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MADISON, Wis. – In early August it looked as if things were unraveling at CUNA Mutual. Not only was the company engulfed in an ugly and public battle with its union, the Office of Professional Employees International Union Local 39, but CEO Mike Kitchen was forced out for allegedly trying to help a group of employees form their own bargaining unit. Kitchen voluntarily told the board about his offer of financial support ($1,000) to the employees. The CUNA Mutual Board called on CFO Jeff Holley, 39, to take the reigns of acting CEO and bring leadership to the company. Holley said he wasn’t part of any succession plan, nor did he expect to get the call from the board to take over. “Mike (Kitchen) and I have known each other for quite a long time. It was a big shock to me to hear of the situation. It’s an unfortunate situation, and not one you want to be placed in to work. You just kind of go forward knowing the organization is terribly strong both financially and business wise,” said Holley. He described the transition as difficult, but said he “wasn’t in awe of” the new responsibility. He quickly received calls and e-mails of encouragement from credit union clients that energized him. Though he was entering a very contentious position with the labor dispute and the Kitchen news, Holley said the good news is the company is in the midst of one of its strongest periods ever. “2003 was probably the best year in the company’s history. It was the first time in 25 years that we reduced expenses year to year. We have a lot of momentum from a business perspective,” he said. Revenue was up 7% in 2003 and expenses dropped 2%. Of course, a spike in revenue could be expected given the tough year the company had in 2002, much of which it attributed to market factors beyond its control such as poor stock market performance and rising healthcare costs. Nearly eight weeks in to the job, Holley isn’t looking to merely maintain the status quo while a new CEO is found, he wants to steer the company on an upward growth path. Shortly after being named to the position, Holley sent employees a list of his seven priorities. Topping that list was reaffirming the company’s strategy, which centers around partnering with credit unions in a number of areas so they can increase product penetration with their members. Over the years, CUNA Mutual has developed quite an arsenal of products that reach down to the end member, not just the credit union. He touted the fact that last year CUNA Mutual products generated $200 million in fee income for credit `unions. With thinning margins, fee income can be the lifeblood for credit unions these days. Holley believes lending is one area where CUNA Mutual can help credit unions thrive. “Lending is credit unions’ bread and butter. It’s what credit unions need to do to be successful,” he said. He noted CUNA Mutual’s new Lender Development Program where the company works with a credit union’s top lending officers to find ways to make more loans and at the same time cross-sell other lending products like insurance for those loans. Last year CUNA Mutual paid out $600 million in credit union claims and $330 million in members’ claims, something Holley said shows the company is doing what it’s supposed to – giving back to those who fund it. Most of Holley’s other seven priorities revolved around boosting staff morale and performance and improving customer relations. There were a few interesting priorities. One was he is committed to getting to know credit union system leaders better, which any good CEO of a company with as deep a reach into credit unions as CUNA Mutual would do. Just a few weeks ago he traveled to Washington D.C. to take part in CUNA Hike the Hill Month festivities. He said though not a trade association, it’s important for CUNA Mutual to know what issues are important to credit unions because CUNA Mutual has “a lot of resources we can bring to bear.” Case in point is the battle over the IRS’ Unrelated Business Income Tax. To date CUNA Mutual has spent more money ( a couple of million) in fighting UBIT than any other credit union group. Most of the costs are in legal fees and for outside consultants. Does his interest in reaching out to other credit union leaders signal his interest in becoming the permanent CUNA Mutual CEO? Holley said he doesn’t want to make the CEO search a public matter at this time. “It’s best that I not comment on my interest or plans, or the board’s interests or plans. My focus is on helping the company to continue moving forward while we transition to a permanent CEO.” CUNA Mutual did confirm that the national search is well underway and it will include candidates from many industries. Another priority for Holley is getting the labor dispute resolved. Based on what’s happening these days that may be easier said than done, and since it ultimately led to Kitchen’s downfall, it is potentially a perilous initiative for Holley and whoever becomes CEO. At press time, union employees were set to picket at CUNA Mutual for the third time in the last four weeks. John Peterson, Business Manager for Office of Professional Employees International Union Local 39, said the negotiation process has bogged down with no new meeting dates scheduled. Peterson described the current state of affairs as very litigious, with not only the union and CUNA Mutual having charges pending with the National Labor Relations Board, but also a group of CUNA Mutual employees trying to break away from the current union and form their own bargaining unit. The union always felt that Kitchen was intent on breaking the union and viewed Holley as a breath of fresh air. What do they think now? Peterson said though the union had high hopes based on past dealings with Holley, so far they are neutral on what Holley will mean to the negotiations because they haven’t heard much from him. Holley said he wants a done deal more than anybody. “We all would like for this to be resolved as quickly as possible, but there’s not a real linear path in contract negotiations when the two sides are fairly far apart. We really believe our package is generous.” Like Kitchen, Holley also believes that the union should bring the June 30 proposal to its membership for a vote, which they’ve yet to do. Holley, 39, started his career at CUNA Mutual in 1994 as senior manager of financial reporting. He moved up the ranks to vice president, financial planning, reporting and performance measurement in 1997. His CUNA Mutual career looked to be ascending nicely, but it came to an abrupt end in 1998 when he left to join insurance giant CNA Financial as vice president. Then in the very next year Holley returned to CUNA Mutual as CFO. He was actually invited back by CUNA Mutual when the job opened up. Though a numbers guy so to speak, Holley said the great thing about being CFO is you learn about all the various areas of the company. “I think having a financial background allows me a very broad perspective. I’ve been focused on helping the organization globally. I talk to our leaders about the same issues of growth and profit and focus on customers. I believe strongly on focusing on execution of fundamentals, a strategy, having strong leadership and following through on what you’re doing.” Holley is married and has five children. He loves sports and tries to golf as often as his schedule will allow. Like many from the Madison area, Holley is a die-hard Green Bay Packers fan. Given that this interview took place the day after a crushing defeat at the hands of the Indianapolis Colts, Holley was one of the walking wounded Wisconsinites on Monday morning. “It was a tough day yesterday. I wasn’t sure I could get up this morning.” [email protected]

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