State Department Federal Credit Union SDFCU New Board

State Department Federal Credit Union (SDFCU) New Board Director Orientation Welcome New SDFCU Board Directors! April 2020

SDFCU Board Onboarding Process p SDFCU Board Director Orientation Presentation p Introduction and access to online resources: Board. Paq, NAFCU and other board director education resources. p Buddy Board Director: Current or emeritus director assigned to provide first year mentorship; including suggestions for committee assignments. p Evaluation and suggested updates to onboarding process applying updates as needed and orientation for next new board director(s). 2

SDFCU Board Director Orientation 1 SDFCU Board Basics, Board Directors, Senior Management Team 2 Board Director’s Role and Key Responsibilities 3 4 Board Governing Authority and Guidelines, Expectations, Duties and Committees Current SDFCU Information, Board Resources and Planning Calendar 3

SDFCU Board Basics p SDFCU Chartered in 1935 p Mission to help members achieve financial well being and piece of mind. p Headquartered in Alexandria, VA p Financial services n Savings accounts n Mortgages, n Credit cards, n Auto loans n Share certificates p Customer Engagement Strategy: Superior Member Service! p Primary difference between a bank and a credit union is banks are for-profit and fee based. 4

Board Director’s Role and Key Responsibilities 5

Board Member’s Role 1 Represent members’ financial interests objectively 2 Carry out governance duties emphasizing confidentiality 3 Perform fiduciary duties of care, loyalty and obedience 4 Ensure adequate safety and soundness policies and practices with sufficient resources 6

Board’s CEO Management and Senior Management Team Responsibility p Recruitment BOD fully engage; nation-wide search employed p Selection Rigorous selection criteria; outside search experts engaged p Development Continual development of CEO and Senior Management Team (SMT) p Compensation Reflect duties, industry norms, credit union’s size and complexity p Retention Improve with compensation packages featuring industry best practices provisions for retirement benefits 7

NCUA: Key Board Responsibilities p Support of SDFCU Management for compliance initiatives. p Communicate respectfully and timely with NCUA officials regarding examination findings. p Knowledgeable of the critical risk categories. 8

Important Key Risk Categories • Credit Risk • Interest Rate Risk • Liquidity Risk • Transaction Risk • Compliance Risk Learn about these risks in the Credit Union Director Handbook • Strategic Risk • Reputation Risk 9

Board Governing Authority and Guidelines, Expectations, Duties and Committees 10

Credit Union Governing Authority SDFCU is a Federally-chartered credit union • The Federal Credit Union Act (FCUA), is the applicable statute for the SDFCU. (revised April 2013) • The National Credit Union Administration (NCUA) provides a regulatory framework and an examination program for the SDFCU. • Directors must be knowledgeable of the risk categories that NCUA focuses on. • Learn more about the NCUA at www. ncua. gov 11

SDFCU Board Governing Guidelines I. Composition of the SDFCU Board II. Qualifications for the SDFCU Board Membership III. Basic Core Duties IV. Fiduciary Duties Expressly Incorporated into these Governance Guidelines Via Appendices V. SDFCU Board Member Removal Procedures VI. Emeritus Status VII. Board Member Resignation VIII. Board Member Insurance Indemnification IX. Emergency or Exigent Circumstances X. Guidelines Remain Intact if One Provision is Invalidated 12

Board Director Expectations Significant Precepts of Board Director Expectations p Read and fully understand the Board Governance Guidelines. p Adhere strictly to the Code of Conduct and Ethics. p Employ basic understanding of budgets and financial reports. p Prepare for and actively participate in monthly Board meetings and strategic planning sessions. p Participate in training and development activities to stay current on credit union issues. p Assume appropriate attire and good hygiene as you represent the only credit union reflecting the exemplary standards of the U. S. Department of State whose employees are the majority of SDFCU members. 13

Basic Core Director Duties p Monthly Attendance at Board Meetings p Service on Board Committees p Electronic Communication p Strategic Planning Objectives p Confidentiality p Ongoing Training and Development p Leadership/Availability During Emergencies p Integrity, Professionalism and Common Courtesy p Participation in Selection of SDFCU President and CEO p Duties of Executive Committee 14 p Tracking of Participation/Service

Scope and Role of SDFCU Board Committees Topic Focus Executive Committee CEO performance etc. and board agenda Supervisory Committee External and internal audit oversight, etc. Pension Committee Ensure pensions funded and administered Policy Committee Developing, reviewing and updating policies Asset-Liability Committee Review lending and investment strategies Nominating Committee Recruit, evaluate and select board candidates Membership Committee Focuses on membership growth strategies Scholarship Committee Annual member scholarship awards ad hoc committees Focus for initiatives pivotal to SDFCU’s future These committees are separate and distinct from the committees formed by SDFCU for its operations, including Loan Review, Enterprise Risk Management, Recreation, etc. 15

Scope and Role of the Supervisory Committee The Supervisory committee is appointed by the Board of Directors Two main goals to ensure Management’s: 1) Financial reporting objectives have been met, and 2) Practices and procedures safeguard member assets. v Established and maintained effective internal controls to achieve the credit union’s financial reporting objectives. v Promptly prepared accounting records and financial reports to accurately reflect operations and results. v Properly administered the relevant plans, policies and control procedures established by the board of directors. v Established policies and control procedures that safeguard against error, carelessness, conflict of interest, self-dealing and fraud. The Supervisory Committee has the power to call by a majority vote a special meeting of the members to consider any violation of charter, bylaws, or any practice of the credit union deemed by the supervisory committee to be unsafe or unauthorized. 16

Board Resource 17

Board Support p Credit Union Administrative Support Contact Information p Board Buddy Designations p Additional resources: n National Association of Federally-insured Credit Unions- www. NAFCU. org n National Association of Credit Union Chairmenwww. NACUC. org n Other national and local associations 18

Thank you and Welcome! We also included: § Strategic Plan Framework § Board Portal Software Information § Board Planning Calendar § Board Photos § CEO, CFO, COO & CIRO Photos 19