This offering statement must be delivered to every purchaser of the securities described herein prior to the purchaser becoming obligated to complete the purchase and, upon request, to any prospective purchasing member. No official of the Government of the Province of Ontario has considered the merits of the matters addressed in this offering statement. The securities being offered are not guaranteed by the Deposit Insurance Corporation of Ontario or any similar public agency. The prospective purchaser of these securities should carefully review the offering statement and any other documents it refers to, examine in particular the section on risk factors beginning on page 21 and, further, may wish to consult a financial or tax advisor about this investment. Alterna Savings and Credit Union Limited OFFERING STATEMENT dated August 29, 2011 MINIMUM $5,000,000 -- MAXIMUM $35,000,000 CLASS A SPECIAL SHARES, SERIES 3 (NON-CUMULATIVE, NON-VOTING, NON-PARTICIPATING SPECIAL SHARES) ("Class A Investment Shares, Series 3") The subscription price for each Class A Investment Share, Series 3 will be $1.00 per share, with a minimum of 1,000 shares per member which may be subscribed for $1,000.00, to a maximum of 200,000 shares per member which may be subscribed for $200,000.00, irrespective of any Class A Investment Shares, Series 1 or Series 2, the member may already hold. There is no market through which these securities may be sold. The purchaser of these securities may reverse his/her decision to purchase the securities if he/she provides notice in writing, or by facsimile, or by e-mail in combination with a telephone call, to the person from whom the purchaser purchases the security, within two days, excluding weekends and holidays, of having signed a subscription form. The Class A Investment Shares, Series 3 are subject to the transfer and redemption restrictions under the Credit Unions and Caisses Populaires Act, 1994 and the restrictions under this offering statement as set out on pages 20 to 21. THE SECURITIES OFFERED ARE NOT DEPOSITS. THE SECURITIES OFFERED ARE NOT INSURED. THE DIVIDENDS ON THE SECURITIES ARE NOT GUARANTEED. Aussi disponible en français TABLE OF CONTENTS OFFERING STATEMENT SUMMARY i Alterna Savings and Credit Union Limited (the “Credit Union”) i The Offering i Dividend Policy ii Use of Proceeds ii Risk Factors iii Summary Financial Information iii GLOSSARY OF TERMS v DETAILED OFFERING STATEMENT 1 The Credit Union 1 BUSINESS OF THE CREDIT UNION 2 General Description of the Business 2 Deposit Services 2 Card Services 2 Lending Services 2 Personal Loans 3 Residential Mortgages 3 Commercial Loans 3 Institutional Loans 3 Agricultural Loans 3 Unincorporated Association Loans 4 Syndicated Loans 4 Summary Lending Comments 4 Vision, Mission and Values Statement 4 Corporate Social Responsibility 4 Bond of Association and Membership 5 Corporate Governance 6 Business Strategy 7 The Regulatory Framework 7 Credit Union Central of Ontario and Central 1 8 Tier I and Tier II Regulatory Capital 9 Capital Adequacy 9 Other 10 Additional Information 10 CAPITAL STRUCTURE OF THE CREDIT UNION 10 CAPITAL STRUCTURE OF ALTERNA SAVINGS’ SUBSIDIARIES 16 DESCRIPTION OF SECURITIES BEING OFFERED 16 Class A Investment Shares, Series 3 16 Issue 16 Dividends 16 Canadian Federal Income Tax Considerations 17 RRSP and TFSA - Eligible 19 Rights on Distributions of Capital 19 Voting Rights 19 Redemption Provisions and Restrictions 20 Restrictions on Transfer 20 Articles of Amalgamation 21 RISK FACTORS 21 Enterprise Risk Management 21 Alterna Savings and Credit Union Limited Offering Statement, Class A Investment Shares, Series 3 Page a Transfer and Redemption Restrictions 22 Capital Adequacy 22 Payment of Dividends 22 Credit Risk 23 Market Risk 23 Liquidity Risk 24 Structural Risk 25 Operational Risk 27 Regulatory Action 27 Reliance on Key Management 28 Economic Risk 28 Competitive Risk 29 DIVIDEND RECORD AND POLICY 29 USE OF PROCEEDS FROM SALE OF SECURITIES 31 PLAN OF DISTRIBUTION 31 MARKET FOR THE SECURITIES 33 SENIOR DEBT (RANKING AHEAD OF CLASS A INVESTMENT SHARES, SERIES 3) 33 AUDITORS, REGISTRAR AND TRANSFER AGENT 34 DIRECTORS AND SENIOR MANAGEMENT 34 Board of Directors 34 Senior Management 35 LAWSUITS AND OTHER MATERIAL OR REGULATORY ACTIONS 36 MATERIAL INTERESTS OF DIRECTORS, OFFICERS AND EMPLOYEES 36 MATERIAL CONTRACTS 36 MANAGEMENT’S DISCUSSION AND ANALYSIS 41 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION 54 AUDITORS’ CONSENT 55 CONSENT FROM CS ALTERNA BANK 56 STATEMENT OF OTHER MATERIAL FACTS 57 BOARD RESOLUTION 58 CERTIFICATE 59 General Subscription, Transfer and Redemption Form 60 AUTHORIZATION TO PLACE FUNDS IN ESCROW 62 SCHEDULE A – INTERIM CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE B – ANNUAL CONSOLIDATED FINANCIAL STATEMENTS Alterna Savings and Credit Union Limited Offering Statement, Class A Investment Shares, Series 3 Page b OFFERING STATEMENT SUMMARY The following is a summary only and is qualified in its entirety by the more detailed information appearing elsewhere in this offering statement. A “Glossary of Terms” can be found at the end of this summary, prior to the detailed offering statement. Alterna Savings and Credit Union Limited (the “Credit Union”) Alterna Savings and Credit Union Limited (“Alterna Savings”) was created on April 1, 2005, as a result of the amalgamation of Metro Credit Union Limited (“Metro”) and The Civil Service Co-operative Credit Society, Limited (“CS CO-OP”). CS CO-OP began operating in 1908, was incorporated in 1928 and became the first such entity formed under the Co-operative Credit Act, which was revised in 1932 and became the Credit Unions Act (Ontario). From its roots as a credit union for federal government employees, CS CO-OP evolved into a full service credit union with a broad bond of association and branches in Ontario in the National Capital Region, Kingston, the greater Toronto area, North Bay and Pembroke. Metro was incorporated in August, 1949, as University of Toronto Employees’ Credit Union Limited, a closed-bond credit union to serve all employees of the university. Its bond was expanded, in 1969, 1971, and 1972, to include the employees of the Ontario Institute for Studies in Education, of all post-secondary educational institutions located in Metropolitan Toronto, and of the Clarke Institute of Psychiatry, and, in 1973, it changed its name to Universities and Colleges (Toronto) Credit Union Limited. In 1994, after additional acquisitions resulted in an expanded bond covering any resident or employee in Metropolitan Toronto, it changed its name to Metro Credit Union Limited. Alterna Savings is the sole owner of Alterna Holdings Inc., a holding company that owns Alterna Savings’ investment in CS Alterna Bank, a Schedule I Bank under the Bank Act. As of May 31, 2011, CS Alterna Bank had assets of $175,145,000, constituting less than 10% of the consolidated assets of Alterna Savings, and the results of CS Alterna Bank’s operations have been consolidated with those of Alterna Savings. All significant inter-company balances and transactions have been eliminated on consolidation. Alterna Savings offers a full range of financial services and products to 107,550 members (as of May 31, 2011) through 22 branches, located in the Greater Toronto Area (“GTA”), the National Capital Region (“NCR”), Kingston, North Bay, and Pembroke, Ontario, and its Internet and telephone banking systems. Alterna Savings provides a full range of retail and commercial credit and non-credit financial services and products. See also “Business of Alterna Savings”, on pages 2 to 10. The Offering Alterna Savings offers for sale to its individual members, at $1.00 per share, Class A Non-Cumulative, Non-Voting, Non-Participating, Redeemable Special Shares, Series 3 (“Class A Investment Shares, Series 3”), in the capital of Alterna Savings. Class A Investment Shares, Series 3, are special, non-membership shares and constitute part of the authorized capital of Alterna Savings. Subscriptions will be accepted from members of Alterna Savings for a minimum of 1,000 Class A Investment Shares, Series 3, and a maximum of 200,000 Class A Investment Shares, Series 3, irrespective of any Class A Investment Shares, Series 1 or Series 2, the member may hold. Subscription, purchase and redemption of these shares are exclusively through Alterna Savings’ offices. Class A Investment Shares, Series 3, are not redeemable at the shareholder’s option until after the end of the fifth fiscal year following the fiscal year in which those shares are issued. The Board will approve such redemption requests once annually, at its first Board meeting in each fiscal year once redemptions can legally occur. Alterna Savings will consider all requests made by the estates of deceased shareholders, before considering requests made by shareholders who have been expelled from membership in Alterna Savings, and only then all other requests. Requests in each category will be considered on a first come, first served basis. Redemptions at the shareholder’s option in a Alterna Savings and Credit Union Limited Offering Statement, Class A Investment Shares, Series 3 Page i particular fiscal year are also subject to a limit of 10% of the number of the Class A Investment Shares, Series 3, issued and outstanding at the end of the prior fiscal year. Purchasers of Class A Investment Shares, Series 3, who are intending to include such shares in an RRSP contract should carefully review the redemption restrictions on page 20 before proceeding. Transfer of such shares