chfa – program profitability and community impact September, 2016

project vision Allow CHFA to regularly monitor and manage the financial performance of its diverse product portfolio against its mission and vision. Program profitability was born. Allocating revenue and expense (direct and indirect) to our 30 business units. 2

business terms Business Unit A distinct product or service with revenues and expenses Not dependent on divisional reporting structure – could be picked up and moved to a different division Line of Business A related set of Business Units serving a common customer (example: single family LOB contains acquisition, servicing and bonds) (Indirect) Cost Center Activities conducted to support Business Units 3

business terms Direct Business Unit Revenue and Expense Revenue / expense earned or spent by a business unit (examples: subservicing fees / salaries) Direct Cost Center Expense Expense for work done by a cost center for a particular business unit (examples: IT subservicing transition, IRM imaging) Indirect Cost Center Expense Activities conducted to support all business units (examples: executive salaries, marketing, building services) 4

profitability model single business unit example Business Unit 1 Revenue In Less Direct Expense $2,220Fees $115Salaries Outsource$964 Purchase$1,135 $1,050Gross Profit Less Direct Cost Center Expense $43Cost Center 1 Cost Center 2$41 Cost Center 4$11 Net Bus Unit Profit Cost Center 1 Other$49 Cost Center 2 Cost Center 3 $360Other Revenue $3,511Total Revenue Other$247 $2,461Total Expense Direct Cost Center Expense$163 Less Indirect Cost Center Expense $225 $668 Cost Center 1 Cost Center 2 Cost Center 3 $931Gain Allocation Cost Center 3$19

6 BU CC BU 33 Business Units 15 Cost Centers CC CHFA Wide Revenue In Interest $ 101,651 Fees $ 22,414 Gain on Loan Sale (less seconds) $ 15,955 Other $ 1,439 Total Revenue $ 141,459 Less Direct Expense Interest $ 96,857 Salary & Benefits $ 8,099 SRP $ 5,906 Outsourced Services $ 3,702 Fees $ 3,560 Other $ 2,131 Total Expense $ 120,256 Gross Profit $ 21,203 Less Cost Center Direct Expense Accounting $ 898 Legal $ 810 IT $ 803 IRM $ 799 Other $ 654 Total Cost Center Direct Expense $ 3,965 Less Indirect Expense $ 9,137 Net Profit $ 8,102

7 By lines of business Profitable Not Profitable

8 Drill down on line of business ProfitableNot Profitable

9 Impact Profitability High Low Community impact / profitability matrix Break even Adapted from The Matrix Map: A Powerful Tool for Mission-Focused Nonprofits

measuring community impact Measures include: 1. Degree to which product/service aligns with the mission. 2. Directness, depth, and scale of the product’s impact in the communities we serve. 3. Operational advantage or strategic importance of CHFA offering a product or performing a service internally. 10