Westminster Savings ANNUAL REPORT

Westminster Savings ANNUAL REPORT 2017

A message to our members From Board Chair Darlene K. Hyde and President and CEO Gavin Toy Acting on your feedback to provide even greater value for membership remained our highest priority throughout 2017. Our employees rallied behind our You deserve more! campaign to deliver advice-focused service and tailored financial solutions for customers with every interaction. With the aim of delivering on our commitment to serve customers where they need us, we expanded our physical footprint by 25% with the addition of three new branches in North Surrey, South Surrey and South Vancouver. We also made important investments in our other service channels our Member Service Centre and Online Banking as we know how important it is for our customers to have a choice in how, when and where they do business with us. Through ongoing training and development programs, we continue to equip our employees with important skills and capabilities to uncover customers needs and help them achieve their most important goals. For the Westminster Savings Foundation (the foundation), 2017 was the first year of a three-year partnership totalling $675,000 with KidSport BC, Special Olympics BC and Arts Umbrella, which is helping our communities thrive by creating greater access to arts and active-living opportunities. We are delighted to report that our efforts in 2017 were rewarded with increased customer and employee engagement, and the strongest financial results achieved by the credit union in the last five years. We believe these successes lay the foundation for delivering even greater value and service for our membership moving forward, and we hope you join us in feeling proud of your credit union s achievements in 2017. Westminster Savings Annual Report 2017 2

2017 saw us strike a healthy balance between advancing on our strategic priorities and accommodating a significant number of regulatory changes and technological investments. The expansion of our branch network was an important step forward in 2017. As well as being the friendly face of Westminster Savings Credit Union (Westminster Savings) in the community, our hope is that our branch teams play a vital role in helping our customers explore more fully their financial needs relative to wealth management, small business products and services, and commercial lending and leasing solutions. As a result of our continued commitment to providing enduring value to membership, Westminster Savings attracted a record number of new customers in 2017 (6,534) and achieved the highest net growth in the past five years, with the opening of three new branches responsible for almost 1,000 new customers. Central City branch Grandview Central branch River District branch We believe you deserve more from your financial institution. With that in mind, in addition to expanding our geographical footprint, we continued to develop our wealth management offerings with more of our financial planners transitioning to investment advisors with the ability to offer new solutions that provide customers with greater investment options than ever before. We also expanded our life insurance capabilities adding a dedicated insurance specialist to ensure customers have easier access to appropriate coverage for their families needs, and we anticipate hiring additional insurance resources in the year ahead. As mentioned, we continued to place great importance on training and development programs for our employees in 2017 to help them meet your needs. We also took some time to ask ourselves whether there are better ways of doing things that will benefit membership and result in efficiencies for the credit union. We believe our investments in these two important areas are paying off. Our employee engagement hit a record high and we also saw an increase in our Net Promoter Score for the third consecutive year. These successes reassure us that we are on the right track when it comes to our commitment to delivering an exceptional customer experience. We believe these two metrics are linked: we know that engaged employees take great pride in what they do and will go above and beyond in their duties, which ultimately we expect will benefit you our customers and your experience doing business with us. That said, we know there is always room to improve and we will strive to build on these high employee and customer engagement scores moving forward. Overall, our financial performance in 2017 was very strong despite continued rising regulatory and compliance costs and a relentlessly competitive financial services market resulting in ongoing margin compression. Total assets under management grew by 12.2% to more than $4.0 billion, while members deposits grew by 11.5% to $2.7 billion. As a result of the vibrant residential mortgage market in Metro Vancouver and the Fraser Valley, the credit union found itself in a strong position to help more of our members with their home financing needs. In doing this, net interest income was up by $6.3 million or 10.1% against 2016 and operating costs remained closely managed, resulting in an improved efficiency ratio. Net income after tax for the year was $13.2 million and members equity grew by 7.8% to $195.0 million. These results allowed your credit union to maintain a very healthy capital level of 14.2%, well above the regulatory threshold of 8.0%. Looking to the future, we know we will need to carefully monitor and manage the rapid pace and nature of our growth against the impacts on our liquidity and capital, so that we can continue to help as many of our members as possible. Westminster Savings Annual Report 2017 3

The first year of the foundation s new three-year community partnerships with KidSport BC, Special Olympics BC and Arts Umbrella saw our employees heavily involved with these impactful organizations. This included unveiling a major art installation created by Arts Umbrella students at our Corporate Centre, getting bold and cold at the Special Olympics Polar Plunge and pulling out all the stops to compete in the KidSport Corporate Kids Challenge. We re thrilled that so many of our employees embraced the opportunity to get involved with the foundation s official community partners and look forward to participating in a variety of events again in 2018. The credit union invested $333,000 through sponsorships and direct donations to our local communities in 2017. In addition, we made a $250,000 contribution to the foundation, bringing its community endowment fund to more than $9.0 million. The foundation, one of the largest credit union foundations in Canada, disbursed $317,000 to local charitable organizations in 2017. Arts Umbrella art installation at Corporate Centre Special Olympics athletes at our Central City branch opening Arts Umbrella in-branch art exhibit Our team at the KidSport Corporate Kids Challenge Special Olympics Polar Plunge KidSport BC at our Central City branch opening We hope you are able to attend our Annual General Meeting on Tuesday, April 17 at 7 p.m. at the Anvil Centre in New Westminster, where we will be announcing the results of the 2018 Directors Election. In the meantime, we encourage you to reach out through our branches, Member Service Centre or Online Banking for assistance with your needs. Thank you for your continued loyalty and commitment, and we look forward to the opportunity to continue earning your business and supporting our local communities in the years ahead. Darlene K. Hyde Chair, Board of Directors Westminster Savings Annual Report 2017 Gavin Toy President and CEO 4

Summarized consolidated financial statements Management s responsibility The accompanying summarized consolidated financial statements are derived from the audited consolidated financial statements of Westminster Savings Credit Union ( Westminster Savings ) for the year ended December 31, 2017. The summarized consolidated financial statements have been prepared by management in accordance with the requirements of the Financial Institutions Act. The accompanying summarized statements include amounts based on informed judgments and estimates of the expected effects of current events and transactions. To meet its responsibility for preparing reliable financial information, management maintains and relies on comprehensive internal accounting, operating and system controls. These controls are designed to provide reasonable assurance that the financial records are reliable for preparing financial statements and safeguarding the assets of the organization. The summarized consolidated financial statements are approved by the Board of Directors. The Audit and Risk Committee, comprised of four directors of the board, has reviewed the statements with management and the external auditors in detail. KPMG LLP has been appointed by the membership as independent auditors to examine and report on the summarized consolidated financial statements. They have had full and free access to the internal audit staff, other management staff and the Audit and Risk Committee of the board. Gavin Toy President and CEO Mary Falconer SVP, CFO and Corporate Secretary March 7, 2018 Westminster Savings Annual Report 2017 5

Report of the Independent Auditor on the Summarized Consolidated Financial Statements To the members of Westminster Savings Credit Union The accompanying summarized consolidated financial statements of Westminster Savings Credit Union, which comprise the summarized consolidated statement of financial position as at December 31, 2017, the summarized consolidated statements of income, comprehensive income and changes in members equity for the year then ended, and related notes, are derived from the complete audited consolidated financial statements, prepared in accordance with International Financial Reporting Standards, of Westminster Savings Credit Union as at and for the year ended December 31, 2017. We expressed an unmodified audit opinion on those complete consolidated financial statements in our auditors report dated March 7, 2018. The summarized consolidated financial statements do not contain all the requirements of International Financial Reporting Standards applied in the preparation of the complete audited consolidated financial statements of Westminster Savings Credit Union. Reading the summarized consolidated financial statements, therefore, is not a substitute for reading the complete audited consolidated financial statements of Westminster Savings Credit Union. Management s responsibility for the summarized consolidated financial statements Management is responsible for the preparation of the summarized consolidated financial statements in accordance with the basis described in note 1. Auditors responsibility Our responsibility is to express an opinion on the summarized consolidated 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 consolidated financial statements derived from the complete audited consolidated financial statements of Westminster Savings Credit Union as at and for the year ended December 31, 2017 are a fair summary of those complete consolidated financial statements, in accordance with the basis described in note 1. Chartered Professional Accountants Vancouver, Canada March 7, 2018 KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG Canada provides services to KPMG LLP. Westminster Savings Annual Report 2017 6

Summarized consolidated statement of financial position (Expressed in thousands of dollars) December 31, 2017, with comparative information for 2016 2017 2016 Assets Cash and cash equivalents $ 90,650 $ 129,809 Investments 341,218 332,371 Loans 2,409,509 2,032,750 Leases receivable 299,956 287,366 Premises and equipment 10,670 9,109 Intangible assets 1,830 2,001 Current taxes receivable 2,203 939 Deferred tax asset 8,130 7,911 Other assets 6,896 7,251 Liabilities and Members Equity $ 3,171,062 $ 2,809,507 Members deposits $ 2,668,641 $ 2,392,881 Accounts payable and accrued liabilities 17,879 14,547 Securitization debt obligations 265,193 201,404 Current taxes payable 1,119 253 Deferred tax liability 14,424 15,577 Retirement benefit obligations 8,783 3,986 2,976,039 2,628,648 Members equity Retained earnings 186,823 177,318 Available-for-sale fair value reserve 8,200 3,541 195,023 180,859 See accompanying note to the summarized consolidated financial statements. $ 3,171,062 $ 2,809,507 Approved on behalf of the board: Darlene K. Hyde, Chair Director Director Kathleen Kennedy-Strath, Vice Chair Westminster Savings Annual Report 2017 7

Summarized consolidated statement of income (Expressed in thousands of dollars) Year ended December 31, 2017, with comparative information for 2016 2017 2016 Financial income: Interest income from loans, leases and investments $ 101,493 $ 93,076 Interest expense on deposits, borrowings and debts (32,429) (30,354) Net interest income 69,064 62,722 Impairment losses on loans and leases receivable (1,778) (1,532) Net interest income after impairment 67,286 61,190 Fee and commission income 12,483 11,110 Fee and commission expense (3,042) (3,570) Net fee and commission income 9,441 7,540 Net gains on financial instruments 3,201 1,361 Gain on sale of assets 389 1,752 Impairment losses on other assets (2,640) (2,823) Net interest and other income 77,677 69,020 Operating expenses: Salary and employee benefits 38,486 36,694 Occupancy and equipment 10,282 8,408 General and administrative 15,368 13,871 64,136 58,973 Income before the undernoted: 13,541 10,047 Contribution to Westminster Savings Foundation (250) - Community investment (333) (238) Income before income taxes 12,958 9,809 Provision for income taxes: Current 1,445 1,160 Deferred (1,725) 1,167 (280) 2,327 Net income $ 13,238 $ 7,482 See accompanying note to the summarized consolidated financial statements. Westminster Savings Annual Report 2017 8

Summarized consolidated statement of comprehensive income (Expressed in thousands of dollars) Year ended December 31, 2017, with comparative information for 2016 2017 2016 Net income $ 13,238 $ 7,482 Other comprehensive loss: Items that will be reclassified to net income: Net gains (losses) on available-for-sale financial assets, net of tax provision of $963 (2016 provision - $168) 4,659 759 Items that will never be reclassified to net income: Net actuarial losses on defined benefit pension plans, net of tax provision of $22 (2016 recovery - $511) (3,733) (1,249) 926 (490) Comprehensive income $ 14,164 $ 6,992 See accompanying note to summarized consolidated financial statements. Westminster Savings Annual Report 2017 9

Summarized consolidated statement of changes in members equity (Expressed in thousands of dollars) Year ended December 31, 2017, with comparative information for 2016 Year ended December 31, 2017, with comparative information for 2016 Available-for -sale fair Retained Total value reserve earnings equity Members equity, beginning of 2017 $ 3,541 $ 177,318 $ 180,859 Net income - 13,238 13,238 Fair value gains on available-for-sale financial assets - net of tax provision of $963 4,659-4,659 Actuarial losses on defined benefit pension plans - net of tax provision of $22 - (3,733) (3,733) Other comprehensive income (loss) 4,659 (3,733) 926 Comprehensive income 4,659 9,505 14,164 Members equity, end of 2017 $ 8,200 $ 186,823 $ 195,023 Available-for -sale fair Retained Total value reserve earnings equity Members equity, beginning of 2016 $ 2,782 $ 171,085 $ 173,867 Net income - 7,482 7,482 Fair value gains on available-for-sale financial assets - net of tax provision of $168 759-759 Actuarial losses on defined benefit pension plans - net of tax recovery of $511 - (1,249) (1,249) Other comprehensive income (loss) 759 (1,249) (490) Comprehensive income 759 6,233 6,992 Members equity, end of 2016 $ 3,541 $ 177,318 $ 180,859 See accompanying note to the summarized consolidated financial statements. Westminster Savings Annual Report 2017 10

Note to summarized consolidated financial statements (Expressed in thousands of dollars) Year ended December 31, 2017 1. Basis of presentation: These summarized consolidated financial statements have been prepared in accordance with section 128(4) of the Financial Institutions Act and are derived from the audited consolidated financial statements, prepared in accordance with International Financial Reporting Standards, as at and for the year ended December 31, 2017. Those audited consolidated financial statements were approved by Westminster Savings Board of Directors on March 7, 2018 and can be obtained online or at any of our branches. Westminster Savings Annual Report 2017 11

Contact information Personal and Small Business Banking Member Service Centre Austin Branch 1101 Austin Avenue Coquitlam, BC V3K 3P4 Central City Branch 10153 King George Blvd, Unit 2672 Surrey, BC V3T 2W1 Cloverdale Branch 18722 Fraser Hwy Surrey, BC V3S 7Y4 Grandview Central Branch 16090 24 Avenue Surrey, BC V3Z 0R5 Hastings Heights Branch 4106 Hastings Street Burnaby, BC V5C 2J4 Landmark Branch 20201 Lougheed Hwy, Unit 200 Maple Ridge, BC V2X 2P6 Langley Branch 20831 Fraser Hwy, Unit 1 Langley, BC V3A 4G7 Maple Ridge Branch 22415 Lougheed Hwy Maple Ridge, BC V2X 2T8 Metrotown Branch 4705 Kingsway Burnaby, BC V5H 2C4 New Westminster Branch 601 Sixth Street, Unit 100 New Westminster, BC V3L 3C1 Newton Branch 7488 King George Blvd, Unit 500 Surrey, BC V3W 0H9 River District Branch 8586 River District Crossing Vancouver, BC V5S 0C2 Shaughnessy Station Branch 2850 Shaughnessy Street, Unit 6108 Port Coquitlam, BC V3C 6K5 Sunwood Square Branch 3025 Lougheed Hwy, Unit 290 Conquitlam, BC V3B 6S2 White Rock Branch 1608 152nd Street Surrey, BC V4A 4N2 601 Sixth Street, Unit 210 New Westminster, BC V3L 3C1 604 517 0100 1 877 506 0100 wscu.com Corporate Centre (Including the Wealth Management, Commercial Banking and Leasing divisions) 13450 102 Avenue, Suite 1900 Surrey, BC V3T 5Y1 604 519 4300 Westminster Savings Annual Report 2017 12

Board of Directors Bill Brown James R. Ensom Darlene K. Hyde Chair Kathleen Kennedy-Strath Vice Chair Hanne Madsen Emmet McGrath Patty Sahota Robert G. Shirra Art Van Pelt Corporate Counsel Dentons Canada LLP Vancouver, BC Executive Leadership Team Gavin Toy President and Chief Executive Officer Mary Falconer Senior Vice President, Chief Financial Officer and Corporate Secretary Maury Kask Senior Vice President, Consumer Operations and Chief Customer Experience Officer Greg Oyhenart Senior Vice President, Corporate Development and Chief Strategy Officer Brian Rogers Senior Vice President, Commercial Operations and Chief Credit Officer TJ Schmaltz Senior Vice President, Human Resources and Corporate Communications and Chief Human Resources Officer Auditors KPMG LLP Vancouver, BC Westminster Savings Annual Report 2017 13