A Summarized History of Our Company for the Period

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1 A Summarized History of Our Company for the Period : CU Technical & Administrative Services Corp. (CUTASC) conceived as a shared technology vehicle for ten northern BC credit unions, offering economies of scale for the participants. 2002: CUTASC formally came into existence under the ownership and guidance of Evergreen Savings Credit Union (ESCU) and Northern Savings Credit Union : ESCU & NSCU, Terrace and District, Quadra and Cumberland and District credit unions convert to a new Wealthview Banking System from Fincentric under CUTASC 2006: Terrace and District Credit Union merges with Northern Savings Credit Union, CUTASC s parent company. 2006: Evergreen Savings entered into a merger with Coastal Community Credit Union and exited both its client and shareholder relationship with CUTASC. 2006: CUTASC converted off the Open Solutions ATM/POS switch due to service deterioration and eventual exit from the business by Open Solutions Inc. 2008: CUTASC acquires NuTech IT Solutions Inc., expanding its IT support business. 2009: Quadra Credit union merges with Coastal Community Credit Union. 2010: CUTASC signs Bridgewater Bank to a long-term services contract 2011: CUTASC signs First Credit Union to a long-term managed services contract 2012: Cumberland & District Credit Union merges with First Credit Union 2013: CUTASC acquires Solutions Only Financial Technologies Inc. 2014: CUTASC rebrands to

2 Detailed History and Background of CUTASC CU Technical and Administrative Services Corporation (CUTASC) is a technology services company, formed on March 7, 2002, to serve a number of credit unions in northern BC and mid-vancouver Island. The formation of CUTASC was initially driven by research indicating that $700 million in asset size was a baseline size necessary for a credit union to have the scale to operate an in-house technology option economically. The concept of a technology service bureau was initially discussed and developed by four credit unions (Northern Savings, Terrace & District, Williams Lake and Evergreen Savings) as an approach to achieve the desired economies of scale. Through this approach, the credit union management teams believed they would achieve the threshold of $700 million in assets. Ultimately, CUTASC was formed as a partnership of two credit union shareholders, Northern Savings Credit Union and Evergreen Savings Credit Union (now part of Coastal Community Credit Union). At start-up, Evergreen Savings invested 55%, and Northern Savings invested 45% of the start-up costs, and this was reflected in the original shareholder ownership. The founding credit unions became clients of CUTASC, consolidating their banking and information technology platforms. CUTASC also expanded to provide service to three other credit unions: Terrace and District, Quadra, and Cumberland and District. Prior to CUTASC, the original five clients of CUTASC operated on two different banking system platforms, and received services from two different switch providers. Prior to CUTASC, Northern Savings and Terrace were on the VisionWest (Datawest) core-banking platform, while Evergreen Savings, Quadra and Cumberland operating on the RFS-NT (CGI/Fincentric) core-banking platform. Datawest and CGI operated independent switches. In 2004, CUTASC successfully converted all five credit unions to a common core banking (processing) technology system, the Fincentric Wealthview platform. Northern and Terrace operated on independent Wealthview banking system platforms. Evergreen, Quadra and Cumberland shared a common system (Quadra and Cumberland operated more as branches on the Evergreen database). One common core set of banking system code was maintained for all of the credit union clients. Separate and distinct Wealthview Designers (configuration tools) provide unique and separate configurations and products for each institution.

3 This move created the first wave of synergies and economies anticipated from the formation of CUTASC as the scale created by all five credit unions operating on a common platform exceeded the threshold of $700 million in assets. However, since the credit unions did not agree to operate on one standardized platform with common products, the full range of economies available to a single credit union of the threshold size were not achieved. However, it is believed and agreed by the CEO s that the credit union clients gained more value than would have been available from other service bureaus or shared services providers. In setting up CUTASC, the founding partners envisioned developing a shared services organization, or service bureau, building on their combined size to achieve the operational benefits and lower costs of a larger credit union. The original concept proposed that in addition to providing service bureau functions, CUTASC would engage in development activities that would support the long-range strategic business directions of the partner and client credit unions. As an organization owned and operating within the credit union philosophy, CUTASC was expected to become an integrated partner within each of the participating credit unions. It was also envisioned that, in time, CUTASC would expand to provide other shared services, for example administration or finance functions. In this way, the credit unions would have the tools to compete as if they had the infrastructure and deep pockets of a larger player in their markets. Additionally, the founding partners felt that CUTASC should continue to offer services to smaller credit unions. They did not expect to subsidize these credit unions, but the hope was that in providing a basic plain vanilla banking system, at a reasonable price, a small credit union would still receive and enjoy technology value beyond what they could otherwise reasonably afford. Over the past few years, a number of events have taken place within the founding partners and clients that had a significant impact on CUTASC s strategic direction, profitability and the ability to achieve the outcomes targeted in the original business plan. In 2005, Evergreen Savings Credit Union merged with two other mid-island credit unions to form Coastal Community Credit Union (Coastal) with approximately $1.3 billion in assets. In 2006, as part of the operational merger of the three credit unions, Coastal consolidated its internal operations to the Open Solutions TCCUS banking system. In adopting this direction, Coast continued to develop an

4 internal Information Systems/Technology department to manage its technology requirements and activities. Therefore, effective November 2006, Coastal Community decided to no longer continue as a shareholders as per the original alliance and would no longer be a client or user of CUTASC s services. In 2007 Northern Savings bought out the shares of Coastal Community and now owned 100% of CUTASC. CUTASC continued to support Quadra and Cumberland for a fixed fee. In July 2006, Northern Savings Credit Union and Terrace and District Credit Union merged and the two separate banking systems were consolidated in October 2006, as the Terrace membership moved onto the Northern Savings platform. Both of these exercises involved considerable work for CUTASC in supporting the various project activities. Based on these changes, by mid-2007 CUTASC was providing existing banking system and technical services to Northern Savings, Quadra and Cumberland and District Credit Unions. This represents 40% of the original client base and overall consolidated assets in the range at the time of $450 million. This asset base was about half of the threshold needed to achieve the operational economies envisioned in the original technology service bureau concept. During this time CUTASC continued heads down in the support of the existing clients as well as work related to projects for the departing credit unions. This also had the effect of providing income to support the CUTASC infrastructure in the interim as services needed to continue to be delivered to the credit unions. In mid 2009 Quadra Credit Union merged with Coastal Community Credit Union and as a result they were converted to the TCCUS banking system and were no longer requiring of CUTASC services. In May of 2009 informal conversations were occurring with resources at Bridgewater Bank, a bank operated as a subsidiary of the Alberta Motor Association. Bridgewater Bank had been working through numerous conversion activities for the previous 2 years at considerable financial and enterprise cost but had not made the progress they had expected. Bridgewater planned to convert to and operate the same banking system CUTASC supports internally, Wealthview, and planned to support their systems out of the Edmonton AMA data centre. Out of our informal conversations

5 CUTASC then provided a formal proposal to convert their banking system which was accepted. This project began in mid 2009 and the successful conversion occurred April 1, As a result of the success of the conversion projects new discussions began re the potential for CUTASC to consider remote management of their banking system hardware on a 24 X 7 support basis. A 3 year formal contract was agreed upon and CUTASC began providing this support in April 1, Conversations are now in the works to discuss the potential to fully move their hardware and equipment to a CUTASC data centre and allow us to fully outsource and manage their banking system infrastructure. In the interim a number of other BC credit unions have also approached CUTASC for a variety of services including development, business analysis, conversion support, gateway management, disaster recovery support and project management. As a result CUTASC have a number of resources working on various projects for a number of credit unions currently and planned through the end of In early 2010 it was decided CUTASC would work to build a more formal senior management team capable of managing the specific tactical activities of the organization. As a result resources were hired and organizational changes were made. CUTASC now has in place a formal Senior Management team that is now beginning to understand the work at hand and participate in the planning and delivery of strategic and operational activities moving forward. It was understood that this resource investment would take some time to build as a team before producing results but it was imperative to have in place if CUTASC was going to be taken seriously in the marketplace. It should be noted that much of the new work that has come to CUTASC over the last few months has been as a direct result of relationships of these new hires with little to no new advertising. At this point we are not looking for more work for the rest of 2010 based on the resources we have in place today. As of July 2010, CUTASC manages Wealthview banking system technologies for Northern Savings CU, Cumberland and District CU and Bridgewater Bank on 3 to 5 year contracts (Cumberland is unsigned as of today). As noted above, professional services are also being or will be provided to Sunshine Coast CU, Westminster CU, East Kootenay CU and First CU. Other discussions are also currently under way with one credit union related to potential providing them with the Wealthview Banking system. The other issue of note affecting our business planning has been the sale of the Wealthview Banking system by Fincentric to Open Solutions Inc. (OSI) operating out of the US. OSI purchased Fincentric initially with a vision that all of the existing banking system clients would be eager and willing to simply move from their current banking system to the system they planned to deliver within Canada. This

6 proved on their part to be a very incorrect assumption and in fact no Wealthview/Ovation users have or are planning to convert to a different banking system. This has forced the hand of OSI to continue to support and develop the Wealthview and related platforms and as a result ensures that our existing clients have years of use left in the banking system life cycle. CUTASC has renewed their Wealthview contract through to end of October 2015 for existing clients while retaining the ability to sell to any new interested qualifying clients in BC. OSI has proven though that they are pulling back on any new sales activity re the Wealthview banking system and their efforts are pretty much directed to selling their flagship US product. As a result of the sale of Fincentric this has forced CUTASC to re-evaluate our suite of potential products and services we believe the market will be most interested in. This is discussed in more detail in the Business Model section below. The important issue at hand for CUTASC is for us to identify and take advantage of the skills we have in place today and then plan and resource to deliver where the biggest results can be garnered moving into the future. The recent work for Bridgewater Bank and other credit unions has been a clear positive indication of our abilities and our areas of expertise. In fact the completion and analysis of the conversion and related activities was the reason for delaying the creation of this document somewhat as we wanted those results in hand as we began to more formally plan for the future. As a note the comments and results of the conversion project have been outstanding and are clear indication that we have some abilities to bring to the market. In fact there are some background conversations happening with Open Solutions regarding the potential for CUTASC to possibly assist in managing other worldwide Wealthview banking system conversions if they prove through to fruition. These are a long shot of course but encouraging in relation to the skills of the resources we have put in place. CU Technical and Administrative Services Corp. (CUTASC) is currently 100% owned by Northern Savings Credit Union. Bridgewater Bank (BW) and Cumberland & District Credit Union (CDCU) operate as clients of CUTASC. Northern Savings continues to be interested if another organization would be interested in purchasing a share of CUTASC but has no plans to divest them of some ownership of the company. It is understood that future changes in the CEO position at Northern Savings may change this point of view as we move into the future. Once again, it would be expected that there would be a financial gain involved if a decision was made to sell a portion of the CUTASC ownership. Historically, CUTASC s role has been to provide banking system and related technology services to client credit unions and now smaller banks, either directly or using third party vendors. Along with the operation and management of the banking system and gateways, CUTASC provides other network,

7 hardware and software support services for clients. Software development work and business analysis to maintain or enhance the banking system is also performed.