2011 Annual Report

2011 LSCU Annual Report

one vision. one voice.The Power of

President's Message

“The Power of One” is our theme for this year’s LSCU Annual Convention and Exposition (AC&E). It’s such an appropriate theme since the collaborative spirit of credit unions is rare in the financial services industry. It is that collaborative spirit that sets us apart from for-profit institutions. In the second full year of the LSCU, on your behalf and alongside you, we had many accomplishments. We spent more time inside your credit unions listening and assisting you with your needs with nearly 700 face-to-face staff visits across Alabama and Florida. This embodies the Power of One.

Last year we pushed Congress firmly to delay the implementation of interchange fees. We are proud to say that all four senators from Alabama and Florida voted to delay the fees, showing our senators understood how the issue would affect credit unions. Our Governmental Affairs staff made more than 90 visits last year with our federal lawmakers in Washington, D.C. and back in the district. These relationships continue to improve as we work on Member Business Lending legislation.

We had 101 credit unions participate in the $1.3 million LSCU Cooperative Image Campaign in 2011. It was the largest voluntary league campaign ever conducted. The campaign set the table for “Bank Transfer Day” and the bank fees backlash. More than 65,000 consumers went to www.betternameforbanking.com. Our pre- and post-campaign research showed a slight increase in credit union awareness following the campaign, six percent in Alabama and eight percent in Florida. A good foundation has been set for the 2012 campaign, and the years to come.

The Southeastern Credit Union Foundation (SECUF) raised more than $280,000 for victims of the Alabama tornadoes in April 2011. Sixty-two grants were given to tornado-affected credit union staff. The SECUF also worked with Pen Air FCU to secure the use of its mobile branch for Community Credit Union of Gadsden, who completely lost its branch in Rainsville. In 2012, the SECUF is fundraising with credit unions to build a therapeutic playground in St. Petersburg in honor of the Republican National Convention this summer. This is a great way to “leave behind” a lasting memory of the convention from credit unions.

These are just a few examples of the Power of One. This annual report has many more accomplishments from the past year. The support of our credit union community has helped make this a successful year. I

also appreciate the commitment and dedication of your LSCU and LEVERAGE board of directors. The Power of One is our collective efforts. The more we work together, the more we can accomplish.

Sincerely,

Patrick La PinePresident/CEOLeague of Southeastern Credit Unions & Affiliates

LSCU President/CEO Patrick La Pine and CUNA President /CEO Bill Cheney

LSCU Board Chairman Joe McGee

Chairman's Message

Since the consolidation of our respective state credit union leagues just over two years ago, the League of Southeastern Credit Unions (LSCU) has quickly become an effective and successful model of efficiency. LSCU’s measure of success rests in our ability to effectively serve our membership. Your league understands the challenges presented by a sluggish and uncertain economy; consequently, your dues dollars are greatly appreciated and never taken for granted. Financial stewardship is a responsibility that we do not take lightly.

The benefits of our consolidated structure have not gone unnoticed, and many state credit union leagues across the country are now exploring this option, with some already beginning to emulate it. We continue to seek operational efficiencies in an effort to provide value to our members. To date, those efficiencies have resulted in more than $900,000 in realized savings. As promised, cost savings of consolidation are expected to increase to more than $1 million by the end of next year. These ongoing savings continue to be reinvested into enhanced products and services that enable our member credit unions to remain competitive in today’s rapidly changing financial environment.

Additionally, LSCU posted a net income of more than $154,000, and LEVERAGE produced net earnings in excess of $367,000, well ahead of budgeted projections. These earnings enable the League to maintain its reserves to provide a cushion against economic difficulty and serve as a strong base for future growth. This is important because the League is not only focused on how to help our credit unions today but, also, strategically charting a course for future success. I hope you will take the time to read through this annual report. You will see many of the accomplishments that the League has completed on your behalf.

I would like to extend my sincere appreciation to my colleagues on the board of directors for their excellent service to the credit union community, and for the support they have given me during my past two years as chairman. I would also like to thank Patrick La Pine and his outstanding staff for their dedicated efforts and tireless commitment in support of our credit unions and the credit union movement. Finally and perhaps most importantly, on behalf of the board of directors, thank you for your membership and support for the LSCU and its affiliates. It is a true privilege to work together with you to provide trusted and reliable financial alternatives that make a difference for our 6.3 million Alabama and Florida credit union members.

Sincerely,

Joe McGeeChairman, League of Southeastern Credit Unions & AffiliatesPresident & CEO, Legacy Community Federal Credit Union

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Board Members

Linda WalkerRiverdale CU (AL)

John HirabayashiCommunity First CU of Florida

Alvin J. Cowans, CCUEMcCoy FCU (FL)

Pat Mason*Sun Credit Union (FL)

Anice ProsserEnvision CU (FL)

Greg OlmstedNorth Alabama Educators CU

LSCU Executive Committee: Front row, l to r: Mary Wood,* CCUE, chair-elect, Florida West Coast CU (FL); Joe McGee,* chairman, Legacy Com-munity FCU (AL); Steve Swofford, vice-chair, Alabama CU (AL); Back row, l to r: Tina Williams, secretary, Mobile Educators CU (AL); Brent Lister, treasurer, First Florida CU (FL), Rich Helber,* past chair, Tropical Financial CU (FL); and Patrick La Pine, president/CEO, LSCU.

LSCU Board of Directors

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LEVERAGE Board of Directors

Joe Melbourne, TreasurerCFE FCU (FL)

Ron Summerall*Alabama Teachers CU (AL)

Bob Steensma*Five Star CU (AL)

Deborah Seymour, CCUEDarden Employees FCU (FL)

Brad GreenListerhill Employees CU (AL)

Sharon DowningAlabama River CU

Caryl GreeneMembers First CU of Florida

Shane Nobley, SecretaryFamily Security CU (AL)

* Also on the LEVERAGE Board of Directors

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The Power of One

It is with this one voice and one vision, credit unions stand apart from the rest in the spirit of cooperation. It is because of this uniqueness that the League is here to support its members and industry partners through its actions and efforts. As the Power of One – the League of Southeastern Credit Unions, industry partners, and member credit unions – we have accomplished much in the past year.

The Power of One is the cooperation, overall support, hard work, and united efforts of all credit unions. It is through these concentrated services that we are able to bring you the accomplishments of 2011.

Successful Advocacy Efforts on Both State and Federal Level

• Support of the LSCU Political Action Committee (PAC) afforded more than $1 million contributed to state and federal candidates since 2010.

• Contact through more than 100 meetings with members of Congress and their staff in Washington, D.C. and in the districts.

• All four U.S. Senators from Alabama and Florida voted “yes” on the bill to delay the Federal Reserve’s Interchange Rule. This was a direct result of the relationships the League and credit unions have built with each office.

• Thousands of contacts were made to lawmakers and regulators on important issues, such as the interchange vote, comments to the Fed on the Interchange Rule, and to Congress in support of increased member business lending for credit unions.

• 85 percent of candidates in Alabama and Florida supported by the League won in the 2010 election.

The League continues to expand its presence both on the state and federal levels. Already in 2012, the League has unveiled its grassroots advocacy strategy guide, the LSCU PLAN to Win, and an online grassroots advocacy center, the LSCU Action Center, which will make contacting elected officials easier than ever. The development of a 2012 voter guide so that credit unions and their members will be aware of who our friends are that are running for office and coordination of “Get Out the Vote” efforts in both Florida and Alabama are underway.

Efficient and Effective Use of Operational Resources

• Consolidation efficiencies resulted in more than $900,000 in realized savings.

Cost savings of consolidation are expected to increase to more than $1 million by the end of 2013.

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LEVERAGE Board Member Caryl Greene and State Rep. Clay Ingram (R-Pensacola)

2011 LSCU Disaster Preparedness Workshop

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Increased Emphasis on Credit Union Relationships to Ensure All Needs Are Met

• The League maintained strong relationships with member credit unions with more than 700 face-to-face meetings with Alabama and Florida credit unions by League staff. The LSCU made it a priority to spend more time visiting credit unions and assisting them with their needs.

• 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.

• $44,400 was offered through $400 voucher program for credit unions under $35 million for use toward an LSCU, LEVERAGE, or CUNA product or service. Credit unions used the vouchers for AC&E and Development Conference registration, SAS Workshops, Compliance Update, Disaster Recovery Conference, Bank Secrecy Act training, webinars, NADA guides, audit and consulting fees, CUNA conferences, webinars, and CUNA’s Volunteer Achievement Program.

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

The League remains dedicated to maintaining strong member relations with credit unions and chapters. One of the new programs for 2012 is a Philosophy in Action program similar to the National Credit Union Foundation’s (NCUF) Credit Union Development Education (CUDE) program to help members be leaders in their communities.

Accessible, Relevant Education and Training for All Credit Union Disciplines

• More than 3,500 credit union staff and volunteers were trained at LSCU conferences and workshops that include the AC&E, Development Conference, Supervisory Conference, Disaster Recovery Conference, Bank Secrecy Act workshops, and Regulatory Compliance workshops.

• Nearly 800 educational webinar participants from 46 Alabama credit unions and 86 Florida credit unions were trained through more than a 100 webinars.

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

• Close to 500 volunteers participated in specialized training programs from the LSCU that focused on their fiduciary responsibilities in 2011. Volunteers attended financial literacy training, board of directors training, Supervisory Committee training, and Bank Secrecy Act training held in conjunction with events, planning sessions, and the state Governmental Affairs Conferences (GAC).

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

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Innovative Communications Channels to Inform Credit Unions and the Public

• 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 9,500 views of videos/podcasts from the CUNA GAC, LSCU AC&E, the State GACs and more.

• 90,000 clicks on the LSCU website reinforces that the website is a great information resource for members.

• 4.3 million readers, viewers, and listeners were reached through the LSCU proactive media relations. This includes facilitating interviews for Listerhill CU and Redstone FCU in the Wall Street Journal.

The League continues to enhance its communications in 2012 including a website update for a more user-friendly homepage, as well as usage of social media and new innovative ways to deliver news to League members. In addition, the League website was named the Best League Website at the 2011 CUNA Pro and Blockbuster Awards, and received a Hermes Platinum Award (the highest available) in the Website Overall/Association category as did Signal in the Publications/Magazine category.

Cooperative Effort Across Both States to Educate Consumers on the Uniqueness of Credit Unions

• With $1.3 million raised by 101 participating credit unions for the LSCU Cooperative Image Campaign, media buys, including television, radio, billboard and online, in 14 media markets across Alabama and Florida. LEVERAGE contributed the first $100,000 to cover all creative costs.

• Research results showed an increase of credit union awareness in Alabama (six-percent lift) and in Florida (eight-percent lift).

To date, the LSCU Cooperative Image Campaign is the largest voluntary cooperative advertising program ever offered by any credit union league. The next campaign run, which includes a new commercial, will be in June 2012.

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2011 Image Campaign Ad Shoot

Alabama Tornado Damage, April 2011

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Determined dedication to foster charity, community, and cooperation through the Southeastern Credit Union Foundation (SECUF)

• $283,668 raised for Alabama tornado relief, including CUAid funding from the NCUF, with $148,400 awarded in disaster relief to credit union employees affected by the April, 2011 tornadoes.

• 62 grants were given to credit union employees totaling $85,900, with another $50,000 donated to the American Red Cross of Alabama., and $12,500 to “Rebuilding Alabama” chapter projects for debris removal with the Northeast Chapter, Tuscaloosa Chapter, and the Alabama Credit Union calendar project and the Tuscaloosa Credit Union Adopt-a-Family project.

• $25,545 awarded in scholarships to representatives of 20 credit unions to attend the CUNA GAC, AC&E, Supervisory Committee Conference, and CUNA Lending School, to name a few.

The Foundation continues to create valuable resources and programs for member credit unions and the communities they serve. New programs in 2012 include a college internship program for credit unions interested in providing a learning environment for college students, and a credit union philosophy workshop. Also in 2012, the Foundation is spearheading the fundraising for a $300,000 therapeutic playground at All Children’s Hospital in St. Petersburg in honor of the Republican National Convention.

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Streamlined Solutions to Assist in Maximizing Operational Bottom Line

• More than $360,000 was recovered in fraud losses for credit union members through the card services program.

• 23 credit unions saved a total of more than $5 million on operational expenses through improved buying strategies and ePurchasing events.

• Credit unions that utilized the Office Depot partnership saved $1 million on office and machine supplies, furniture, technology, custom stationery, digital printing, promotional products, break room products, and more.

• Participating credit unions earned close to $800,000 in non-interest income through the Sprint Membership Program.

• ComplyTrac was launched providing credit unions with automated compliance execution to reduce costs and streamline the process to more easily meet compliance regulations.

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.

Timely Regulatory and Compliance Resources

• 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. More than 200 credit union staff took part in the calls.

• Compliance information was accessible to credit unions online at their fingertips. More than 16,000 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.

Regulatory advocacy and compliance support are two areas where credit unions rely heavily on the League. In 2012, the League continues to look for ways to support credit unions in this area through the distribution of relevant information.

Working together for one overall cause is what pushes the credit union movement forward. Collectively, we are 'The Power of One.'

League of Southeastern Credit Unions, Inc. and AffiliatesDecember 31, 2011

Combined Statement of Financial Position & Activities include:

League of Southeastern Credit UnionsLEVERAGE, the LSCU Service CorporationSoutheastern Credit Union FoundationAlabama Credit Union Legislative Action Committee (ACULAC)Florida Credit Union Political Action Committee (Florida CUPAC)LSCU Federal Political Action Committee (LSCU FEDPAC)

December 31, 2011

Current AssetsCash and Cash Equivalents $ 9,870,428

Donor Restricted Cash 1,213,548

Cash Held for Others 646,140

Short-Term Investments 128,129

Accounts Receivable 2,901,500

Inventory 13,485

Prepaid Expenses 132,852

Total Current Assets 14,906,082

Property and Equipment - Net 1,890,182

Other AssetsInvestments in Stock 555,085

Intangible Assets 150,000

Other Assets 104,588

Total Other Assets 809,673

Total Assets $ 17,605,937

Accounts Payable and Accrued Expenses $ 1,168,771

Deferred Revenue 1,605,004

Other Liabilities 645,362

Total Current Liabilities 3,419,137

Long-Term Liabilities

Accrued Leave 77,752

Other Liabilities 101,462

Special Defense Fund 509,168

Deferred Income Taxes 78,565

Total Long-Term Liabilities 766,947

Total Liabilities 4,186,084

Net Assets

Unrestricted 12,266,305

Temporarily Restricted 495,569

Permanently Restricted 657,979

Total Net Assets 13,419,853

Total Liabilities and Net Assets $ 17,605,937

Combined Statement of Financial Position

Liabilities and Net AssetsCurrent Liabilities

Assets

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Combined Statement of Activities

Year ended December 31, 2011

Unrestricted revenueDues $3,052,510

Management Fees 163,849

Commissions and Promotional Fees 3,589,241

Sales 7,501,621

Schools and Conferences 338,855

Convention Income 635,833

Servicing Fees 140,288

PAC Contributions 294,831

Other Contributions 150,292

Net Assets Released from Restrictions 190,315

Other 120,130

Total Unrestricted Revenues 16,177,765

Unrestricted ExpensesProgram Service:

Mortgage Support Services 70,957

Personnel Services 154,661

Financial Management and Processing Services 5,800,501

Shared Facilities Management 245,155

Educational Programs 1,079,746

Business Development 3,086,072

Meetings, Committees and Convention 552,388

Government Affairs 1,392,165

Member Communications 358,565

Foundation 393,718

Political Contributions 426,900

Supporting services:General and Administrative 2,054,566

Total Unrestricted Expenses 15,615,394

Change in Unrestricted Net Assets Before Other UnrestrictedIncome (loss), Income Taxes and Transfer 562,371

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Combined Statement of Activities (continued)

Year ended December 31, 2011

Other Unrestricted Income (loss)

Equity in Earnings of Subsidiary $ (0)

Interest 44,460

Total Unrestricted Other Income (loss) 44,460

Change in Unrestricted Net Assets Before Income Taxes and Transfer 606,831

Income Tax Benefit (expense) (245,056)

Change in Unrestricted Net Assets Before Transfer 361,775

Transfer of Net Assets (0)

Change in Net Assets 361,775

Unrestricted Net Assets, Beginning of Year, as Previously Reported 11,904,530

Prior Period Adjustment 0

Unrestricted Net assets, Beginning of Year, as Restated 11,904,530

Unrestricted Net Assets, End of Year 12,266,305

Temporarily Restricted Contributions 186,251

Net Assets Released From Restrictions (190,315)

Change in Temporarily Restricted Net Assets (4,064)

Temporarily Restricted Net Assets, Beginning of Year 499,633

Temporarily Restricted Net Assets, End of Year 495,569

Permanently Restricted Net assets, End of Year 657,979

Total Net Assets, End of Year $ 13,419,853

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The 'Power of One' is the cooperation, overall support, hard work, and united efforts of all credit unions.

Birmingham Office22 Inverness Center Parkway, Suite 200Birmingham, Alabama 35242

Tallahassee Office3773 Commonwealth BoulevardTallahassee, Florida 32303

www.lscu.coop866.231.0545

THEPOWER

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