making - All Trans Financial Services Credit Union

MAKING
INROADS
ANNUAL REPORT
05
MAKING
INROADS
05
ANNUAL REPORT
At All Trans we
promise to deliver
to our members,
full financial services
with passion and
integrity.
We’ll Go the Distance.
EXECUTIVE REPORT
1
EXECUTIVE
LENDING REPORT
2
REPORT
REPORT OF THE AUDIT COMMITTEE
3
REPORT OF THE NOMINATING COMMITTEE
4
REPORT OF THE
HUMAN RESOURCES COMMITTEE
4
MANAGEMENT’S RESPONSIBILITY
FOR FINANCIAL REPORTING
5
AUDITORS’ REPORT
6
BALANCE SHEET
7
STATEMENT OF OPERATIONS
AND RETAINED EARNINGS
8
STATEMENT OF CASH FLOWS
9
NOTES TO THE FINANCIAL STATEMENTS
10
SCHEDULE OF EXPENSES
17
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
It is a privilege to deliver our report to Members on the
activities of All Trans Financial Services Credit Union in 2005.
We were fortunate in the enjoyment of a strong economy
and a vibrant Bond environment in 2005. All of our sponsoring
companies and organizations were in positive employment
situations and most of our members were in a good position
to take advantage of the credit union’s financial offerings. Both
our retail and wholesale operations prospered during the year.
All Trans operates a unique retail member service in the Toronto
and London markets. Our banking Pavilions offer a wide range
of consultative services while cash services are available through
our ABM network and our on line banking facility. Our service
centerpiece in Toronto is our Mobile Banking team who visit
with Members at work, home or other convenient locations
to conduct many types of financial transactions. That Members
enjoy and appreciate our service mix is evidenced by the
growth in business for All Trans and the increased number
of services used by many of our Members.
Of special note during 2005 was our ongoing “ALLtimate Race”
promotion. Over 1,000 Members were able to enter the
competition by acquiring new services from the credit union.
One of the twelve competition finalists will win a brand new
Hyundai Accent in the draw to be held at our Annual General
Meeting in March. Due to the success of the programme we
will be instituting a brand new “ALLtimate Race” promotion for
2006. Details will be available at the Annual General Meeting.
All Trans operates a number of wholesale businesses, in addition
to our retail activities. The concept behind the wholesale
operations is to leverage the credit union’s business powers as
a licensed financial institution to derive additional revenue
which can be made available to support and expand our retail
member services, such as the Mobile Banking programme.
Our two largest wholesale operations are Vault Cash supply
and Card Services. The Vault Cash operation is a consortium of
credit unions managed by All Trans which supplies cash to ABM
operators. At the end of 2005 the consortium had fifty million
dollars committed to the project. All Trans collects a
management fee for administering the operation. Our Card
Services operation enables third party processors to offer
All Trans debit cards to their customers in a variety of retail
situations – All Trans collects a processing fee for each of these
card transactions. Our various wholesale operations contributed
almost 45 per cent of total corporate revenues in 2005.
As a result of our robust retail and wholesale operations All Trans
experienced a strong financial performance in 2005. Total assets
increased by 7 per cent to over 41 million dollars. Our profit
increased by 72 per cent over 2004, to $313,799. Our reserves,
which the government of Ontario requires us to maintain at
or above 5 per cent, increased to 7.02 per cent. Our reserves
represent real financial strength for the credit union, providing
a cushion against potential future adverse economic conditions
and other difficult situations.
Our strong financial performance during 2005 has allowed
the Board of Directors to deliver some ongoing benefits to our
Members, in the form of reduced account fees. It is felt that
reducing our fees is a tangible way to thank all Members for
their support of the credit union. Details of these exciting
changes will be announced at the Annual General Meeting.
All Trans is fortunate in having a very able and dedicated Board
of Directors. In 2005 the Board again provided strong leadership
to the credit union. Major Board activities included a review of
credit union operations and policy to ensure compliance with
the new By-Law number 5 regulations from the Deposit
Insurance Corporation of Ontario. The Board also conducted
a Strategic Planning conference with Management and Staff
to chart the ongoing course for the credit union; in addition
the Board conducted a self assessment retreat to ensure that
it is performing to its full potential and in accordance with
Member’s expectations. Every Board member devotes much
time and energy to the credit union’s affairs - and we thank
them for it.
In conclusion we would like to extend our appreciation to all
our Staff, who again provided a high level of service and
dedication to our Members. We would also like to thank the
Bond companies and organizations, union locals and business
partners who contributed so much to our success in 2005.
Lastly, again, a big thank you to our loyal members for your
confidence and support for all Trans in the past twelve months.
It has been our pleasure and privilege to serve you.
Ross Taylor
Chair, Board of Directors
Mike Alexander
Chief Executive officer
Toronto. January 2006.
01
ANNUAL REPORT 2005
LENDING
REPORT –
DIRECTOR OF
OPERATIONS
In 2005 we experienced mixed results in the credit area.
We are pleased to report that Smart Line real estate secured line of credit approvals increased
by nearly $1,000,000.00. Growth was also recorded in personal loan application volumes with
conventional mortgages and smart lines application numbers remaining virtually the same as
2004. A successful Smart Line campaign was conducted in the spring of the year and provided
excellent growth in this area.
During the year we experienced a drop in personal loan volumes funded of approximately
$600,000, with conventional mortgage balances outstanding declining by 1.1 million Comparing
2004 to 2005, the total value of loans and mortgages advanced dropped by $757,000 or 5.7%.
On a year over year basis our total credit portfolio declined by $660,000 or 2.2%. While we were
disappointed in the overall decline it was not unexpected, as we operated on one less Mobile
Money Manager which resulted in less applications being generated.
Delinquent loans continued to be well monitored and our allowance for bad debts reached a
new low of $11,877. We suffered 2 bankruptcies in 2005 but given the number of bankruptcies
experienced in Toronto alone our results have been outstanding. The reduced amount recovered
on Bad Debts reflects the drop in the amount of personal loans written off in recent years.
2004
2005
Personal Loans Granted
795
897
Personal Loans Declined
261
262
Total Personal Loan Applications
$-Value Approved Personal Loans
1,056
1,159
$4,830,185
$ 4,248,462
1st Mortgages Approved Internally
$-Value 1st Mortgages (Internal)
30
28
$4,384,898
$ 3,680,178
1st Mortgages Approved Equitable
4
3
$ 666,112
$ 253,273
56
59
$-Value Approved Smart lines
$3,599,255
$ 4,550,740
Delinquent Accounts Over 90 Days
$
$
$-Value Equitable 1st Mortgages
Smart Line Applications
28,681
11,876
Impaired Loans
$ 194,898
$ 110,753
Recoveries Bad Debts
$
$
Bankruptcies
3,023
2
2,695
2
While we did not enjoy the increases generated in prior years in our credit portfolio, the efforts
put forth by the Pavilion staff and the Mobile Money Managers in generating new business is
greatly appreciated and acknowledged. The credit department has continued to perform in an
outstanding manner as evidenced by both results, and the excellent reviews received from the
internal and external auditors. My appreciation is extended to both groups for their efforts in 2005.
Ian Huffman, Director Operations
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
REPORT OF
THE AUDIT
COMMITTEE
The Audit Committee for the past year was comprised of directors Sam Lightowler, Egbert
Balthazar and Rodger Sheppard. The committee is responsible to ensure that the member’s
funds and investments are protected through a system of audits, internal checks and periodic
third-party reviews.
The committee meets with the External Auditors, Retford & Lane, on a regular basis to review
the financial position and balance sheets of the Credit Union. The External Auditors conduct a
half-year Notice to Reader Report and full year-end Audit of our financial position. The year-end
audit is included in the annual report for your review. These reports are reviewed by the
committee, both with management and in-camera with the auditors.
The committee also meets with the Internal Auditors, Rick Belsby and Associates, to ensure that
our internal policies and procedures are being followed in all aspects of our business. The auditors
conducted audits of many aspects of our operations to ensure that we are operating in compliance
with both government legislation and internal policy. The committee meets with the auditors to
review every audit conducted. Recommendations from these audits are tracked and reviewed
with management.
The following audits were conducted in 2005:
• Impaired Loans Allowance audit
• Payroll and Personnel Audit
• Mortgage Loan Audit
• General Ledger Ratios and Financial analysis
• Accounts Payable Audit
• Cash Card Programme Audit
• Vault Cash Programme – Threshold Electronics Mini Audit
• RRSP and RRIF Audit
• Investment audit
• Money Laundering and Privacy Audit
• Officer and Staff Loan Audit
• Dormant account Audit
• Clarica Branch Audit
An Information Security Review was also carried out for the Audit Committee by DynTek Services
Inc. This review was undertaken to assess the integrity and security of the credit union’s various
operating systems and software.
On behalf of the Audit Committee I would like to thank both the Staff and Management for
another year of hard work and impressive results. Both the Internal and External Auditors
continually express commendations for the thoroughness and accuracy of their work.
Thanks to all management, staff and directors for their support to the Audit Committee
during the past year.
Sam Lightowler, Committee Chair
03
ANNUAL REPORT 2005
REPORT OF THE
NOMINATING
COMMITTEE
The By-Laws of All Trans Financial Services Credit Union Limited require the Nominating Committee to
present a slate of suitable candidates for election at the Annual General Meeting. Each year a number
of vacancies occur on the Board. The terms of office are organized in such a manner that 1/3 (one third)
of all elected positions are open for consideration each year. This year there are four open positions on
the Board, three due to regular rotation and one due to a Director resignation early in 2005.
The Nominating Committee is pleased to endorse the following slate of candidates as qualified for
election at the annual General Meeting on March 8th, 2006.
Mr. Ross Taylor
Director 12 years
Incumbent
Mr. Egbert Balthazar
Director 6 years
Incumbent
Steve Dainard
Brian Elcombe
Kevin Morton
Diana Marcon
I would like to take this opportunity to personally thank my fellow members of the Nominating
Committee, Sam Lightowler and James McDonald for their support during the past year. Our
brainstorming efforts proved to be very successful in generating positive new initiatives in going forward.
Elaine Bell, Chair, Nominating Committee
REPORT OF
THE HUMAN
RESOURCES
COMMITTEE
First I would like to thank you for taking the time to read the annual report. As the report is our
opportunity as a Board to report to you the member on how your Credit Union is doing.
Ladies and Gentlemen as Chair of the Human Resources Committee, over the past year I have
had the pleasure of working with Jim McDonald and Steve Holmes. I would like to thank these
individuals for their hard work and time commitment on the Human Resources Committee.
The Human Resources Committee is responsible for assisting and/or advising management on
Personnel/Human Resources issues including Employee Relations, Training & Development,
Benefits and Salary Compensation.
It was a busy year for the Human Resources Committee. As per the Credit Union Act we review all
sections of the Personnel Policies. We planned and ran the Board Self Assessment as required by
DICO’s By-Law #5. We continued to monitor the Mobile Money Manager Program, use of new
Marketrax and CallTrax software.
The committee also developed two new sections of the Personnel Policy. First we tailored
a genetic Workplace Violence and Harassment Policy to suit the needs of All Trans. Secondly
we wrote a Policy to recognize the Long Service and dedication of the employees of All Trans.
All Trans is very fortunate to have a dedicated and stable work force, all but four employees have
been with the Credit Union for more than 10 years. In 2005 one employee reached 20 years of
service with All Trans. The committee’s only disappointment was, we were unable to get the Long
Service Recognition Policy passed as retroactive. We had wanted this as it was a policy long over
due and with such a small work force we felt it was the right thing to do. But due to concerns raised
by management about being retroactive, the policy was passed by the Board as Non-Retroactive.
In closing I would like to Thank all the staff of All Trans for their hard work and dedication.
Frank Hood, Chair of Human Resources Committee
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
MANAGEMENT’S
RESPONSIBILITY
FOR FINANCIAL
REPORTING
The financial statements of All Trans Financial Services Credit Union Limited and all information
in this annual report are the responsibility of management and have been approved by the
board of directors.
The financial statements have been prepared by management in accordance with Canadian
generally accepted accounting principles. When alternative accounting methods exist,
management has chosen those it deems most appropriate in the circumstances. Financial
statements are not precise since they include certain amounts 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 respects. Management has prepared the
financial information presented elsewhere in the annual report and has ensured that it is
consistent with that in the financial statements.
All Trans Financial Services Credit Union Limited maintains systems of internal accounting and
administrative controls of high quality and consistent with reasonable cost. Such systems are
designed to provide reasonable assurances that the financial information is relevant, reliable
and accurate, and that the Credit Union’s assets are appropriately accounted for and safeguarded.
Also, the Credit Union has established an appropriate Code of Business Ethics, Conflict of Interest
Policy and a Confidential Information Policy.
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 carries out this responsibility principally through its Audit Committee.
The Audit Committee is appointed by the board and all members are active directors of the
Credit Union. The committee meets regularly with management and the Internal Auditor to discuss
internal controls over the financial reporting issues in order to satisfy it that each party is properly
discharging its responsibilities and to review the financial statements and the External Auditors’
Report. The committee reports its findings to the Board for consideration when approving the
financial statements for issuance to the Credit Union membership. The committee also considers
for review by the Board and approval by all members, the engagement or reappointment of the
external auditors.
The financial statements have been audited by Retford and Lane LLP, the external auditors,
in accordance with Canadian generally accepted standards on behalf of the Credit Union
membership.
Mike Alexander, Chief Executive Officer
Greg Turgeon, Chief Financial Officer
05
ANNUAL REPORT 2005
AUDITORS’
REPORT
To the Members of
All Trans Financial Services Credit Union Limited:
We have audited the balance sheet of All Trans Financial Services Credit Union Limited as at
December 31, 2005 and the statements of operations and retained earnings and cash flows
for the year then ended. These financial statements are the responsibility of the credit union’s
management. Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial
position of the credit union as at December 31, 2005 and the results of its operations and its
cash flows for the year then ended in accordance with Canadian generally accepted
accounting principles.
Retford & Lane LLP, Chartered Accountants
January 5, 2006
07
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
BALANCE SHEET
2005
2004
ASSETS
AS AT
DECEMBER 31, 2005
Cash resources and currency held
in third-party ABMs (Notes 2 and 3)
Investments (Note 4)
Loans to members (Notes 5 and 6)
Accrued interest and other receivables
Prepaid expenses
Capital assets (Note 7)
$
7,708,553
3,751,921
28,781,810
274,397
69,959
426,675
$ 41,013,315
$
5,803,533
2,212,262
29,440,516
188,159
118,214
561,031
$ 38,323,715
$ 37,650,612
482,629
$ 35,254,732
479,788
626,671
649,591
38,759,912
2,253,403
$ 41,013,315
36,384,111
1,939,604
$ 38,323,715
LIABILITIES AND RETAINED EARNINGS
Liabilities
Members’ deposits (Note 8)
Other liabilities (Note 9)
Liabilities qualifying as regulatory capital
Member shares (Note 10)
Retained earnings
Approved by the Board
Director ______________________________
Director ______________________________
ANNUAL REPORT 2005
STATEMENT
OF OPERATIONS
AND RETAINED
EARNINGS
2005
Revenue
Interest on mortgage loans
Interest on personal loans
Investment income
Third-party ABM revenue
Other income
$
FOR THE YEAR ENDED
DECEMBER 31, 2005
Interest expense
Member deposits
Demand
Term
Registered savings plans
Registered income funds
External borrowings
Gross profit
Expenses
Deposit insurance
Occupancy costs (Schedule)
Other administration expenses (Schedule)
Provision for impaired loans (Note 6)
Remuneration to officers and staff (Schedule)
Income before income taxes
Income taxes (Note 12)
Net income for the year
Retained earnings, beginning of the year
Retained earnings, end of the year
$
1,179,065
443,881
150,471
433,974
1,270,521
3,477,912
2004
$
1,217,741
500,505
110,810
423,723
1,044,857
3,297,636
7,066
303,676
278,228
57,185
646,155
2,831,757
6,941
261,797
318,175
67,384
19
654,316
2,643,320
34,120
183,274
1,124,682
69,005
1,038,876
2,449,957
34,582
210,711
980,133
87,677
1,107,092
2,420,195
381,800
68,001
313,799
1,939,604
2,253,403
223,125
40,796
182,329
1,757,275
1,939,604
$
09
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED
2005
Cash flows from operating activities
Net income for the year
Adjustments for:
Amortization
$
313,799
2004
$
182,329
169,192
482,991
139,094
321,423
48,254
(86,238)
2,845
447,852
38,966
(45,589)
55,536
370,336
(34,838)
658,705
(1,539,659)
(915,792)
(139,629)
(2,594,404)
317,231
(2,416,802)
2,395,880
(22,920)
2,372,960
976,129
(27,294)
948,835
DECEMBER 31,2005
Changes in non-cash working capital balances:
Prepaid expenses
Other assets
Other liabilities
Cash flows from investing activities
Purchase of capital assets
Loans to members - net
Investments
Cash flows from financing activities
Members’ deposits
Membership shares
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of the year
Cash and cash equivalents, end of the year
INTEREST AND INCOME TAXES PAID:
Interest paid
Income taxes paid
$
1,905,020
5,803,533
7,708,553
$
(1,097,631)
6,901,164
5,803,533
$
$
612,673
66,075
$
$
665,909
17,927
ANNUAL REPORT 2005
NOTES TO
THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31,2005
1.
SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with Canadian generally
accepted accounting principles and their basis of application is consistent with the preceding
year. Outlined below are the accounting policies considered to be significant.
THE CREDIT UNIONS AND CAISSES POPULAIRES ACT, 1994 (THE "ACT")
Regulations to the Act specify that certain items are required to be disclosed in the financial
statements which are presented at annual meetings of members. It is management’s opinion
that the disclosures in these financial statements and notes comply, in all material respects,
with the requirements of the Act. Where necessary, reasonable estimates and interpretations
have been made in presenting this information.
USE OF ESTIMATES
The preparation of financial statements in conformity with Canadian generally accepted
accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and
expense during the year. These estimates are reviewed periodically and, as adjustments
become necessary, they are reported in earnings in the year in which they become known.
CARRYING VALUES OF INVESTMENTS
Investments in interest-bearing securities are stated at cost less amortization of any purchase
premiums or discounts. Investments in co-operative organizations are stated at cost. If there
is a decline in value of an investment which is considered to be other than temporary, the
investment would be written-down to net realizable value.
Gains and losses arising on the sale of investments are included in earnings from operations.
CAPITAL ASSETS
Capital assets are stated at acquisition cost. Amortization is calculated using the methods
set out below applied to the cost of the assets, at annual rates based on their estimated
useful lives as follows:
Furniture and equipment
ATM equipment
Leasehold improvements
20%
10 years
term of lease
diminishing balance
straight line
straight line
LOANS TO MEMBERS
Loans to members are stated at cost which includes amounts advanced and applicable
charges, less repayments. Interest is accounted for on the accrual basis for all loans other
than impaired loans.
A loan is classified as impaired when a specific provision has been established or a write-off
taken or when, in the opinion of management, there is reasonable doubt as to the ultimate
collectibility of principal or interest. A loan is also classified as impaired when interest or
principal is contractually 90 days past due, unless the loan is fully secured and in the process
of collection. Fully secured loans are classified as impaired after a delinquency period of
180 days. Also, a loan is classified as impaired when, in the opinion of management, there is
no longer reasonable assurance of timely collectibility of principal or interest. Once a loan
is classified as impaired, all previously accrued interest is reversed and charged against
current income, except for loans which are fully secured.
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
NOTES TO
THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31,2005
1.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Loans are generally returned to accrual status when all delinquent principal and interest
payments are brought current and the timely collection of both principal and interest is
reasonably assured.
The business of the credit union necessitates the management of credit risk. Credit risk is the
potential for loss due to the failure of a borrower to meet its financial obligations. The Board
of Directors of the credit union oversees the risk management process. Senior management
coordinates policy setting on risk management issues, assesses the risk exposure of the credit
union and reviews the effectiveness of internal control processes.
ALLOWANCE FOR IMPAIRED LOANS
The allowance for impaired loans is maintained in an amount considered adequate to absorb
estimated credit related losses in the loan portfolio. The allowance for impaired loans reflects
management’s best estimate of the losses existing in the loan portfolio and their judgements
about current economic conditions. If the circumstances under which these estimates and
judgements were made change, there could be a significant change to the allowance for
impaired loans which consists of specific provisions and a general provision, each of which is
reviewed on a regular basis. The allowance is increased by provisions for impaired loans which
are charged to earnings and reduced by write-offs net of recoveries.
Specific provisions are determined on an item-by-item basis and reflect the associated
estimated credit loss. The specific provision is the amount that is required to reduce the
carrying value of an impaired loan to its estimated realizable amount, which is generally the
fair value of any security underlying the loan, net of expected costs of realization.
The general provision is established to absorb potential credit losses and is determined
through analysis of economic developments and current portfolio trends for credit losses and
cannot be determined on a loan by loan basis. When losses can be attributable to individual
loan facilities, specific provisions are recorded.
Write-offs are generally recorded after all reasonable restructuring or collection activities
have taken place and there is no realistic prospect of recovery.
TRANSLATION OF FOREIGN CURRENCIES
The monetary assets and liabilities of the credit union denominated in foreign currencies
are translated at the rates of exchange at the balance sheet date. Revenues and expenses are
translated at the average exchange rate prevailing during the year. Exchange gains or losses
are included in operations.
MEMBER SHARES
The credit union’s membership shares are presented in the balance sheet as financial liabilities
in accordance with recommendations of the Canadian Institute of Chartered Accountants.
These liabilities qualify as capital for regulatory purposes, notwithstanding their financial
statement classification.
11
ANNUAL REPORT 2005
NOTES TO
2.
THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED
CASH RESOURCES
Cash resources consists of cash on hand and member payroll deductions which have been
made but which have not yet been received. The credit union has available a line of credit of
$972,500 to cover a shortfall in cash resources due to unanticipated volume in clearings. This
line of credit bears interest at prime and is secured by a general security agreement and an
assignment of book debts. At December 31, 2005, the line of credit was not utilized.
The business of the credit union necessitates the management of liquidity risk. Liquidity risk
is the risk of being unable to meet financial commitments, under all circumstances, without
having to raise funds at unreasonable prices or sell assets on a forced basis.
DECEMBER 31,2005
3.
CURRENCY HELD IN THIRD-PARTY ABMS
The credit union entered into an agreement with a third-party service organization to provide
currency for ABMs (automated banking machines) owned by the third party. As compensation,
the credit union receives a fee calculated primarily by reference to the aggregate funding
provided and a prescribed interest rate. Repayments of the amounts placed into the ABMs
occur through the electronic clearing process and the credit union retains control over and
legal title to such funds until repayment is made. At the year ended December 31, 2005, the
currency in third-party ABMs was $4,850,000.
4.
INVESTMENTS
Bonds - government guaranteed
Bankers acceptances
Canada Treasury Bills
Investments in co-operatives
Carrying value
Market value
5.
$
$
$
2005
2,022,563
199,329
1,523,213
6,816
3,751,921
3,731,609
$
$
$
2004
2,095,917
109,529
6,816
2,212,262
2,211,682
LOANS TO MEMBERS
Mortgages
Personal
Less allowance for impaired loans (Note 6)
2005
$ 23,540,826
5,441,870
28,982,696
200,886
$ 28,781,810
2004
$ 23,740,795
5,863,872
29,604,667
164,151
$ 29,440,516
The loan classifications set out above are as defined in the Regulations to the Credit Unions
and Caisses Populaires Act, 1994.
Mortgage loans are repayable in monthly blended principal and interest instalments over a
maximum term of five years based on a maximum amortization period of twenty-five years.
Personal loans, including line of credit loans, are repayable to the credit union in monthly blended
principal and interest instalments over a maximum term of five years, except for line of credit
loans which are repayable on a revolving credit basis and require minimum monthly payments.
As at December 31, 2005, the credit union was committed to the issuance of mortgage
loans to members in the aggregate amount of $390,000 (2004 - $212,000).
As at December 31, 2005, the approved and unused line of credit limits amount to
$7,320,172 (2004 - $5,396,232).
13
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
NOTES TO
6.
THE FINANCIAL
ALLOWANCE FOR IMPAIRED LOANS
Balance at beginning of year
Loans written off
Loans recovered
STATEMENTS
FOR THE YEAR ENDED
$
Provision charged (credited) to operations
Balance at end of year
DECEMBER 31,2005
$
2005
164,151
(34,965)
2,695
131,881
69,005
200,886
$
$
2004
77,919
(4,468)
3,023
76,474
87,677
164,151
The allowance for impaired loans provided for in the accounts of the credit union is in
accordance, in all material respects, with the by-law of the Deposit Insurance Corporation
of Ontario governing such allowances.
Mortgages
Personal
$
$
7.
Allowance for impaired
loans balance
2005
2004
$
200,886
164,151
200,886
$
164,151
Aggregate impaired loans
$
$
2005
67,691
43,062
110,753
$
$
2004
150,549
45,447
195,996
CAPITAL ASSETS
Cost
Furniture and
equipment $
Leasehold
improvements
ATM equipment
$
1,688,517
263,690
438,776
2,390,983
2005
Net Book
Value
Accumulated
Amortization
$
1,384,365
$
141,167
438,776
1,964,308
$
304,152
$
122,523
426,675
2004
Net Book
Value
$
340,999
$
147,673
72,359
561,031
Amortization expense for the year amounted to $169,192 (2004 - $139,094).
8.
MEMBERS’ DEPOSITS
Personal chequing accounts
Savings accounts
Term deposits
Registered savings plans
Registered income funds
2005
5,066,696
7,985,356
12,428,078
10,416,405
1,754,077
$ 37,650,612
$
2004
3,694,558
7,775,151
10,785,014
11,073,900
1,926,109
$ 35,254,732
$
REGISTERED PLANS
Concentra Trust is the trustee of the registered plans offered to the members. Under an
agreement with the trust company, members’ contributions to these plans, as well as
income earned on them, are deposited in the credit union. On withdrawal, payment of the
plan proceeds is made to the members or their designates, by the credit union on behalf of
the trust company.
ANNUAL REPORT 2005
NOTES TO
8.
MEMBERS’ DEPOSITS (continued)
INDEX-LINKED DEPOSITS
The credit union has issued and outstanding $768,749 (2004 - $946,507) of an Index-Linked
Registered Savings Plan product to its members. These term deposits have maturities of 3 and
5 years and pay interest to the depositors, at the end of the respective terms, based on the
performance of the S&P / TSX 60 Index.
THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED
The credit union has entered into hedge agreements with Credit Union Central of Ontario
(CUCO) to offset the exposure to the S&P / TSX 60 Index associated with these products. The
credit union has paid CUCO an amount discounted over the term of the deposit to fully fund
the credit union’s liability to Central. At the end of the term of the deposit, Central pays to the
credit union an amount equal to the amount that will be paid to the depositors based on the
performance of the S&P / TSX 60 Index.
DECEMBER 31,2005
9.
OTHER LIABILITIES
Accounts payable and accrued charges
Accrued interest on members’ deposits
Certified cheques
Future income taxes
Income taxes payable
$
$
2005
97,949
326,967
7,438
17,000
33,275
482,629
$
$
2004
133,748
293,485
24,000
28,555
479,788
10. MEMBER SHARES
The credit union has 6,761 (2004 - 6,964) members. Each member must hold between 18 and
20 shares with a par value of $5 each. All members must acquire two shares per year until the
maximum of 20 shares is reached. Shares may be withdrawn on demand or withdrawal from
membership, subject to the credit union meeting capital adequacy requirements, and the
discretion of the directors who may require notice.
11. CAPITAL ADEQUACY
In accordance with the requirements of the Credit Unions and Caisses Populaires Act, 1994
and accompanying Regulations, credit unions are required to maintain sufficient capital to
meet two tests:
(a) Leverage test:
Regulatory capital, comprising membership shares, any other class of qualifying capital that
may be issued and retained earnings, must amount to at least 5% of total assets.
(b) Risk-weighted assets test:
Regulatory capital, comprising membership shares, any other class of qualifying capital that
may be issued and retained earnings, must amount to at least 8% of risk-weighted assets.
The risk weighting of assets is specified in the Regulations to the Act.
Regulatory capital at December 31:
(a) Leverage test ratio:
(b) Risk-weighted assets test ratio:
$
2005
2,880,074
7.02%
17.03%
$
2004
2,589,195
6.76%
15.04%
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
NOTES TO
THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31,2005
12 INCOME TAXES
The credit union’s basic statutory tax rate is approximately 19% on the first $300,000 of income
and approximately 28% on the balance. Any future income taxes included in other liabilities is
the cumulative amount of tax applicable to temporary differences between the carrying
amount of the assets and liabilities and their values for tax purposes.
13 COMMITMENTS
The credit union is committed to the following minimum annual payments for its leased
premises and ABM premises:
2006
2007
2008
2009
$
$
$
$
181,635
81,220
47,748
23,874
14. RELATED PARTY TRANSACTIONS
As at December 31, 2005, the aggregate value of interest bearing personal and mortgage
loans outstanding to directors, officers and their related parties totalled $341,685
(2004 - $297,373). There was no allowance for impaired loans required in respect of these
loans as at December 31, 2005.
The Regulations require the financial statements to disclose a general description of the
nature, number and aggregate value of Restricted Party transactions, as defined, and
the allowance for loan losses related to such transactions. Restricted Party has been defined
to include a person, and the person’s relative, spouse, or relative of the spouse, who has been
a director, officer or committee member in the preceding twelve months, and corporations in
which the person owns more than 10% of the voting shares.
15. CONTINGENCY
During the normal course of business, there are various claims and proceedings which have
been or may be instituted against the credit union. Management believes the disposition of
the matters that are pending or asserted is not expected to have a material adverse effect
on the financial position or the results of operation of the credit union.
16. ADDITIONAL DISCLOSURES REQUIRED BY THE ACT
The only remuneration paid to directors and committee members was for travel allowance
and expenses for attendance at meetings.
15
ANNUAL REPORT 2005
NOTES TO
THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31,2005
17. FINANCIAL INSTRUMENTS
Fair value
The fair values of cash resources, certain other assets and other liabilities are equivalent to
the respective book values given the short-term nature of the amounts. The fair value of
investments is disclosed in Note 4 to the financial statements. These are based on quoted
market prices, where available. The fair value of other financial assets and liabilities has not
been determined since it was not practicable within the constraints of timeliness and cost
to determine the fair value with sufficient reliability. A significant portion of the other financial
assets and financial liabilities have either variable rates or are due within one year, and their
fair values will approximate their book values. For items that mature beyond one year,
increases in market interest rates will result in the fair values of assets and liabilities both
decreasing; similarly, decreases in market interest rates will result in the fair values of assets
and liabilities both increasing. In management’s opinion, the difference between fair values
and book values of the other net financial assets and liabilities would not be significant.
INTEREST RATE RISK
Interest rate risk refers to the potential impact of changes in interest rates on the credit union’s
earnings when maturities of its financial liabilities are not matched with the maturities of its
financial assets. It is the policy of the credit union to keep exposure to interest rate fluctuations
within limits set by the Board of Directors and by the Act.
The table below summarizes amounts by maturity dates and effective interest rates for the
following financial instruments:
Variable
Rate
Cash resources
Investments
Loans to members
Total
Less than
one year
One to
five years
$ 7,686,994 $
- $
3,311,383
440,538
14,915,509
7,227,133
6,639,168
22,602,503
10,538,516
7,079,706
Non-rate
Sensitive
$ 21,559
21,559
Total
Effective
Interest
Rate
$ 7,708,553
3,751,921
28,781,810
40,242,284
3.77%
3.90%
5.61%
Members’deposits 14,049,732
16,204,803
7,088,847
307,230 37,650,612
Liabilities qualifying
as regulatory capital
626,671
626,671
Total
14,049,732
16,204,803
7,088,847
933,901 38,277,283
Matching gap
$ 8,552,771 $ (5,666,287) $ (9,141) $(912,342) $ 1,965,001
1.67%
0.00%
In the event of a 1% increase in interest rates, the expected net interest income would increase
by approximately $29,200 over the next 12 months.
17
ALL TRANS FINANCIAL SERVICES CREDIT UNION LIMITED
SCHEDULE OF
EXPENSES
FOR THE YEAR ENDED
DECEMBER 31, 2005
2005
Other administration expenses
ATM charges
Advertising and promotion
Amortization
Annual meeting
Bank and cash charges
Bonding
Business taxes
Collection costs
Consulting
Credit reports and applications
Data processing
Directors and committee meetings
Education
Equipment maintenance
Insurance
Mobile bank costs
Office supplies
Postage
Professional fees
RRSP management fees
Telephone
Travel
$
$
Remuneration to officers and staff
Employee benefits
Salaries to employees
$
$
Occupancy costs
Amortization
Building repairs and maintenance
Rent
$
$
2004
197,094
118,786
144,043
22,521
37,488
20,665
5,229
41,795
16,277
42,528
46,834
12,395
33,739
34,907
4,397
91,110
26,669
101,008
7,105
99,572
20,520
1,124,682
$
176,345
862,531
1,038,876
$
25,149
4,803
153,322
183,274
$
$
$
$
204,649
75,559
119,473
15,350
33,125
22,109
2,299
11,961
23,603
31,579
36,328
12,586
42,841
13,257
5,324
103,474
27,268
64,814
7,895
100,637
26,002
980,133
177,973
929,119
1,107,092
19,621
41,832
149,258
210,711
SERVICE LOCATIONS
ABM LOCATIONS
Administration Centre
ABMs
24 Hour Locations
ABMs
Subway Locations
Clarica Center
(2 ABMs, also Deposit taking)
100 – 3250 Bloor St. W.
East Tower, Concourse Level
Etobicoke, Ontario
Dundas
(Eaton Center)
707 – 3250 Bloor St. W.
Clarica Centre East Tower
Etobicoke, Ontario
M8X 2X9
Tel: 416.231.8400
Fax: 416.231.8296
E-Mail: [email protected]
Toll Free Line: 1.800.363.0578
Smartmouth Teller:
416.532.BANK
(416.532.2265)
Website:
www.alltrans.com
Financial Service
Pavilions
Clarica Centre
100 – 3250 Bloor St. W.
East Tower Concourse Level
Etobicoke, Ontario
M8X 2X9
Tel: 416.533.1090
Fax: 416.538.9655
London
450 Highbury Ave. N.
London, Ontario
N5W 5L2
Tel: 519.453.2480
Fax: 519.453.0556
O I Canada
(Restricted Access)
777 Kipling Ave.
Toronto, Ontario
Bay St.
(Toronto Bus Terminal)
610 Bay St.
Toronto, Ontario
ABMs
Regular Business Hours
Dufferin
Kennedy
(2 locations)
MOBILE MONEY
MANAGERS
Suzette Heber
Eastern GTA
Tel: 416.554.0726
E-Mail: [email protected]
Brenda Heaney
Western GTA
Tel: 416.220.7784
E-Mail: [email protected]
Kipling
Main
Queen’s Park
Spadina
St. Patrick
Union Station
TTC - Hillcrest Yard Division
(Limited Access)
Subway Operations Building
Toronto, Ontario
Warden
London Transit Commission
(Limited Access)
450 Highbury Ave. N.
London, Ontario
Wilson
Sheppard & Yonge
(Sheppard Line)
Victoria Park
Davisville
London Transit Commission
Downtown Ticket Office
150 Dundas St.
London, Ontario
OI Canada Kipling
(Restricted Access)
777 Kipling Ave.
Toronto, Ontario
M8Z 5Z4
Tel: 416.232.3389
TTC Hillcrest Yards
(Limited Access)
1138 Bathurst St.
Toronto, Ontario
Tel: 416.937.1708
Visit us at alltrans.com and check out our Web Banking Services.
Caroline Memmo
Central West GTA
Tel: 416.554.0728
E-Mail: [email protected]
David Shivgulam
Central East GTA
Tel: 416.220.7804
E-Mail: [email protected]