1. MCU – moving to a new business model
MCU Board
Maleny Community Centre
Thursday 15 September 2016
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2. MCU Maleny Credit Union Strategic Questions
Where have we come from?
Where do we want to go?
What are we proposing?
What is the project about?
Define the goal of this project
Is it similar to projects in the past or is it a new effort?
Define the scope of this project
Is it an independent project or is it related to other projects?
* Note that this slide is not necessary for weekly status meetings

3. Where have we come from? When MCU started in 1984: MCU in 2001?
A small credit union doing personal loans, financial inclusion
MCU in 2001?
A tiny ‘ADI’ doing green loans, microfinance, a few home loans. MCU slowly becoming a small community bank like most ADIs.
What happened in 2011?
A merger with CUA was proposed and rejected by members
Since then the board and management have stabilised, nevertheless profitability is still under pressure
Where is MCU in 2016?
As Maleny continues to evolve as a community, demographics necessitated a strategic review
* If any of these issues caused a schedule delay or need to be discussed further, include details in next slide.

4. What’s happening in the mutual ADI sector?
APRA regulation and increased competition are changing the playing field
The number of mutual ADIs is now less than 80 (down from over 600 in the early 90s)
Merger is the most common response to falling profitability but not always the most appropriate
Alternatives are limited
If there was an EASY solution, everyone would be flocking to it
Margin pressure, IT costs and compliance are REAL challenges
Changing a business model takes lots of time and money.
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This and related slides can be moved to the appendix or hidden if necessary.

5. What do we need in 2016 and beyond?
Real community banking – based on relationships and service
Flexible services – meeting community and small business needs
Contemporary internet and online banking
Bigger and better loans, a wider range of products, at a good price
Community projects that make Maleny a better place to live
Retaining jobs and investment in the community
Duplicate this slide as necessary if there is more than one issue.
This and related slides can be moved to the appendix or hidden if necessary.

6. What’s happening for MCU?
Profits are flat-lining with a loss recorded this year.
Margin pressure, falling rates and competition are key factors.
We need to invest in a new IT system and key staff.
MCU remains small and our capital position restricts growth.
Maintaining the status quo (business as usual) is not a long term option
Duplicate this slide as necessary if there is more than one issue.
This and related slides can be moved to the appendix or hidden if necessary.

7. Other options considered
Business as usual – not viable long term
Wind up – carries significant costs (wind up and redundancies) and leaves us with no financial services provider
Heritage alternative partnership – they are not ready to do business
Merger – after 2011 experience, not under active consideration

8. What are we proposing?
Joining the Alliance Bank model – with Bendigo and 4 ex-credit unions
Enhanced member value proposition
Consistent with Objects of company
Retains MCU identity
Continuity of financial services for our local community
Member investment shares repaid to supportive members
Building (Maple Street) retained under member ownership
Capital invested in Charitable Trust for other community projects.

9. What happens next? Constitutional change required – AGM Nov 2016
Approval of transaction by APRA and members – early 2017
Transfer of business – later in 2017
New IT System – later in 2017
The changes will take time
… Let’s make this happen. Together.