8. CU PERFORMANCE IN DOWNTURN Significant media attention 9. CU PERFORMANCE IN DOWNTURN Membership growth Millions more joined credit unions Led to largest one-year growth in 12 years Significant growth immediately before, after Bank Transfer Day 1.82 1.71.5 1.211.21.4 1.11.31.2 0.6200120022003200420052006200720082009201020112012Annual membership # change, in millions9 10. CU PERFORMANCE IN DOWNTURN Downturn downsides for CUs Collapse of corporate credit unions Smaller credit unions struggling CU ROA, 2009-13(MY), in bp 84CU member growth by categories, MY '13 3.6%8468 500.4%18-1.1% -2.2%20092013$100M10 11. CU PERFORMANCE TODAY Credit unions are recovering and thriving Lending is on the upswing Nearly 96% are well capitalized Net worth reaching prerecession levels Membership at 97 million and growing On right track working to stay that wayCU loan growth, 2009-13(MY)4.8%1.2%20095.5%1.2%-1.2%201311 12. WHAT WEVE COVERED Because of co-op structure, credit unions continued to serve Lending, adding members Recession took its toll but we have recovered and are moving on to building our CU movement12 13. Thank you October, 2013Bill Cheney President/CEO Credit Union Natl. Assn. (CUNA) bcheney@cuna.coop @BillCheney