1. [this space intentionally left blank] Stephen Nelson | Utah’s Credit Unions | sn@utahscreditunions.org

2. How is the shape of Utah’s credit unions changing? Are small credit unions doomed? Is the credit union industry in Utah different than in other states?

3. Data point Loans/ Assets Charge off Rate Gross Income/ Average Assets Delin- quency Net interest Margin Operating Expneses/ Average Assets Yield on Earning AssetsROA Range88%4%8.91%6.47%6.64%7.24%7.04%5.41% Minimum9%-0.44%0.66%0.00%0.51%0.48%0.74%-3.11% Maximum97%3.34%9.57%6.47%7.15%7.72%7.78%2.30% Median65%0.19%4.58%0.59%3.08%3.35%3.54%0.57% Mean64%0.34%4.62%0.98%3.23%3.49%3.78%0.55% Standard Deviation 17%0.57%1.55%1.33%1.01%1.28%1.12%0.83% Percentile 25% (Q1) 55%0.05%3.50%0.24%2.74%2.79%3.18%0.26% Percentile 75% (Q3) 77%0.40%5.30%0.97%3.57%4.02%4.12%0.98%

7. Capital depletion/victims of NCUA panicking HeritageWest Beehive Southwest Community Mountain High Family First Utah Central Pacific Rails Sheet Metal Employees (2013) Struggling small CUs/no succession plan IFA Big Valley Salt Lake County Employees of Granite Mill Treasury SL City VAF SL Regional Ogden Wonder EMSCO People’s Electric Newspaper Employees (2013) St. Mark’s (2013) Premier Services (2014) Logan City Employees (2014) Deseret News Employees (2014) Valtek (2015) Grantsville (2016) Moon Lake Electric (2015) One on the docket for 2016 Seeking Scale Weber/Alliance Credit Union One Summit One (2013) USU Charter (2013) Chevron West (2013) Reasons for Utah mergers since 2010

8. Large HeritageWest Mid-sized Weber/Alliance Credit Union One Beehive Southwest Community Family First Utah Central Summit One (2013) USU Charter (2013) Chevron West (2013) Small IFA Big Valley Salt Lake County Employees of Granite Mill Treasury SL City VAF SL Regional Ogden Wonder EMSCO People’s Electric Mountain High Pacific Rails Sheet Metal Employees (2013) Newspaper Employees (2013) St. Mark’s (2013) Premier Services (2014) Logan City Employees (2014) Deseret News Employees (2014) Valtek (2015) Moon Lake Electric (2016) Grantsville (2016) Sizes of CUs

9. Location of CUs Outside the Wasatch Front HeritageWest Southwest Community People’s Electric USU Charter (2013) Moon Lake Electric (2016) Grantsville (2016) In the Wasatch Front Weber/Alliance Credit Union One Beehive Family First Utah Central IFA Big Valley Salt Lake County Employees of Granite Mill Treasury SL City VAF SL Regional Ogden Wonder EMSCO Mountain High Pacific Rails Summit One (2013) Chevron West (2013) Sheet Metal Employees (2013) Newspaper Employees (2013) St. Mark’s (2013) Premier Services (2014) Logan City Employees (2014) Deseret News Employees (2014) Valtek (2015)

13. Clearly, there is a difference in the rate of mergers inside and outside the Wasatch Front. How do we know that the difference isn’t due to chance? Perform a chi-square test. This measures the actual outcome vs. the expected outcome, giving us χ2 (chi-squared), which we can test for statistical significance. Excel makes it easy, and gives us a p value, or probability that the difference from expected is due to chance. In statistics, the magical p value is... 0.05

14. Independent Variables2010 Actuals In WF69 Out of WF29 2010 Percentage 70% 30% 2015 expected given # of mergers 49 CUs 21 CUs 2015 Actuals 46 CUs 24 CUs p = 0.39

15. p = 0.11

17. p = 4.95E-70

19. Asset Size2010 Count 2010 % of total Expected 2015 Count Actual 2015 Count 2015 actual % of total $1 mil6148%4933486% $5 mil1,34718%1,08284314% $10 mil1,00113%80466211% $30 mil1,76423%1,4171,37622% $ 50 mil73510%59062010% $100 mil79110%63574512% $250 mil7069%56772612% $500 mil3264%2623365% $1 bil2043%1642384% > $1 bil1662%1332544% Totals7,654100%6,148 100%

20. Asset Size2010 Count 2010 % of total Expected 2015 Count Actual 2015 Count 2015 actual % of total $1 mil1212%9710% $5 mil2121%151420% $10 mil1212%957% $30 mil1616%111319% $ 50 mil55%4710% $100 mil1313%946% $250 mil1010%7913% $500 mil33%234% $1 bil44%346% > $1 bil22%146% Totals98100%70 100%

23. r = 0.19

25. r = 0.43

26. r = 0.05

27. r = 0.49

28. r = -0.03

29. r = 0.64

30. Group of CUs Correlation between assets and ROA All0.19 Billion+-0.03 $250 mil to $1 bil0.48 $50 mil to $250 mil0.05 Quantum CUs0.43 Groups0.65 Over $250 mil0.07 Under $1 bil0.28

32. Group Correlation between loans and ROA All0.36 Billion +-0.15 $250 mil to $1 bil-0.03 $50 mil to $250 mil0.54 Quantum0.32 Groups0.70 Over $250 mil-0.06

33. Other correlation studies No statistically significant, strong correlation between assets and any ratio. Strong, statistically significant correlations: Gross income, loans/assets: r = 0.61p = 0.02 Operating Expense, gross income: r = 0.78p = 0.00 Operating Expense, yield on earning assets:r = 0.74p = 0.00 Operating Expense, net interest margin:r = 0.77p = 0.00 Moderate, statistically significant correlation Yield on earning assets, charge off rate:r = 0.30p = 0.008 Weak, not statistically significant correlations Delinquency, yield on earning assets:r = 0.14p = 0.22 Delinquency, charge off rate:r = 0.01p =.92

34. Is Utah different than the rest of the country?

35. Upper Bound of Group Number of states in Group 2%0 4%6 6%13 8%14 10%8 12%4 14%4 16%0 18%1

36. Upper Bound of Group Number of states in Group 2%0 4%6 6%13 8%14 10%8 12%4 14%4 16%0 18%1

37. Upper Bound of Group Number in Group 2%0 4%6 6%13 8%14 10%8 12%4 14%4 16%0 18%1

38. Upper Bound of Group Number in Group 2%0 4%6 6%13 8%14 10%8 12%4 14%4 16%0 18%1

53. Is Utah different than the rest of the country?

54. Can probably say with some certainty that Utah’s CUs are different than the rest of the states in these ways: More deeply penetrated into the population Have a lot of branches Other operating income makes up a larger portion of income Loan servicing expenses are higher Used auto loans make up a larger portion of loans Our Call Reports indicate we are probably similar to other states when considering financials and ratios.

55. This study did not address: A lot of things We may be different than other states in ways not measureable in Call Report data (or in other aspects of Call Report data not examined in this study)