New Community Credit Union Loan Growth

Transcription

New Community Credit Union
2014 Annual Report
76th ANNUAL MEETING - 2015
NEW COMMUNITY CREDIT UNION
Wednesday, March 25, 2015
St. George’s Senior Citizens Centre
6:30 P.M. REGISTRATION
7:00 P.M. MEETING
MEETING AGENDA
1.
2.
3.
4.
5.
Call to Order
Adoption of Agenda
Moment of Silence – Deceased Members
Reading and Adoption of 75th Annual Meeting Minutes – April 15, 2014
Report’s
a) Board Chair
b) Secretary
c) Management Discussion and Analysis Report
d) Auditor’s Report
6. Discussion and Adoption of Reports
7. Board Election
8. Appointment of Auditor
9. New Business
10. Adjournment
76-ті Річні Загальні Збори
25-го березня 2015 року
Середа , 7 година вечора
Зал Сеньйорів Св.Юрія
1235-20-та Вулиця Захід
1. Відкриття зборів
2. Прийняття порядку денного
3.Вшанування пам’яті померлих членів нашої кредитної спілки хвилиною мовчання
4. Читання і прийняття протоколу 75-тих Річних загальгих зборів від 15-го квітня 2014 року
5. Звіти:
а) Президента
б) Секретаря
в) Головного Менеджера
г) Аудитора
6. Обговорення звітів та їх прийняття
7. Вибори членів дирекції
8. Призначення аудитора
9. Пропозиції та рекомендації
10. Закриття зборів
NEW COMMUNITY CREDIT UNION 75TH ANNUAL MEETING
April 15 2014 – 7:00 pm
St. George’s Senior’s Centre 1235 20th Street West
1.
2.
3.
4.
5.
6.
7.
Meeting was called to order by Board Chair Gordon Klimek.
- Morris Bodnar was nominated to chair the meeting by Julius Calyniuk seconded by Roman
Sywanyk.
- Colleen Brown agreed to take the minutes of the meeting.
Motion to adopt the agenda made by John Chrusch? Seconded by Yaroslaw Sywanyk.
Motion to accept the minutes of the 74th Annual Meeting held April 17th 2013 made by Angela
Wojcichowsky seconded by George Zerebesky.
Presentation of Reports:
A.)
Gordon Klimek presented the Chairman’s report.
B.)
Darren Doepker has now been in the position of General Manager for one year.
Congratulation on a job well done! Also discussed was the Credit Union growth and
profit challenge with regards to compliance. Congratulations to New Community Credit
Union on its 75th Anniversary.
C.)
Colleen Brown presented the Secretary’s report mentioning overall attendance for the 10
regular meetings was 65%. The Audit Committee and GM Selection Committee held two
meetings and the Conduct Review Committee held one meeting. Total remuneration
paid to the directors was $8450.
D.) Darren Doepker presented the General Manager’s Report. NCCU has a good loan
portfolio and at this time we have a 22% profit. There is a strong loan growth however
liquidity is concerning. Member growth is down however assets have grown 5%.
E.)
Alan of MNP presented the Auditor’s Report. Congratulated the credit union on another
successful year.
Motion to adopt the Auditors Report by Barry Slowski seconded by Julius Calyniuk.
Motion to adopt the Chair report by Jack Grover seconded by Julius Calyniuk.
Motion to adopt Secretary Report by Angela Wojcichowsky seconded by Roman
Sywanyk.
Motion to adopt GM Report by Colleen Brown seconded by Barry Slowski.
Election of Board Members:
1 Position was open. Motion made by Julius Calyniuk to nominate Roman Sywanyk for a 3 year
term. Seconded by George Zerebesky.
Motion by Barry Slowski seconded by Angela Wojcichowsky that we appoint MNP to be our
auditors for 2014
New Business
A.)
Token of Appreciation to Morris Bodnar for chairing this evenings meeting.
B.)
Thank you to Gordon Klimek – served 9 years on the NCCU Board of Directors.
C.)
Long Term Service Awards:
Bonita Ireland – 11 years
Cheryl Helmeczi – 15 years
Kathy Hrabowy – 25 years (all 25 years have been with NCCU)
2014 is a milestone as we recognize the forefathers. The original charter which can be seen at the
bank shows the 9 original board members.
8. Moment of silence for deceased members.
9. Other Business
A.)
Member Doug Wolfe voiced concern with the US exchange rate wondering why the
NCCU rate was 4% which was higher than the current market rate. Darren responded
that the exchange rate is dictated by Credit Union Central and it is within the power of
NCCU to determine the rate. Darren also mentioned that there is the USD account
available to members to avoid high percentage to change over to Canadian dollars.
B.)
Gord Klimek presented Darren Doepker with a long term service award – 25 years in the
Credit Union system of which 19 has been with NCCU.
C.)
Door Prizes
Colleen Brown, Alan of MNP, Morris Bodnar, John Chrusch, Gordon Klimek
D.) The 75th Anniversary of NCCU will be held August 30 2014 in the form of a Street Fair.
10. Morris Bodnar adjourned the meeting.
NEW COMMUNITY CREDIT UNION
INCORPORATED: January 26, 1939
CREDIT UNION CHARTER NO. 20
OFFICERS:
PRESIDENT – Cliff Arthurs
VICE-PRESIDENT – Julius Calyniuk
SECRETARY – Colleen Brown
DIRECTORS
Name
Cliff Arthurs – President
Julius Calyniuk - Vice-President
Colleen Brown - Secretary
Delva Rebin
Barry Slowski
Laura Hosaluk
George Zerebecky
Angela Wojcichowsky
Roman Sywanyk
Occupation
Years of Service
Retired
5
Entrepreneur
8
Entrepreneur
4
Retired
4
Chief Financial Officer
4
Artist
3
Retired
3
Director International Projects
2
Claims Investigator
1
STAFF
Name
Darren Doepker
Cheryl Helmeczi
Kathy Hrabowy
Bonita Ireland
Summer Allen
Robert Hoesgen
Tamara Buckingham
Liuba Grynkiv-Stokalko
Stephanie Armitt
Lina Calabrese
Vita Demiashova
Erika Zufka
Position
Years of Service
General Manager
26
Office Supervisor
16
Business Development Officer
26
Member Account Manager
12
Member Account Manager
8
Investment Advisor
5
Support Analyst/Compliance Officer
3
Part time Member Service Rep
10
Member Service Rep
2
Member Service Rep
1
Member Service Rep
1
HR Officer
1
Vision
To be the premier provider of personalized financial services
to a growing and diverse membership.
Mission
By providing financial solutions
and advice we develop meaningful lifelong relationships.
Our professional and knowledgeable people
provide a positive customer experience because they care.
By building on our roots we are able to create prosperity
for our members, employees, and community.
Values
Co-operation and Accountability
We are committed to working towards providing our members with the highest quality service.
Our strength and development is enhanced by acting co-operatively as a system. We take into
account the effect of our actions on each other.
Service and Product Excellence
We strive for the highest quality service in the financial community. We provide all credit union
members with friendly, knowledgeable and helpful service. Our continuous innovations ensure
members receive added value. We provide access to a broad range of financial products tailored to meet
or exceed member needs.
Communication
We communicate in an open, effective and timely manner.
Employee Satisfaction
We respect our employees and their contributions to our success. We encourage employee
involvement and participation. We recognize and reward them for their creativity, team work
and achieving objectives. We support their development by providing training and educational
opportunities. We respect their need to balance personal and professional lives.
Community Impact
We actively support the development of our communities locally, provincially and beyond. Our
communities are stronger because of our credit union.
Financial Performance
Our strong financial performance allows us to fulfill our co-operative principles. We balance our
need for financial results with the needs of our members and communities. We earn the confidence of our
members and ensure our continued growth and development by providing an
unlimited guarantee on member deposits and adhering to sound business practices.
Professional Conduct
Member’s financial affairs are conducted with integrity and in a professional manner. Our ethical
principles are rooted in the concern for the individual. Confidentiality is integral to the way we do
business.
Co-operative Principles
As a true co-operative financial institution, New Community Credit Union (NCCU) acts in accordance with
internationally recognized principles of co-operation:
Voluntary and Open Membership
Co-operatives are voluntary organizations, open to all persons able to use their services and
willing to accept the responsibilities of membership, without gender, social, racial, political or
religious discrimination.
Democratic Member Control
Co-operatives are democratic organizations controlled by their members, who actively participate in
setting their policies and making decisions. Men and women serving as elected representatives are
accountable to the membership. In primary co-operatives members have equal voting rights (one
member, one vote) and co-operatives at other levels are also organized in a democratic manner.
Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their co-operative. At
least part of that capital is usually the common property of the co-operative. Members usually
receive limited compensation, if any, on capital subscribed as a condition of membership.
Members allocate surpluses for any or all of the following purposes: developing their cooperative, possibly
by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to
their transactions with the co-operative; and supporting other activities approved by the membership.
Autonomy and Independence
Co-operatives are autonomous, self-help organizations controlled by their members. If they enter
agreements with other organizations, including governments, or raise capital from external sources, they
do so on terms that ensure democratic control by their members and maintain their co-operative
autonomy.
Education, Training and Information
Co-operatives provide education and training for their members, elected representatives,
managers, and employees so they can contribute effectively to the development of their
cooperatives.They inform the general public - particularly young people and opinion leaders - about the
nature and benefits of co-operation.
Co-operation among Co-operatives
Co-operatives serve their members most effectively and strengthen the co-operative movement
by working together through local, national, regional and international structures.
Concern for Community
Co-operatives work for the sustainable development of their communities through policies
approved by their members.
Credit Union Market Code
NCCU voluntarily adheres to the Credit Union Market Code. This code has been jointly developed by
Saskatchewan credit unions, SaskCentral and Credit Union Deposit Guarantee to ensure the protection of
credit union members. The code sets forth guidelines for the following areas:
o
o
o
o
o
o
o
o
o
o
o
Complaint handling, which outlines the process for dealing with all complaints regarding
the service, products, fees or charges of NCCU.
Fair sales by outlining the roles and relationship of staff to all members and in
accordance with the financial services agreement.
Financial planning process to advise members on the risks and benefits associated with
financial planning services.
Privacy to protect the interests of those who do business with NCCU. Privacy is the practice to
ensure all member information is kept confidential and
used only for the purpose for which it was gathered.
Professional standards to preserve a positive image of NCCU
among our members and communities.
Capital management to ensure our capital structure aligns with our risk philosophy.
Financial reporting to adhere to business and industry standards.
Governance practices to adhere to the intent and stipulation of our corporate bylaws,
which are approved by the membership of NCCU.
Whistleblower policy which provides individuals a mechanism or channel by which they
can report incidents of actual or potentially improper or unethical conduct, without fear
of reprisal or unwarranted negative consequences.
A Social Media policy which is intended to offer practical guidance for responsible social
media use an interaction by employees or management.
Risk management to ensure all risks are measured and managed in an acceptable fashion
Chairperson’s Report
On behalf of our Board of Directors, I am pleased to present the New Community Credit Union 2014
Annual Financial Report.
Our credit union enjoyed another successful year with growth in assets and increase in net revenue.
During the past year, we have had some staff changes and I wish to welcome the new staff members.
Darren Doepker, our General Manager is dedicated and working hard towards maintaining the growth and
stability of our credit union.
The number of credit unions in our province has declined again this year and the mergers are expected to
continue. Although we continue to grow and be profitable, we must be mindful of the future. The main
challenges for our credit union are the compliance requirements set by our regulators.
Congratulations to the New Community Credit Union for 76 years of excellent service to our members and
community.
I am honoured to have served on the Board of New Community Credit Union, both as a member of the
Board and Chairman this past year.
In closing, on behalf of our Board of Directors, management and staff of our credit union, we extend our
sincere thanks to our members for their continued loyalty and patronage. Our sincere gratitude to our
management and staff in providing excellent member service assuring our success into the future.
Cliff Arthurs
Chairperson of the Board
Management Discussion & Analysis
Introduction
NCCU is an independent member owned Saskatchewan credit
union. Current credit union legislation enables NCCU to provide financial services to members and nonmembers. As of December 31, 2014 NCCU had 2222 members, which grew considerably from the 2134
members in 2013. All members hold two $5 shares, allowing them to participate in the democratic
process. NCCU has held its office in Riversdale our entire 76 year history, predominately providing services
to Saskatoon and bordering communities. Service channels are in-branch, the ATM network, CU Connect,
internet banking and some mobile banking.
Strategy
NCCU is “To be the premier provider of
personalized financial services to a growing and diverse membership”. A strategic
Initiative has always been to provide our members with an elite level of service.
After the previous year’s retirements resulted in considerable disruption at the senior level, our key
personnel stabilized nicely in 2014. We did see increased movement in other positions which has resulted
in a number of new faces again this past year. NCCU remains committed to providing a premier level of
personal service and really need to commend our existing staff for continuing to embrace this memberfirst philosophy. Being mindful of our organizational expenses and remaining focused on the diverse
needs of our membership, while maintaining relevance in the highly competitive and scrutinized financial
services industry, is a daily challenge. However, NCCU is committed to long term sustainability.
Success and sustainability both continue to have an ever-evolving definition. Escalating attention on
Capital Adequacy and managing risks result in continued pressure to manage growth, while remaining
profitable and growing Retained Earnings. NCCU is pleased to report a strong financial performance again
in 2014 with good profitability. This success is certainly a byproduct of a strong Saskatchewan and
Saskatoon Market, but would not be possible without the continued patronage of our loyal membership.
Results
Financial Performance
This should provide a summary of the NCCU - Financial Statements found later in this report.
In 2014 we saw an increase in Balance Sheet Assets of 1.06%. to $75.7M
New Community Credit Union Asset
Growth
$80,000,000
$60,000,000
Dollars $40,000,000
Assets
$20,000,000
$0
20042005200620072008200920102011201220132014
NCCU had a challenging year retaining deposits. As a result we report a nominal growth of
< than 1%.
Loan and Deposit Growth
80,000,000
60,000,000
Loan
Dollars 40,000,000
Deposits
20,000,000
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
At the end of 2014 loans made-up just over 80% of our Assets. Difficulties in retaining deposits and
continuing our historically strong loan demand made for challenging times, balancing Deposits with Loans.
As a result NCCU continued to rely heavily on strategic partners to fund excess loan demand. We closed
the year administering just under $21M in mortgages for these partners. The net result was a marginal
increase of 1.85% in balance sheet loans, but a total loan portfolio increase of 4.58%. Our total loan
portfolio stands at $81.6M
New Community Credit Union Loan
Growth
60,000,000
Dollars
40,000,000
Loans
20,000,000
0
20042005200620072008200920102011201220132014
NCCU’s Balance Sheet loan portfolio consisted of the following breakdown at year end:
Loan Categories
Commercial 6%
Mortgages 78%
Consumer 13%
Line of Credit 3%
**Credit Risk
Although our loan portfolio is heavily weighted in Residential Mortgages, providing a very safe
Investment for NCCU, it has resulted in a continued strain on our Interest Margin. Since interest is the
primary source of revenue, as well as the single largest expenditure, it is critical to find the best balance
of risk and reward. The primary risk for a financial institution is its loan portfolio. NCCU continues to
have excellent results in this area, with nominal write-offs. It is worth noting only $5,000 of the reported
2014 write-off was a single bad loan. The remaining $9,000 was a result of Card Skimming. NCCU’s loan
delinquency greater 90 days increased to $598,571 at year-end. This consisted of 3 accounts all secured
by mortgages. We are confident our loan portfolio remains low risk.
New Community Credit Union Writeoffs
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
Writeoffs
$10,000
$5,000
$0
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
($5,000)
**Liquidity Risk
Liquidity is the capacity to generate or obtain sufficient cash in a timely manner at a reasonable
price to meet commitments as they become due. High-quality liquid assets can be easily and
immediately converted into cash at little or no loss of value.
Saskatchewan credit unions are required to maintain 10% of their deposits with SaskCentral.
These statutory deposits support clearing and settlement within the national credit union system and are
administered by SaskCentral.
Operating liquidity is defined as available liquidity as a percentage of potential liquidity outflows.
NCCU’s ongoing strength in loan demand continues to place a strain on Liquidity. We have been
managing this risk for the past number of years, almost exclusively with strategic funding partnerships
with other Saskatchewan CU’s. We ended the year at an excess liquidity position: $4.3M.
Capital and Profitability Management
We are very pleased to report another successful year with net profit of $460,721. This represents a
35.79% year-over-year increase. Good profitability results in a strong and healthy equity position.
Increased regulatory requirements continue to place pressure on building reserves; as a result, the Board
made the decision to move 100% of this year’s profit into Retained Earnings. Equity is the difference
between assets and liabilities which is the measure of ownership. Equity can be measured both as a
percentage of assets or as a dollar amount. We completed the 2014 year with $5,423,656.
Equity or Capital is the financial strength of a credit union. The level of capital held protects against
anticipated and unexpected events. Credit Union Deposit Guarantee Corporation sets standards for the
Credit Unions to follow. Although CUDGC set’s minimum standards, they consider it prudent to maintain
Capital levels which exceed regulatory minimums. One ratio measured is the Leverage Ratio. NCCU has a
leverage ratio of 6.92%. This exceeds the 5.0% regulatory minimum, falling short of our target of 7.5%.
Throughout the credit union system we are becoming very familiar with the phrase “Capital is King”.
Change in Equity Position
6,000,000
4,000,000
Dollars
Equity
2,000,000
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Productivity is an area of operations we continue to focus considerable attention on. With increased costs
and continued pressure on interest rate margin we look for ways to become more efficient. Efficiency
ratio is another measure often used in the financial services industry. Although we are pleased with our
profitability, to remain competitive we will continue to assess this ratio. Effectively, Efficiency Ratio is the
amount you need to spend in order to make $1 - the lower the ratio the better. We are extremely proud
of the fact we were able to lower this ratio by 7.58%, to 72.40%. This brings us in below the system
average and very near our Peers who sit at 71.60%.
Income & Expenses
$2,000,000
$1,500,000
Interest Margin
$1,000,000
Non Interest Revenue
Non Interest Expenses
$500,000
$0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
The following will show our productivity compared to our Peer Group and the provincial average.
PRODUCTIVITY
Assets/Staff
- with Assets under Admin
Deposits/Staff
- with Assets under Admin
Loans/Staff
- with Loans under Admin
Membership/Staff
Personnel
New Community
$6,874,671
$10,063,636
$6,291,977
$8,112,151
$5,518,606
$7,420,970
202
$69,809
Peer Group
Provincial
$5,754,659
$4,901,075
$4,483,171
$4,552,080
163
$80,002
166
$81,895
$6,304,695
$5,669,386
NCCU’s Peer Group is Credit Unions in Saskatchewan, categorized as similar in size. This range is cu’s with
$60M - $160M in assets. There are 20 out of 51 in our Peer Group.
Summary
With a 35.79% increase in net income NCCU has maintained good profitability. A 6.85% increase in noninterest revenue and two SaskCentral dividend payments played a role in profitability. Continuing to look
for additional revenue streams will be important moving forward. Board and management are committed
to sound financial management. Part of this will be to pay close attention to balancing capital levels and
maintaining growth at or near 5%. With escalating attention on capital, NCCU will continue to focus on
building reserves for the foreseeable future.
As a financial institution, the credit union is essentially in the business of taking on and managing risk on
a number of fronts. The Board of Directors and Executive Management are committed to balancing and
managing the various risks of the organization to ensure strength and stability well into the future.
Although we continue to see staff turnover, we feel we have the expertise combined with the financial
industry experience to position NCCU for the future. Management works closely with the credit union’s
Board of Directors to establish policies and procedures to effectively manage the various risks that the
organization is exposed to. The Financial Services Industry is highly scrutinized and regulated. Regular
audits; both internal and external, combined with ongoing monitoring performed by the Credit Union
Deposit Guarantee Corporation (CUDGC) provides support to the risk management function of the credit
union. Risk is managed on a regular basis with monthly meetings and regular and detailed reporting
presented to the NCCU’s Board of Directors.
Enterprise Risk Management
Each year our credit union spends significant resources measuring and assessing risks to ensure we are
adequately prepared to serve our community now and in the future. This process is called Enterprise
Risk Management (ERM) and is a requirement of credit unions in Saskatchewan as laid out by Credit
Union Deposit Guarantee Corporation. In 2014 NCCU contracted SaskCentral to complete an extensive
review of our ERM, ICAAP & perform a 5 Year Capital Plan. Through this process, the following risks
along with Credit Risk and Liquidity Risk previously listed in the financial performance section have
been identified - risks according to their potential impact on NCCU. The result of this process is a strategy
that we continue to maintain and build capital.
Strategic Risk
Strategic risk is the risk that adverse decisions, ineffective or inappropriate business plans, failure to
respond to changes in the competitive environment, customer preferences, product obsolescence, or
resource allocation will impact our ability to meet our objectives. This risk is a function of the compatibility
of an organization’s strategic goals, the business strategies developed to achieve these goals, the
resources deployed against these goals, and the quality of implementation. Strategic risks identified by
NCCU in its ERM continue to include:
resulting from difficulty or inability to implement appropriate strategies
or policies required to address problems or challenges.
Market Risk
Market risk is the exposure to potential loss from changes in market prices or rates. Losses can occur
when values of assets and liabilities or revenues are adversely affected by changes in market conditions,
such as interest rate or foreign exchange movement.
Legal and Regulatory Risk
Legal and regulatory risk is the risk arising from potential violation of, or nonconformance with, laws,
rules, regulations, prescribed practices, or ethical standards.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and
systems, or external events. Exposures to this risk arise from deficiencies in internal controls, technology
failures, human error, employee integrity, or natural disasters.
Credit Risks
Credit risk is the risk of loss arising from a borrower or counterpart’s inability to meet its obligations.
Sources of credit risks include direct lending activities, discussed earlier in this report, and holding of
investment securities.
Liquidity Risk
Liquidity risk is the potential inability to meet obligations, such as liability maturities, deposit withdrawals,
or funding loans without incurring unacceptable losses. Liquidity risk includes the inability to manage
unplanned decreases or changes in funding sources.
Reputational Risk
A negative event occurs that causes the public to lose confidence in financial institutions, Credit Union
Central(s), the credit unions system in general, or more specifically with NCCU.
Regulatory
Regulatory matters are an ongoing concern of NCCU. A number of the more active include; The Registrar
of Credit Unions, The Credit Union Deposit Guarantee Corporation (CUDGC), Office of the Superintendent
of Financial Institutions (OFSI), Financial Transactions & Reports Analysis Center of Canada (FINTRAC),
Canada Revenue Agency (CRA), and Mutual Fund Dealers association(MFDA). The governance of NCCU is
anchored in the co-operative principles of democratic member control.
Board of Directors
Mandate and Responsibilities
The board is responsible for the strategic oversight, business direction and supervision of management, of
NCCU. Acting in the best interests of the credit union and its members, the board’s actions adhere to the
standards set out in The Credit Union Act 1998, the Standards of Sound Business Practice, and other
applicable legislation.
Board Composition
The board composition is 9 individuals, regularly elected to hold 3 year terms. Nominations are made and
if voting is required it is done by paper, with election results announced at the annual general meeting.
Directors whom terms expire in 2015 include Angela Wojcichowsky, George Zerebecky and Laura Hosaluk.
Angela and George have both agreed to allow their names to stand for another 3 year term. Although,
available, Laura has decided to remove herself from re-election. Our Board Chair- Cliff Arthurs has held
the position of Delegate to SaskCentral, for NCCU where he met with other credit union delegates.
Board Compensation/Attendance/Training & Evaluation
NCCU is fortunate to have competent guidance through the dedicated Management and Board of
Directors. As in past years, the Board of Directors were busy with regular and committee meetings
throughout the year (11 regular meetings were held). Directors had an 81% attendance rate and
received a per diem for meetings attended. Out of pocket expenses such as mileage and meal costs are
also reimbursed. To assess their performance the board performs an annual self-assessment.
Board Committees
The Board of Directors organizes itself into several committees to ensure that oversight of various aspects
of our operations and governance can be dealt with most effectively. The committees of the board are as
follows:
 Executive Committee: acts on behalf of the board of directors between regular or special board
meetings on all board matters except those which the board may not, in compliance with legislative
requirements, delegate. The 2014 members of the committee were: Cliff Arthurs President, Julius
Calyniuk - Vice-President, Colleen Brown – Secretary The executive committee is elected annually at
the re-organization meeting.
 Audit & Risk Committee: oversees risk management and ensures the integrity of financial reporting,
adequacy of internal controls and adherence to relevant legislation, regulations and standards. 2014
members of this committee were: Barry Slowski – Chair, Colleen Brown, Roman Sywanyk & Cliff
Arthurs.
The Audit & Risk committee is appointed annually at the re-organization meeting.
 Conduct Review Committee: ensures related party transactions comply with legislation, standards
of sound business practice as well as credit union policies and procedures. This committee also holds
the dual role of Credit Committee, tasked with the review and/or approval of all the General
Managers Credit requests. 2014 members of this committee are: George Zerebecky, Delva Rebin,
Angela Wojcichowsky & Clifff Arthurs. The conduct review committee is appointed annually at the reorganization meeting.
 Nominating Committee: oversees the nomination and election processes for the Elections of credit
union directors. In 2014 members were appointed as per required by the board of directors.
 Policy Review Committee: put in place to review and recommend policy change to the Board. The
2014 members of this committee are: Laura Hosaluk, Angela Wojcichowsky, and management & staff
representation.
 75th Anniversary Committee: put in place to oversee NCCU’s 75th Anniversary Celebrations in 2015.
Members of this committee were: Delva Rebin, Julius Calyniuk, and NCCU’s internal Marketing
Committee - consisting of Kathy Hrabowy, Summer Allen, and Tamara Buckingham.
Corporate Social Responsibility (CSR)
NCCU has always contributed to the well-being of the community. Companies are continually finding ways
to be strong and productive corporate citizens. NCCU is proud to take steps necessary to have a positive
impact on our community, providing a consistent image of a respected corporate citizen. NCCU has
undertaken a number of initiatives during the year in support of the community, charitable or servicebased organizations, as well as provided financial support. NCCU promotes environmental standards by
means of programs such as paper recycling, react promotion, reduced printing, electronic statement
promotion, etc. NCCU Human Resource policies focus on the well-being of employees such as the
development of a safe and respectful workplace. Volunteer hours & activities conducted during work
hours are supported by NCCU. Time off in-lieu of volunteer hours is also provided.
Capital Management
NCCU’s Board and Management recognize a need to sustain the credit union’s capital position in order to
continue to meet regulatory and sound operational requirements. Adequate capital enables the credit
union to sustain its liquidity requirements, to safely fund development initiatives, and provide leverage to
effectively manage performance standards. NCCU’s objective is to hold the optimal amount of regulatory
capital. Holding an inadequate amount of capital threatens the ability of the credit union to meet its
obligations, or restricts its ability to grow. Holding an abundance of capital will unnecessarily reduce the
return on capital. NCCU’s Capital Plan is related to its service delivery strategies and risk philosophy. The
credit union has traditionally held a moderate to low appetite for risk in the loan and investment portfolio.
This has been a valuable strategy in the past.
The Credit Union Deposit Guarantee Corporation has set minimum standards for credit unions, regarding
capital levels. The Standards of Sound Business Practice Capital Adequacy Requirements (July 1, 2013)
are as follows:
Regulatory Limits (as a % of risk-weighted assets)
Common Equity
Tier 1
Minimum
4.5%
Conservation Buffer
(effective January 1, 2016)
Minimum plus conservation buffer
(effective January 1, 2016)
Total
Tier 1
Total Eligible
Capital
6.0%
8.0%
2.5%
2.5%
2.5%
7.0%
8.5%
10.5%
The above stated limits are regulatory minimums. CUDGC does not consider it prudent for credit unions to
rely solely on compliance with regulatory minimums when assessing its capital adequacy. CUDGC expects
credit unions to maintain capital levels above regulatory minimum standards, at levels appropriate for
their individual risk appetite and risk profile. CUDGC’s s expectation of credit unions is to establish capital
limits that:
o
o
o
o
support prudent operations
are appropriate for the credit union’s risk profile, risk appetite and risk tolerance
are aligned with the credit union’s stress testing program and ICAAP; and
are stricter than regulatory minimums
For NCCU the 1st two ratios are very similar. The minimum standard for Total Tier 1 Capital is
6% and will move to 8.5% in the year 2016. Our Tier 1 capital ratio for the year ending
December 31, 2014 was 14.36%. Like size credit unions had a ratio of 12.01% and the aggregate
credit union system held 11.52%.
As at December 31, 2014 NCCU had a Total Eligible Capital Ratio of 14.44%. Like size credit
unions had a ratio of 12.79% and the aggregate credit union system held 12.69%.
Finally the Leverage ratio has a minimum standard of 5% set by CUDGC. We presently have a
Leverage Ratio of 6.92%. Like size credit unions had a leverage ratio of 7.79% and the aggregate
credit union system held 7.69%. NCCU is working to meet our target of 7.5%.
Compared to the system and CUDGC standards our capital places us in a good position. NCCU’s strategy is
to manage its balance sheet growth and capital levels. NCCU currently meets ICAAP capital levels.
Management and the Board will need to stay on top of strategies to maintain sufficient profitability to
ensure we remain above capital limits that will come into effect in 2016.
In concluding, Capital management can be very complex and includes 6 areas. These areas are:
►
Board and Management oversight
- Policies are developed
- i.e. desired capital levels, risk tolerance, capital expenditures
►
Sound capital assessment and planning
- Capital Plans are developed by management and board and reviewed ongoing
►
Comprehensive assessment of risks
- Risks to capital are assessed through processes such as Enterprise Risk management
(ERM)
- i.e. where is the largest concentration of risk to capital (credit/loans)
►
Stress Testing
- On a quarterly basis capital levels are tested for possible erosion
- Stress testing programs are used to test the ability of the credit union to absorb losses
- i.e. How would rising interest rates effect our capital level
►
Monitoring and Reporting
- Regular reports are prepared for the directors and CUDGC.
►
Internal Control Review
- Ongoing internal controls and functions along with scheduled internal audits and CUDGC reviews
CREDIT UNION DEPOSIT GUARANTEE CORPORATION
ANNUAL REPORT MESSAGE 2014
January 2015
Deposits Fully Guaranteed
Credit Union Deposit Guarantee Corporation is the primary regulator for Saskatchewan credit unions.
The Corporation is given its mandate through provincial legislation, The Credit Union Act, 1998, for
the main purpose of guaranteeing the full repayment of deposits held in Saskatchewan credit unions.
The Corporation has successfully guaranteed the repayment of deposits held in Saskatchewan credit
unions for over 60 years. By guaranteeing deposits and promoting responsible governance, the
Corporation contributes to confidence in Saskatchewan credit unions.
The Corporation will continue research and development to respond to regulatory changes at the
international and federal levels such as those for liquidity and capital requirements, and accounting
standards changes. We will engage with stakeholders and inter-jurisdictional regulators to promote
and advocate for common approaches to liquidity in support of a strong and stable provincial credit
union system.
In 2014 the Corporation completed a multi-year project to revise its supervisory framework. The
revised framework aligns with industry best practices and regulatory expectations, including
methodology to assess a credit union’s risks, risk management practices and corporate governance.
In 2015 credit unions will see the Supervisory Framework implemented along with re-designed tools
that correspond with the revised framework and methodology.
The Corporation acknowledges that Saskatchewan credit unions have a long history of holding
themselves to high standards, and have demonstrated their willingness to adopt credible,
industry- based standards. This helps to ensure Saskatchewan credit unions can successfully meet
the challenges of a rapidly changing financial services industry and increasing regulatory
requirements.
For more information about deposit protection, the Corporation’s regulatory responsibilities and its
role in promoting the strength and stability of Saskatchewan credit unions, talk to a representative
at the credit union or visit the Corporation’s web site at www.cudgc.sk.ca.
Financial Statements
December 31, 2014
Contents
For the year ended December 31, 2014
Page
Management's Responsibility
Auditors' Report
Financial Statements
Statement of Financial Position ........................................................................................................................... 1
Statement of Comprehensive Income ................................................................................................................... 2
Statement of Changes in Members’ Equity ............................................................................................................ 3
Statement of Cash Flows ................................................................................................................................... 4
Notes to the Financial Statements ........................................................................................................................ 5
Management's Responsibility
To the Members of New Community Credit Union:
Management is responsible for the preparation and presentation of the accompanying financial statements, including responsibility for
significant accounting judgments and estimates in accordance with International Financial Reporting Standards and ensuring that all
information in the annual report is consistent with the statements. This responsibility includes selecting appropriate accounting principles
and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.
In discharging its responsibilities for the integrity and fairness of the financial statements, management designs and maintains the
necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are
safeguarded and financial records are properly maintained to provide reliable information for the preparation of financial statements.
The Board of Directors and Audit Committee are composed entirely of Directors who are neither management nor employees of the
Credit Union. The Board is responsible for overseeing management in the performance of its financial reporting responsibilities, and for
approving the financial information included in the annual report. The Audit Committee has the responsibility of meeting with
management, internal auditors, and external auditors to discuss the internal controls over the financial reporting process, auditing matters
and financial reporting issues. The Committee is also responsible for recommending the appointment of the Credit Union's external
auditors.
MNP LLP is appointed by the members to audit the financial statements and report directly to them; their report follows. The external
auditors have full and free access to, and meet periodically and separately with, both the Committee and management to discuss their
audit findings.
February 26, 2015
Independent Auditors’ Report
To the Members of New Community Credit Union:
We have audited the accompanying financial statements of New Community Credit Union, which comprise the statement of financial
position as at December 31, 2014, and the statements of comprehensive income, changes in members' equity and cash flows for the
year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International
Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
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 comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of New Community Credit Union as at
December 31, 2014 and its financial performance and its cash flows for the year then ended in accordance with International Financial
Reporting Standards.
Saskatoon, Saskatchewan
February 26, 2015
Statement of Financial Position
As at December 31, 2014
2014
2013
Assets
Cash and cash equivalents (Note 5)
Investments (Note 6)
Member loans receivable (Note 7)
Other assets (Note 8)
Property, plant and equipment (Note 9)
13,000,037
1,552,216
60,684,221
112,672
309,649
14,261,363
545,526
59,579,802
75,653
402,784
75,658,795
74,865,128
69,732,376
475,368
27,395
69,191,291
682,737
28,165
70,235,139
69,902,193
5,423,656
4,962,935
75,658,795
74,865,128
Liabilities
Member deposits (Note 11)
Other liabilities (Note 13)
Membership shares (Note 14)
Commitment (Note 19)
Members' equity
Retained earnings
Approved on behalf of the Board
The accompanying notes are an integral part of these financial statements
1
Statement of Comprehensive Income
2014
Interest income
Member loans
Investments
2013
2,521,312
152,115
2,424,050
179,056
2,673,427
2,603,106
1,151,610
1,783
1,197,567
2,475
1,153,393
1,200,042
1,520,034
514,260
1,403,064
481,310
2,034,294
1,884,374
732,991
73,121
43,349
97,380
525,914
723,870
71,251
46,806
95,160
557,020
1,472,755
1,494,107
Income before provision for impaired loans and provision for (recovery of)
income taxes
Provision for impaired loans
561,539
14,136
390,267
80
Income before provision for (recovery of) income taxes
547,403
390,187
Interest expense
Member deposits
Borrowed money
Gross financial margin
Other income
Operating Expenses
Personnel
Security
Organizational
Occupancy
General business
Provision for (recovery of) income taxes (Note 12)
Current
Deferred
Comprehensive income
2
94,778
(8,096)
57,460
(6,565)
86,682
50,895
460,721
339,292
Statement of Changes in Members’ Equity
Retained
earnings
Total equity
Balance January 1, 2013
4,623,643
339,292
4,623,643
Balance December 31, 2013
4,962,935
460,721
4,962,935
Balance December 31, 2014
5,423,656
5,423,656
3
339,292
460,721
Statement of Cash Flows
Cash provided by (used for) the following activities
Operating activities
Interest received from member loans
Interest received from investments
Other income
Cash paid to suppliers and employees
Interest paid on deposits
Interest paid to SaskCentral/Concentra Financial
Income taxes paid
Financing activities
Net change in member deposits
Net change in membership shares (Note 14)
Investing activities
Purchases of investments
Disposal of investments
Net change in member loans receivable
Purchases of property, plant and equipment (Note 9)
2014
2013
2,491,090
145,425
514,260
(1,605,146)
(1,200,332)
(1,783)
(72,360)
2,446,706
189,017
481,310
(872,372)
(1,274,504)
(2,475)
(58,772)
271,154
908,910
569,730
(770)
3,071,788
(227,998)
568,960
2,843,790
(1,000,000)
(1,088,335)
(13,105)
3,000,000
(2,826,654)
(25,373)
(2,101,440)
147,973
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
(1,261,326)
14,261,363
3,900,673
10,360,690
Cash and cash equivalents, end of year
13,000,037
14,261,363
4
Notes to the Financial Statements
1.
Reporting entity
New Community Credit Union (the “Credit Union”) was formed pursuant to the Credit Union Act 1998 of Saskatchewan
(“the Act”) and operates one Credit Union branch.
The Credit Union serves members and non-members in Saskatoon, Saskatchewan and the surrounding community. The
address of the Credit Union’s registered office is 321 - 20th Street West, Saskatoon, Saskatchewan.
The Credit Union operates principally in personal and commercial banking in Saskatoon, Saskatchewan.
The Credit Union conducts its principal operations through one branch, offering products and services including deposit
business, individual lending, and independent business and commercial lending. The deposit business provides a wide
range of deposit and investment products and sundry financial services to all members. The lending business provides a
variety of credit products and services designed specifically for each particular group of borrowers. Other business
comprises business of a corporate nature such as investment, risk management, asset liability management, treasury
operations and revenue and expenses not expressly attributed to the business units.
Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”)
and interpretations adopted by the International Accounting Standards Board (“IASB”).
The financial statements were approved by the Board of Directors and authorized for issue on February 26, 2015.
2.
Change in accounting policies
Standards and Interpretations effective in the current period
The accounting policies adopted are consistent with those of the previous financial year except as follows:
IAS 32 Financial instruments: presentation
The amendments to IAS 32, issued in December 2011, clarify the meaning of the offsetting criterion "currently has a legally
enforceable right to set off" and the principle behind net settlement, including identifying when some gross settlement
systems may be considered equivalent to net settlement. These amendments had no impact on the Credit Union's financial
results or disclosures.
IAS 36 Impairment of assets
The amendments to IAS 36, issued in May 2013, require:
•
•
Disclosure of the recoverable amount of impaired assets; and
Additional disclosures about the measurement of the recoverable amount when the recoverable amount is based
on fair value less costs of disposal, including the discount rate when a present value technique is used to measure
the recoverable amount.
The amendments to IAS 36 did not have an impact on the measurement of the Credit Union’s assets and liabilities but has
resulted in additional disclosures where appropriate.
IFRIC 21 Levies
In May 2013, the IASB issued IFRIC 21, incorporated into Part I of the CPA Canada Handbook – Accounting by the
Accounting Standards Board ("AcSB") in September 2013, which provides guidance on the accounting for levies within the
scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
The main features of IFRIC 21 are as follows:
•
The obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy,
as identified by the legislation; and
•
The liability to pay a levy is recognized progressively if the obligating event occurs over a period of time.
These amendments had no impact on the Credit Union's financial results or disclosures.
5
3.
Basis of preparation
Basis of measurement
The financial statements have been prepared using the historical basis except for the revaluation of certain financial
instruments.
Functional and presentation currency
These financial statements are presented in Canadian dollars, which is the Credit Union’s functional currency.
Significant accounting judgments, estimates and assumptions
The preparation of the Credit Union’s financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities, at the reporting date. However, uncertainties about these assumptions and estimates could result in
outcomes that would require a material adjustment to the carrying amount of the asset or liability affected in the future.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in comprehensive income in the period in which the estimate is revised if revision affects only that period, or in
the period of the revision and future periods if the revision affects both current and future periods.
Key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date are discussed
below.
Allowance for impaired loans
The Credit Union reviews its individually significant loans at each reporting date to assess whether an impairment loss
should be recognized. In particular, judgment by management is required in the estimation of the amount and timing of
future cash flows when determining the impairment loss.
In estimating these cash flows, the Credit Union makes judgments about the borrower’s financial situation and the net
realizable value of collateral. These estimates are based on assumptions about a number of factors and actual results may
differ, resulting in future changes to the allowance.
Member loans receivable that have been assessed individually and found not to be impaired and all individually
insignificant loans are assessed collectively, in groups of assets with similar risk characteristics, to determine whether
provision should be made due to incurred loss events for which there is objective evidence but whose effects are not yet
evident. The collective provision assessment takes account of data from the loan portfolio such as credit quality,
delinquency, historical performance and industry economic outlook. The impairment loss on member loans receivable is
disclosed in more detail in Note 7.
Key assumptions in determining the allowance for impaired loans collective provision
The Credit Union has determined the likely impairment loss on loans which have not maintained loan repayments in
accordance with the loan contract, or where there is other evidence of potential impairment such as industrial restructuring,
job losses or economic circumstances. In identifying the impairment likely from these events the Credit Union estimates the
potential impairment using loan type, industry, geographical location, type of loan security, the length of time the loans are
past due and the historical loss experience. The circumstances may vary for each loan over time, resulting in higher or lower
impairment (losses). The methodology and assumptions used for estimating future cash flows are reviewed regularly to
reduce any differences between loss estimates and actual loss experience.
For purposes of the collective provision, loans are classified into separate groups with similar risk characteristics, based on
the type of product and type of security.
Financial instruments not traded on active markets
For financial instruments not traded in active markets, fair values are determined using valuation techniques such as the
discounted cash flow model that rely on assumptions that are based on observable active markets or rates. Certain
assumptions take into consideration liquidity risk, credit risk and volatility.
6
3.
Basis of preparation (Continued from previous page)
Impairment of non-financial assets
At each reporting date, the Credit Union assesses whether there are any indicators of impairment for non-financial assets.
Non-financial assets that have an indefinite useful life or are not subject to amortization, such as goodwill, are tested
annually for impairment or more frequently if impairment indicators exist. Other non-financial assets are tested for
impairment if there are indicators that their carrying amounts may not be recoverable.
Income taxes
The Credit Union periodically assesses its liabilities and contingencies related to income taxes for all years open to audit
based on the latest information available. For matters where it is probable that an adjustment will be made, the Credit
Union records its best estimate of the tax liability including the related interest and penalties in the current tax provision.
Management believes that they have adequately provided for the probable outcome of these matters; however, the final
outcome may result in a materially different outcome than the amount included in the tax liabilities.
Impairment of available-for-sale financial assets
Management determines when an available-for-sale financial asset is impaired in accordance with IAS 39 Financial
Instruments: Recognition and Measurement. This determination requires significant judgment. Management evaluates the
duration and extent to which the fair value of an investment is less than its cost; and the financial health of and short-term
business outlook for the investee, including factors such as industry and sector performance, changes in technology and
operational and financing cash flow.
When the fair value declines, management makes assumptions about the decline in value to determine if it is an
impairment to be recognized in profit or loss.
At December 31, 2014, no impairment losses have been recognized for available-for-sale assets (2013 - $nil). The carrying
amount of available-for-sale assets is $545,526 (2013 - $545,526).
Deferred income taxes
The calculation of deferred income tax is based on assumptions, which are subject to uncertainty as to timing and which
tax rates are expected to apply when temporary differences reverse. Deferred income tax recorded is also subject to
uncertainty regarding the magnitude of non-capital losses available for carry forward and of the balances in various tax
pools as the corporate tax returns have not been prepared as of the date of financial statement preparation. By their
nature, these estimates are subject to measurement uncertainty, and the effect on the financial statements from changes
in such estimates in future years could be material. Further details are in Note 12.
Useful lives of property, plant and equipment
Estimates must be utilized in evaluating the useful lives of all property, plant and equipment for calculation of the
depreciation for each class of assets. For further discussion of the estimation of useful lives, refer to the heading property,
plant and equipment contained in Note 4.
4.
Summary of significant accounting policies
The principle accounting policies adopted in the preparation of the financial statements are set out below. The policies
have been consistently applied to all the years presented, unless otherwise stated.
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.
7
4.
Summary of significant accounting policies (Continued from previous page)
Foreign currency translation
Transactions denominated in foreign currencies are translated into the functional currency of the Credit Union at exchange
rates prevailing at the transaction dates (spot exchange rates). Monetary assets and liabilities are retranslated at the
exchange rates at the statement of financial position date. Exchange gains and losses on translation or settlement are
recognized in profit or loss for the current period.
Non-monetary items that are measured at historical cost are translated using the exchange rates at the date of the
transaction and non-monetary items that are measured at fair value are translated using the exchange rates at the date
when the items’ fair value was determined. Translation gains and losses are included in profit or loss.
Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Credit Union and the
revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is
recognized:
Interest income is recognized in profit or loss for all financial assets measured at amortized cost using the effective interest
rate method. The effective interest rate is the rate that discounts estimated future cash flows through the expected life of the
financial instrument back to the net carrying amount of the financial asset. The application of the method has the effect of
recognizing revenue of the financial instrument evenly in proportion to the amount outstanding over the period to maturity or
repayment.
Interest penalties received as a result of loan prepayments by members are recognized as income in the year in which the
prepayment is made, unless only minor modifications (based on a present value of future cash flows test) were made to the
loan in which case they are deferred and amortized using the effective interest method.
Fees related to the origination or renewal of a loan are considered an integral part of the yield earned on a loan and are
recognized using the effective interest method over the estimated repayment term of the related loan.
Investment income is recognized as interest is earned on interest-bearing investments, and when dividends are declared
on shares.
Investment security gains and losses are recognized in accordance with the requirements of their classification as outlined
further under the Financial Instruments policy note.
Loan syndication fees are recognized on completion of the syndication arrangement. Incremental direct costs for
originating or acquiring a loan are netted against origination fees.
Commission revenue is recognized net of broker commission expense as earned on the effective date of each policy.
Other revenue is recognized as services are provided to members.
Financial instruments
Classification and measurement
All financial instruments are initially recognized at fair value at acquisition. Measurement in subsequent periods depends
on whether the financial instrument has been classified as fair value through profit or loss, available-for-sale, held-tomaturity, loans and receivables, or other financial liabilities as described below. Transactions to purchase or sell these
items are recorded on the settlement date. During the year, there has been no reclassification of financial instruments.
Financial instruments classified as fair value through profit or loss are measured at fair value with unrealized gains and
losses recognized through profit or loss. The Credit Union's financial instruments classified as fair value through profit or
loss include cash and cash equivalents, derivative assets and liabilities, and line of credit.
Available for sale financial assets are measured at fair value with unrealized gains and losses recognized in other
comprehensive income. Certain equity instruments which do not trade in an open market and whose fair value cannot be
reliably measured are recorded at cost. The Credit Union’s financial instruments classified as available for sale include
shares in SaskCentral and Concentra Financial.
8
4.
Financial assets classified as held-to-maturity are subsequently measured at amortized cost using the effective interest
rate method. The Credit Union's financial instruments classified as held-to-maturity include term deposits.
Financial assets classified as loans and receivables are subsequently measured at amortized cost. The Credit Union's
financial instruments classified as loans and receivables include all member loans receivable and accrued interest thereon,
and other receivable balances.
Financial instruments classified as other financial liabilities include member deposits, accounts payable and accruals, and
membership shares. Other financial liabilities are subsequently carried at amortized cost.
Derecognition of financial assets
Derecognition of a financial asset occurs when:
"
The Credit Union does not have rights to receive cash flows from the asset;
"
The Credit Union has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to a third party under a “pass-through" arrangement; and
either:
"
The Credit Union has transferred substantially all the risks and rewards of the asset, or
"
The Credit Union has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Credit Union has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, and has neither transferred or retained substantially all of the risks and rewards of the asset nor transferred
control of the asset, the asset is recognized to the extent of the Credit Union’s continuing involvement in the asset. In that
case, the Credit Union also recognizes an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Credit Union has retained.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. Where an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of the
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amount is recognized in net
income.
The Credit Union designates certain financial assets upon initial recognition as at fair value through profit or loss (fair value
option). Financial instruments in this category are the embedded derivatives. These instruments are measured at fair value,
both initially and subsequently. The related transaction costs are expensed. Gains and losses arising from changes in fair
value of these instruments are recorded in profit or loss.
Derivative financial instruments
Derivative instruments are recorded at fair value, including those derivatives that are embedded in financial or non financial
contracts that are not closely related to the host contracts. Changes in the fair values of derivative instruments are recorded
in net income.
Fair value measurements
The Credit Union classifies fair value measurements recognized in the statement of financial position using a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
"
Level 1: Quoted prices (unadjusted) are available in active markets for identical assets or liabilities;
"
Level 2: Inputs other than quoted prices in active markets that are observable for the asset or liability, either
directly or indirectly; and
"
Level 3: Unobservable inputs in which there is little or no market data, which require the Credit Union to develop
its own assumptions.
Fair value measurements are classified in the fair value hierarchy based on the lowest level input that is significant to that
fair value measurement. This assessment requires judgment, considering factors specific to an asset or a liability and may
affect placement within the fair value hierarchy.
9
4.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and short-term highly liquid investments with original
maturities of three months or less that are readily convertible into known amounts of cash and which are subject to an
insignificant risk of change in value. Cash and cash equivalents are shown net of bank overdrafts that are repayable on
demand and form an integral part of the Credit Union’s cash management system. Cash subject to restrictions that prevent
its use for current purposes is included in restricted cash.
Investments
Each investment is classified into one of the categories described under financial instruments. The classification dictates
the accounting treatment for the carrying value and changes in that value.
SaskCentral and Concentra Financial deposits and shares
SaskCentral and Concentra Financial deposits are accounted for as held to maturity, adjusted to recognize other than a
temporary impairment in the underlying value, or as available for sale, based on management’s intent. Shares are
accounted for as available for sale at cost, as no market exists for these investments.
Member loans receivable
Loans are initially recognized at their fair value and subsequently measured at amortized cost. Amortized cost is calculated
as the loans’ principal amount, less any allowance for anticipated losses, plus accrued interest. Interest revenue is recorded
on the accrual basis using the effective interest method. Loan administration fees are amortized over the term of the loan
using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash
receipts through the expected life of the financial asset to the carrying amount of the financial asset.
Allowance for loan impairment
Allowance for loan impairment represents specific and collective provisions established as a result of reviews of individual
loans and groups of loans. In particular, judgment by management is required in the estimation of the amount and timing of
future cash flows when determining the impairment loss. In estimating these cash flows, the Credit Union makes judgments
about the credit worthiness of the borrower’s financial situation and the net realizable value of collateral. These estimates are
based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.
Member loans receivable that have been assessed individually and found not to be impaired are then assessed
collectively, in groups of assets with similar risk characteristics, to determine whether provision should be made due to
incurred loss events for which there is objective evidence but whose effects are not yet evident. The collective provision
takes account of data from the loan portfolio and based on analysis of historical data, such as credit quality, levels of
arrears, historical performance and economic outlook.
Individual allowances are established by reviewing the credit worthiness of individual borrowers and the value of the
collateral underlying the loan. Collective allowances are established by reviewing specific arrears and current economic
conditions.
Restructured loans are not considered impaired where reasonable assurance exists that the borrower will meet the terms
of the modified debt agreement. Restructured loans are defined as loans greater than 90 days delinquent that have been
restructured outside the Credit Union’s normal lending practices as it relates to extensions, amendments and
consolidations.
Loans are classified as impaired, and a provision for loss is established, when there is no longer reasonable assurance of
the timely collection of the full amount of principal or interest. It is the Credit Union’s policy that whenever a payment is 90
days past due, loans are classified as impaired unless they are fully secured or collection efforts are reasonably expected
to result in repayment of the debt.
10
4.
In such cases, a specific provision is established to write down the loan to the estimated future net cash flows from the loan
discounted at the loans’ original effective interest rate. In cases where it is impractical to estimate the future cash flows, the
carrying amount of the loan is reduced to its fair value calculated based on an observable market price. Any previously
accrued but unpaid interest on the loan is charged to the allowance for loan impairment. Interest income after the
impairment is recognized using the rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss.
Impairment of financial assets
For financial assets carried at amortized cost, the Credit Union first assesses individually whether objective evidence of
impairment exists for financial assets that are significant, or collectively for financial assets that are not individually
significant. If the Credit Union determines that no objective evidence of impairment exists for an individually assessed
financial asset, it includes the financial asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. Financial assets that are individually assessed for impairment and for which an
impairment loss is, or continues to be, recognized are not included in a collective assessment for impairment.
If there is objective evidence that an impairment loss has occurred, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows. The carrying amount of the
financial asset is reduced through the use of the provision for impaired financial assets and the amount of the impairment
loss is recognized in net income.
The present value of the estimated future cash flows is discounted at the financial assets' original effective interest rate. The
calculation of the present value of estimated future cash flows reflects the projected cash flows including provisions for
impaired financial assets, prepayment losses, and costs to securitize and service financial assets.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any
subsequent reversal of an impairment loss is recognized in net income.
Impairment of non-financial assets
At the end of each reporting period, the Credit Union reviews the carrying amounts of its tangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not
possible to estimate the recoverable amount of an individual asset, the Credit Union estimates the recoverable amount of
the cash-generating units (“CGU”) to which the asset belongs. Where a reasonable and consistent basis of allocation can
be identified, corporate assets are also allocated to individual CGU’s, or otherwise they are allocated to the smallest group
of CGU’s for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the
asset or CGU is reduced to its recoverable amount. An impairment loss is recognized immediately in net income.
Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognized for the asset or CGU in prior years. A reversal of an
impairment loss is recognized immediately in net income.
11
4.
Syndication
The Credit Union syndicates individual assets with various other financial institutions primarily to manage credit risk, create
liquidity and manage regulatory capital for the Credit Union. Syndicated loans transfer substantially all the risks and rewards
related to the transferred financial assets and are derecognized from the Credit Union’s statement of financial position. All
loans syndicated by the Credit Union are on a fully serviced basis. The Credit Union receives fee income for services
provided in the servicing of the transferred financial assets. Fee income is recognized in other income on an accrual basis in
relation to the reporting period in which the costs of providing the services are incurred.
Foreclosed assets
Foreclosed assets held for sale are initially recorded at the lower of cost and estimated fair value less costs to sell. Cost
comprises the balance of the loan at the date on which the Credit Union obtains title to the asset plus subsequent
disbursements related to the asset, less any revenues or lease payments received. Foreclosed assets held for sale are
subsequently valued at the lower of their carrying amount and fair value less cost to sell. Foreclosed assets (if any) are
recorded in member loans receivable.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes
expenditures that are directly attributable to the acquisition of the asset. When parts of an item of property, plant and
equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
All assets having limited useful lives are depreciated using the straight-line method over their estimated useful lives. Land
has an unlimited useful life and is therefore not depreciated. Assets are depreciated from the date of acquisition. Internally
constructed assets are depreciated from the time an asset is available for use.
The depreciation rates applicable for each class of asset during the current and comparative period are as follows:
Rate
10-20 years
10-20 years
2-8 years
2-5 years
50 years
Buildings
Capital improvements
Computer equipment
Furniture and equipment
Parking lot
The residual value, useful life and depreciation method applied to each class of assets are reassessed at each reporting
date.
Gains or losses on the disposal of property, plant and equipment are determined as the difference between the net
disposal proceeds and the carrying amount of the asset, and recognized in net income as other operating income or other
operating costs, respectively.
Income taxes
The Credit Union accounts for income taxes using the asset and liability method. Current and deferred tax are recognized
in net income except to the extent that the tax is recognized either in other comprehensive income or directly in equity, or
the tax arises from a business combination. Under this method, the provision for income taxes is based on the tax rates
and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets
are realized or the liabilities are settled.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base,
except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the
initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the
transaction affects neither accounting or taxable income.
12
4.
Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to
those instances where it is probable that future taxable profit will be available which allow the deferred tax asset to be
utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realized.
Leases
A lease that transfers substantially all of the benefits and risks of ownership is classified as a finance lease. At the
inception of a finance lease, an asset and a payment obligation are recorded at an amount equal to the lesser of the
present value of the minimum lease payments and the asset’s fair market value at inception of the lease. Assets under
finance leases are amortized on a straight-line basis, over their estimated useful lives. All other leases are accounted for
as operating leases and rental payments are expensed as incurred.
Employee benefits
The Credit Union’s post employment benefit programs consist of a defined contribution plan.
Credit Union contributions to the defined contribution plan are expensed as incurred. Pension benefits of $35,241 (2013 –
$34,071) were paid to the defined contribution retirement plan during the year.
Accounts payable
Accounts payable are initially recorded at fair value and are subsequently carried at amortized cost, which approximates
fair value due to the short term nature of these liabilities.
Member deposits
Member deposits are initially recognized at fair value, net of transaction costs directly attributable to the issuance of the
instrument, and are subsequently measured at amortized cost using the effective interest rate method.
Membership shares
Shares are classified as liabilities or member equity in accordance with their terms. Shares redeemable at the option of the
member, either on demand or on withdrawal from membership, are classified as liabilities. Shares redeemable at the
discretion of the Credit Union Board of Directors are classified as equity. Shares redeemable subject to regulatory
restrictions are accounted for using the criteria set out in IFRIC 2 Members' Shares in Cooperative Entities and Similar
Instruments.
Standards issued but not yet effective
The Credit Union has not yet applied the following new standards, interpretations and amendments to standards that have
been issued as at December 31, 2014 but are not yet effective. Unless otherwise stated, the Credit Union does not plan to
early adopt any of these new or amended standards and interpretations.
IFRS 8 Operating segments
The amendments to IFRS 8, issued in December 2013, require an entity to disclose the judgements made by management
in applying the aggregation criteria for reportable segments. The amendments only affect disclosure and is effective for
annual periods beginning on or after July 1, 2014.
IFRS 9 Financial instruments
In July 2014, the IASB issued the final version of IFRS 9 (2014) as a complete standard including the requirements
previously issued and the additional amendments to introduce a new expected loss impairment model and limited changes
to the classification and measurement requirements for financial assets. This Standard will replace IAS 39 Financial
Instruments: Recognition and Measurement.
13
4.
IFRS 9 (2014) is effective for reporting periods beginning on or after January 1, 2018 with early adoption permitted (subject
to local endorsement requirements). IFRS 9 (2014) supersedes all previous versions including IFRS 9 (2009), IFRS 9 (2010)
and IFRS 9 (2013). However, an entity may elect to apply those earlier versions of IFRS 9 instead of applying IFRS 9 (2014)
if, and only if, the entity’s relevant date of initial application is before February 1, 2015. The Credit Union is currently
assessing the impact of these amendments on its financial statements.
IFRS 13 Fair value measurement
The Credit Union applies the “portfolio exception”. Accordingly, it measures the fair value of financial assets and liabilities,
with offsetting positions in market or counterparty credit risk, consistently with how market participants would price the net
risk exposure. The amendments to IFRS 13, issued in December 2013, clarify that the portfolio exception applies to all
contracts within the scope of IFRS 9 Financial instruments or IAS 39 Financial instruments: recognition and measurement,
regardless of whether they meet the definitions of financial assets or financial liabilities in IAS 32 Financial instruments:
presentation. The amendments are effective for annual periods beginning on or after July 1, 2014. The Credit Union is
currently assessing the impact of these amendments on its financial statements.
IFRS 15 Revenue from contracts with customers
IFRS 15, issued in May 2014, specifies how and when entities recognize revenue, as well as requires more detailed and
relevant disclosures. IFRS 15 supersedes IAS 11 Construction contracts, IAS 18 Revenue, IFRIC 13 Customer loyalty
programmes, IFRIC 15 Agreements for the construction of real estate, IFRIC 18 Transfers of assets from customers and
SIC-31 Revenue – barter transactions involving advertising services. The standard provides a single, principles based fivestep model to be applied to all contracts with customers, with certain exceptions. The five steps are:
"
Identify the contract(s) with the customer.
"
Identify the performance obligation(s) in the contract.
"
Determine the transaction price.
"
Allocate the transaction price to each performance obligation in the contract.
"
Recognize revenue when (or as) the entity satisfies a performance obligation.
IFRS 15 is effective for annual periods beginning on or after January 1, 2017. The Credit Union does not expect this
standard to have a material impact on its financial statements.
IAS 16 Property, plant and equipment and IAS 38 Intangible assets
The amendments to IAS 16 and IAS 38, issued in December 2013, clarify how an entity calculates the gross carrying
amount and accumulated depreciation when a revaluation is performed. The amendments are effective for annual periods
beginning on or after July 1, 2014. The Credit Union does not expect these amendments to have a material impact on its
financial statements.
The amendments to IAS 16 and IAS 38, issued in May 2014, clarify that the use of revenue-based methods to calculate the
depreciation of an asset is not appropriate. Amendments to IAS 38 specify that an amortization method based on revenue is
generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an
intangible asset. The amendments are effective for annual periods beginning on or after January 1, 2016. The Credit Union
does not expect these amendments to have a material impact on its financial statements.
IAS 19 Employee benefits
The amendments to IAS 19, issued in November 2013, revise the requirements for contributions from employers or third
parties that are linked to service and are set out in formal terms of a defined benefit plan. If the amount of the contributions is
independent of the number of years of service, an entity is permitted to recognize such contributions as a reduction in the
service cost in the period in which the related service is rendered. This is done instead of attributing the contributions to the
periods of service. If the amount of the contributions is dependent on the number of years of service, an entity attributes
those contributions to the periods of service. This is done by either using the plan’s contribution formula or on a straight-line
basis. The amendments are effective for annual periods beginning on or after July 1, 2014. The Credit Union does not
expect these amendments to have a material impact on its financial statements.
14
4.
IAS 24 Related party disclosures
The amendments to IAS 24, issued in December 2013, clarify that a management entity, or any member of a group of
which it is a part, that provides key management services to a reporting entity, or its parent, is a related party of the
reporting entity. The amendments also require an entity to disclose amounts incurred for key management personnel
services provided by a separate management entity. This replaces the more detailed disclosure by category required for
other key management personnel compensation. The amendments only affect disclosure and are effective for annual
periods beginning on or after July 1, 2014.
5.
2014
Cash
Cash equivalents
6.
2013
1,052,511
11,947,526
1,443,668
12,817,695
13,000,037
14,261,363
Investments
2014
Available for sale
SaskCentral and Concentra Financial shares
545,526
Held to maturity
SaskCentral and Concentra Financial terms
1,000,000
1,000,000
1,545,526
6,690
Accrued interest
1,552,216
2013
545,526
545,526
545,526
Pursuant to Regulations, SaskCentral requires that the Credit Union maintain 10% of its total liabilities in specified liquidity
deposits. The provincial regulator for Credit Unions, Credit Union Deposit Guarantee Corporation ("CUDGC"), requires that
the Credit Union adhere to these prescribed limits and restrictions. As of December 31, 2014 the Credit Union met the
requirement.
The table below shows the credit risk exposure on investments, excluding liquidity reserves and balances on deposit with
SaskCentral and Concentra Financial. Ratings are as provided by Dominion Bond Rating Services ("DBRS") unless
otherwise indicated.
2014
2013
Investment portfolio rating
Unrated
1,552,216
SaskCentral and Concentra Financial shares are included in the unrated category above.
15
545,526
7.
Principal and allowance by loan type:
2014
Principal
performing
Agriculture loans
Commercial loans
Consumer loans
Lines of credit
Mortgages
Accrued interest
Total
Principal
impaired
Allowance
specific
Net carrying
value
43,725
3,385,672
7,659,124
2,258,729
47,151,457
-
-
43,725
3,385,672
7,659,124
2,258,729
47,151,457
60,498,707
-
-
60,498,707
185,514
-
-
185,514
60,684,221
-
-
60,684,221
2013
Principal
performing
Commercial loans
Consumer loans
Lines of credit
Mortgages
Accrued interest
Total
Principal
impaired
Allowance
specific
Net carrying
value
1,931,271
7,251,942
2,150,089
48,091,209
-
-
1,931,271
7,251,942
2,150,089
48,091,209
59,424,511
-
-
59,424,511
155,291
-
-
155,291
59,579,802
-
-
59,579,802
The allowance for loan impairment changed as follows:
2014
2013
Balance, beginning of year
Provision for impaired loans
14,136
8,074
80
Less: accounts written off, net of recoveries
14,136
14,136
8,154
8,154
-
Balance, end of year
16
-
7.
Member loans receivable (Continued from previous page)
A loan is considered past due when a counterparty has not made a payment by the contractual due date. The table that
follows presents the carrying value of loans at year-end that are past due but not classified as impaired because they are
either i) less than 90 days past due, or ii) fully secured and collection efforts are reasonably expected to result in
repayment.
December 31, 2014
1-30 days
31-60 days
61-90 days
91 days and
greater
Total
Personal
Commercial
479,826
-
333,051
-
598,571
-
1,078,397
333,051
Total
479,826
333,051
-
598,571
1,411,448
December 31, 2013
1-30 days
31-60 days
61-90 days
91 days and
greater
Total
Personal
Commercial
907,314
14,788
17,944
-
-
-
925,258
14,788
Total
922,102
17,944
-
-
940,046
The principal collateral and other credit enhancements the Credit Union holds as security for loans include (i) insurance,
mortgages over residential lots and properties, (ii) recourse to business assets such as real estate, equipment, inventory
and accounts receivable, (iii) recourse to commercial real estate properties being financed, and (iv) recourse to liquid
assets, guarantees and securities. Valuations of collateral are updated periodically depending on the nature of the
collateral. The Credit Union has policies in place to monitor the existence of undesirable concentration in the collateral
supporting its credit exposure. In management's estimation, the fair value of the collateral is sufficient to offset the risk of
loss on the loans past due but not impaired.
8.
Other assets
2014
Accounts receivable
Deferred tax asset
Prepaid expenses and deposits
17
2013
6,784
25,135
80,753
6,247
17,039
52,367
112,672
75,653
9.
Furniture
Capital
Computer
and improve- Parking
equipment equipment
ments
lot
Land
Buildings
Total
Balance at December 31, 2012
Additions
35,500
-
291,030
-
676,751
24,825
233,373
548
556,305
-
3,165
-
1,796,124
25,373
35,500
291,030
701,576
233,921
556,305
3,165
1,821,497
13,105
(312,753)
(159,485)
(80,808)
-
13,105
(553,046)
291,030
401,928
74,436
475,497
3,165
1,281,556
Cost
Additions
Disposals
35,500
-
Accumulated depreciation
10.
Depreciation
-
291,030
-
427,089
27,185
207,105
26,816
388,323
48,000
3,165
-
1,316,712
102,001
-
291,030
454,274
233,921
436,323
3,165
1,418,713
Depreciation charge for the year
Disposals
-
56,928
(309,584)
1,500
(162,654)
47,813
(80,808)
-
106,241
(553,046)
-
201,618
72,767
403,328
3,165
971,908
119,982
-
402,784
72,169
-
309,648
291,030
Net book value
At December 31, 2013
35,500
-
247,302
At December 31, 2014
35,500
-
200,310
1,669
Line of Credit
The Credit Union has an authorized line of credit due on demand, with no fixed repayment date, bearing interest at prime
minus 0.5%, in the amount of $1,300,000 (2013 - $1,300,000) from SaskCentral.
Borrowings are secured by an assignment of book debts, financial services agreement, and an operating account
agreement.
18
11.
Member deposits
2014
Chequing, Savings, Plan 24
Registered savings plans
Term deposits
Accrued interest
2013
22,619,858
8,080,079
38,548,605
483,834
23,905,860
7,324,166
37,448,785
512,480
69,732,376
69,191,291
Total deposits include $243,558 (2013 - $285,726) denominated in foreign currencies.
Member deposits are subject to the following terms:
Chequing, savings and plan 24 products are due on demand and bear interest at rates up to 1.05% (2013 - 1.05%).
Registered savings plans are subject to fixed and variable rates of interest up to 6.00% (2013 - 4.05%), with interest
payments due monthly, annually or on maturity.
Term deposits are subject to fixed and variable rates of interest up to 4.00% (2013 - 4.00%), with interest payments due
monthly, annually or on maturity.
12.
Income tax
Income tax expense (recovery) recognized in comprehensive income
The applicable tax rate is the aggregate of the federal income tax rate of 13.84% (2013 - 11.04%) and the provincial tax
rate of 2% (2013 - 2%).
Deferred income tax recovery recognized in comprehensive income
The deferred income tax recovery recognized in comprehensive income for the current year is a result of the following
charges:
2014
Deferred tax asset
Net deferred tax asset is reflected in the statement of financial position as
follows:
Deferred tax asset
19
2013
25,135
17,039
25,135
17,039
25,135
17,039
12.
Income Tax (Continued from previous page)
Reconciliation between average effective tax rate and the applicable tax rate
Applicable tax rate
Credit Union deduction
Non-deductible and other items
Average effective tax rate (tax expense divided by profit before tax)
2014
2013
27.00 %
(12.40)%
1.24 %
27.00 %
(14.00)%
0.04 %
15.84 %
13.04 %
In October 2013, the government substantially enacted a change in the federal tax rate from 11% to 15% that was
introduced in the March 2013 budget. This increase in tax rate will impact income above the small business deduction within
the Credit Union with a phase in over the five year period from 2013 to 2018. Federally, the result is 40% of the Credit
Union’s taxable income will be taxed at a rate of 15%, with the remaining income continuing to be taxed at a rate of 11% for
2014. By 2018 100% of the Credit Union's taxable income will be taxed at a rate of 15%. No changes in provincial tax rates
were substantially enacted in 2014.
13.
Other liabilities
2014
Accounts payable
Corporate income tax payable
14.
2013
441,090
34,278
670,877
11,860
475,368
682,737
Membership shares
Authorized:
Unlimited number of Common shares, at an issue price of $5
Unlimited number of Surplus shares, at an issue price of $1
Issued:
2014
Member shares classified as liability
2,220 Common shares (2013 - 2,134)
5,175 Surplus shares (2013 - 6,820)
2013
22,220
5,175
21,345
6,820
27,395
28,165
All common shares are classified as liabilities.
When an individual becomes a member of the Credit Union, they are issued two common shares at $5 per share. Each
member of the Credit Union has one vote, regardless of the number of common shares held.
Surplus shares are established as a means of returning excess earnings to the members and at the same time increasing
the Credit Union's equity base. The Articles of Incorporation for the Credit Union disclose the conditions concerning surplus
shares.
During the year, the Credit Union issued 492 (2013 - 96) and redeemed 406 (2013 - 116) common shares, and also
redeemed 1,645 (2013 - 207,803) surplus shares.
20
15.
Related party transactions
Key management compensation of the Credit Union
Key management personnel ("KMP") of the Credit Union are the General Manager and Office Supervisor, and members of
the Board of Directors.
KMP remuneration includes the following expenses:
2014
175,754
Salaries and short-term benefits
2013
202,359
Transactions with key management personnel
The Credit Union, in accordance with its policy, grants credit to its directors, management and staff. The management and
staff rates are slightly below member rates. Directors pay regular member rates on loans.
Loans made to directors and KMP are approved under the same lending criteria applicable to members, and are included
in member loans receivable on the statement of financial position. There are no loans to KMP that are impaired.
Directors, management and staff of the Credit Union hold deposit accounts. These accounts are maintained under the
same terms and conditions as accounts of other members, and are included in deposit accounts on the statement of
financial position.
There are no benefits or concessional terms and conditions applicable to the family members of KMP.
These loans and deposits were made in the normal course of operations and are measured at the exchange amount, which
is the consideration established and agreed to by the related parties.
Aggregate loans to KMP
Aggregate revolving credit facilities to KMP
Less: approved and undrawn lines of credit
During the year the aggregate value of loans disbursed to KMP amounted to:
Mortgages
Loans
2014
2013
619,629
370,500
(147,382)
564,040
421,000
(164,600)
842,747
820,440
2014
210,400
-
2014
Interest earned on loans and revolving credit facilities to KMP
Interest paid on deposits to KMP
30,611
4,095
2014
2013
20,000
2013
35,594
7,129
2013
The total value of member deposits to KMP as at the year-end:
Chequing and demand deposits
Registered plans
294,605
67,191
166,434
1,978
Total value of member deposits due to KMP
361,796
168,412
21
15.
Related party transactions (Continued from previous page)
Directors’ fees and expenses
2014
8,975
374
-
Directors fees and committee remuneration
Directors expenses
Meeting, training and conference costs
2013
8,450
2,044
1,330
SaskCentral and Concentra Financial
The Credit Union is a member of SaskCentral, which acts as a depository for surplus funds received from and loans made
to credit unions. SaskCentral also provides other services for a fee to the Credit Union and acts in an advisory capacity.
The Credit Union is related to Concentra Financial, which is owned in part by SaskCentral. Concentra Financial provides
financial intermediation and trust services to Canadian credit unions and associated commercial and retail customers.
Interest earned on investments during the year ended December 31, 2014 amounted to $152,115 (2013 - $179,056)
Interest paid on borrowings during the year ended December 31, 2014 amounted to $1,783 (2013 - $2,475).
Payments made for affiliation dues for the year ended December 31, 2014 amounted to $25,738 (2013 - $27,906).
16.
Capital management
A capital management framework is included in policies and procedures established by the Board of Directors. The Credit
Union’s objectives when managing capital are to:
"
Adhere to regulatory capital requirements as minimum benchmarks;
"
Co-ordinate strategic risk management and capital management;
"
Develop financial performance targets/budgets/goals;
"
Administer a patronage program that is consistent with capital requirements;
"
Administer an employee incentive program that is consistent with capital requirements; and
"
Develop a growth strategy that is co-ordinated with capital management requirements.
CUDGC prescribes capital adequacy measures and minimum capital requirements. The capital adequacy rules issued by
CUDGC have been based on the Basel III framework, consistent with the financial industry in general.
The Credit Union follows a risk-weighted asset calculation for credit and operational risk. Under this approach, credit unions
are required to measure capital adequacy in accordance with instructions for determining risk-adjusted capital and riskweighted assets, including off-balance sheet commitments. Based on the prescribed risk of each type of asset, a weighting
of 0% to 1,250% is assigned. The ratio of regulatory capital to risk-weighted assets is calculated and compared to the
standard outlined by CUDGC. Regulatory standards require credit unions to maintain a minimum total eligible capital to
risk-weighted assets of 8%, a minimum tier 1 capital to risk-weighted assets of 6% and a minimum common equity tier 1
capital to risk-weighted assets of 4.5%. Eligible capital consists of total tier 1 and tier 2 capital. In addition to the minimum
capital ratios, the Credit Union is required to hold a capital conservation buffer of 2.5% effective January 1, 2016. The
capital conservation buffer is designed to avoid breaches of the minimum capital requirement.
Tier 1 capital is defined as a credit union’s primary capital and comprises the highest quality of capital elements while tier 2
is secondary capital and falls short of meeting tier 1 requirements for permanence or freedom from mandatory charges.
Tier 1 capital consists of two components: common equity tier 1 capital and additional tier 1 capital. Common equity tier 1
capital includes retained earnings, contributed surplus and accumulated other comprehensive income ("AOCI").
Deductions from common equity tier 1 capital include goodwill, intangible assets, deferred tax assets (except those arising
from temporary differences), increases in equity capital resulting from securitization transactions, unconsolidated substantial
investments and fair value gains/losses on own-use property. Additional tier 1 capital consists of qualifying membership
shares and other investment shares issued by the Credit Union that meet the criteria for inclusion in additional tier 1 capital.
22
16.
Capital management (Continued from previous page)
Tier 2 capital includes a collective allowance for credit losses to a maximum of 1.25% of risk-weighted assets, subordinated
indebtedness, and qualifying membership shares or other investment shares issued by the Credit Union that meet the
criteria for inclusion in tier 2 capital and are not included in tier 1 capital.
Regulatory standards also require the Credit Union to maintain a minimum leverage ratio of 5%. This ratio is calculated by
dividing eligible capital by total assets less deductions from capital plus specified off-balance sheet exposures. Based on the
type of off-balance sheet exposure, a conversion factor is applied to the leverage ratio.
The following table compares CUDGC regulatory standards to the Credit Union’s board policy for 2014:
Regulatory Board standards
standards
Total eligible capital to risk weighted assets
Tier 1 capital to risk-weighted assets
Common equity tier 1 capital to risk-weighted assets
Leverage ratio
8.00 %
6.00 %
4.50 %
5.00 %
11.50 %
6.50 %
6.50 %
6.00 %
During the year, the Credit Union complied with all external capital requirements.
The following table summarizes key capital information:
Eligible capital
Total tier 1 capital
Total tier 2 capital
2014
2013
5,258,593
27,395
4,746,108
28,165
Total eligible capital
5,285,988
4,774,273
14.44 %
14.36 %
14.36 %
6.92 %
13.82 %
13.74 %
13.74 %
6.36 %
Risk-weighted assets
Total eligible capital to risk weighted assets
Total tier 1 capital to risk-weighted assets
Common equity tier 1 capital to risk-weighted assets
Leverage ratio
17.
Financial instruments
The Credit Union as part of its operations carries a number of financial instruments. It is management's opinion that the
Credit Union is not exposed to significant interest, currency or credit risks arising from these financial instruments except
as otherwise disclosed.
Risk management policy
The Credit Union carries a number of financial instruments which result in exposure to the following risks: credit risk,
market risk, and liquidity risk.
The Credit Union, as part of operations, has established avoidance of undue concentrations of risk, hedging of risk
exposures, and requirements for collateral to mitigate credit risk as risk management objectives. In seeking to meet these
objectives, the Credit Union follows risk management policies approved by its Board of Directors.
The Credit Union's risk management policies and procedures include the following:
"
"
"
"
Ensure all activities are consistent with the mission, vision and values of the Credit Union;
Balance risk and return;
Manage credit, market and liquidity risk through preventative and detective controls;
Ensure credit quality is maintained;
23
17.
Financial instruments (Continued from previous page)
"
"
"
"
Ensure credit, market, and liquidity risk is maintained at acceptable levels;
Diversify risk in transactions, member relationships and loan portfolios;
Price according to risk taken; and
Using consistent credit risk exposure tools.
Various Board of Directors committees are involved in risk management oversight, including the Audit Committee and
Loan Committee.
There have been no significant changes from the previous year in the exposure to risk, policies, procedures or methods
used to measure risk.
Credit risk
Credit risk is the risk of loss resulting from the failure of a borrower or counterparty to honour its financial or contractual
obligations to the Credit Union. Credit risk primarily arises from member loans receivable. Management and the Board of
Directors review and update the credit risk policy annually. The Credit Union's maximum credit risk exposure before taking
into account any collateral held is the carrying amount of loans as disclosed on the statement of financial position with
additional detail reported in Note 7. For investment securities and derivative instruments, the Credit Union is exposed to the
risk of default by the counterparty for instruments reported in Note 6.
Concentration of credit risk exists if a number of borrowers are engaged in similar economic activities or are located in the
same geographical region, and indicate the relative sensitivity of the Credit Union's performance to developments affecting
a particular segment of borrowers or geographical region. Geographical risk exists for the Credit Union due to its primary
service area being Saskatoon, Saskatchewan and surrounding area.
Credit risk management for loan portfolio
The Credit Union employs a risk management process for its loan portfolio which is designed to assess and quantify the
level of risk inherent in credit granting activities. Risk is measured by reviewing qualitative and quantitative factors that
impact the loan portfolio and starts at the time of a member credit application and continues until the loan is fully repaid.
Management of credit risk is established in policies and procedures by the Board of Directors.
The primary credit risk management policies and procedures include the following:
"
Loan security (collateral) requirements;
Security valuation processes, including method used to determine the value of real property and personal
property when that property is subject to a mortgage or other charge;
"
Maximum loan to value ratios where a mortgage or other charge on real or personal property is taken as
security.
Borrowing member capacity (repayment ability) requirements;
Borrowing member character requirements;
Limits on aggregate credit exposure per individual and/or related parties;
Limits on concentration to credit risk by loan type, industry and economic sector;
Limits on types of credit facilities and services offered;
Internal loan approval processes and loan documentation standards;
Loan re-negotiation, extension and renewal processes;
Processes that identify adverse situations and trends, including risks associated with economic, geographic and
industry sectors;
Control and monitoring processes including portfolio risk identification and delinquency tolerances;
Timely loan analysis processes to identify, access and manage delinquent and impaired loans;
Collection processes that include action plans for deteriorating loans;
Overdraft control and administration processes; and
Loan syndication processes.
"
"
"
"
"
"
"
"
"
"
"
"
"
"
24
17.
Credit risk management for investments and derivative instruments
Management of risk in relation to investments and derivatives is performed as per board approved policies which set out
eligible investment securities and limits on exposure to single entities, issuer groups and maximum terms of investment.
Eligible derivatives are defined in policy which includes limits on approval for purchase and disposal of investments and
derivatives. Credit risk within these portfolios is monitored and measured by reviewing exposure to individual
counterparties and ensuring the Credit Union remains within policy limits by issuer weightings and by dollar amount. The
quality of the counterparty is assessed through published credit ratings which is outlined in Note 6.
Credit commitments
To meet the needs of its members and manage its own exposure to fluctuations in interest rates, the Credit Union
participates in various commitments and contingent liability contracts. The primary purpose of these contracts is to make
funds available for the financing needs of members. These are subject to normal credit standards, financial controls, risk
management and monitoring procedures. The contractual amounts of these credit instruments represent the maximum credit
risk exposure without taking into account the fair value of any collateral, in the event other parties fail to perform their
obligations under these instruments.
The Credit Union makes the following instruments available to its members:
(a)
guarantees and standby letters of credit representing irrevocable assurances that the Credit Union will pay if a
member cannot meet their obligations to a third party;
(b)
commitments to extend credit representing unused portions of authorizations to extend credit in the form of loans,
(including lines of credit and credit cards), guarantees or letters of credit.
The amounts shown on the table below do not necessarily represent future cash requirements since many commitments
will expire or terminate without being funded.
As at year-end, the Credit Union had the following outstanding financial instruments subject to credit risk:
2014
Unadvanced lines of credit
Commitments to extend credit
2013
2,755,604
844,330
2,913,627
380,000
3,599,934
3,293,627
Market risk
Market risk is the risk of loss in value of financial instruments that may arise from changes in market factors such as
interest rates, equity prices and credit spreads. The Credit Union's exposure changes depending on market conditions.
Market risks that have a significant impact on the Credit Union include fair value risk and interest rate risk.
Market risk arises from changes in interest rates that affect the Credit Union's net interest income. Exposure to this risk
directly impacts the Credit Union's income from its loan and deposit portfolios. The Credit Union's objective is to earn an
acceptable net return on these portfolios, without taking unreasonable risk, while meeting member owner needs.
Risk measurement
The Credit Union's risk position is measured and monitored each month to ensure compliance with policy. Management
provides monthly reports on these matters to the Credit Union's Board of Directors.
25
17.
Objectives, policies and processes
Management is responsible for managing the Credit Union's interest rate risk, monitoring approved limits and compliance
with policies. The Credit Union manages market risk by developing and implementing asset and liability management
policies, which are approved and periodically reviewed by the Board.
The Credit Union's goal is to achieve adequate levels of profitability, liquidity and safety. The Board of Directors reviews
the Credit Union's investment and asset liability management policies periodically to ensure they remain relevant and
effective in managing and controlling risk.
Interest rate risk
Interest rate risk is the sensitivity of the Credit Union’s financial condition to movements in interest rates. Cash flow interest
rate risk is the risk that the future cash flows of the Credit Union’s financial instruments will fluctuate due to changes in
market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of
changes in prevailing market interest rates. Interest margins reported in net income may increase or decrease in response to
changes in market interest rates. The Credit Union incurs interest rate risk on its loans and other interest bearing financial
instruments.
In managing interest rate risk, the Credit Union relies primarily upon use of asset - liability and interest rate sensitivity
simulation models, which is monitored by the Credit Union and reported to the Audit Committee.
Sensitivity analysis is used to assess the change in value of the Credit Union’s financial instruments against a range of
incremental basis point changes in interest rates over a twelve month period. Interest rate shock analysis is calculated in a
similar manner to sensitivity analysis but involves a more significant change of 100 basis points or greater in interest rates.
Sensitivity analysis and interest rate shock analysis are calculated on a quarterly basis and are reported to the Audit
Committee. Based on current differences between financial assets and financial liabilities as at year-end, the Credit Union
estimates that an immediate and sustained 100 basis point increase in interest rates would increase net interest income by
$129,534 over the next 12 months while an immediate and sustained 100 basis point decrease in interest rates would
decrease net interest income by $129,534 over the next 12 months.
Other types of interest rate risk are basis risk (the risk of loss arising from changes in the relationship of interest rates
which have similar but not identical characteristic; for example, the difference between prime rates and the Canadian
Deposit Offering Rate) and prepayment risk (the risk of loss of interest income arising from the early repayment of fixed
rate mortgages and loans), both of which are monitored on a regular basis and are reported to the Audit Committee.
The Credit Union's major source of income is financial margin which is the difference between interest earned on
investments and loans to members and interest paid to members on their deposits. The objective of managing the financial
margin is to match re-pricing or maturity dates of loans and investments and member deposits within policy limits. These
limits are intended to limit the Credit Union's exposure to changing interest rates and to wide fluctuations of income during
periods of changing interest rates. The differential represents the net mismatch between loans and investments and
members' savings and deposits for those particular maturity dates. Certain items on the statement of financial position, such
as non-interest bearing member deposits and equity do not provide interest rate exposure to the Credit Union. These items
are reported as non-interest rate sensitive in the table below.
Amounts with variable interest rates, or due on demand, are classified as on demand.
A significant amount of member loans receivable and member deposits can be settled before maturity on payment of a
penalty. No adjustment has been made for repayments that may occur prior to maturity.
Interest rate sensitivity
In the table below, the carrying amounts of financial instruments are presented in the periods in which they next re-price to
market rates or mature and are summed to show the net interest rate sensitivity gap.
26
17.
Contractual repricing and maturity
All financial instruments are reported in the schedule below based on the earlier of their contractual re-pricing date or
maturity date. The schedule below does not identify management's expectations of future events where re-pricing and
maturity dates differ from contractual dates.
(In thousands)
On demand
Assets
Cash and cash
equivalents
Average yield
%
Investments
Average yield
%
Member loans
receivable
Average yield
%
Accounts
receivable
Over 1 year
Non-Interest
Sensitive
2013
Total
Total
-
-
-
1,052
13,000
14,261
1.00
1,000
-
545
-
-
0.92
1,552
0.91
546
1.40
-
-
-
-
0.90
-
13,908
5,220
7
18,475
23,061
4.96
3.64
3.74
4.18
-
-
-
-
5,220
19,020
23,061
8,946
11,971
25,388
0.87
1.99
2.00
2.36
-
-
-
-
-
-
-
-
11,770
8,946
(3,726)
11,971
7,049
20
7
15,086
15,086
Net sensitivity
2014
11,948
26,856
Liabilities
Member
deposits
Average
yield %
Membership
shares
Accounts
payable
Over 3
Within 3 months to 1
months
year
25,388
(2,327)
1,086
60,684
59,580
4.18
4.12
7
6
75,243
8,341
74,393
69,732
69,191
1.65
1.56
27
27
28
441
441
671
70,200
69,890
5,043
4,503
-
8,809
(7,723)
Fair value risk
Fair value risk is the potential for loss from an adverse movement in the value of a financial instrument. The Credit Union
incurs fair value risk on its loans, certain deposit accounts and investments held. The Credit Union does not hedge its fair
value risk. See Note 18 for further information on fair value of financial instruments.
27
17.
Liquidity risk
Liquidity risk is the risk that the Credit Union cannot meet a demand for cash or fund its obligations as they come due. The
Credit Union's management oversees the Credit Union's liquidity risk to ensure the Credit Union has access to enough
readily available funds to cover its financial obligations as they come due. The Credit Union's business requires such capital
for operating and regulatory purposes. Refer to Note 16 for further information about the Credit Union's regulatory
requirements.
Liquidity risk is managed through a three tiered structure consisting of the local Credit Union level, the provincial Credit
Union level and the national Credit Union level.
Locally, the Credit Union manages its liquidity position from three perspectives:
"
Structural liquidity risk, which addresses the risk due to mismatches in effective maturities between assets and
liabilities, more specifically the risk of over reliance on short-term liabilities to fund long-term illiquid assets;
"
Tactical liquidity risk, which addresses the day-to-day funding requirements that are managed by imposing
prudential limits on net fund outflows; and
"
Contingent liquidity risk, which assess the impact of sudden stressful events and the Credit Union’s responses
thereto.
The primary liquidity risk policies and procedures include the following:
"
Liquidity risk management framework to measure and control liquidity risk exposure;
"
Measurement of cashflows;
"
Maintain a line of credit and borrowing facility with SaskCentral;
"
Maintenance of a pool of high quality liquid assets;
"
Monitoring of single deposits and sources of deposits; and
"
Monitoring of term deposits.
Provincially, SaskCentral manages a statutory liquidity pool on behalf of Saskatchewan Credit Unions. Nationally, Central 1
Credit Union maintains required levels of marketable investment securities to support national system liquidity needs.
SaskCentral maintains bi-lateral credit union lines with the other participating centrals for the purpose of accessing funding
in a liquidity event as a participant in the national liquidity program.
The following table details contractual maturities of non-derivative financial liabilities:
As at December 31, 2014:
< 1 year
1-2 years
> 3 years
Total
Member deposits
Accounts payable
Membership shares
44,344,286
441,090
27,395
10,606,457
-
14,781,633
-
69,732,376
441,090
27,395
Total
44,812,771
10,606,457
14,781,633
70,200,861
< 1 year
1-2 years
> 3 years
Total
As at December 31, 2013:
Member deposits
Accounts payable
Membership shares
48,134,386
670,877
28,165
7,685,254
-
13,371,651
-
69,191,291
670,877
28,165
Total
48,833,428
7,685,254
13,371,651
69,890,333
28
17.
The Credit Union manages liquidity risk on a net asset and liability basis. The following tables explain the contractual
maturities of financial assets held for the purpose of managing liquidity risk.
< 1 year
1-2 years
> 3 years
Total
Investments
Accounts receivable
13,000,037
1,552,216
37,623,137
6,784
13,811,786
-
9,249,298
-
13,000,037
1,552,216
60,684,221
6,784
Total
52,182,174
13,811,786
9,249,298
75,243,258
< 1 year
1-2 years
> 3 years
Total
Investments
Accounts receivable
14,261,363
545,526
29,903,456
6,247
15,889,101
-
13,787,245
-
14,261,363
545,526
59,579,802
6,247
Total
44,716,592
15,889,101
13,787,245
74,392,938
The above tables were prepared using undiscounted contractual maturities of financial assets and liabilities including
interest that will be earned or paid on these amounts.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. In seeking to manage the risks from foreign exchange rate fluctuations, the Credit
Union maintains foreign cash balances to approximately offset deposits held in foreign funds.
Foreign currency risk is not considered significant at this time as the Credit Union does not engage in any active trading of
foreign currency positions or hold significant excess foreign currency denominated financial investments for an extended
period.
29
18.
Fair value measurements
Recurring fair value measurements
The Credit Union’ s assets and liabilities measured at fair value on a recurring basis have been categorized into the fair
value hierarchy as follows:
2014
(In thousands)
Fair Value
Level 1
Level 2
Level 3
Assets
Financial assets at fair value through profit or loss
13,000
13,000
-
-
Total recurring fair value measurements
13,000
13,000
-
-
Level 1
Level 2
2013
Fair Value
(In thousands)
Level 3
Assets
Financial assets at fair value through profit or loss
14,261
14,261
-
-
Total recurring fair value measurements
14,261
14,261
-
-
As outlined in Note 4 to the financial statements, the Credit Union's SaskCentral and Concentra Financial shares are
classified as available for sale and measured at cost, therefore are not included in the above table. Amortized cost of these
items totalled $545,526 (2013 - $545,526).
Asset and liabilities for which fair value is only disclosed
The following table analyses within the fair value hierarchy the Credit Union’s assets and liabilities (by class) not measured
at fair value at December 31, 2014 but for which fair value is disclosed:
(In thousands)
2014
Fair Value
Level 1
Level 2
Level 3
Assets
Investments
Accounts receivable
1,548
61,059
7
-
1,548
61,059
7
-
Total assets
62,614
-
62,614
-
Liabilities
Member deposits
Accounts payable
Membership shares
70,515
441
27
-
70,515
441
-
27
Total liabilities
70,983
-
70,956
27
30
18.
Fair value measurements (Continued from previous page)
(In thousands)
2013
Fair Value
Level 1
Level 2
Level 3
Assets
Accounts receivable
59,798
6
-
59,798
6
-
Total assets
59,804
-
59,804
-
Liabilities
Member deposits
Accounts payable
Membership shares
69,709
671
28
-
69,709
671
-
28
Total liabilities
70,408
-
70,380
28
All fair values disclosed and categorized within Level 2 of the hierarchy use a net present value valuation technique and
inputs consisting of actual balances, actual rates, market rates (for similar instruments) and payment frequency.
As there is no observable market data for all fair values disclosed and categorized within Level 3 of the hierarchy, the
Credit Union has assumed that the fair value of the amounts is comparable to their amortized cost.
19.
Commitment
In 2009, the Credit Union entered into a seven year commitment for the provision of retail banking services provided by CGI.
The annual operating fee is calculated based on the level of equipment and services utilized as well as the number of Credit
Union members. The annual operating fees to December 31, 2014 were $94,441 and recorded as an expense (2015
estimate to approximate 2014).
20.
Other legal and regulatory risk
Legal and regulatory risk is the risk that the Credit Union has not complied with requirements set out in terms of compliance
such as standards of sound business practice, anti-money laundering legislation or their code of conduct/conflict of interest
requirements. In seeking to manage these risks, the Credit Union has established policies and procedures and monitors to
ensure ongoing co
31
P. Suknacky
M. Mudryk
S. Huk
J. Nasalsky
J. Horodysky
O. Hryhorowich
T. Oginsky
J. Waschuk
N. Bukowsky
J. Bayrak
P. Bozok
W. Topolnicky
S. Romanow
N. Makohon
M. Babij
D. Lotosky
J. Antonik
S. Wowk
W. Budz
N. Laschuk
O. Waschuk
P. Kashuba
A. Walko
J. Teslek
A. Mysyk
G. Bibyk
F. Rawlyk
P. Tkachuk
A. Kowbel
P. Perchyshyn
B. Sawka
Dr. M. Woytowich
J. Bedzyk
D. Romanow
J. Rawlyk
J. Galon
J. Basarab
O. Hnatiuk
L. Kuleba
G. Seniuk
M. Korpan
T. Baran
Dr. S. Dershko
Fr. V. Iwaszko
1939-1946
1939-1940
1939-1940
1952
1939-1942
1939-1952
1939
1939-1947
1939
1939-1952
1956-1964
1971-1976
1979-1984
1939-1941
1939-1942
1939
1940-1941
1940-1943
1940-1941
1941
1941-1942
1941-1953
1942
1944-1953
1942-1946
1942-1943
1943-1945
1943-1944
1943-1951
1944
1944-1951
1953-1956
1945-1951
1946-1966
1946-1951
1953-1954
1946-1951
1948-1951
1952-1957
1952
1959-1963
1952-1953
1953-1960
1953-1955
1953-1957
1953-1956
1953
1953-1958
1953-1956
1953-1956
1955-1957
1966-1968
1976-1979
1957-1962
1967-1969
1971-1977
Dr. D. Sokulsky
N. Wiwchar
A. Chelak
O. Waschuk
W. Sharko
P. Kostyshyn
P. Kolysher
M. Seniuk
M. Cherneskey
M. Pawlyk
Dr. M. Stadnyk
C. Kostiw
Prof. A. Michalenko
J. Sywanyk
J. Chorney
S. Kuzma
Prof. V. Buyniak
V. Maik
J. Fernetz
Dr. B. Rozdilsky
P. Kyba
S. Franko
J. Olynyk
A.W. Prociuk
Dr. M. Nebeliuk
S. Woytowich
Dr. B. Klymenko
A. Hawrish
P. Krawchuk
M. Berezowsky
P. Worobetz
O. Lazarowich
S. Kays
W. Michayliuk
T. Pasichniak
A. Korolewich
P. Kaminsky
H. Oleniuk
J. Hrytzak
N. Hawrysh
W. Korol
M. Boychuk
Dr. D. Cipywnyk
NEW COMMUNITY CREDIT UNION – 2014 ANNUAL REPORT
1957-1958
1957-1960
1957-1959
1957-1958
1961-1966
1958-1979
1958-1962
1959-1969
1959-1960
1959-1973
1960-1962
1961-1963
1961
1962-1965
1972-1974
1963-1974
1981-1986
1963-1965
1977-1982
1984-1989
1963-1974
1979-1984
1964-1965
1965-1967
1965-1970
1966-1969
1966-1971
1967-1972
1976-1978
1990-1992
1998-2002
1968-1970
1969-1971
1970-1972
1970-1975
1971-1975
1973-1977
1973-1978
1980-1982
1973
1973-1978
1980-1982
1974-1975
1974-1979
1975-1977
1975-1980
1975-1978
1976-1981
1978-1983
1985-1990
1978-1979
1979-1983
1979-1983
1980-1985
1987-1992
1980-1982
T. Huchkowsky
R. Kaminsky
P. Yuzwa
M. Sorochka
A. Stachniak
W. Wasylciw
S. Duch
M. Baniak
W. Hnatiuk
M. Luczka
J. Kornylo
N. Penry
N. Budzak
B. Bodnar
E. Gabruch
Dr. R. Papish
Z. Dershko
J. Matweyko
M. Rygajlo
R. Luczka
M. Pasichniak
J. Chrusch
W. Pillipow
P. Tymchatyn
R. Maluk
M. Gregory
A. Kalist
D. Luczka
B. Baran
M. Bodnar
R. Gabruch
A. Pshebylo
G. Trischuk
E. May
E. Koshman
S. Hawryliw
D. Lalach
G. Klimek
J. Calyniuk
D. Demeria
C. Arthurs
B. Slowski
D. Rebin
C. Brown
L. Hosaluk
G. Zerebecky
A. Wojcichowsky
R. Sywanyk
1982-1984
1983-1988
1983-1988
1983-1989
1991-1993
1984-1989
1984-1988
1985-1990
1985-1990
1996-1998
1985-1986
1986-1991
1993-1997
1987-1990
1995-2000
1989-1994
1989-1994
1989-1994
1990-1992
1990-1995
1997-2003
1991-1996
1991-1993
1991-1993
1992
1993-1998
1993-1998
1993-1995
1995-1997
1995-2000
2003-2012
1996-2005
1998-2003
1999-2003
1999-2005
1999-2005
2001-2006
2001-2010
2002-2011
2003-2010
2003-2012
2005-2011
2005-2012
2005-2014
2007-Present
2010-2011
2010-Present
2011-Present
2011-Present
2011-Present
2012-2015
2012-Present
2012-Present
2014-Present
Has served as President
during term of office
NEW COMMUNITY CREDIT UNION – 2014 ANNUAL REPORT

New Community Credit Union Loan Growth

Transcription

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