Dianne Huffman CHAIR, AUDIT COMMITTEE

2014
ANNUAL
REPORT
Continuing along the path of sustainable organic growth, the 2014 audited
performance results for our credit union again identifies the core strength
demonstrated by member support, staff commitment, and strategic and effective
management.
On behalf of the Board of Directors, Management and Staff, I am pleased to report
Asset Growth up 12.8%, Deposit Growth up 76% and Loan Growth up 60%. While
loan applications closed increased 154% over 2013, Bad Debt was reduced by eight
times the previous five year average with double the recovered dollars resulting
in an improvement of $73,000 in income over the past five year average loan loss
numbers. Financial Margin (98%) and Other Income (120%) satisfied management’s
goals with Net Income coming in at a respectable 94% of target.
MESSAGE
TO THE
MEMBERS
Unfortunately, a requirement to incorporate a $150,000 unrealized investment loss
in our CUCO Co op investment (ABCP LP) into our financials reduced our Net Income
to 31% of budget and adversely affected Retained Earnings. This inherited liability
outside the control of Ganaraska`s management is a consequence, but will not be
allowed to compromise our strength or alter our plan for growth moving forward.
Along with management’s MPP initiative producing 84 new memberships in 2014,
the launch of our new full service Peterborough branch has been successful and in
one year added 160 new members and approximately 150% of targeted deposit and
loan growth realized with little marketing expense.
Although slightly increased, Operating Expenses as a percentage of average assets
are the lowest in seven years. Liquidity levels remain stable; remuneration and
health benefits for employees have been improved; 4% dividends were declared
for Class B shareholders; and the Community Investment Program has been further
expanded in Peterborough.
Looking forward to 2015 in Year 4 of our 5 Year Strategic Plan as we continue to build
upon seventy years of serving our members, the Board of Directors is confident and
eager to embrace the exciting opportunities that are before us.
With the building of Retained Earnings being the task ahead, ground work is well
underway for a $3.5 M Investment Share Offering to strengthen Capital over 7%
supporting future growth; technology improvements to manage and mitigate IT
risk; a permanent home for Cobourg operations; opening of a full service branch in
Whitby area; and a projected 20% growth rate for the year.
The future is bright for our credit union. Management’s consistent achievement of
remunerative and prolific board approved goals yielding results that enable growth,
will continue to successfully position Ganaraska Financial Credit Union to provide
increased value for our members, employees and our communities.
I sincerely thank all Members for their perpetual support and all Staff, Management,
and Board Directors for their uninterrupted commitment over the past year.
Respectfully,
Mark Hill
CHAIR
Mark Hill
Board Chair
1
MANAGMENTENT
RESPONSIBILITY
The accompanying financial statements of Ganaraska Credit Union Ltd. and all
information contained in this Annual Report are the responsibility of management.
The financial statements have been prepared using the appropriate accounting
policies that are in accordance with International Financial Reporting Standards.
Management is also responsible for the integrity and fairness of the information
presented, which include certain amounts that are based on estimates and
judgements. Management has determined such amounts on a reasonable basis
in order to ensure that the financial statements are presented fairly, in all material
aspects.
Ganaraska management has developed and maintains a system of internal
accounting and administrative controls. The systems are designed to provide
reasonable assurance that the financial information is relevant, reliable and accurate
for preparation of financial statements and that assets are properly accounted
for and are safeguarded. The Board of Directors is responsible for ensuring that
Management fulfills its responsibilities for financial reporting and is ultimately
responsible for reviewing and approving the financial statements. The Board of
Directors carried out its responsibilities for the financial statements through its
regular review of financial results and operations and through its Audit Committee.
The Audit Committee is appointed by the Board. The Committee meets periodically,
as per regulations, with Management, the external auditors and reviews quarterly
third party internal audit reports. Internal controls, the financial reporting process,
auditing matters and overall financial reporting issues are reviewed and discussed
to satisfy itself that each party is properly discharging their responsibilities.
The financial statements have been audited by BDO Canada LLP, our member
appointed external auditors and their report is shown as part of the summarized
financial statements.
Paul Hallas, CMA, CPA
PRESIDENT
& CEO
2
The Audit Committee of Ganaraska Credit Union Ltd. is a committee of the Board
of Directors pursuant to section 125 of the Credit Union and Caisse Populaires Act,
1994. The Committee, which consists of five directors, has adopted a mandate
which covers all the duties which are specified in the Regulations and Act.
The Audit Committee meets at least quarterly throughout the year (in 2014 the
Committee met 4 times) and has the following oversight responsibilities;
•
Financial reporting and disclosure;
•
The external audit function;
•
The internal audit function;
•
Risk management and control environment; and
•
Compliance.
AUDIT
COMMITTEE
REPORT
As per Ganaraska’s Audit Committee Charter, the committee’s purpose is to oversee
and assess the;
•
Integrity of the financial reporting process and financial statements;
•
Adequacy of the internal and external audit functions;
•
Adequacy and effectiveness of internal controls;
•
Adequacy and effectiveness of the risk management process;
•
Compliance with legal and regulatory requirements;
•
External auditor’s qualifications and independence;
•
Performance of the external auditors; and
•
Performance of the internal audit function.
The Committee received full co-operation and support from management. There are
no significant recommendations made by the Audit Committee that management
has not implemented and there are no matters which the Committee believes
should be reported to the members or are required to be disclosed pursuant to the
Act or regulations.
Dianne Huffman
CHAIR, AUDIT
COMMITTEE
3
INDEPENDENT
AUDITOR’S
REPORT
TO THE MEMBERS OF GANARASKA CREDIT UNION LTD.
REPORT ON THE SUMMARY FINANCIAL STATEMENTS
The accompanying summary financial statements, which comprise the summary
statement of financial position as at December 31, 2014 and the summary statements
of comprehensive income and changes in members’ equity for the year then ended
(the “Summary Financial Statements”), are derived from the audited financial
statements of Ganaraska Credit Union Ltd. for the year ended December 31, 2014.
We expressed an unmodified audit opinion on those financial statements in our
report dated February 4, 2015.
The Summary Financial Statements do not contain all disclosures required by
International Financial Reporting Standards. Reading the Summary Financial
Statements, therefore, is not a substitute for reading the audited financial statements
of Ganaraska Credit Union Ltd.
MANAGEMENT’S RESPONSIBILITY FOR THE SUMMARY
FINANCIAL STATEMENTS
Management is responsible for the preparation of Summary Financial Statements
based on the audited financial statements of Ganaraska Credit Union Ltd. for the
year ended December 31, 2014.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on the Summary Financial Statements
based on our procedures, which were conducted in accordance with Canadian Audit
Standards (CAS) 810, ‘Engagements to Report on Summary Financial Statements’.
OPINION
In our opinion, the Summary Financial Statements derived from the audited financial
statements of Ganaraska Credit Union Ltd. for the year ended December 31, 2014
are a fair summary of those financial statements.
Chartered Professional Accountants, Licensed Public Accountants
Peterborough, Ontario February 4, 2015
4
With Financial contributions and hundreds of hours donated by dedicated GFCU
Staff, together we improved the lives of countless members of our communities.
Our plan for 2015 is to continue building up our communities as we’ve done for the
last 70 years, making for a better place to live, work and do business.
IT’S ALL ABOUT
COMMUNITY
• Big Brothers & Big Sisters
• The Northumberland United Way
• Peterborough United Way
• Dragon Boat
• The Heart & Stroke Foundation
(Big Bike and Walk)
• Cobourg Rotary Pancake Breakfast
• Northumberland United Way
(Back Pack for Kids Program)
• Port Hope Lawn Bowling
• Bowling for Kids Sake
• Peterborough Salvation Army
• Northumberland Salvation Army
• Relay for Life
5
STATEMENT
OF FINANCIAL
POSITION
Dec 31, 2014 Dec 31, 2013
ASSETS
Cash resources Liquidity deposits Investments $ 1,258,399
$ 1,224,627
6,462,399
5,755,704
837,951
958,336
Loans to members 93,834,487
83,282,170
Deferred tax assets 295,000
270,000
Other assets 1,095,672
488,246
Property & Equipment 2,225,371
1,978,824
$ 106,009,279
$ 93,957,907
Member deposits $ 100,835,350
$ 88,825,593
Accounts payable & accrued liabilities 29,144
67,951
1,010,022
1,207,080
LIABILITIES AND MEMBERS’ EQUITY
LIABILITIES
Members’ shares $ 101,874,516
$ 90,100,624
$ 3,476,574
$ 3,170,093
658,189
687,190
4,134,763
3,857,283
$ 106,009,279
$ 93,957,907
MEMBERS’ EQUITY
Members’ shares Retained earnings 6
Dec 31, 2014 Dec 31, 2013
INTEREST REVENUE
Interest on loans to members
Investment income $ 3,834,964
262,162
$ 3,474,132
226, 782
4,097,126
3,700,914
STATEMENT OF
COMPREHENENSIVE
INCOME
INTEREST AND LOAN RELATED EXPENSES
Interest on member deposits Interest on borrowings Loan loss expense recovery
1,590,114
6,836
(19,386)
1,319,679
3,785
81,897
1,577,564
1,405,361
FINANCIAL MARGIN OTHER INCOME 2,519,562
650,918
2,295,553
714,586
3,170,480
3,010,139
Salaries and employee benefits Occupancy Banking costs Other expenses Data costs Deposit insurance Amortization 1,503,257
241,711
203,699
578,402
143,029
119,768
195,719
1,458,842
175,249
245,875
571,137
144,982
114,086
127,301
2,985,585
2,837,472
OPERATING INCOME 184,895
172,667
FAIR VALUE ADJUSTMENTS
ON INVESTMENTS 150,164
39,578
INCOME BEFORE
INCOME TAXES 34,731
133,089
(25,000)
(50,000)
59,731
183,089
--
--
$ 59,731
$183,089
OPERATING EXPENSES
INCOME TAX (RECOVERY) NET INCOME OTHER COMPREHENSIVE INCOME COMPREHENSIVE INCOME 7
STATEMENT OF
CHANGES
IN MEMBERS’
EQUITY
For the year ended December 31
BALANCE AT
DEC 31, 2012 RETAINED EARNINGS
TOTAL
$ 3,177,359
$ 587,826
$ 3,765,185
Comprehensive income --
183,089
183,089
Distributions
to members --
(83,725)
(83,725)
Net increase in
members’ shares (7,266)
--
(7,266)
$ 3,170,093
$ 687,190
$ 3,857,283
Comprehensive income --
59,731
59,731
Distributions
to members --
(88,732)
(88,732)
Net increase in
members’ shares 306,481
--
306, 481
$ 3,476,574
$ 658,189
$ 4,134,763
BALANCE ON
DEC 31, 2013 BALANCE ON
DEC 31, 2014 8
MEMBERS’ SHARES
LOCATIONS
PORT HOPE
17 Queen Street
Port Hope, ON L1A 2Y8
T. 905 885-8134 F. 905 885-8298
COBOURG
57 Albert Street
Cobourg, ON K9A 2P8
T. 905 885-8134 F. 905 372-0238
PETERBOROUGH
823 Park Street S
Peterborough, ON K9J 3T9
T. 905 885-8134 F. 705 750-1071
Toll Free 1-888-374-1717
WEBSITE & EMAIL
www.ganaraskacu.com
[email protected]