2014 Business Plan
River Valley Credit Union – 2014 Business Plan
Page 1
Executive Summary
The Board continues to focus on being a cooperative. Credit unions continue to look out
for their members’ interests and provide a level of service that is not generally available at other
financial institutions. A cooperative is significantly more open, democratic, transparent, and
inclusive than that of a for-profit business. Credit unions are consumer-owned cooperatives.
Cooperatives are about meeting the needs of its owners. Cooperatives build a better world by
putting people at the center of their business and not capital. Cooperatives around the world
generally operate according to the same core principles and values. In an era when many
average working Americans are increasingly fed up with Wall Street, the cooperative principles
of credit unions strike a chord with many people looking for increased accountability in banking.
The Board continues to adopt the seven cooperative principles into our strategic plan.
Mission Statement: Exceeding expectations.
Vision Statement: To be the trusted choice for superior service within our community.
Values Statement: Building a community of trust and integrity with friendly, quality service.
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SEVEN COOPERATIVE PRINCIPLES
1. Voluntary Membership
All qualifying members are welcomed, embraced, and valued. You own, by simply
participating.
2. Democratic Member Control
Credit union members enjoy equal voting rights, and the members who serve as the
elected board of directors are accountable to the membership.
3. Customer-owner (Member) Participation
Through the elected board of directors, members have control over how the credit union’s
capital is used – for paying dividends or new products and services. Members recognize
benefits of ownership in proportion to general usage.
4. Autonomy and Independence
We value the rights of our members to be individuals and the diversity of the
communities we serve. We are stronger when we work together.
5. Education, Training, and Information
We educate our members, elected officials, managers, and employees so that everyone
can contribute to making the credit union stronger. We recognize the importance of
ensuring the general public and law makers are informed about the nature, structure, and
benefits of the cooperative.
6. Cooperation Among Cooperatives
We strengthen the cooperative movement by working together through local, state,
regional, national, and international structures. We are involved with other credit unions
through our local chapter of our state trade association. We offer operation assistance,
especially to smaller credit unions, so that all can thrive.
7. Concern for the Community
We take pride in participating in the communities we serve.
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STRATEGIES TO DRIVE OUR COOPERATIVE PRINCIPLES
Member-Owner Strategies:
Get back to the core values of a credit union and what makes our structure unique. Members
need to understand and value the power of ownership. The following will reinforce cooperative
principles 1-4: voluntary membership, democratic member control, member participation, and
autonomy and independence.
1. Continue to allow for electronic ballots during Board elections per Bylaw Article V.
2. Continue a virtual Annual Meeting to increase member/owner awareness and
participation.
a. Post annual reports on our website for members to review.
b. Post scholarship winners’ essays to promote this program.
c. Utilize online ballots in home banking for board elections.
d. Have virtual meeting material available two weeks prior to live annual meeting to
encourage attendance and participation.
3. Investigate the possibility of paying a patronage dividend.
a. Members should be rewarded based on their usage of the credit union.
b. The board and management will need to discuss feasibility and design at least
quarterly.
c. The credit union needs to determine a portion of earnings to retain in order to
build capital.
Education, Training, and Information Strategies:
1. Members.
a. We educate, advise, and provide suitable products and services for our members.
b. We communicate the importance of financial responsibility.
c. We look for opportunities to host financial education seminars.
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2. Elected Officials.
a. Continue board education and training.
b. Encourage participation in MCUL events.
3. Employees.
a. Continue online training tools.
b. Encourage participation in MCUL and vendor events.
4. General public and lawmakers.
a. Continue participation with the Michigan Credit Union League (MCUL).
b. Contribute to MCUL Cooperative Advertising fund.
c. Participate in MCUL legislative events.
Concern for the Community Strategies:
1. Ada Community Events Supported:
a. Ada in August (kids event)
b. Expo
c. Treats, Trolleys, and Holiday
d. Run 4 A Cause
2. Lowell
a. Expo
b. River Walk
c. Flat River Outreach Ministries (FROM)
d. Relay for Life
e. Christmas Through Lowell – including Santa pictures
f. Hunt for a Cure Golf Outing
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g. Harvest Celebration
h. Little League
i. Summer Concert Series
3. Edmore
a. Potato Festival
b. Women’s Expo
c. Santa pictures
d. Firemen’s Parade
e. Letters to Soldiers
f. School visits for financial education
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STRATEGIES THAT DRIVE OUR BUSINESS LINES
Loan Strategies:
This follows Cooperative Principle number 6, cooperation among cooperatives.
1. Participation loans
a. Lendkey Private Student Loan Participations. We participate in a CUSO
participation pool where we hold 10% in private student loans. This allows us to
offer a consolidation loan to our members that we could not hold on our own. We
mitigate our risk on this type of loan by only holding 10% of the loan. We will
continue our due diligence of this program, monitor for desired performance, and
be ready to act on our exit strategy if necessary.
b. Progressive CU Taxi Medallion Participation Loans. Progressive CU has been
offering these loans to its members for over 20 years without a loss. They
participate with credit unions nationwide offering a higher yield than what we can
get on any other type of investment. Recent regulations limit us to a $5M
maximum. We will continue our due diligence of this program, monitor for
desired performance, and be ready to act on our exit strategy if necessary.
2. Evaluate eDoc’s packages with DocuSign. We are looking toward technology to offer
online loan closing for our members. This project is dependent on the successful
installation of a VPN.
3. Continue to push for organic loan growth within our own membership.
Deposit Strategies:
We will keep aware of emerging technologies that provide desired convenience to our
members. New technologies can be costly. We strive to introduce new products and
services that are affordable for our members.
1. Promote P2P or A2A transfers within home banking (person-to-person, account-toaccount).
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2. Evaluate remote deposit capture.
Marketing Strategies:
1. Utilize our website to communicate our seven cooperative principles. This will also be a
focal point for our annual meeting.
2. Continue with onboarding program to build deeper relationships with new members.
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River Valley Credit Union
FINANCIAL GOALS
2013 Results
2014
9.49%
> 9.50%
0.53%
< 1.00%
0.10%
< 0.80%
0.55%
> 0.55%
56.77%
> 60.00%
$71.7M
> $73.5M
Benchmark
Capital
Delinquency
Charge Offs
ROA
Loans to Shares
Assets (5% growth)
2015
> 9.75%
< 1.00%
< 0.80%
> 0.55%
> 65.00%
> $77.2M
Michigan Credit Union Trends
Net Worth Ratios by Asset Size Category
(Percent of Assets)
18
16
14
12
10
8
6
4
2
0
102
100.0
97.6
97.8
100
98
96
91.9
94
92
90
16.5
11.2
11.0
10.7
< $5Mil
$5-$20
$20-$100
> $100 Mil
88
86
NW Ratio (left)
Percent of CUs > 7% (right)
Asset Quality by Asset Size Category
3.00
1.83
2.50
2.00
1.50
0.50
0.68
0.55
1.00
Net Worth (Capital) Ratio is equity
divided by assets. Credit unions must
maintain a minimum of 7%. RVCU’s
current ratio is at 9.49% with a 2014
goal of > 9.50%. Asset size has a
huge impact on this figure. Each
spring when Amway pays our
members bonuses, our Capital Ratio
drops. ROA is critical in achieving
our Net Worth (Capital) Ratio goal.
2.52
1.54
< $5Mil
$5-$20
1.21
0.82
1.12
0.00
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Asset Quality is achieved through the
Delinquency and Charge-offs Ratios.
Our goal is to be < 1.00% in
Delinquency and < 0.80% in Chargeoffs. Our performance in these
categories during the past couple years
has been well below our peers. There
is room for some controlled risk.
$20-$100 > $100 Mil
60+ Day Dollar Delinquency (left)
Net Chargeoffs (right)
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ROA in Basis Points
by Asset Size Category
120
120
95.5
100
100
84.8
80
80
58.1
60
48.5
60
Return on Assets (ROA) or earnings
have been a challenge for small credit
unions. ROA is essential in building
capital. ROA for 2014 is budgeted at
0.56%.
40
40
20
20
-4
41
105
< $5Mil
$5-$20
$20-$100
> $100 Mil
20
0
-20
0
ROA (left)
Percent with positive ROA (right)
Ratio of Total Loans-to-Total Savings (%)
By Asset Size Category
63.9
54.6
45.0
< $5Mil
49.1
$5-$20
$20-$100
The Loans-to-Shares Ratio indicates
how well we are utilizing deposits
towards earnings. Ideally, we want
to make loans to our members.
Yields on investments have been low
since the economic turndown.
> $100 Mil
Growth Rates By Asset Size Categogy (%)
8.3
5.5
We would like to see a 5% growth in
assets per year. Keeping asset
growth in control will help us to
reach our goals for building capital.
-0.5
-2.2
-5.0
-7.8
-8.2
-11.1
< $5Mil
$5-$20
Loan Growth
$20-$100
> $100 Mil
Savings Growth
*Source: NCUA and CUNA E&S, June 2013.
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