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Forming a Prosperous Region

Forming a Prosperous Region continues what Libro Credit Union started with our inaugural Building Momentum and Engaging Prosperity plans over the past two years. Rooted in Be Libro, this is a roadmap to guide us for the coming three years.

Be Libro is why we exist. At the heart of who we are is the social aim of building prosperity, for our Owners, employees and our communities. We do this every day through our business objectives and thoughtful consideration of the economic, social and environmental impacts of our operations. This type of business model creates shared value for Libro and all of southwestern Ontario, and attracts individuals, business and community organizations who share our common vision. Libro Owners continue to entrust more business with their credit union, engage in more prosperity conversations with their Libro Coaches, and continue to benefit from profit sharing. Owners are also experiencing prosperity coaching, receiving tailored advice and personalized service designed to inspire financial happiness. To achieve further growth, revenue and profitability goals, Libro will continue to centre on our Owners, uncovering their business and striving to increase the portion of business each Owner entrusts with Libro. We will better leverage our resources to deliver more value to Owners, and find new ways to accomplish more while holding expenses level. We are continuing to incorporate our purpose across the organization, becoming a Living Wage Employer, championing innovation with the University of Guelph and raising our profile on a national stage. Across southwestern Ontario, we’re speaking with a stronger voice, constantly exploring ways to collaborate and tackle the challenges and opportunities in the communities we serve. This purpose driven approach continues to shape Libro and our promise of forming a prosperous region.

Stephen Bolton Gary Baker Head Coach, President & CEO Board Chair January 2017 January 2017

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What does forming a prosperous region look like?

In 2016 we began implementing a purpose-based business model to improve the social, economic and environmental resiliency of households, community organizations and businesses. Adopting a purpose-based business model further fosters financial well-being, is a source of sustainable profitability, creates a virtuous circle of growth, and a reason investors and Owners will choose to partner and do business with Libro. The basics are already embedded in Be Libro, and differ from businesses whose primary purpose is creating profits for shareholders: Libro’s model begins with Owners and their financial health. We believe that by leveraging

personalized advice, service and seamless banking experience, we attract new Owners who entrust their business and deposits with us.

Libro activates those deposits through loans, investments and innovative partnerships with people, businesses, and organizations to create new markets and strengthen our communities.

Stronger communities further support the economic success of Libro and all of southwestern

Ontario, encouraging more Owners to do business with Libro and increasing our capital for purpose-based investments.

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How did we coach to prosperity this past year? During 2016, we focused on executing our strategy as a reimagined Credit Union. While growing our business, we strive to grow prosperity through positive economic, social and environmental impacts. Prosperous Owners Partnered with passionate Libro Coaches, our Owners had 6,919 Prosperity Plan

conversations to build their personal financial well-being

Improved a seamless banking experience with the launch of Flash Debit Cards, Deposit Anywhere, Remote Deposit Capture for Businesses and enhancements to Commercial Online Banking offering

Offered and Issued Prosperity Series 5 Investment Shares just prior to the start of 2016, with the opportunity to build personal prosperity and fund regional well-being, with $75 million purchased by Owners

Prosperous Regions Launched the Prosperity Project and invested $1.5 million to support hundreds of

organizations in building prosperity through Prosperity Fund grants, sponsorship and donations, the Co-operative Young Leaders (CYL) program and Student Awards

Libro staff logged 13,186 total volunteer hours in the community, helping hundreds of local organizations increase regional prosperity

Unveiled the Libro Professorship in partnership with the University of Guelph to foster regional economic development and launched the Money Smarts program, designed to build financial literacy for employees of Business Owners and Community Groups

Prosperous Credit Union Welcomed 7,857 new Owners, for a total of 103,180 total Owners, achieved 4.5 out of 5 in

Owner Satisfaction scores and received the AON Hewitt Platinum Level Best Employers Award; Libro Owners entrusted $512 million of their prosperity with Libro in 2016.

Invested over $750,000 in Learning and Development opportunities for staff, including the launch and integration of Lean methodology and Prosperity Coaching

We became a Living Wage Employer, fostering social inclusion and supporting the quality of life of all our staff

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Being Libro Libro intentionally differentiates where we believe prosperity originates: Advice: Holistic advice through prosperity coaching and acting in the best interest of Owners.

Service: Proactively delivering meaningful personalized service in a simplified manner.

Community: By every definition, Libro is a community. We live and invest locally to grow prosperity here. Our success will be the vitality of southwestern Ontario.

We regularly engage stakeholders to assess how we are perceived in our marketplace. The graph below illustrates how our Owners and the people of southwestern Ontario perceive what Libro offers, compared to full service banks:

This graph shows we have significant strengths and opportunities when it comes to how we are perceived. Owners perceive us as delivering a superior experience within our value proposition, and there is also a strong competition for the trust of the people who live here. We strive to increase in areas where we are perceived to be at a disadvantage, while leveraging our value proposition to stand out from other financial institutions around us.

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How are we moving forward? Our plan is supported by Libro’s four main goals, each rooted in the four critical factors that ensure our shared success. Each goal is reinforced with initiatives to help fulfill our objectives, including why the initiative furthers our purpose, how we will complete our objective, and what it means for stakeholders.

Engagement: Talent Management

Libro Credit Union will be the employer of choice for southwestern Ontario. The right people will choose to work here and actively seek us out. Libro fosters a diverse, inclusive and financially knowledgeable workforce engaged in growing prosperity.

Our motivation to attract, hire, develop and retain people who demonstrate what it means to Be Libro is as strong as ever and we are well underway in building a more robust talent strategy. We continue to welcome and develop new staff who have intentionally sought out a different place to grow their careers and are proud of our strong engagement scores and efforts to sustain and improve staff engagement. Enhancing the overall well-being of our staff and Owner Representatives has a direct impact on Libro’s success, so we’re committed to providing professional development opportunities and creating a healthy balance between work, family and personal wellness. Libro is committed to diversity and inclusion as a critical component of growing prosperity, of a healthy culture and a driver of stronger business results.

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Maintain Career Development & Staff Planning Why: Enhance experiential learning opportunities necessary for leading our Credit Union

today and in the future. How: Within Career Development programs, we will expand support and skill building for leaders to

engage in stronger career conversations with staff, along with the tools for development. What: A new mentorship program and additional resources for continuing professional

development. Integrate a Human Resources Management System Why: Leverage technology to meet Libro’s current and future talent management needs. How: In 2016 we completed the needs analysis for a Human Resources Management System and

will analyze, select and begin implementation in 2017. What: More efficient and effective management of our people information, including administrative

information, reporting and performance management and career development. Renew our Compensation Philosophy Why: Invest in staff to grow prosperity for our Owners, and ensure we reflect the diversity

needed for our thriving culture. How: We will engage a staff team to review our benefits program, update role and career profiles

and create a leaner approach to maintaining job evaluation and compensation structure. What: Providing leading compensation practices and programs for all Libro staff. Internal Communications Why: Provide an engaging, clear and consistent internal communications experience for Staff

to deliver world-class advice and service. How: We will streamline our internal website, design space for the social sharing of ideas, and

further harness power of video to strengthen communication across multiple locations. What: Strong staff engagement and alignment, strong Owner experience and continuous

improvement across Libro communication channels.

Best Governance Through Owner Representative Engagement Why: Leverage our unique governance structure through Owner Representative collaboration,

attracting the best candidates for our Branch Councils and governance succession needs. How: We will increase Owner Representative coaching, workshops and development opportunities. What: Strong engagement and shared expectations for Owner Representatives and Branch Councils. Through Best Board Development Why: Our purpose will continue to flourish with a strong, passionate Board with the desired

experience, diversity, skills, attributes and behaviours. How: Develop new methods of coaching, developing and evaluating candidates for current and

future Board needs. What: Board recruitment will be fully aligned with desired competencies and skills with a strong

Owner Representative pool of applicants.

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Operational Excellence: Value Creation

Libro Credit Union will devote itself to creating synergy throughout the organization, instilling a culture of continuous improvement and focused on maximizing the resources to deliver Be Libro. Achieving value starts with considering what elements make the most impact on our Owners, staff and the communities across southwestern Ontario. It involves a commitment to set principles and behaviours that not only helps Libro carry out its vision and business goals, but a culture fully engaged to sustain those principles and behaviours in the long term. It involves building a culture of continuous improvement, constantly innovating how we get the work done, and ensuring balance between delivering our services and mitigating potential risk.

LEAN Integration Why: Lean is a holistic and sustainable approach to using less to produce “more”. More means

more staff knowledge and empowerment, more organizational agility and capability and delivering more value to Libro Owners.

How: In 2017, all staff will be certified in Lean methodology, with knowledge of Libro’s Lean culture, adopting Lean thinking in our daily activities and supporting high impact Lean initiatives.

What: Application of Lean methods results in high levels of staff engagement, continuous improvement and waste elimination, allowing resources to be reassigned to activities to better serve our Owners.

Smart Risk Culture Why: Impactful investments and loans within southwestern Ontario requires an effective

enterprise risk management model to protect people, assets and reputation. How: Continue our 3 year journey to mature our risk management processes in an Owner-centric

manner and maintain regulatory requirements. What: A smart risk culture, balancing our passion for Owners and staff empowerment.

Sustainable Operations Why: Responsible purchasing, outsourcing and environmental footprint strategies will

positively impact southwestern Ontario and result in a more sustainable and cost-effective way to do business.

How: Develop sustainable purchasing guidelines, assess regionalized services and conduct an environmental audit in order to generate efficiencies and reduce overall waste, and energy use.

What: Increased focus on sourcing environmentally and socially sustainable goods and services offered by qualified local vendors as well as creating a greener work environment for our Owners and Staff.

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Financial Performance: Resource Allocation

Libro Credit Union will deliver real and sustainable impact in southwestern Ontario. We will be seen as a leader and regional multiplier as a result of our purpose based sustainable business model.

As the largest credit union in southwestern Ontario, Libro plays a large role in contributing to the economic impact and growth of the region. As Libro steadily grows in assets and revenue, we have the opportunity to make investments to support economic and social impact, creating a robust circle of mutual success. The full sale of our Prosperity Series 5 Investment Shares leading into 2016 further strengthened our capital position and enhanced our ability to deliver economic impact. Our tradition of profit sharing helped us remain accountable to our Owners as a rock solid financial institution. To further our understanding of our potential, we commissioned a study by The Conference Board of Canada to measure the economic footprint of Libro within southwestern Ontario, and will use these findings to guide our next steps.

Resource Allocation Why: To maximize our positive economic impact for Owners and the communities we serve. How: By leveraging our entire balance sheet and developing the appropriate mix of profitability,

growth, capital, and sharing profits to strengthen stakeholders’ prosperity and sustainability. What: Stakeholders – staff, owners, businesses, and communities will invest, partner and work with a

Credit Union focused solely on the prosperity of southwestern Ontario, driving robust economic impact to the region.

Value Proposition: Delivery & Access

Libro Credit Union will deliver the best coaching, advice and service to southwestern Ontario in a way that is simple, meaningful and valuable. People will continue to choose Libro Credit Union because we inspire their financial happiness. Libro’s approach across the organization is simple – our Owners need to be better off because of what we do. Financial Happiness comes from a mutual understanding of what motivates action, alleviates stress and brings prosperity to our Owners. At Libro, coaching is a partnership of mutual learning – a journey of inspiring personal growth by transforming potential into accomplishments. Our coaching philosophy allows us to identify what prosperity means to each individual, our advice helps tailor a personalized plan, and our service simplifies banking for our Owners, and inspires financial happiness.

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Optimize our Delivery Strategy Libro will create an integrated access strategy that inspires financial happiness, one that is achieved when Owners can engage with Libro when, where and how they want.

Through our Digital Delivery Why: Consumer behaviours continue to be driven and enhanced by the digital revolution. How: Libro develops high-quality personalized advice and solutions in a form consumers expect –

seamlessly combining digital technologies with relationship banking. What: We will bring elements of coaching online, align mobile and desktop banking, launch a new Libro

website and enhance the online process for new Owners to strengthen Owners’ experience. Through our Branch Delivery Why: The local branch is important to Owners and to Libro’s delivery strategy. Growing prosperity

requires access to branches that engage our Owners and deliver a world-class experience. How: Libro will require an expanded presence, and in 2017 we will complete renovations to our Exeter

branch and build our long-term branch vision and strategy. What: A place to bring together coaching, prosperity planning and education for Owners. Owner Insights Why: Owners expect we will anticipate their individual needs and plans. Delivering personalized

solutions requires enhancing our analytics and digital communication capabilities. How: We will explore analytics-driven insights and build the infrastructure to deliver tailored solutions

through new digital channels. What: Increasingly proactive advice and planning, engaging content through new communication

avenues, and an enhanced online and digital experience of Libro’s offerings.

New Owner Experience Why: Libro delivers a strong value proposition through all delivery channels, and is reinventing how

we provide a consistent, holistic and needs-based experience for new Owners. How: We will re-examine how to engage those exploring Libro for the first time. What: Build a strong foundation of trust to grow and maintain lasting relationships with new Owners. Payments Why: Libro will remain nimble within the world of payments, an area that is rapidly changing as

newcomers to the market disrupt the traditional methods of accessing and sharing funds. How: We will explore, develop and deliver debit and credit payment options through card, mobile

payments, digital wallets and additional functionality. What: Owners will benefit from payment methods with those who matter most and where they choose. Become a known leader in the small and medium-sized business market Why: Supporting the growth and success of small and medium-size businesses translates into a

better economy for us all. How: We will develop and implement initiatives with more focus on enhancing local, agricultural/food

processes and social enterprise business sectors and continue to evolve business segment management and prosperity coaching.

What: Through partnerships and collaboration, Libro coaches will provide Owners with the best advice, business life cycle support, financial products, services and tools, when, where and how they choose.

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Integrating our Prosperity Purpose Why: A purpose based business model is a profitable and sustainable way to carry out Libro’s vision

and help attract new Owners. How: By considering the economic, social and environmental impacts (triple bottom line) of our

operations. What: Implement a three year plan to integrate purpose across the organization and consider the

prosperity lens in all we do. Engaging our Communities Why: Investing in innovative and strategic opportunities through sponsorships, donations, student

awards and the Prosperity Fund helps grow prosperity. How: We will identify opportunities aligned with our three key pillars – regional economic development,

money smarts and youth leadership and entrepreneurship. We will invest dollars and volunteer our time.

What: Launch a community-focused educational program called Each One Teach One to increase money smarts, and build financial confidence.

Instill our Innovation Community Why: To meet the evolving needs of Owners and regions, we will continue to instill a culture of

innovation and develop new concepts centered on increasing financial well-being. How: By partnering with Filene Research Institute to continue delivering Libro Innovation groups,

implementing concepts, and continued integration of Human Centred Design into our culture. What: The opportunity to leverage the creativity of staff and develop unique solutions for stakeholders.

Evolving our Business Model Why: To grow prosperity by thinking differently about our current business structure. How: We will research incorporating new business structures that enable the best investments, including

research of a foundation and venture capital arm. What: The opportunity to enhance how we do business and how we can partner with others to champion

growth and investment.

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What outcomes will we achieve?

Strategic Metrics 2017 2018 2019 2026

Value Proposition

Owner Prosperity (1-5 scale) 4.4 4.4 4.4 4.5

Total Owners 105,845 108,409 111,449 135,250

Holdings Per Owner $69,295 $74,399 $79,607 $127,831

Owner Opportunities ($ in millions) $2,758 $4,061 $4,481 $10,478

Financial Performance

($ in millions)

Total Portfolio $7,335 $8,066 $8,872 $17,289

Total Assets $3,620 $3,958 $4,379 $8,534

Operational Excellence

Lean Assessment Score 2.7 2.7 2.7 3.0

Engagement (Survey Scores)

Staff (Aon Hewitt Employee Engagement Score) 80% 80% 80% 85%

Board of Directors (Internal Survey)

80% 80% 80% 85%

Owner Representatives (Internal Survey)

80% 80% 80% 85%

Key Performance Indicators

2017 2018 2019 2026 Measures

Owner Satisfaction 4.5 4.5 4.5 4.5 Owner Survey (1-5 scale)

Overall Growth 9.4% 10% 10-12% 10-12% Annual % Organic Growth

Return on Assets 0.34% 0.48% 0.52% 0.75% % of Assets

Efficiency Ratio 84.1% 79.1% 77.7% 69.2% Operating Expenses as % of Revenue

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Engaging Possibility As we grow prosperity, Libro is exposed to the same risks that are inherent to all financial institutions and we understand the need for balance between the many great possibilities and these risks. Our approach to risk management is to anticipate risk in all planning and decision making, be proactive in managing risk, and be passionately accountable for the impact of our actions. Libro has established an Enterprise Risk Management [ERM] framework to reinforce a smart risk culture at Libro and ensure that all stakeholders have a common understanding of how Libro manages risk. This is accomplished by defining what risks impact Libro’s strategy and operations, the amount of risk it is prepared to take on and the risk oversight and mitigation tactics needed to successfully deliver our business plan objectives.

Libro’s ERM program includes a systematic and disciplined process for identifying, assessing, managing and reporting on the significant strategic and business level risks that can impact the Credit Union's operations. The program covers all operating areas that expose us to material strategic, financial, technology, operational, regulatory and reputational risks. Enterprise risk management is the responsibility of everyone at Libro, including the Board of Directors, management and all employees. By integrating our risk assessment and business planning processes, we are able to leverage the knowledge and expertise of Libro’s leadership and risk management teams to ensure business strategies and activities remain consistent with Libro’s risk appetite.

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