1. Proprietary / Confidential Addressing Regulatory Headwinds October 2015

2. Addressing Regulatory Headwinds Agenda 2

3. Addressing Regulatory Headwinds Agenda ● What Regulations Are Doing To Financial Institutions 3

4. Addressing Regulatory Headwinds Agenda ● What Regulations Are Doing To Financial Institutions ● Where Are We Heading? 4

5. Addressing Regulatory Headwinds Agenda ● What Regulations Are Doing To Financial Institutions ● Where Are We Heading? ● So What Do We Do? 5

6. Addressing Regulatory Headwinds Banking Crises And The Resulting Increase In Regulations ● Dodd Frank has exacerbated the pre-existing trend of banking consolidation by piling up regulatory costs on institutions that neither pose systemic risk nor have the diversified businesses to support such costs (Harvard Kennedy School of Government) 6

7. Addressing Regulatory Headwinds Banking Crises And The Resulting Increase In Regulations ● Dodd Frank has exacerbated the pre-existing trend of banking consolidation by piling up regulatory costs on institutions that neither pose systemic risk nor have the diversified businesses to support such costs (Harvard Kennedy School of Government) ● Community financial institutions saw a 26 percent increase in the number of hours and employees required to meet regulatory compliance demands (2015 Banking Compliance Index – Continuity Control ) 7

8. Addressing Regulatory Headwinds Banking Crises And The Resulting Increase In Regulations ● Dodd Frank has exacerbated the pre-existing trend of banking consolidation by piling up regulatory costs on institutions that neither pose systemic risk nor have the diversified businesses to support such costs (Harvard Kennedy School of Government) ● Community financial institutions saw a 26 percent increase in the number of hours and employees required to meet regulatory compliance demands (2015 Banking Compliance Index – Continuity Control ) ● The average community financial institution needed to devote 653 additional hours… 1.86 full-time employees… to manage new regulatory changes (2015 Banking Compliance Index – Continuity Control ) 8

9. Addressing Regulatory Headwinds 9 Source : NCUA

10. Addressing Regulatory Headwinds Financial Industry Crises And The Resulting Increase In Regulations 10 Source: FDIC

11. Addressing Regulatory Headwinds Financial Industry Crises And The Resulting Increase In Regulations ● Two periods of branch contraction 11 Source: FDIC

12. Addressing Regulatory Headwinds Financial Industry Crises And The Resulting Increase In Regulations ● Two periods of branch contraction ● 1989 – 1995 o Followed the Thrift crisis o 180 bank failures a year starting in the late 1980s 12 Source: FDIC

13. Addressing Regulatory Headwinds Financial Industry Crises And Resulting Increase In Regulations ● Two periods of branch contraction ● 1989 – 1995 o Followed the Thrift crisis o 180 bank failures a year starting in the late 1980s ● 2008 – 2014 o Followed the 2008 recession o 100 bank failures a year between 2008 and 2012 o 49 credit unions have failed since 2012 13 Source: FDIC

14. Addressing Regulatory Headwinds 14 Source: FDIC

15. Addressing Regulatory Headwinds 15 Source: FDIC

16. Addressing Regulatory Headwinds 16 Source: FDIC

17. Addressing Regulatory Headwinds 17 Source: FDIC

18. Addressing Regulatory Headwinds 18 Source: FDIC

19. Addressing Regulatory Headwinds Be Member Centric and Address Organizational Silos Disciplines MUST work together toward common goal(s) Doing so will strengthen efficiencies and enhance member service 19

20. Addressing Regulatory Headwinds Be Omni-Channel Align channel experiences o Gen Y shops online but would rather open accounts in branches o A poor online experience takes you out of the running o Extend your reach Help members purchase a vehicle Help members find and purchase a home Etc Promote Mobile - Mobile consumers access their financial information 66% more often than online non-mobile users, providing additional opportunities to cross-sell Cross sell o In the branch o Through the mail (postal and digital) o Online 20

21. Addressing Regulatory Headwinds 21 * FMSI, What will your Branch Transaction Volume be in 2025 **Bank Innovation – US Branches to Decline 30-40% as Consumers Migrate to Digital Channels 1992 – 11,700 monthly teller transactions 2012 – 6,400 monthly teller transactions 45.3% decrease in average number of branch transactions

22. Addressing Regulatory Headwinds 22 * FMSI, What will your Branch Transaction Volume be in 2025 **Bank Innovation – US Branches to Decline 30-40% as Consumers Migrate to Digital Channels 1992 – 11,700 monthly teller transactions 2012 – 6,400 monthly teller transactions 45.3% decrease in average number of branch transactions 1992 – $ 8.85 per hour 2012 – $16.30 per hour 84.2% increase in average teller salaries

23. Addressing Regulatory Headwinds 23 * FMSI, What will your Branch Transaction Volume be in 2025 **Bank Innovation – US Branches to Decline 30-40% as Consumers Migrate to Digital Channels 1992 – 11,700 monthly teller transactions 2012 – 6,400 monthly teller transactions 45.3% decrease in average number of branch transactions 1992 – $ 8.85 per hour 2012 – $16.30 per hour 84.2% increase in average teller salaries 1992 – $.48 per transaction 2012 – $1.08 per transaction 123.6% increase in branch labor cost per transaction

24. Addressing Regulatory Headwinds Remain On Top Of Technology 24

25. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: 25

26. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: ● ATMs – debuted in 1969 26

27. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: ● ATMs – debuted in 1969 ● Credit Cards – became common in the 1970s 27

28. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: ● ATMs – debuted in 1969 ● Credit Cards – became common in the 1970s ● Telephone Banking – appeared in the 1970s 28

29. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: ● ATMs – debuted in 1969 ● Credit Cards – became common in the 1970s ● Telephone Banking – appeared in the 1970s ● Debit Cards – introduced in the 1990s 29

30. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: ● ATMs – debuted in 1969 ● Credit Cards – became common in the 1970s ● Telephone Banking – appeared in the 1970s ● Debit Cards – introduced in the 1990s ● Online Banking – began in the 1990s 30

31. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: ● ATMs – debuted in 1969 ● Credit Cards – became common in the 1970s ● Telephone Banking – appeared in the 1970s ● Debit Cards – introduced in the 1990s ● Online Banking – began in the 1990s ● Remote Deposit Capture – a 21 st century service 31

32. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: ● ATMs – debuted in 1969 ● Credit Cards – became common in the 1970s ● Telephone Banking – appeared in the 1970s ● Debit Cards – introduced in the 1990s ● Online Banking – began in the 1990s ● Remote Deposit Capture – a 21 st century service ● Mobile Banking – smart phones are driving adoption 32

33. Addressing Regulatory Headwinds Remain On Top Of Technology Some of the important banking technologies introduced over the past 50 years: ● ATMs – debuted in 1969 ● Credit Cards – became common in the 1970s ● Telephone Banking – appeared in the 1970s ● Debit Cards – introduced in the 1990s ● Online Banking – began in the 1990s ● Remote Deposit Capture – a 21 st century service ● Mobile Banking – smart phones are driving adoption ● Interactive Teller Machines (ITM) ● Community ITMs segue to the home 33

34. Addressing Regulatory Headwinds 34

35. Addressing Regulatory Headwinds 35 4.5 The Bank of Things

36. Addressing Regulatory Headwinds Be Access Facilitators ● Provide access to accounts when and where members want it 36 Source: Milward Brown Digital

37. Addressing Regulatory Headwinds 37 Source: Accenture – 2014 – The Digital Disruption in Banking

38. Addressing Regulatory Headwinds 38 Source: Accenture – 2014 – The Digital Disruption in Banking

39. Addressing Regulatory Headwinds 39 Source: Accenture – 2014 – The Digital Disruption in Banking

40. Addressing Regulatory Headwinds 40 Source: Novarica – December 2013

41. Addressing Regulatory Headwinds 41 Source: Novarica – December 2013

42. Addressing Regulatory Headwinds 42 Source: Novarica – December 2013

43. Addressing Regulatory Headwinds 43 Source: Nielsen - 2014

44. Addressing Regulatory Headwinds 44 Source: Nielsen - 2014

45. Addressing Regulatory Headwinds 45 Source: Nielsen - 2014

46. Addressing Regulatory Headwinds 46 Source: Nielsen - 2014

47. Addressing Regulatory Headwinds 47 Source: Novantas

48. Addressing Regulatory Headwinds 48 Source: Novantas

49. Addressing Regulatory Headwinds 49 Source: Novantas

50. Addressing Regulatory Headwinds 50 Source: Novantas

51. Addressing Regulatory Headwinds 51 Source: Nielsen - 2014

52. Addressing Regulatory Headwinds 52 Source: Nielsen - 2014

53. Addressing Regulatory Headwinds 53 Source: Nielsen - 2014

54. Addressing Regulatory Headwinds 54 Source: Nielsen - 2014

55. Addressing Regulatory Headwinds 55 Source: Nielsen - 2014

56. Addressing Regulatory Headwinds 56 Source: Nielsen - 2014

57. Addressing Regulatory Headwinds 57 Source: Clickfox 2014

58. Addressing Regulatory Headwinds 58 Source: McKinsey and Company

59. Addressing Regulatory Headwinds 59 Source: McKinsey and Company

60. Addressing Regulatory Headwinds 60 Source: McKinsey and Company

61. Addressing Regulatory Headwinds 61 Source: McKinsey and Company

62. Addressing Regulatory Headwinds 62 Source: McKinsey and Company

63. Addressing Regulatory Headwinds 63 Source: McKinsey and Company

64. Addressing Regulatory Headwinds 64 Source: McKinsey and Company

65. Addressing Regulatory Headwinds 65 Source: McKinsey and Company

66. Addressing Regulatory Headwinds 66 Source: McKinsey and Company

67. Addressing Regulatory Headwinds 67 Source: McKinsey and Company

68. Addressing Regulatory Headwinds 68 Source: McKinsey and Company

69. Addressing Regulatory Headwinds 69 Source: McKinsey and Company

70. Addressing Regulatory Headwinds Be Advice Providers ● Retain space as “trusted” advisors ● Deliver tailored and personalized advice… when and where the member wants it 70 Source: Milward Brown Digital

71. Addressing Regulatory Headwinds 71 Source: 2013 Gallup U.S. Retail Banking Survey

72. Addressing Regulatory Headwinds SegmentCharacteristicsChannel Engagement 72

73. Addressing Regulatory Headwinds SegmentCharacteristicsChannel Engagement Established 18% of HHs - Upscale - Empty Nesters - Well-Educated - Homeowners - Branch and online users - Appreciate convenience of online banking - Don’t fully trust mobile banking 73

74. Addressing Regulatory Headwinds SegmentCharacteristicsChannel Engagement Established 18% of HHs - Upscale - Empty Nesters - Well-Educated - Homeowners - Branch and online users - Appreciate convenience of online banking - Don’t fully trust mobile banking Sophisticate 15% of HHs - Upscale - Families - Well-Educated - Homeowners - Mobile and ATM users - Use smartphones for quick activities - Don’t view the branch as convenient 74

75. Addressing Regulatory Headwinds SegmentCharacteristicsChannel Engagement Established 18% of HHs - Upscale - Empty Nesters - Well-Educated - Homeowners - Branch and online users - Appreciate convenience of online banking - Don’t fully trust mobile banking Sophisticate 15% of HHs - Upscale - Families - Well-Educated - Homeowners - Mobile and ATM users - Use smartphones for quick activities - Don’t view the branch as convenient Traditionalist 25% of HHs - Midscale - Retired Seniors - Low-Education - Homeowners - Branch bankers who value safety of branch - Don’t fully trust mobile banking 75

76. Addressing Regulatory Headwinds SegmentCharacteristicsChannel Engagement Established 18% of HHs - Upscale - Empty Nesters - Well-Educated - Homeowners - Branch and online users - Appreciate convenience of online banking - Don’t fully trust mobile banking Sophisticate 15% of HHs - Upscale - Families - Well-Educated - Homeowners - Mobile and ATM users - Use smartphones for quick activities - Don’t view the branch as convenient Traditionalist 25% of HHs - Midscale - Retired Seniors - Low-Education - Homeowners - Branch bankers who value safety of branch - Don’t fully trust mobile banking Connected 33% of HHs - Low to Midscale - Young with kids - Some College - Renters - Mobile and Call Center bankers - Rely on smartphones - Value speed and convenience - Use Call Center when they need personal interaction 76

77. Addressing Regulatory Headwinds SegmentCharacteristicsChannel Engagement Established 18% of HHs - Upscale - Empty Nesters - Well-Educated - Homeowners - Branch and online users - Appreciate convenience of online banking - Don’t fully trust mobile banking Sophisticate 15% of HHs - Upscale - Families - Well-Educated - Homeowners - Mobile and ATM users - Use smartphones for quick activities - Don’t view the branch as convenient Traditionalist 25% of HHs - Midscale - Retired Seniors - Low-Education - Homeowners - Branch bankers who value safety of branch - Don’t fully trust mobile banking Connected 33% of HHs - Low to Midscale - Young with kids - Some College - Renters - Mobile and Call Center bankers - Rely on smartphones - Value speed and convenience - Use Call Center when they need personal interaction Practical 9% of HHs - Midscale - Middle Aged - Some College - Homeowners/Renters - Online and Call Center bankers - Value speed and convenience - Use Call Center when they need personal interaction 77 Source: Nielsen – Mu;lti-Channel Consumer Banking - 2013

78. Addressing Regulatory Headwinds Invest 78

79. Addressing Regulatory Headwinds Invest ● Analytics ● Anticipate member needs ● Deliver the products and services members demand 79

80. Addressing Regulatory Headwinds Invest ● Analytics ● Anticipate member needs ● Deliver the products and services members demand ● Tailored pricing and product development ● One size fits all does not work anymore 80

81. Addressing Regulatory Headwinds Invest ● Analytics ● Anticipate member needs ● Deliver the products and services members demand ● Tailored pricing and product development ● One size fits all does not work anymore ● Distribution ● Know how your members want to access and purchase accounts 81

82. Addressing Regulatory Headwinds Invest ● Analytics ● Anticipate member needs ● Deliver the products and services members demand ● Tailored pricing and product development ● One size fits all does not work anymore ● Distribution ● Know how your members want to access and purchase accounts ● Agility ● Be ready to adapt to technological shifts 82

83. Addressing Regulatory Headwinds Invest ● Analytics ● Anticipate member needs ● Deliver the products and services members demand ● Tailored pricing and product development ● One size fits all does not work anymore ● Distribution ● Know how your members want to access and purchase accounts ● Agility ● Be ready to adapt to technological shifts ● Innovation ● Anticipate and respond to members’ ever-changing needs 83

84. Addressing Regulatory Headwinds THANK YOU 84