Nicole HaverlySenior Portfolio Manager Affinity Plus Federal Credit Union ($1,839M) Saint Paul, Minnesota

"A penny saved is a penny earned:" Savings Accelerator Program

2016 CUES NTCUE Competition

Nicole Haverly - Senior Portfolio Manager October 24, 2016

• Past Inspiration to Current Motivation

• Evidence through Data

• Concept and Strategy of Program

• Quantitative Statistics

• Impact: Employees, Members, Organization as a whole

• Looking Ahead

Overview

Past Inspiration to Current Motivation

Past Inspiration: Goal to Reality

"Develop your dreams. Advertise your goals. Execute your plan. Close the sale."

Michael Dooley

Traditional Strategy vs. Strategic Innovation

Current Motivation

• Where to Play: Member needs and experience • How to Play: What we offer is a win-win-win • How to Win: Value all around

Sniukas, M., Lee, P., Morasky, M. (2016). The Art of Opportunity. Hoboken: Wiley.

Evidence through Data

Survey Results

Google Consumer Surveys Sample: National adult Internet population

Are you satisfied with the amount of money you save each month? [Results for all respondents]

Survey Results

Google Consumer Surveys Sample: National adult Internet population

Are you satisfied with the amount of money you save each month? [Results for 25-34 yr olds]

Survey Results

Google Consumer Surveys Sample: National adult Internet population

What percentage of your income do you put into savings in an average month? [Results for all respondents]

Survey Results

Google Consumer Surveys Sample: National adult Internet population

What percentage of your income do you put into savings in an average month? [Results for 25-34 yr olds]

Survey Results

Google Consumer Surveys Sample: National adult Internet population

If your bank or credit union built in an automatic savings plan with your regular car payments, would you choose this product as a way to grow your savings?

[Results for 25-34 yr olds]

Survey Results

In general, how secure do you think your members feel with their current savings balance?

Do you feel that a lack of adequate savings account balances contribute to auto loan delinquencies and

defaults at your credit union?

SurveyMonkey Sample: CU employees and executives

Concept and Strategy of Program

Savings Accelerator: Program of interlocking gears

Large accumulation of savings once you pay your loan off

Reduced rate on

your new auto loan

Increased rate in your new savings

account

Interlocking gears

Up to $2000 = 1.0% APY

1) Increased rate on your new savings

• Unknown savings rates on own accounts

• Millennials have not experienced the magnitude of compound interest

Interlocking gears

2) Reduced rate on your new auto loan

• Thrifty and Frugal: Groupon, Cartwheel, Airbnb, etc.

• No layered products gimmicks

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.40%

0.45%

0.50%

< 620 FICO 620-669 FICO & NoScore Borrowers

≥ 670 FICO

Interlocking gears

3) Large accumulation of savings when loan is paid off

• The "unexpected expenses"

• Laying the foundation with $1000

• Your sinking fund

Quantitative Statistics

Statistics of Savings Accelerator loans

$13,612 Average loan amount

WA FICO: 665 Range: 497 - 850

WA DTI: 30% Range: 10% - 82%

WA LTV: 95% Range: 40% - 141%

WA Term: 61 months Range: 24 - 84 months

WA Rate: 5.40% Range: 1.94% - 11.99%

Goal: Millennials

4%

42%

19%

22%

10%

3% 1%

< 20

20 to <30

30 to <40

40 to <50

50 to <60

60 to <70

>= 70

Goal: Attract new borrowers

9

1

4 2

4

1 2

1 3

1

6

12 13 13

8

13

20

0

5

10

15

20

25

Quantitative Measures

27

71

114

140

0

20

40

60

80

100

120

140

160

June 2016 July 2016 August 2016 September 2016

Loans Originated

Quantitative Measures

$2k

$8k

$12k

$14k

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

June 2016 July 2016 August 2016 September 2016

Interest Saved

Quantitative Measures

$14k

$20k

$32k

$43k

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

June 2016 July 2016 August 2016 September 2016

Savings Accumulated

Impact: Employees, Members,

Organization as a whole

Employee Experience: Corinne Loe

• Champions the concept

• Every member matters; no one left behind

• Passion to create change and imbeds optimism

Member Experience: Ce'Airra T.

• 26 yr old millennial

• "Able to save for certain things, but struggles if not tied to something specific"

• "This forces me to save, regardless of a thought out plan"

• Music career: CiCi Bella http://www.cicibella.com

Organization: Core Values

Organization: Financial Soundness

• Potential of reduced interest income and increase in interest expense

• Offset with reduced probability of charge off and credit union's added protection in event of default

Looking Ahead

CFPB Study

Exposure

Importance of Future Actions

• Provide accessible, robust resources

• Get ahead of the payoff to provide impactful financial advice

• Concept is scalable and relevant

Thank You!

Q&A with

Nicole