7 ANNUAL 01 2 REPORT

Transcription

1 2017 ANNUAL REPORT

2 ANNUAL REPORT 2017 TABLE OF CONTENTS Mission and Vision Statements Report from the Board Chair, President and CEO Bullfrog Power Initiative IPSOS Best Banking Awards Report of the Audit Committee & Five Year Financial History Report of the Independent Auditor on the Summarized Financial Statements Statement of Comprehensive Income Statement of Changes in Members Equity Statement of Financial Position Marketing Report for 2017 Excerpts for the Credit Union Community & Economic Impact Report 2017 Community Initiatives 1

3 MISSION & VISION S T AT E M E N T S OUR MISSION We serve our member owners as a proud and socially responsible financial services co-operative. OUR VISION Achieve growth, attract youth and reward our member owners with shared profits. OUR VALUES These values will guide our actions and decisions as we fulfill our commitments to our member owners, employees and communities. PEOPLE Recognizing that both knowledgeable employees and loyal member owners are the building blocks of our success. INTEGRITY Demonstrating high ethical standards in order to maintain your trust. INNOVATION Capturing the future with creative solutions. COMMITMENT Guaranteeing that you come first. PERFORMANCE Sustaining profitable growth in our communities. CO-OPERATION Differentiation through profit sharing.

4 REPORT FROM THE BOARD CHAIR, PRESIDENT & CEO 2017 ANNUAL REPORT Canada s 150th anniversary was the major theme of We live in an amazing country with unmatched quality of life and a very bright future. As we take a moment to look back at Your Credit Union s success, we acknowledge the contributions of thousands of our members who volunteer and contribute in our amazing communities. Thank you! Your Credit Union celebrated 67 years of business in 2017 with: Total member loans increase of $31MM or 14% Total member deposits increase of $27MM or 12% Sustainability Award from Carbon new members Net earnings of $482,000 Major sponsorship of the United Way of SD&G campaign We are very proud of our accomplishments and central to our success is our amazing staff, who are wonderful brand ambassadors and industry leaders. According to the annual 2017 Ipsos Best Banking Awards program, Canadians have ranked Canada s credit unions first among all financial institutions in providing Customer Service Excellence and Branch Service Excellence for the 13th year in a row. Credit unions were also awarded sole honours for Values My Business for the 10th consecutive year. Additionally, we express our thanks to our Board of Directors for their ongoing commitment and contributions to YCU and we want to express our deep gratitude and pay special homage to Michael Clarke and Rob Vye who have stepped down from the Board after serving for a combined 45 years. They will be missed. As we look forward to the final year of our current strategic plan, we are focused on further improving our digital offering: Our Open Anywhere Solution allows new members to join Your Credit Union via a fully digital experience no need to visit a branch. In support of the above platform, we have also launched the Click Switch product that greatly simplifies the transfer of a chequing account from one of our competitors. We have also launched the Personal Financial Management upgrade within our Online Banking platform to provide our members with an industry leading solution. We look forward to launching our Borrow Anywhere Solution in 2018 allowing our members to apply for a loan via a fully digital channel. We thank you for YOUR loyalty and trust as we share our great story with potential new member-owners across our entire region. Co-operatively yours, Tanya Gracie Joel Lalonde Board Chair President & CEO 3

5 BULLFROG POWER INITIATIVE THE FIRST FOR THE PLANET Your Credit Union is proud that we were the first CU in Canada to power all of our branches with 100% green electricity and natural gas through our partnership with Bullfrog Power. Bullfrog Power s producers put green electricity and green natural gas onto the respective energy system on our behalf to match the amount of conventional electricity and natural gas used by our operations. SINCE JOINING THE BULLFROGPOWERED COMMUNITY, YOUR CREDIT UNION HAS DISPLACED MORE THAN: tonnes of CO 2 This is equivalent to: Taking 58 cars off the road for a year Diverting more than 87 tonnes of waste from landfills The same amount of CO 2 emissions produced by consuming 116,923 L of gasoline Your Credit Union Blazes a Trail for Environmental Leadership The environmental commitment of Your Credit Union goes beyond our partnership with Bullfrog power. We were one of the first organizations to join Carbon 613, a target-based sustainability program for Ottawa businesses. The program provides businesses with concrete tools and knowledge to track and understand their energy use, helping them set targets for reduction and remain accountable. In June of 2017, Your Credit Union was honoured with the Trailblazer Award for Sustainability Leadership by the Carbon 613 program. 4

6 FIRST FOR CUSTOMER SERVICE EXCELLENCE (13th consecutive year) FIRST FOR BRANCH SERVICE EXCELLENCE (13th consecutive year) THE REWARDS OF AWARDS FIRST FOR VALUES MY BUSINESS (10th consecutive year) Winning awards is always nice for the winner but, in the case of the IPSOS 2017 Best Banking Awards, the winner is really credit union members across Canada. Once again, credit unions in Canada have been ranked best for customer service, online and mobile banking and, of particular importance, first for valuing the customer s business. While we are proud to receive this recognition along with our fellow credit unions, we are extremely gratified that these awards are confirmation of a special relationship that our member-owners truly value. WINNER MOBILE BANKING EXCELLENCE (3rd time) WINNER FINANCIAL PLANNING AND ADVICE (10th consecutive year) WINNER ONLINE BANKING EXCELLENCE (3rd consecutive year) 5

7 REPORT OF THE AUDIT COMMITTEE The Audit Committee of the Board of Directors fulfills the responsibilities of the Audit Committee as set out the in Credit Unions and Caisses Populaires Act (Ontario) (the Act ) and conducts its affairs in accordance with the requirements of the Act and its accompanying regulations. The Audit Committee also fulfills certain other governance duties related to finance and risk management as prescribed by Board policy. The Audit Committee, comprised of five members of the Board of Directors, held five meetings during the fiscal year ended September 30, The Committee meets at least quarterly and arranges its agenda so that, on an annual basis, the following duties are performed and appropriate action taken as a result thereof: Serve as the principal communication link between the external auditors and the Board of Directors and, in particular, review the terms of engagement and scope of the audit, and review the Credit Union s annual financial statements prior to Board approval for issuance to the members. Obtain reasonable understanding of the significant elements of internal controls that are important to safeguarding the assets of the Credit Union, ensuring the accuracy of financial reports, and ensuring compliance with policies and procedures. Serve as the Board s liaison with the internal auditor and review the internal audit mandate, work plan and reports. Review the policies, procedures and controls that relate to legislative compliance, with a particular focus on the requirements for liquidity, capital adequacy and interest rate risk management. Based on its findings, the Audit Committee issues reports and makes recommendations to the Board of Directors or Senior Management, as appropriate, with respect to the matters outlined above and follows-up to ensure that the recommendations are considered and implemented. During the year, the Audit Committee received full co-operation and support from management to enable it to play an effective role in improving the quality of financial reporting to the Members and enhancing the overall control structure of Your Credit Union. All significant recommendations made by the Audit Committee have been either implemented or are in the process of being implemented by management. In addition, there are no matters that the Audit Committee believes should be reported to the Members, nor are there any further matters which are required to be disclosed pursuant to the Act or the Regulations thereto. On behalf of the Committee, Kelly Storie Chair of the Audit Committee 6

8 FIVE YEAR FINANCIAL HISTORY 2017 ANNUAL REPORT SEPTEMBER 30 (000 S) Statements of Comprehensive Income and Changes in Members Equity Interest income $8,311 $8,335 $8,275 $8,517 $9,006 Investment income Interest expense (2,799) (3,204) (2,948) (2,723) (3,156) Net interest income 5,875 5,550 5,674 6,049 6,050 Provision for credit losses (248) (590) (391) (361) (282) Other operating income 1,394 1,612 1,804 1,685 1,570 7,021 6,572 7,087 7,373 7,338 Operating expenses (6,599) (6,332) (6,117) (6,813) (6,808) Dividends on investment shares (10) (11) (12) (12) (14) Income before income taxes Income taxes (35) 6 (116) (15) (34) Comprehensive income $377 $235 $842 $533 $482 Dividends on investment shares (87) (214) (332) (347) (355) Retained earnings, beginning of year 8,149 8,439 8,460 8,970 9,156 Retained earnings, end of year $8,439 $8,460 $8,970 $9,156 $9,283 Assets Cash and cash equivalents $13,783 $22,016 $5,640 $4,790 $6,157 Investments 15,695 16,711 16,405 16,874 18,485 Income taxes receivable Loans to members 185, , , , ,480 Property and equipment 5,554 5,200 5,286 6,065 5,699 Deferred income tax asset Other assets 1,294 1, $221,526 $236,872 $230,557 $243,854 $277,683 Liabilities and Members Equity Deposits from members $202,825 $217,792 $210,436 $223,403 $250,963 Borrowings 5, ,000 Other liabilities 1,680 1,228 1,555 1,375 1,189 Membership and investment shares 3,582 9,392 9,596 9,920 10,248 Retained earnings 8,439 8,460 8,970 9,156 9,283 $221,526 $236,872 $230,557 $243,854 $277,683 7

9 FIVE YEAR FINANCIAL HISTORY Total Income (000s) 7,500 7,250 7,000 6,750 $7,021 $7,087 $7,373 $7,338 6,500 6,250 $6,572 6, Operating Expenses (000s) 7,000 6,750 6,500 6,250 6,000 5,750 $6,599 $6,332 $6,117 $6,813 $6,808 5, Income Before Income Taxes $ $412 $229 $548 $

10 FIVE YEAR FINANCIAL HISTORY 2017 ANNUAL REPORT 250,000 Loans to Members (000s) 240,000 $246, , , ,000 $215, , , ,000 $185,200 $191,731 $202, , , ,000 Deposits from Members (000s) 250, ,000 $250, , , ,000 $217,792 $223, ,000 $210, ,000 $202, Retained Earnings (000s) 9,500 9,000 8,500 $8,970 $9,156 $9,283 8,000 7,500 7,000 $8,439 $8,

11 Deloitte LLP 300 McGill Street Hawkesbury, Ontario K6A 1P8 Canada Tel.: Fax: REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARIZED FINANCIAL STATEMENTS To the Members of Your Credit Union Limited The accompanying summarized financial statements, which comprise the summarized statement of financial position as at September 30, 2017, and the summarized statements of comprehensive income and changes in members equity for the year then ended, are derived from the audited financial statements of Your Credit Union Limited for the year ended September 30, We expressed an unmodified audit opinion on those financial statements in our report dated December 11, The summarized financial statements do not contain all of the disclosures required by International Financial Reporting Standards applied in the preparation of the audited financial statements. Reading the summarized financial statements, therefore, is not a substitute for reading the audited financial statements of Your Credit Union Limited. Management s Responsibility for the Summarized Financial Statements Management is responsible for the preparation of a summary of the audited financial statements. The summary financial statements are derived from the complete set of financial statements of Your Credit Union Limited. They meet the recognition and measurement principles of International Financial Reporting Standards. Auditor s Responsibility Our responsibility is to express an opinion on the summarized financial statements based on our procedures, which were conducted in accordance with Canadian Auditing Standard (CAS) 810, Engagements to Report on Summary Financial Statements. Opinion In our opinion, the summarized financial statements derived from the audited financial statements of Your Credit Union Limited as at September 30, 2017 are a fair summary of those financial statements, in accordance with the recognition and measurement principles of International Financial Reporting Standards. Chartered Professional Accountants Licensed Public Accountants December 11, Membre de / Member of Deloitte Touche Tohmatsu Limited

12 STATEMENT OF COMPREHENSIVE INCOME YEAR ENDED SEPTEMBER 30, 2017 (CDN DOLLARS IN THOUSANDS) 2017 ANNUAL REPORT $ $ Interest income 9,006 8,517 Investment income ,206 8,772 Interest expense 3,156 2,723 Net interest income 6,050 6,049 Provision for impaired loans Net interest margin 5,768 5,688 Other operating income 1,570 1,685 Total operating income 7,338 7,373 Deposit insurance premium Depreciation of property and equipment Administrative and technology 2,656 2,806 Personnel expenses 3,543 3,396 Total operating expenses 6,808 6,813 Dividends on investment shares Income before income tax Income tax expense Net income Other comprehensive income for the year, net of income tax - - Total comprehensive income for the year, net of income tax

13 STATEMENT OF CHANGES IN MEMBERS EQUITY YEAR ENDED SEPTEMBER 30, 2017 (CDN DOLLARS IN THOUSANDS) Accumulated Other Membership Investment Retained Comprehensive Shares Shares Earnings Income Total $ $ $ $ $ As at September 30, ,748 8,970-18,264 Total comprehensive income Dividends on investment shares - - (347) - (347) Net (decrease) increase in shares (20) As at September 30, ,081 9,156-18,763 Total comprehensive income Dividends on investment shares - - (355) - (355) Net (decrease) increase in shares (29) As at September 30, ,414 9,283-19,194 12

14 STATEMENT OF FINANCIAL POSITION AS AT SEPTEMBER 30, ANNUAL REPORT (CDN DOLLARS IN THOUSANDS) $ $ Assets Cash and cash equivalents 6,157 4,790 Investments 18,485 16,874 Income taxes receivable Loans to members 246, ,228 Property and equipment 5,699 6,065 Deferred income tax asset 16 - Other assets , ,854 Liabilities Borrowings 6,000 - Deposits from members 250, ,403 Other liabilities 1,096 1,317 Income taxes payable 93 - Deferred income tax liability - 58 Investment shares , ,091 Members Equity Membership shares Investment shares 9,414 9,081 Retained earnings 9,283 9,156 Accumulated other comprehensive income ,194 18, , ,854 On behalf of the Board Director Director 13

15 * WE RE FREAKIN GENIUSES! I REALLY AM BRILLIANT! WE DISCOVERED SMARTBANKING We purchased our term deposits at Your Credit Union because it s just plain SMART. YCU is owned by members like us who like amazing returns. We owners also like the lower fees and award-winning service at Your Credit Union because you know we re geeeeniuses! Talk to YCU today about your SMART TERM DEPOSIT * 2.50% FOR 2 YEAR TERM DEPOSIT 2.70% FOR 4 YEAR TERM DEPOSIT MY DAD IS Smarter YourCU.com THAN YOUR DAD! I discovered SMARTBANKING at Your Credit Union. At YCU I m an owner instead of a number, which is just plain smarter. It means they exist to make money for me, not from me. So I get the lowest fees and these amazing returns on my term deposits. Choosing YCU was brilliant and I do say so myself. SMART TERM DEPOSITS 2.50% FOR 2 YEAR TERM DEPOSIT 2.70% FOR 4 YEAR TERM DEPOSIT My dad owns his own bank. He s a member at Your Credit Union and he says they work for him. He gets, like, tons of money for his investments and super low rates when he wants money. He is like some financial jeenyus - just ask him. SMART TERM DEPOSITS 2.50% FOR 2 YEARS 3.25% * 2.70% FOR 4 YEARS 5-YEAR MORTGAGE YourCU.com YourCU.com

16 MARKETING REPORT FOR ANNUAL REPORT THE BENEFITS OF OWNERSHIP TAKE CENTRE STAGE The Your Credit Union brand is built on the benefits of ownership. Ownership is what distinguishes a credit union from a traditional bank and it is the model that has caused credit unions to be named best in customer service for 13 straight years. In 2017 Your Credit Union decided to take a bolder approach to celebrating the superiority of the credit union model with a campaign that recognizes the genius of being a YCU member-owner. With tongue planted only slightly in cheek, the campaign uses common slang to position YCU members as Freakin Geniuses for having made the decision to join Your Credit Union. The campaign also introduces the term SMARTBANKING to describe all of the services and products offered by YCU. As in the past, the campaign focuses on promoting term deposits for the first part of the year and will then switch to promoting lending in the spring of The primary term deposit target remains Baby Boomers and the ads feature a range of individuals and couples from that cohort. The campaign utilizes local newspapers in both Ottawa and Cornwall and various digital media including Google Adwords, Facebook advertising and blogs on popular websites. The campaign also includes social media initiatives on Facebook and Twitter The campaign also targets very specific markets like the construction industry. In magazines produced by the Greater Ottawa Home Builders Association and the Ottawa Construction Association, YCU ads talk to the greater level of understanding and flexibility that small business can expect from YCU. Teachers were also specifically addressed in the campaign and reminded that YCU exists to make money for them, not from them. It is a powerful message about the benefits of ownership and one that continues to draw new members to YCU. THIS TERM IS GOING TO BE BRILLIANT SMART Term Deposits 2.50% FOR 2 YEAR TERM 2.70% FOR 4 YEAR TERM I pride myself on making smart decisions but choosing Your Credit Union was pure genius. I m an owner at YCU so they work to make money for me, not from me. This means my SMART TERM DEPOSITS deliver A+ results that are guaranteed. They give a new definition to the term brilliant. * Discover SMARTBANKING YourCU.com I AM A BUSINESS BRAINIAC I moved my business banking to Your Credit Union because my big bank didn t understand small business. My workload fluctuates so my cash flow does too. YCU understands the challenges of small businesses and has the flexibility to meet my needs. I can even invest on my terms. Choosing YCU for my business was a brilliant move just ask me. Young families are a primary target for YCU as new members and for loans so the campaign has been adapted for that market. In a parody of playground bravado, a young boy proclaims the jeenyus of his father for being a YCU owner. The ad promotes both term deposits and mortgages as they tend to be of particular interest to this market. The ads can be seen in Ottawa Parenting Times Magazine. * 2.50% FOR 2 YEAR TERM DEPOSIT 3.25% FOR 5 YEAR MORTGAGE Discover SMARTBANKING 2.70% FOR 4 YEAR TERM DEPOSIT YourCU.com

17 CREDIT UNIONS OFFER A SMARTER ALTERNATIVE FOR CANADIANS Being a financial co-operative drives why we do what we do. That s because the people who bank with the credit union are the same people who own the credit union. Being accountable to the same people at the teller desk and at the boardroom table results in a fundamentally different kind of financial institution one that can think beyond the bottom line to the impacts we have on our members, our community and our economy. Martha Durdin, President and CEO Canadian Credit Union Association We think this makes credit unions a smarter choice for Canadians and it s easy to see why when you consider the following numbers: CANADA S 275 CREDIT UNIONS AND CAISSES POPULAIRES: Serve 5.6 million members (outside of Quebec) Contribute over $ 6.5 billion directly & indirectly to Canada s GDP Operate from more than 1,800 locations Are the only financial institutions operating in 369 Canadian communities Directly and indirectly employ more than 58,000 Canadians Are governed by more than 2,750 volunteer directors, 45.4% of which are women. 16

18 CREDIT UNIONS ARE: 2017 ANNUAL REPORT Keeping money in the pockets of more than 5.6 million Canadians by providing access to a national fee-free ATM network, returning profits to members and offering free or low cost financial products and services. Strengthening Canada s Economy... by creating jobs, providing access to capital and contributing tax revenues. Partnering for public policy solutions Credit unions are working with local, provincial and national governments to address pressing public policy issues, ranging from helping people manage debt through financial literacy, to supporting access to capital for small businesses and farmers. Helping Main Street and rural communities prosper By putting members money to work locally in communities large and small, by supporting small and medium sized enterprises, providing access to capital for co-operatives and lending to farmers. Putting people before profit Credit unions have a unique way of doing business: money left over at the end of the year goes directly back to community at rates that far exceed industry standards. 17

19 SUPPORTING THE REAL ECONOMY Credit unions use a traditional banking model taking deposits and issuing loans. As a result, most of what credit unions do directly supports the real economy economic activities that produce goods and services as opposed to the financial economy, which is more concerned with buying and selling investments on financial markets. In 2016, more than 84 per cent of credit union and caisses populaires assets were loans to consumers and Main Street businesses in the real economy, compared with 71 per cent for the big banks. 18

20 MORE RETAINED EARNINGS: UNDERSTANDING CREDIT UNION CAPITAL Unlike banks, credit unions can t build capital as easily through share offerings or high risk activity like investment banking. And we re not in business to reward shareholders. As a result, more than 85 per cent of credit union capital is 2017 ANNUAL REPORT in the form of retained earnings, compared with an average of 48 per cent for the banks. As co-operatives, every dollar a credit union makes is used either to strengthen the credit union, is returned to members or invested in the community. 19

21 OUR COMMITMENT CONTINUES The Cornwall Centre for Community Addiction and Mental Health Services opened in 2016 with a commitment from Your Credit Union to donate $50,000 over the next five years. Once again this year it was our great pleasure to present a cheque for $10,000 towards this ultimate goal. The centre has brought together a variety of addiction and mental health services that were provided at different locations around the region and expanded care and services overall. Your Credit Union is proud to be a supporter of this important facility and particularly proud that it is our staff and members who have once again maintained our commitment. A PIONEERING PARTNERSHIP Causeway is a not-for-profit agency that empowers and supports people with mental illness and other challenges to help them find rewarding work and live more independently. Your Credit Union, along with Alterna Savings and Frontline Credit Union, have partnered with Causeway to deliver an innovative program of financial support and education. Each of the financial partners provides small, short-term loans at fair and reasonable rates to individuals who are looking to break free from the burdensome cycle of payday lending. The program also seeks to improve financial literacy and facilitate a relationship between Causeway clients and mainstream financial institutions such as credit unions and banks. This unique initiative is one of the first of its kind in Canada and will hopefully inspire other organizations as well as financial institutions to tackle the issues around payday lending. 20

22 YourCU.com