Our Compensation Philosophy

To Our Members:

As Co-Chairs of the Compensation Committee of Westerra's Board of Directors, we want to share our perspective on how Westerra measures performance, how we motivate and reward our executives and how we work to align both performance measurement and compensation with the financial safety and soundness of the Credit Union and the best interests of our members.

The Westerra Credit Union compensation philosophy is built on values and long-term financial strength. Westerra has always taken a long-term view. Through its long history dated back to 1934, the credit union has weathered many economic cycles. Westerra has done this by making solid decisions in the best interest of our members, and, of course, hiring and training disciplined leaders who focus on achieving our long-term strategies.

The Westerra Credit Union compensation philosophy is designed to foster long-term financial strength for the credit union with business practices reflecting solid values and ethics. It is based upon the premise that the success of the organization depends largely on the dedication and commitment of the people in key management positions, and the incentives provided to successfully implement our business strategy and corporate objectives.

We recognize that Westerra operates in a competitive environment for talent. Therefore, our approach to compensation considers the full range of compensation alternatives to enable us to compete with our peers as we seek to attract and retain key personnel.

We base our compensation decisions on four basic principles:

• Reflecting Our Business Philosophy - Our approach to compensation encompasses our solid values, ethics and the way we do business in the communities we serve. We do not encourage risky financial activities when salaries, compensation, and goals are designed, but instead focus on driving financial strength in the best interest of members.

• Driving Performance - We base compensation in part on the attainment of companywide, business unit and individual targets that contribute to our earnings and financial strength.

• Aligning Management's Success with Westerra's Success - Our compensation is designed to develop a culture of ownership in which financial incentives appropriately align with the financial success of the credit union.

• Meeting the Demands of the Market - Since we are considered the employer of choice among our peers who provide similar financial services in the markets we serve, our goal is to compensate our employees at competitive levels consistent with sound and reasonable compensation practices.

As a member-owned cooperative, Westerra's business decisions are based upon the best interests of members, a responsibility to safeguard the organization and a vision for long-term success. This culture is guided by the President/Chief Executive Officer and channeled by management throughout the organization. Compensation is designed to encourage and protect these critical responsibilities and values. We do this through a tiered approach:

Consultants - The Board of Directors works closely with independent outside compensation consultants to provide the Board expertise on competitive compensation practices to help us evaluate and compare our compensation program and financial performance with that of our peers. We have retained a consultant with expertise in the Credit Union compensation practices and national and local Credit Union compensation market data. In addition, we utilize resources both within and outside the credit union industry that include the Credit Union Executives Compensation Survey Reports from nationally recognized organizations, and Employers Council to obtain market data for all positions in the Credit Union.

Board of Directors - The Board ensures that the compensation programs are designed to encourage high levels of performance, accountability, ongoing professional development, adhere to the Mission, Vision and Values, align with the short-term and long-term strategic goals, and serve the best interest of the members. Annually, the Board of Directors utilizes the services of independent compensation experts to ensure reasonable and sound compensation practices for executive officers. The Board of Directors conducts an annual performance review of the President/Chief Executive Officer and sets the compensation.

The creation of long-term value for the members, who are the owners of Westerra Credit Union, is highly dependent on the development and effective execution of a sound business strategy by our executive officers. Our compensation program is designed to compensate management based on their level of responsibilities, knowledge of our organization/industry/markets, experience, sound performance, and disciplined decision making that respects our business plan, but adapts to change.

All our members should know that the Board of Directors of Westerra remains committed to working on your behalf. We will continue to ensure Westerra has the right strategies and the right people to make certain your credit union's business practices reflect solid values and ethics, and foster financial strength for the long-term.

Sincerely,

JT Gaietto and Bill Abbey

Compensation Committee Co-Chairmen

Westerra Credit Union Board of Directors