Annual Report | 2010

DEFINING OUR FUTURE

I am excited about what the future holds for this organization and how we can be of assistance in your future.”“

The first year for the League of Southeastern Credit Unions (LSCU) went by like a flash of an eye. Consolidating two leagues, two service corporations, and three foundations has given me a new found appreciation for what credit unions must go through during mergers.

The new LSCU & Affiliates is focused squarely on the needs of our member credit unions, and we expect to continue to enhance our product and service offering as we go forward fulfilling our vision of being a leader in “Advocacy and Information.”

By concentrating our advocacy efforts for credit unions through our Governmental Affairs, Education, Communications, and Cooperative Initiatives departments, the LSCU has been able to really hone in on the areas where credit unions need us the most. We added positions in Governmental Affairs for a greater presence in Montgomery, Tallahassee, and Washington, D.C. Our website is a great resource with multimedia tools. The Cooperative Initiatives staff is in contact with all of you on a regular basis with League staff making many more and frequent credit union visits.

Last year, each department was focused on short-term deliverables centered around our consolidation but with a strategic eye looking ahead, developing new and better ways to provide solutions. The League is now better equipped to act quickly on ever changing legislative and regulatory fronts, as well as providing education offerings that matter most to credit unions. Our education department is always looking for ways to bring timely topics to our credit unions in the most convenient way possible while still keeping them as affordable as possible.

Also debuting last year was the LSCU’s service group, LEVERAGE. Through LEVERAGE, credit unions utilized products and services to assist in strategic purchasing, credit card fraud loss recovery, and non-interest income generation, just to name a few. Our product development team has been working non-stop on the development of new solutions, many of which you will see at this year’s AC&E. We are partnering and collaborating with other League service corporations and trusted system partners like never before to identify and bring you best-in-class products and services.

In this report, we showcase the actions and results of our first year as the League of Southeastern Credit Unions. I am excited about what the future holds for this organization and how we can be of assistance in your future. However, none of this would have been possible without the support of our credit union community. Thank you for your support in making this past year successful and, most importantly, productive.

I would be remiss in not also mentioning the commitment and dedication of your LSCU and LEVERAGE board of directors in charting our course as well as the hard work of League staff.

Working together, our future is bright!

Patrick La PinePresident/CEOLeague of Southeastern Credit Unions & Affiliates

President’s Message

”“ ...we are well on our way to being a leader among state credit union leagues.

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

Chairman’s ReportOn behalf of the board of directors of the League of Southeastern Credit Unions, I would like to extend our sincere appreciation for your membership and support. As a result, and through the dedicated efforts of the League staff, we have put in place a strong, efficient and effective association for the credit unions of Alabama and Florida.

“Defining our Future,” the theme of this year’s Annual Convention & Exposition, is exactly what we had in mind when the consolidation of the Alabama and Florida leagues was set in motion. One of the promises behind consolidation was to produce a more streamlined operation. The operational efficiencies of a consolidated association have resulted in $812,000 in savings to date. These ongoing savings are being reinvested through enhanced products and services to better serve our member credit unions.

As we founded the League of Southeastern Credit Unions, we pledged to be a good steward of our member credit unions’ dues dollars. Last year, the League posted more than $376,000 in net income and LEVERAGE, our League service corporation, produced net income in excess of $500,000, well ahead of budgeted projections. These earnings will enable the League to build reserves to provide a strong base for future growth.

As we look to the future, we will build on these strengths to reinforce LSCU’s commitment to our core vision of “Advocacy and Information.” Although we have accomplished much in this regard, we will continue to strive for a greater presence among member credit unions, as well as heightened visibility with our state and federal legislators and regulators. Many of these accomplishments are set forth in this annual report and I encourage you to take a moment to review how the League is working on your behalf.

In closing, I would like to thank my colleagues on the board of directors for their service to the credit union community and the support that they have shown me during my term as chairman. Their countlesshours of dedication and support have provided excellent guidance and produced sound decisions and actions on your behalf. I can assure you that you are well represented by these outstanding individuals.

I would also like to offer my thanks to Patrick La Pine, the president & CEO of the League of Southeastern Credit Unions, and to his exceptional staff for their hard work and commitment and their invaluable contribution toward the success of the League. In my mind, the LSCU is certainly a leader among state credit union leagues and is well on the way to being one of the strongest leagues in the country.

As we “Define our Future” together, I look forward to the continued success of the League and our credit unions.

Sincerely,

LSCU Board of DirectorsExecutive Committee

Board Members

John HirabayashiCommunity First CU of Florida (FL)

Ola AniseAzalea City CU (AL)

Pat Mason*Sun Credit Union (FL)

Alvin J. Cowans , CCUEMcCoy FCU (FL)

LSCU Executive Committee: Front row, l to r: Mary Wood,* CCUE, chair-elect, Florida West Coast CU (FL); Joe McGee,* chairman, Legacy Community 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.

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Board Members (continued)

LEVERAGE Board of Directors

Joe Melbourne, TreasurerCFE FCU (FL)

Brad GreenListerhill Employees CU (AL)

R. Larry ScottCampus USA CU (FL)

Ron Summerall*Alabama Teachers CU (AL)

Linda WalkerRiverdale CU (AL)

Deborah Seymour , CCUEMulti Media FCU (FL)

Shane Nobley, SecretaryFamily Security CU (AL)

Ron FieldsPen Air FCU (FL)

Greg OlmstedNorth Alabama Educators CU (AL)

Bob SteensmaFive Star CU (AL)

LSCUAnnualReport|2010 2

* Also on the LEVERAGE Board of Directors

Defining Our FutureThe year 2010 was a big “first” step in defining the future of the League as well as Alabama and Florida credit unions’ future. Jan. 4, 2010 marked the start of “doing business as” the League of Southeastern Credit Unions. This first step, or year of transition, marked a year of defining, and building up, a structure that would support streamlined operations and allow more emphasis on serving the more than 300 Alabama and Florida credit unions. This structure, composed of advocacy, education and training, communication, and cooperative initiatives, sets the stage for years to come.

AdvocacyRepresenting 306 credit unions with $57 billion in assets and 5.7 million members enables the LSCU to tell our credit union story with a strong, unified voice, commanding attention in Washington D.C., Montgomery, and Tallahassee. The LSCU is able to convey the “credit union difference” to lawmakers in a powerful, collective message that allows the League to advocate positive change for the credit union industry.

The Governmental Affairs (GA) department is focused on legislative advocacy, grassroots advocacy, political action fundraising, regulatory advocacy, and compliance/operational support.

By reconstituting the Governmental Affairs Committee with representatives from each chapter plus at-large representatives, the committee is equipped to assess and address the state and federal legislative issues facing credit unions. The GA team helped credit unions have a more active role in the legislative process by facilitating 21 legislative events at individual credit unions and chapter meetings. Meeting with lawmakers is an important part of advocacy and the LSCU conducted multiple Hike-the-Hills in Washington, D.C. during the CUNA GAC and a credit union “fly-in” in June. These lawmaker

visits resulted in 37 face-to-face meetings with members of Congress, 14 with Alabama lawmakers, and 23 with Florida lawmakers. The CUNA GAC also saw more than 110 Alabama and Florida credit union staff make the trip to Washington D.C.

During the mid-term elections, the GA team developed candidate surveys and report cards on key legislative issues, as well as put together federal and state voter’s guides to help credit union staff and members make a more informed decision. PAC fundraising plays a major role in advocacy as it helps identify candidates that understand credit union issues. In 2010, the League restructured the LSCU Federal PAC, allowing both Alabama and Florida participation. A more concerted effort was put forth to help credit unions reach their PAC goals with the addition of a political action and grassroots advocacy coordinator position for Alabama.

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U.S. Rep. Debbie Wasserman-Schultz meets with Florida credit union representatives at a Hike-the-Hill visit during CUNA’s 2010 GAC in Washington, D.C.

A fundraising guide was developed to assist credit unions with their PAC fundraising efforts. In 2010, LSCU PACs raised more than $414,000 and contributed $1.1 million

to credit union friendly candidates during the 2010 election cycle. Regulatory advocacy and compliance support are two areas where credit unions rely heavily on the League. In 2010, the League ramped up its efforts in this area with the addition of a director of compliance position based in the Birmingham office.

Also, the League developed and strengthened relationships with state and federal regulators, while providing opportunities for credit union interaction with regulatory agencies (NCUA, ACUA, and OFR). This included having the regulators at the LSCU Annual Convention and the Development Conference.

Other compliance and regulatory resources provided to credit unions included access to a free regulatory and compliance resource, League InfoSight, which also includes model policies and a weekly newsletter.

The League helps to strengthen the content of League InfoSight which saw an increase in usage by 251 percent in Alabama and 30 percent in Florida. Custom Performance Reports were distributed to credit unions on a quarterly basis to help credit unions and boards gain a better understanding of their financial picture and how it compares with their peers.

A compliance helpline is available to provide members ongoing assistance in the compliance area. Also in 2010, the League ramped up its efforts to distribute summaries and explanations of all major regulatory proposals and final regulations.

Advocacy (continued)

306 creditunions

$57 billion inassets

5.7 million members

LSCUAnnualReport|2010 4

Alabama credit union representatives meet with House Financial Services Committee Chair U.S. Rep. Spencer Bachus (AL-6) during a visit during CUNA’s GAC.

LSCU President/CEO Patrick La Pine takes part in a meeting with NCUA Regional III Director Herb Yolles and several league presidents in Atlanta.

Education & TrainingThe LSCU’s expanded educational offerings provide the timely, relevant training credit union staff and volunteers need to perform in their positions more efficiently and effectively. Utilizing the best industry resources and speakers, the LSCU Education Department trained more than 1,200 credit union staff and volunteers in 2010 through conferences, workshops, distance learning, and the LSCU Councils in order to offer a wide variety of opportunities for member credit unions. Credit unions could see right away that the new League’s education calendar was robust and the training opportunities beneficial.

The LSCU Annual Convention & Exposition (AC&E) is the League’s premier event, providing the more than 1,100 attendees a number of high quality speakers, including political pundits Tucker Carlson and Paul Begala, CUNA CEO Dan Mica, CUNA Mutual Group CEO Jeff Post, and WOCCU CEO Pete Crear. The education breakout sessions provided top-notch training and information and were led by many of the industry’s leaders. Attendees had access to more than 130 vendors in the sold out exhibit hall. In its first year, the AC&E quickly became one of the premier credit union conventions in the country. The Development Conference provided close to 200 attendees, representing 50 credit unions, a mix of relevant educational sessions, speakers such as NCUA Region III Director Herb Yolles and demographer Ken Gronbach. The Development Conference also included fun networking activities and a golf outing.

Distance learning provides a flexible learning experience for credit union professionals who wanted quality training but did not have the time or ability to travel. Through the use of webinars and audio conferences, the LSCU offered a variety of opportunities, particularly as hot topics came onto the credit union radar. Additionally, through its partnership with the Credit Union National Association’s (CUNA) Center for Professional Development (CPD), LSCU member credit unions had access to hundreds of online educational offerings. The League also began looking into partnering with a new webinar company that would bring delivery of more than 80 webinars annually covering critical issues for every credit union employee.

In 2010, the LSCU Councils were expanded into Alabama, bringing the networking and learning to a broader audience. The councils are designed to provide credit union professionals with peer-to-peer networking opportunities, discuss key issues in their areas of concentration, share ideas, and hear from industry experts. Participation in the councils was not what we hoped for in 2010, so we will be redoubling our efforts this year to get the word out to credit unions on what the councils are all about.

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Tucker Carlson speaks to the crowd at LSCU’s 2010 AC&E General Session.

LSCU Councils include the following disciplines:

CommunicationsWhen the LSCU officially debuted on January 4, 2010, a new website, www.lscu.coop, was launched. The state-of-the-art website offers daily and weekly updated information as well as an area to house valuable resources such as key legislation summaries, events calendar, chapter events calendar, and an archive for the League’s publications so credit unions may access them at any time. The website also houses two new communications channels for the League: videos and audio podcasts. At the end of 2010, the website has been seen by more than 83,000 visitors with more than 250,000 pages viewed.

Proactive media relations efforts have put Alabama and Florida credit unions in front of more than two million readers and viewers by placing more than 70 stories in the mainstream and credit union trade press.

In 2010, the Communications team also debuted two new publications and a cooperative advertising program. By December 2010, readership of eSignal, the weekly electronic newsletter, had more than doubled since January 2010. Signal, the League’s signature publication, offered readers

in-depth information on topics important to credit unions on a quarterly basis. Communications also conducted the Southeastern Credit Union Compensation Report for purchase and, in turn, as a member benefit, distributed the results back to credit unions for taking part in the survey.

Work began on the development of a statewide credit union image campaign with the assembly of the LSCU Statewide Image Campaign Task Force. The campaign, set to launch in the fall of 2011, has the goal to increase credit union membership, explain the credit union difference, and show that credit unions are unique and modern.

In August 2010, the LSCU, with the recommendation from the Statewide Image Campaign Task Force, retained Scout Branding Company of Birmingham as the ad agency for this project. Scout developed the tagline “Credit Unions: We’re giving banking a better name” around which the campaign creative will be centered.

The task force established a goal to raise $2.1 million, with LEVERAGE contributing the first $100,000 to help cover the cost of creative. The money raised by the credit unions will stay in the respective media markets of the contributing credit unions; the campaign will utilize radio, TV, print, billboard, and online advertising.

Volume 1: Issue 2

The Magazine of the League of Southeastern Credit Unions

Summer 2010

EconomicRecovery

INSIDE LSCUCredit Union Leading By Example

Tracking TDR’s

Save to Win Program

Upcoming Conferences

2011 Image Campaign

The Light at the End of the Tunnel

LSCUAnnualReport|2010 6

Cooperative InitiativesHoused within the LSCU Cooperative Initiatives (CI) department are member relations, small asset size (SAS) credit union development and support, chapter support, foundations, financial education, and the League’s international partnership with Costa Rica. The LSCU’s Cooperative Initiatives area helps the League maintain stronger member relations with credit unions and chapters. Between the LSCU management and CI teams, 558 contacts were made with credit unions in 2010. Credit unions felt the presence of the new League by seeing more of this interaction.

The League has always been a catalyst for cooperative activities. Its job is to help members be leaders in their communities and help differentiate their credit union from other financial institutions. One of these cooperative activities was to bring in new CUNA President/CEO Bill Cheney to Alabama and Florida credit unions for roundtable discussions on the current issues within the movement. This also gave credit unions the opportunity to get to know the new leader of CUNA and hear his vision for the future of the industry.

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SAS credit unions saw an increase of attention from the League. More than 200 face-to-face meetings were held with SAS credit unions in 2010. An SAS initiatives account was established, providing a $400 credit for any LSCU or CUNA product or service to all affiliates under $35 million. CI staff also developed a service plan tailored to the needs of these credit unions, which includes a comprehensive assessment of operations, member services, and financial performance.

New CUNA President Bill Cheney speaks to Orlando-area credit unions during one of the many town hall meetings held in Alabama and Florida.

Representatives of Alabama, Florida, and Costa Rica credit unions pose with Costa Rica President Laura Chinchilla (c) dur-ing a visit to the country with which the League has an inter-national partnership.

CI focused on providing SAS credit unions with the support and resources needed for success at events such as the SAS Roundtable held at the 2010 AC&E.

Chapter support is a major function of the CI staff. In 2010, the LSCU Chapter Leaders Retreat was held to explore ways to tie the chapters to the League’s priorities. Two members of each chapter were invited to the retreat that included plenty of time for give and take on improving the chapter experience for credit unions.

Through the League’s three foundations, 23 scholarships, totaling $29,808, were awarded to credit union professionals for use toward training and 33 scholarships, totaling $49,500, were awarded to Alabama and Florida high school seniors for use toward college. The LSCU also placed a greater commitment on raising money for the Children’s Miracle Network (CMN).

In June 2010, the LSCU raised $27,000 for CMN at the AC&E. Also in 2010, pieces were put in place to bring the League’s three Foundations, with combined assets of more than $2.7 million, under one umbrella and to hire a standalone executive director. A strategic plan to consolidate the three foundations was developed and would be completed in 2011.

The CI staff coordinated visit to Costa Rica in November that included meetings with the president of Costa Rica, president of the General Legislative Assembly, members of the Legislative Assembly, the Costa Rican League, and credit unions. This was a rare opportunity to spend time with the leader of another country.

I am extremely happy with the merger of both Leagues. We are a small asset size credit union and I feel this League truly cares about the small credit unions, our needs, and our survival. LSCU has led me to many tools, support systems, and services that I did not know existed, that are free or affordable. ”

“

Debbie Woodson, CEO, Financial Educators Federal Credit Union, Daytona Beach, FL

Cooperative Initiatives (continued)

LSCUAnnualReport|2010 8

LEVERAGEIn January 2010, LEVERAGE was launched to credit unions throughout Alabama, Florida, and beyond. Credit unions know with LEVERAGE they are promised to provide “access to best-in-class solutions, helping credit unions leverage buying power, utilize industry knowledge to increase credit union performance, reduce operating costs, and promote future growth.” Not only have credit union clients found LEVERAGE services to surpass their expectations, but we have successfully stayed true to our promises and look forward to delivering the same high standard in 2011. Our credit union clients have experienced significant gains based on our commitment to the industry and our promises to help them buckle down on expenditures as well as streamline processes to gain performance efficiencies.

In 2010, LEVERAGE chargeback services managed more than 350,000 outstanding cards and handled disputes and fraud cases against 14,360 transactions. In the last six months, $218,509 in fraud losses for credit unions was recovered. The gift card program reached an all-time high and earned credit unions more than $25,000 in additional fee-based income. The program offers a simple web-based application to load cards, a variety of card designs, and low implementation costs. Credit unions generated more than $442,000 in non-interest income through their participation in the Sprint Member Discount Program. As checks were delivered in early December 2010, many found their unexpected revenue surprising considering the no cost, easy-to-implement steps required to get their credit union on the program.

Credit unions utilizing the Business Services Division program, powered by Office Depot, also saw significant savings. With more than 1,100 credit unions on the program, more than $1 million in savings was achieved.

As more credit unions utilize Ventelligence, LEVERAGE’s strategic purchasing program, they are seeing significant savings. The armored car services event held in September 2010 created a collective 36.3 percent savings on an almost $1 million purchase from prior year costs. A second armored car services event was held in December 2010 and created a collective 58 percent savings. An enterprise risk management software event was held in November 2010 and produced a total savings of 12.1 percent. We plan to expand our commodity portfolio to include teller cash dispensers and maintenance services for our credit unions in 2011 to provide more products and services that will help streamline processes and maximize savings for our credit union clients.

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Grow Financial FCU SVP, Marketing, Wes Strickland receives a check from CU Solutions Group’s Leslie Norush for revenue generated through the credit union’s use of the Sprint Member Discount Program.

What was presented here is only a snapshot of the success credit unions experienced in 2010. The national credit union movement took notice of the LSCU and Affiliates in 2010. Through the good works and new, innovative ideas and solutions for 2011, the League expects our member credit unions in Alabama and Florida to see an even stronger League focused on helping them operate in an ever-changing environment.

League of Southeastern Credit Unions, Inc. & AffiliatesDecember 31, 2010

Combined Statement of Financial Position & Activities include:

League of Southeastern Credit UnionsLEVERAGE, the LSCU Service CorporationAlabama Charitable FoundationAlabama Educational FoundationLSCU FoundationAlabama State Political Action CommitteeFlorida State Political Action CommitteeLSCU Federal Political Action Committee

December 31, 2010

Current AssetsCash and Cash Equivalents $ 9,619,903

Donor Restricted Cash 1,207,612

Cash Held for Others 1,244,942

Short-Term Investments 126,611

Accounts Receivable 1,858,969

Inventory 14,675

Prepaid Expenses 258,994

Total Current Assets 14,331,706

Property and Equipment - Net 2,027,500

Other AssetsInvestments in Stock 505,085

Intangible Assets 150,000

Other Assets 123,896

Total Other Assets 778,981

Total Assets $ 17,138,187

Accounts Payable and Accrued Expenses $ 846,719

Deferred Revenue 1,165,257

Other Liabilities 1,249,977

Total Current Liabilities 3,261,953

Long-Term Liabilities

Accrued Leave 56,163

Other Liabilities 112,684

Special Defense Fund 420,000

Deferred Income Taxes 225,245

Total Long-Term Liabilities 814,092

Total Liabilities 4,076,045

Net Assets

Unrestricted 11,904,530

Temporarily Restricted 499,633

Permanently Restricted 657,979

Total Net Assets 13,062,142

Total Liabilities and Net Assets $ 17,138,187

Combined Statement of Financial Position

Liabilities and Net AssetsCurrent Liabilities

Assets

LSCUAnnualReport|2010 12

Combined Statement of Activities

Year ended December 31, 2010

Unrestricted revenueDues $ 3,035,888

Management Fees 245,580

Commissions and Promotional Fees 3,247,980

Sales 4,636,236

Schools and Conferences 331,286

Convention Income 637,725

Servicing Fees 150,563

PAC Contributions 394,715

Other Contributions 136,890

Net Assets Released from Restrictions 10,000

Other 997,430

Total Unrestricted Revenues 13,824,293

Unrestricted ExpensesProgram Service:

Mortgage Support Services 112,880

Personnel Services 39,980

Financial Management and Processing Services 3,499,987

Shared Facilities Management 319,740

Educational Programs 1,181,056

Business Development 2,893,379

Meetings, Committees and Convention 503,767

Government Affairs 994,401

Member Communications 217,840

Foundation 107,215

Political Contributions 841,715

Supporting services:General and Administrative 2,155,246

Total Unrestricted Expenses 12,867,206

Change in Unrestricted Net Assets Before Other UnrestrictedIncome (loss), Income Taxes and Transfer 957,087

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Combined Statement of Activities (continued)

LSCUAnnualReport|2010 14

Year ended December 31, 2010

Other Unrestricted Income (loss)

Equity in Earnings of Subsidiary $ (19,795)

Interest 76,537

Total Unrestricted Other Income (loss) 56,742

Change in Unrestricted Net Assets Before Income Taxes and Transfer 1,013,829

Income Tax Benefit (expense) (496,359)

Change in Unrestricted Net Assets Before Transfer 517,470

Transfer of Net Assets (420,000)

Change in Net Assets 97,470

Unrestricted Net Assets, Beginning of Year, as Previously Reported 11,691,304

Prior Period Adjustment 115,756

Unrestricted Net assets, Beginning of Year, as Restated 11,807,060

Unrestricted Net Assets, End of Year 11,904,530

Temporarily Restricted Contributions -

Net Assets Released From Restrictions (10,000)

Change in Temporarily Restricted Net Assets (10,000)

Temporarily Restricted Net Assets, Beginning of Year 509,633

Temporarily Restricted Net Assets, End of Year 499,633

Permanently Restricted Net assets, End of Year 657,979

Total Net Assets, End of Year $ 13,062,142

BirminghamOffice22InvernessCenterParkway,Suite200Birmingham,Alabama35242

TallahasseeOffice3773CommonwealthBoulevardTallahassee,Florida32303

www.lscu.coop866.231.0545