ASSET MANAGEMENT Credit Union Investment Advisory Services Firm Overview MEMBERS Capital Advisors MCA-0113-69F2 - Not For Distribution to the General Public
Table of Contents CUNA Mutual Group Overview MEMBERS Capital Advisors Overview Investment Advisory Services MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 2
CUNA Mutual Group Profile The world s leading provider of services to credit unions and their members $3.1 billion in annual revenues* World headquarters in Madison, WI, operations in Waverly, IA and Fort Worth, TX International Division serves Great Britain, Ireland, the Caribbean Region and Puerto Rico 4,100 employees worldwide as of 12/31/2012 *Total revenues are based on preliminary, unaudited GAAP financial statements as of 12/31/2012 MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 3
MEMBERS Capital Advisors (MCA) Firm History SEC Registered Investment Advisor Founded in 1982 Wholly owned affiliate of the CUNA Mutual Group (wholly owned by credit unions and members) Investment responsibility for CUNA Mutual assets supporting insurance obligations Institutional separate accounts Credit Union Investment Advisory Services MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 4
MCA Assets Under Management $12.7 Billion as of December 31, 2012 Account Type (amounts in $ billions) Asset Class (amounts in $ billions) Defined Benefit $.6 Investment Advisory $1.1 Alternative Assets $1.9 Cash/Short Term $0.4 Equities $.1 General Account $11 Fixed Income $10.3 MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 5
MCA Senior Leadership David P. Marks, CFA Scott R. Powell, CFA John R. Fields Kurt Y. Lin 2005-present President 2005-present Executive Vice President and Chief Investment Officer for CUNA Mutual Group in Madison, Wisconsin and the CUNA Mutual Life Insurance Company in Waverly, Iowa 2002-2005 Chief Investment Officer CIGNA / Citigroup Insurance Investments 2001-2002 Partner, Green Mountain Partners 1991-2001 President and Chief Investment Officer, Allianz of America Prior to 1991 Senior Vice President- Private Placements, Connecticut General Dartmouth College, Executive MBA University of Connecticut, BA, MBA 2012-present Sr. Managing Director General Account Private Investments 2009-2012 Managing Director General Account 2008-2009 Managing Director, Common Stock & Managed Account Investments 2007 2008 Managing Director, Managed Account Services and Mutual Funds 2006-2007 Director, Managed Account Services 2003-2006 Partner, Virchow Krause LP 2001-2003 Vice President-Investments, Jacobus Wealth Management, Inc., 1999-2000 Sr. Vice President, Heartland Advisors 1997-1999 Vice President-Investments, CIMCO 1996-1997 Vice President, T. Rowe Price Associates 1989-1996 Investment Officer, CIMCO and the CUNA Mutual Group University of Wisconsin-Madison, BA, MBA 2012-present Sr. Managing Director General Account Public Investments 1991 2011 Sr. Portfolio Manager, Allianz of America, Inc. 1989 1991 Managing Director 1985 1989 Associate Director/Limited Partner 1984 1985 Vice President-Fixed Income Trading and Research Bearn Stearns & Co. Inc. 1981 1984 Vice President, Mortgage Investment Analyst Reilly Mortgage Group, Inc. Gordon College, BA 2006 present Managing Director, Quantitative & Derivatives Group 2003 2006 Senior Portfolio Manager, Citigroup Asset Management 1997 2003 Portfolio Manager, Citigroup Insurance Investments 1994 1997 Vice President, Smith Barney Derivatives Products Group 1991 1993 Bank of Montreal 1986 1991 Trader, Citibank Derivatives Desk Stern School of Business - (NYU), MBA New York University, BS MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 6
Investment Advisory Services Portfolio Management Edward Meier, Director, Portfolio Manager, Fixed Income Edward Meier is a Portfolio Manager in the Fixed Income Division of MEMBERS Capital Advisors (MCA) in Madison, Wisconsin. Edward is responsible for the Investment Advisory Portfolios and Agency Mortgage holdings of CUNA Mutual Group. Edward has been managing fixed-income assets since he began his investment career in 1992. He possesses a broad base of experience in most fixed-income sectors. Prior to joining MEMBERS Capital Advisors, Edward managed the Mortgage-and Asset-Backed Portfolios for AEGON U.S.A. Investment Management Co., based in Louisville, Kentucky. In this role, he was responsible for managing $5 billion in mortgage-backed securities and $3 billion in asset-backed securities. Edward holds a Bachelor s Degree in economics from Indiana University. He earned a Master of Business Administration (MBA) Degree from DePaul University. MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 7
Investment Advisory Services Sales Specialist Jeffrey Weber, Investment Sales Specialist Jeffrey Weber is an Investment Sales Specialist for MEMBERS Capital Advisors. He is responsible for the sales and marketing of investment products and services to credit unions throughout the United States. He also works closely with Account Consultants to ensure a professional approach along with superior service. Jeffrey has over twenty years experience in the securities industry. He has developed a broad understanding of the equity and fixed income markets and how they are impacted by economic and political events. During his career on Wall Street, Jeff developed new contacts and expanded existing relationships in the brokerage community while covering large institutional asset managers. Prior to joining MEMBERS Capital Advisors, Jeffrey served as Managing Director of Equity Trading for Allianz of America where he was responsible for managing a Standard and Poor s 500 Index Fund with over six hundred million dollars in assets. Jeffrey earned his Bachelor s Degree in Economics from the University of Maryland. He is an Investment Advisor Representative of MEMBERS Capital Advisors. MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 8
MCA Firm Philosophy MEMBERS Capital Advisors is dedicated to providing premier investment services to credit unions and their members. To achieve this, MCA: Seeks consistently competitive performance (at or above market benchmark returns), which produces very competitive long-term results Provides unequaled access to our investment professionals, which allows our investment advisor clients to be more productive and of greater value to their credit union This results in a breadth and depth of services that distinguishes MCA in the investment management arena and helps assure the investment success of its clients MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 9
Fixed Income Investment Philosophy Strategy & Objectives Our Belief Incremental value can be added through both security and sector selection Our Objective To produce predictable and consistent excess returns while strictly controlling risk Our Strategy In-depth analysis of the balance sheet Multiple disciplined approaches Employ active management that incorporates multiple fixed income sectors Focus on risk management Utilize qualitative and quantitative methods MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 10
MEMBERS Capital Advisors Fixed Income Overview $8.1 billion in assets under management* Disciplined investment management process Experienced in multiple fixed income sectors State-of-the-art quantitative systems Corporates 52% Structured Product 24% High Yield 2% International 1% Governments 10% Municipals 11% *Represents all public fixed income securities managed by MCA as of 12/31/2012 MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 11
MEMBERS Capital Advisors Experienced back-office operations 19 staff Investment Accounting, Information Technology and Back Office Advisor compliance requirements and reporting Security trade operations Investment performance measurement Performance reporting Investment technology Investment accounting MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 12
MCA Processes and Resources Disciplined Processes with Top Tier Resources Fundamental and valuation screening tools Objective analysis to validate screened investment opportunities Quantitative Team Stress test portfolios Attribution analysis Expertise in derivatives Subjective analysis Earnings quality Competitive position Peer comparisons Outlook Financial forecasts Macro overlay Consensus and what-if MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 13
Institutional Analytic Tools Used by MCA MCA spends over $2.8 million on analytics Nearly $100,000 per investment professional Tool The Yield Book Bloomberg Market Axess & TradeWeb Trepp Intex BondHub Internal Quantitative Tools Private i Purpose Premier Fixed Income analytical system for portfolio analysis and benchmark comparison. Preeminent tool for gathering new, economic data and security data. Two main electronic trading platforms for determining current prices and evaluation trade ideas. The industry leading tool for analyzing Commercial Mortgage Backed Securities The gold standard tool for analyzing Asset Backed Securities, Whole Loan Residential Mortgage Securities, and Collateralized Mortgage Securities. An internet-based system for accessing broker-dealer research, data, fixed income indices, and analytical tools. An array of tools and people for creating benchmarks, quantitatively assessing relative value, reviewing risks, etc. A platform of Portfolio management tools for Limited Partnership. As Of 12/31/12 MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 14
Investment Advisory Process Understanding your risk / return philosophy Building and customizing your Investment Policy Statement Assess your current position Bringing you ideas for portfolio structure Individual security selection upon your approval Performance and analytical reporting Ongoing dialog and adjustment MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 15
Investment Advisory Client Profiles 11 Credit Unions totaling over $6.4 Billion in Assets * $1,164 million investments under management as of 12/31/12 Fixed Income asset sectors: Treasuries, Agencies, Agency MBS, Agency ABS, Passthroughs/CMO s, Investment Grade Corporate Credit, Commercial Mortgage Backed Securities Portfolio duration: 1.5-5.0 years Portfolio credit quality AAA/AA- Advise State and Federally chartered Credit Unions *As of 12/31/2012 MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 16
The MEMBERS Capital Advisors Difference MEMBERS Capital Advisors goals are uniquely aligned with Credit Union goals Unbiased, objective investment advice Holistic balance sheet management approach Understanding of credit union regulatory and compliance environment Depth of resources and expertise across all sectors MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 17
Credit Union Advisory Account Reference List Consumers Credit Union Merced School Employees FCU Rivers Edge Community Credit Union Waukegan, IL 60079 Merced, CA 95341 Allen Park, MI 48101-2040 Total Assets: $574 Million Total Assets: $381 Million Total Assets: $88 Million Contact: Sean Rathjen, CEO Contact: Nancy Deavours, CEO Contact: Thomas H. Fisher, President Phone: (847) 265-5520 Phone: (209) 383-5550 x100 Phone: (734) 671-6280 Email: seanr@myconsumers.org Email: nancy.deavours@mercedschoolcu.org Email: tfisher@reccu.org Decatur Earthmovers Credit Union Montgomery County Employees FCU Security Credit Union Decatur, IL 62525 Germantown, MD 20874 Flint, MI 48505 Total Assets: $260 Million Total Assets: $90 Million Total Assets: $371 Million Contact: Barry Schmidt, CEO Contact: Jim Norris, CEO Contact: Linda Hrcka, VP Finance Phone: (217) 875-2301 (301)279-1964 ext. 3546 Phone: (810) 235-2322 x1185 Email: bschmidt@decu.com Email: jnorris@mcefcu.org Email: hrckal@securitycu.org Flint Area School Employees Credit Union Municipal Credit Union Wildfire Credit Union Flint, MI 48532 New York, NY Saginaw, MI 48605 Total Assets: $335 Million Total Assets: $1,808 Million Total Assets: $676 Million Contact: Patrick Hagedorn, CFO Contact: Norman Kohn, SVP Contact: Bob Trumble. VP of Finance Phone: (810) 720-8373 Phone: (212)238-3376 Phone: (989) 249-8284 Email: phagedorn@fasecu.org Email: nkohn@nycmcu.org Email: rtrumble@wildfirecu.org Lake Trust Credit Union Piedmont Advantage Credit Union Lansing,MI 48933 Winston Salem, NC 27105-3911 Total Assets: $1,582 Million Total Assets: $221 Million Contact: Brian McVeigh, SVP/CFO Contact: Judy Tharp, CEO/President Phone: (517) 267-7218 Phone: (336) 744-8500 Email: bmcveigh@laketrust.org Email: jtharp@pacu.com This listing includes all CUNA Mutual Group Investment Advisory Services Clients who have been with the program for at least one quarterly reporting cycle. CUNA Mutual Group does not know whether this list of clients approve MEMBERS Capital Advisors, Inc. or its services. MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 18
Contact Information Edward Meier 800-356-2644 x 7184 edward.meier@cunamutual.com Jeffrey Weber 800-356-2644 x 8179 jeff.weber@cunamutual.com This presentation is intended only for the exclusive benefit and use of the MEMBERS Capital Advisors, Inc. ("MCA") clients and prospects to whom it is addressed. This presentation does not carry any right of publication or disclosure. Neither this presentation nor any of its contents may be used for any purpose without the prior written consent of MCA. The information in this presentation reflects prevailing market conditions and MCA's judgment as of this date, which are subject to change. In preparing this presentation, MCA has relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources. MCA considers the information in this update to be accurate, but does not represent that it is complete or should be relied upon as the sole source of performance or suitability for investment. Past performance is not indicative of future results. No representation or warranty is made as to the efficacy of any particular strategy or the actual returns that may be achieved. An investment is not a deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency or by MCA or any of its affiliates. MEMBERS CAPITAL ADVISORS MCA-0113-69F2 Not For Distribution to the General Public 19