Looking to the future - Affinity Credit Union

Transcription

Looking to
the future
2015 Annual Report
“
Affinity immediately
saw the potential
of our construction
project.
”
Greg Foley, Executive Director with Elim Lodge Housing Group
Financing with Impact
At Affinity, we work with our business members to
provide them with the tools they need to succeed –
because their business ventures matter. A prosperous
business improves our local economy, creates
jobs, provides essential services and ensures
local sustainability.
Hyde Park View, Saskatoon’s newest 50-plus adult
residence, developed and managed by Elim Lodge
Inc. is now under construction. When it’s completed
in the fall of 2016, this impressive 170,000 sq. ft.,
4.5 storey residence will offer a total of 140 units
composed of 100 life leases, 15 rental suites and
25 personal care suites. They will house around 250
people who will enjoy a safe, affordable independent
living facility with a community atmosphere.
“It’s hard to believe we have come so far,” said Greg
Foley, Executive Director with Elim Lodge. “Plans
have been in the works since 2012, but until we found
financing – which was a huge challenge – everything
was on hold. Demand for safe and secure seniors’
housing in Saskatoon has been rising quickly in
recent years, so we felt the need to get this project
off the ground as soon as possible.
“That’s when I approached Affinity Credit Union.
Their business banking people immediately
understood our needs and saw the potential of the
project – we both wanted to make our community
better for everyone.”
The project now provides employment locally
to around 60 people and the majority of building
materials are sourced in Saskatchewan. Foley said:
“It’s a good feeling to be a part of one of the largest
projects of its kind in the province, boost employment,
enhance services and to allow seniors to age
gracefully and happily in a secure environment –
it doesn’t get any better than that!”
CONTENTS
1
Financing with Impact
32Strengthening Local Communities
3CEO and Board President’s Report
34Strategic Focus Areas
6Values You Can Bank On
42Management Discussion
and Analysis
8Banking Local
9Business Expansion & Success
10Board of Directors
55Summary Consolidated Financial
Statements
12District Council Delegates
56Management’s Responsibility
for Financial Reporting
14How We Are Governed
57Independent Auditors’ Report
18Leadership
58Summary Consolidated Statement
of Financial Position
19Stakeholder Engagement
20Member Service & Innovation
24Engaging Employees
27Employee Diversity
28Employee Development
29Social Impact of Our
Financial Services
30Help for Small Businesses
of Comprehensive Income
of Changes In Equity
of Cash Flows
62Note to the Summary Consolidated
Financial Statements
31Flexible Financing
DECEMBER 31, 2015
Looking to
the future
2015 Annual Report
The cover graphic showcases
the newest addition to Affinity’s
visual brand. Called the Chevron,
it represents who we are, where
we’re going and how we’ll get
there. Translated, that means
Affinity is always moving forward
and upwards working to improve
the lives of our members and
communities. Look out for it on
Affinity mobile apps, brochures,
website and advertisements. It
belongs to you.
Annual Report and Summary Consolidated Financial Statements
1
Scott Flavel, Board President and Mark Lane, CEO
“
We focus on creating long-term
economic well-being for our
members and their communities.
”
Mark Lane, CEO
CEO and Board
President’s Report
On behalf of the Board of Directors, executive management and employees, we are pleased to present the
2015 Annual Report for Affinity Credit Union.
Being a member-owned, democratically-run financial institution, the success of the credit union relies on our
members and owners. We want to begin by thanking you for choosing Affinity Credit Union as your financial
institution and to assure you that we are committed to providing an excellent service experience to our members.
Throughout 2015, we focused on delivering consistent value to our members, optimizing operational resources
and maintaining our commitment to co-operative values and principles. We moved forward in many key areas
relating to member service and innovation, community building, employee engagement and financial strength.
Member Service and Innovation
We continued our investment in better access through improved mobile and technology-enabled channels,
which aimed to appeal to both existing members and a new generation of members.
Given the significant adoption of members now preferring to complete transactions remotely and the
corresponding decline in those being conducted in-branch, we began implementing changes to Affinity’s
branch structure. We took steps to align our branch network so that going forward, branches will be strategically
located to maximize and enhance service delivery to members while, at the same time, maintaining our financial
sustainability. To further support this strategy, we opened our newest location in Stonebridge, Saskatoon. The
new 1,440 square-foot branch is full service and is open six days a week to serve the needs of one of Saskatoon’s
fastest growing communities.
We launched new pilots in 2015, including in-lobby terminals in locations with 24/7 access. These included
features such as video-enabled live chat with a contact centre representative, envelope-less deposits and large
transaction screens. We also completed network upgrades and hardware installations that better connected
members with Affinity specialists across the province using video technology. These services improved the
member experience and our operational efficiency at the same time.
In our efforts to enhance member engagement, we implemented a new format that provides members with the
ability to view our Annual General Meeting (AGM) from any location, even their own home. Using a link hosted
on our website, members were able to view the AGM remotely if they were unable to attend the meeting in
Saskatoon or at one of our nine other locations across the province. This service will be further enhanced to
allow full participation in the AGM beginning in 2016.
Community Building
The success of the communities we serve has always been an important measurement of the success we enjoy
as a credit union. In 2015, we contributed to an improved quality of life for neighbourhoods and communities,
in addition to individuals. This included a continued focus on entry-level housing, and our alternative lending
programs including community loans and micro-loans.
DECEMBER 31, 2015
3
Myrna Hewitt, EVP Marketing and Community, accepts the 2015 Strategic Alliance Partnership award on behalf of Affinity
We used our community investment dollars to provide many member benefits, and demonstrated to nonmembers the benefits of banking with Affinity. As one example, we developed and promoted Affinity exclusive
member discounts as part of select sponsorship arrangements with arts and cultural events, tradeshows and
other community programs.
We were recognized locally and nationally for our work in strengthening communities. Affinity was the
recipient of a 2015 Credit Union Central of Canada national award for community economic development
for our Business for Good Social Venture Challenge and, more locally, we received the 2015 Strategic Alliance
Partnership award from Saskatoon Community Foundation for our partnership with READ Saskatoon.
Our ability to be good corporate citizens was made stronger by our unique governance model, which keeps the
credit union connected to its co-operative roots and communities. Our District Council Delegates ensured the
voice of our members was heard and responded to. They played a vital role in determining and implementing
strategy and guiding the credit union in support of our community funding in strategic focus areas.
Employee Growth
Our employees are the engine that drives us as a credit union. Throughout 2015, we continued our progress
toward a common service culture following recent mergers and partnerships and banking system conversions.
We recognize the importance of growing our own talent and continued to invest in our employees’ personal and
professional growth. Throughout the year, our organizational focus was on operational excellence. Part of this
included diversity training for our people managers, as they are the key decision makers in the hiring, coaching
and mentoring of employees and are therefore critical to the overall member experience.
2015 also saw the continued development and implementation of our electronic performance management
system. During the year, the performance planning, coaching and review modules were rolled out to all employees.
For a number of years we’ve completed a review of our employee engagement through an organization-wide
engagement survey. This survey was repeated in 2015 and we are pleased to report that employee satisfaction
levels remain high in spite of recent challenges and changes following mergers, banking conversions,
restructures and changes to operating processes. Going forward, we remain committed to assessing and
understanding the experience of our employee group and making improvements as necessary.
4
DECEMBER 31, 2015
Our Board Directors and Delegates continued to be champions of corporate social responsibility and inspired
both themselves and our employees to demonstrate change. As one goal throughout the year, we aimed
to decrease work-related travel by 5%. It was challenging in 2015, given our partnerships and geographical
footprint, but we made some good progress. In the end, however, even with upgrades to technology (video
conferencing, webinar training), we fell short. As such, in 2016, our goals will remain the same and we’ll
make continued efforts in this area. However, we exceeded our goal of reducing paper consumption by 15%,
achieving 22.2% by the end of the year and were successful in changing 58% of our photocopying paper to a
more eco-friendly product. Congratulations to all employees for their efforts!
We continued to support the involvement of our employees and elected officials in community activities and
through the Community Spirit Fund, which provides for the allocation of $200 by each individual to the cause of
their choice. We are proud that over 98% took part in this initiative. In addition, all employees had the opportunity
to spend one paid volunteer day throughout the year where they were involved in community work. This
amounted to 1,474 hours, 199 days and had an estimated economic value of $47,280.
“
We’re deepening our commitment
to values-based banking.
Scott Flavel, Board President
”
Financial Strength
Financially, we continued to achieve balanced growth and strong profitability, while enabling and encouraging
many local economies.
Our complete financial story accompanies this report in the form of our 2015 Summary Consolidated
Financial Statements.
Future
As always, we would like to thank Board Directors and District Council Delegates for their dedication during the
past year. Thanks also to our executive management team who have demonstrated leadership and commitment
to the success of the credit union and our 906 employees for their continued commitment to Affinity in
embracing another great year of change and success.
Looking to the future, Affinity’s Board and management will continue to focus on excellence in member
experience by offering enhanced accessibility and providing quality, competitively-priced products and services.
By choosing this path, we hope to strengthen our credit union and become the financial institution of choice
for people in Saskatchewan. We have confidence that we can achieve our goals. It is our opportunity to make
a difference and to build a better world for everyone, every day.
DECEMBER 31, 2015
5
Values You Can Bank On
Our purpose as an organization and our promise to our members, employees and
communities is built on co-operative values and principles. These values and principles
guide us in all we do and set us apart from any other financial institution. This means
we’re locally focused, member-centered and democratically controlled. Our focus is on
building relationships with individuals, businesses and local organizations, facilitating
and empowering member groups and bringing new people into our governance process.
Our Vision
Build a better world for everyone, every day.
Our Mission
Enabling members and communities to invest in one another.
Our Values
Open, honest, inclusive and committed.
135,879
66 branches in
57 communities
100%
906
$5.9b
Deposits
employees
in managed assets
Member deposits are fully
guaranteed by the Credit
Union Deposit Guarantee
Corporation
members
6
DECEMBER 31, 2015
of the credit union
is owned and run
by members
“
If members want to discuss their
mortgage options, I’m happy to
meet them at a place and time
that is convenient for them.
Hilary Maughan (left), Mobile Mortgage Specialist Saskatoon, with Affinity members
DECEMBER 31, 2015
”
7
Banking Local
Accounts
We offer account and card options designed to fit your age, stage and lifestyle.
And, you can access your funds from anywhere in the world using automated
teller machines, mobile devices, internet banking or any one of our branches
across the province.
Loans and Mortgages
Becoming a homeowner, advancing your education, building your retirement
– no matter what your next goal is, Affinity Credit Union is here to lend you so
much more than money.
Investments and Advice
Looking to craft a personalized plan to help meet your financial goals? Our
investment experts are ready to show you how it’s done! With Affinity, you
can choose from a full range of investment options and wealth management
expertise, plus the personal attention that comes with being a member-owner.
Financial Planning and Estate Planning
Financial planning, investments, estate planning – Affinity offers all of the
services you’d find at a bank, with the benefit of personalized service. Whether
you’re buying a home, saving for your little one’s education or counting down
to your retirement, we’re here to help you achieve your dreams.
Business Loans
We offer a wide range of commercial loans to finance just about any business,
large or small. Micro-loans are also available to provide funds to those
businesses that would not qualify for traditional financing.
Insurance Brokerage
We have a team of professionals that offer a comprehensive range of general
insurance solutions, including home, tenant, condo, farm, commercial, travel,
bonding and surety through a variety of insurers. You can visit an insurance
broker and get great personalized advice from two locations in Regina, four in
Saskatoon and locations in Meadow Lake, Naicam and Prince Albert. We also
offer motor vehicle licensing and web-based renewals at affinityis.ca.
100%
$2.5m
of our profits are
re-invested in Saskatchewan
in donations, sponsorships
and grants
Affinity members Gene and Susan Minard, owners of Minard’s Leisure World Ltd and Minard’s Steadfast Homes Ltd
Business Expansion & Success
In 2004, the RV business became a major part of Gene
and Susan Minard’s lives when they opened Minard’s
Leisure World Ltd in Weyburn.
Positioned between Regina and the U.S. border, the
city had nothing to offer RV customers, and Gene and
Susan saw both a need and an opportunity. “People
wanted to be able to purchase RVs and parts and
accessories,” said Susan.
Armed with a background in marketing, Susan
launched the business from a 9,000-square-foot
building on six acres of land and with five employees.
Business soon took off and they felt they were on top
of the world.
Then, in 2009, the recession hit, their financier pulled
out of the industry and things looked grim. “It was
hard, but we survived,” said Gene. They had to forge
new relationships with new financiers, including
Affinity Credit Union. “What we really appreciated was
that Affinity had faith in our ability to manage Minard’s
Leisure World Ltd and this gave us the chance to not
only survive, but to thrive.”
Just over a decade later, Minard’s Leisure World Ltd
is one of the largest RV dealers in Western Canada
with 751% growth, over $35 million in sales and
50 employees. Further expansion has seen the
company branch out into additional businesses.
Minard’s Steadfast Homes Ltd, which just opened
a second location in Estevan, specializes in a choice
of manufactured, modular and ready-to-move homes,
and Offices to Go provides mobile office trailers that
are ideal for the construction, commercial and
oilfield industries.
16,758
8,083
business members
new members welcomed
to Affinity in 2015
Board of Directors
Affinity Credit Union is a financial co-operative
governed by a Board of Directors and accountable
to the member-owners of the credit union. The Board
establishes the vision and oversees core business
operations at Affinity while building relationships with
members and communities and providing leadership
within the values-based banking, co-operative and
credit union systems.
The Board has a fiduciary responsibility to the credit
union and follows the standards set out in The Credit
Union Act 1998, the Standards of Sound Business
Practice and other applicable legislation.
The Board, led by a non-executive President, is
comprised of 23 independent and elected Directors
and is based on a tiered governance structure.
Terms are three years in duration and renewable.
Collectively, the Board is capable of fulfilling its role
and represents a variety of experience, education,
competence and knowledge: 35% are women and
65% are men.
The Board delegates the day-to-day leadership and
management of Affinity to the Chief Executive Officer,
who establishes the accountabilities for each member
of the executive leadership team.
10
DECEMBER 31, 2015
23
Board members
35%
65%
Women
Men
Wayne Amos
Gailmarie Anderson
Mitchell Anderson
Ed Cechanowicz
Duane Chipley
Saskatoon
Spectra
Scott Flavel
Ruth Glatt
Kearney Healy
Lois Herback
Audrey Horkoff
East
1st Vice President
Evelyn Kasahoff
Regina
Milton Kerpan
Paul Ledoux
Martin McInnes
Cameron Nordin
Spectra
Hugh Sampson
Saskatoon
Owen Sebastian
Norman Sheehan
Cy Standing
Dannie Wreford
Vanda Wutzke
Spectra
Central
President
Advantage N.E.
Saskatoon
Advantage N.E.
Saskatoon
Saskatoon
First Nations
First Nations
Saskatoon
Shellbrook
2nd Vice President
North
Advantage N.
Deb Chobotuk
Saskatoon
Langham
Shaunavon
Pauline ZiehlGrimsrud
Spectra
Ethics and Integrity
Our Board approves credit union policies and management ensures
the highest standards of ethics, integrity, honesty, fairness and
professionalism – in every respect, without exception, are followed
at all times. Our Market Code outlines this commitment and can be
found on our website at affinitycu.ca
DECEMBER 31, 2015
11
District Council Delegates
Our communities are represented by local member-elected District Councils. In 2015, there
were 12 District Councils representing the communities and members we serve throughout
Saskatchewan. Delegates elect Directors to the Affinity Board of Directors from their respective
District Councils.
Delegates play an influential role in the governance of the credit union. They use their local
knowledge and established community relationships to ensure that the member-owners are
represented. Delegates also provide leadership in allocating community development funds
and attend many of the credit union’s community events.
Tyler Dueck
Henry Dyck
Lise Gareau
Terry Hinz
Henry Penner
Katrina Regier
Leo Schulz
Vanda
Wutzke
Mitchell
Anderson
Gayl Basler
Ed
Cechanowicz
Deb
Chobotuk
Linsey Gatzke
Ruth Glatt
Kearney Healy Kurt Holfeuer
Linh Le
Martin
McInnis
Victoria Morris Norman
Sheehan
Cecile Smith
Brandi
Tracksell-Sampson
Joanne
Brochu
Tiffany Dreger
Scott Flavel
Grant
Greenshields
Wendy
Gullacher
Brett Halstead
Gerald
Munholland
Kelvin
Schapansky
Colleen
Sekulich
Perry
Thiessen
Sara Trenouth
Leni Udell
Nathanial
Cole
Jean
Dufresne
Lois Herback
Richard
Heroux
Martin Lelliott
Gwen Nell
Doug
Knowles
Mike Heinrich
Patricia
Isherwood-Thomas
Ronda Palmer
Gordon
Perkins
DISTRICT 5
SOUTH
DISTRICT 4
CENTRAL
DISTRICT 23
SASKATOON
DISTRICT 1
NORTH
As of December 31, 2015, we had 112 Delegates and 10 vacancies. 49% are women and
51% are men.
12
DECEMBER 31, 2015
Betty Ann
Schiefner
DISTRICT 6
EAST
Bryan
Cottenie
Rosalie
Daisley
Caron Hallen
Georgina
Harambura
Audrey
Horkoff
Andrew
Kazakoff
Myra
Paslowski
James
Yakimoski
Donna Epp
Joanne
Janzen
Evelyn
Kasahoff
Becky
Loewen
Deborah Ann
McGuire
Mike McLeod
Bev Turgeon
Peggy Walker
Lyle Banda
Gary Gerein
Stephanie
Gosselin
Philip
Joanette
Heather
Ranger
Tina Stene
Dannie
Wreford
Michael Bob
Leighanne
Gardipy
Alex Kennedy
Paul Ledoux
Chief Richard
Okemow
Jacalyn Pilon
Cy Standing
Janine Hoey
Ray Keller
Karl Panas
Joseph
Rybinski
Hugh
Sampson
Nick Trofimuk
Gailmarie
Anderson
Don Bohay
Randy Boyko
Gladys Court
Milton Kerpan
Alice
McFarlane
Dara McMunn Lynn
Pederson
Joseph
Schemenauer
Larry Sparks
Denis
Sunderland
Paul Ulrich
Wayne Amos
Amanda
Bendickson
Dennis Bode
Jasmin
Carlton
Duane
Chipley
Joyce Fraser
Garry Lafrentz
Cameron
Nordin
Robert
Anderson
Ted Anderson
Delana
Floberg
Linda
Kutschall
Debbie
Olesen
Linda Ruest
Joe-Ann
Ruetz
Owen
Sebastian
DISTRICT 13
SHAUNAVON
DISTRICT 12
SPECTRA
DISTRICT 11
ADVANTAGE N.E.
DISTRICT 10
ADVANTAGE N.
DISTRICT 9
FIRST NATIONS
DISTRICT 8
SHELLBROOK
DISTRICT 7
LANGHAM
Linda
Bourque
DECEMBER 31, 2015
13
How We Are Governed
Delegate and Director Election Process
In accordance with the Affinity Credit Union bylaws,
members can nominate members to serve as a District
Council Delegate. Voting is by electronic or paper
ballot. District Council Delegates elect Board Directors
from each of their Districts.
Member Engagement
Members are encouraged to engage with the Board
of Directors and provide feedback in a variety of ways:
•Through their locally-elected Delegates or directly
to the Board of Directors
•By submitting a resolution or participating in a vote
at the Annual General Meeting
•By Delegates participating in the All Delegates
Meeting, District Council Meetings, and on
Board Committees
In 2015, Affinity appointed an external consultant
to facilitate a governance assessment process
designed to evaluate the performance of the overall
Board, Board Chair, Board Committees and individual
Directors as self-assessed by each Board member.
Avoiding Conflicts of Interest
A conflict of interest occurs when a personal interest
of a Director or Delegate interferes or is perceived
to interfere with the interests of the credit union. To
ensure our elected officials contribute according
to high ethical standards, each is required to sign a
conflict of interest declaration annually. They are also
required to declare conflicts on Board, District Council
and Committee meeting agendas.
Continuing Education of Delegates
and Directors
Directors and Delegates receive the training they
need to participate in the governance of the credit
union. This includes an orientation program for newlyelected Delegates and Directors and recommended
Mandate and Responsibilities of
Members of Board Committees
Directors and Delegates are expected to prepare
for, attend and contribute meaningfully to all Board
and applicable Committee meetings and keep
deliberations confidential. Each Committee has a
mandate outlining its purpose and responsibilities.
Committees meet regularly throughout the year and
provide regular reports to the Board. Affinity Credit
Union has five Committees.
Board Committees
Scott Flavel, Board President, is an ex officio member
on all Board Committees.
Assessing the Board’s Performance
14
courses. Directors and Delegates are reimbursed
for expenses incurred in connection with these
education programs and receive per diems.
•
Audit and Risk Committee (7 Directors; Board
President) – responsible for overseeing risk
management and financial reporting integrity.
•
Conduct Review Committee (7 Directors; Board
President) – responsible for overseeing conduct
and ethical business standards.
• C
ompensation and Liaison Committee
(5 Directors; Board President) – responsible for
providing advice to the CEO on issues affecting the
credit union and agendas for Board of Directors’
or Delegates’ meetings on matters pertaining to
compensation, policy, structure and direction of
the organization.
•
Governance Committee (6 Directors; 5 Delegates;
Board President) – responsible for overseeing
corporate governance.
•
Co-operative Values Committee (4 Directors;
1 Delegate from each District; 1 employee;
Board President) – responsible for ensuring our
co-operative values and traditions remain healthy
and robust and for maintaining progressive
corporate social responsibility policies.
DECEMBER 31, 2015
Board Meeting Attendance
The Governance Committee is responsible for reporting on Board of Directors’ meetings and committee attendance.
2015 Board & Board Committee Meeting Attendance
Committee Membership and Attendance May 1 – December 31, 2015 1
Audit
and Risk
Conduct
Review
Compensation
Liaison
Co-operative
Values
District Council
Meetings
Board Directors
Board
Meeting
Wayne Amos
9 of 11
Gailmarie
Anderson
8 of 11
Mitchell
Anderson
10 of 11
4 of 5
2 of 2
4 of 4
–
–
Ed Cechanowicz
11 of 11
5 of 5
1 of 2
Duane Chipley
11 of 11
Deb Chobotuk
(from Apr 1/15)
7 of 7
Scott Flavel,
Board President
11 of 11
Ruth Glatt
10 of 11
Kearney Healy
10 of 11
Lois Herback
11 of 11
Cathy
Holtslander
(to Apr 1/15)
3 of 4
–
–
Audrey Horkoff
10 of 11
4 of 5
1 of 2
Evelyn Kasahoff
11 of 11
3 of 3
4 of 4
Milton Kerpan
10 of 11
3 of 3
4 of 4
Paul Ledoux
7 of 11
Martin McInnis
(from Apr 1/15)
6 of 7
5 of 5
2 of 2
3 of 4
Cameron Nordin
9 of 11
3 of 5
2 of 2
4 of 4
Hugh Sampson
11 of 11
4 of 5
1 of 2
4 of 4
Owen Sebastian
9 of 11
Norman
Sheehan
(from Aug 21/15)
4 of 4
Cy Standing
8 of 11
Brandi TracksellSampson
(to June 19/15)
5 of 7
Dannie Wreford
11 of 11
Vanda Wutzke
11 of 11
8 of 11
Gayl Basler
(to Apr 1/15)
Governance
3 of 3
4 of 4
3 of 3
3 of 4
–
–
–
3 of 4
3 of 3
2 of 2
4 of 4
4 of 4
3 of 3
5 of 5
3 of 4
3 of 3
3 of 3
4 of 4
3 of 3
3 of 3
4 of 4
3 of 3
3 of 3
–
4 of 4
–
4 of 4
4 of 4
–
–
3 of 4
1 of 3
2 of 2
4 of 4
3 of 4
4 of 4
3 of 3
3 of 4
1 of 1
3 of 4
3 of 3
5 of 5
4 of 4
2 of 2
4 of 4
3 of 3
4 of 4
Board Committee functions were consolidated in May 2015 resulting in Board Committees reducing from Eight (8) to Five (5). Some Directors did not
serve for the entire 2015 calendar year due to the Board election process for those Directors whose terms have expired.
1
DECEMBER 31, 2015
15
Director Remuneration
The Governance Committee is responsible for reviewing elected officials’ compensation.
2015 per diem amounts paid to each Board Director are as follows:
2015 Board Director Per Diems
Board Director
Total Per Diems
Dates served as a Director in 20151
Wayne Amos
8,470.00
January 1 to December 31, 2015
Gailmarie Anderson
9,005.00
Mitchell Anderson
9,965.00
Gayl Basler
5,840.00
January 1 to April 1, 2015
10,930.00
Duane Chipley
9,975.00
Deb Chobotuk
10,455.00
April 1 to December, 2015
Scott Flavel, Board President
34,960.00
9,610.00
Kearney Healy
12,910.00
Lois Herback
10,435.00
1,795.00
January 1 to April 1, 2015
Audrey Horkoff
13,805.00
Evelyn Kasahoff
9,435.00
10,770.00
Paul Ledoux
6,770.00
Martin McInnis
8,395.00
April 1 to December 31, 2015
Cameron Nordin
7,890.00
Hugh Sampson
9,655.00
Owen Sebastian
6,625.00
Norman Sheehan
4,800.00
June 19 to December 31, 2015
Cy Standing
7,680.00
Brandi Tracksell-Sampson
5,410.00
January 1 to June 19, 2015
Dannie Wreford
9,180.00
Vanda Wutzke
11,400.00
7,095.00
Ed Cechanowicz
Ruth Glatt
Cathy Holtslander
Milton Kerpan
Pauline Ziehl-Grimsrud
Total 2015 Director Per Diems
$253,260.00
1 Some
Directors may not have served for the entire 2015 calendar year due to the Board election process for those Directors whose terms have expired.
Amounts paid to individuals (including Directors who served for only a portion of the year) include all per diems paid to them for attendance at both
Director and Delegate meetings and training sessions throughout 2015. Directors are elected by District Councils in March each year, election results
were announced at the Annual General Meeting on April 1, 2015.
16
DECEMBER 31, 2015
Delegate Remuneration
2015 per diems and expenses paid to all Delegates and Directors are as follows:
Delegate Remuneration
2015 Totals
Director per diems
$253,260.00
Delegate per diems, taxable benefits and honorariums
$181,450.00
Director and Delegate expenses (includes all meals, accommodation, mileage and training)
$394,100.59
Memberships in Associations
Executives and Board Directors hold memberships in various organizations and participate in boards and
committees of these organizations. They include, but are not limited to: SaskCentral, Canadian Credit Union
Association, Saskatchewan Co-operative Association, Co-operative Development Foundation of Canada,
Concentra Financial and the Centre for the Study of Co-operatives.
Global Alliance for Banking on Values
Affinity is a member of the Global Alliance for
Banking on Values (GABV), a network of the world’s
leading values-based financial institutions. As a
member of GABV, Affinity complies with sustainable
banking principles and shares a commitment to
finding global solutions to international problems
and to promote positive, viable improvements to
the current financial system.
In 2015, Affinity’s EVP Human Resources and
Employee Services Manager attended the GABV
annual meeting in Paris and Nanterre, France, and
marked the 5th anniversary of this growing network
of values-based banks. The event represented an
opportunity to connect, debate and collaborate
on how to build a sustainable financial future.
GABV also held its first face-to-face meeting of the
Governing Board Forum in Copenhagen, Denmark,
attended by Kearney Healy, Affinity Board Director
who lead a discussion on member engagement.
DECEMBER 31, 2015
17
Leadership
Affinity Credit Union’s executive leadership team plays a vital role in determining
organizational strategy and guiding the operations of the credit union.
Pat Brothers
EVP HR
Ken Harding
EVP Governance
& Risk
Myrna Hewitt
EVP Marketing
& Community
Mark Lane
CEO
Lise de Moissac
EVP & CFO
Tim Schroh
Atul Varde
EVP & COO
EVP & CIO
Shawna Miller
Josh Pion
Affinity Credit Union’s senior leaders develop and implement operational
strategies to meet the organizational goals of the credit union.
Hugh Balkwill
Glenn Brodt
Myles Lariviere
Tanya Llewellyn
Dave Schneider
Serese Selanders
Mark St. Onge
Murray Yeadon
VP Credit Services
VP Compliance
18
VP Administration
VP Member
Experience
VP Wealth Strategies
& Insurance
VP Service Delivery
(to Sept 30, 2015)
VP Accounting
VP Business Banking
DECEMBER 31, 2015
Rick Matte
VP Network
Infrastructure
VP Governance
& Strategy
Chief Internal Auditor
By working with Youth Ambassadors, we hope to develop
co-operative and credit union leaders of tomorrow.
Delegates provide input to the leadership team at the annual
All Delegates Meeting.
Affinity took part in the Saskatoon Doors Open event and welcomed over 300 people to tour the campus building.
Stakeholder Engagement
Affinity’s leadership engages with members, communities, employees, co-operatives,
the business community and government agencies, in the following ways:
• Formal surveys and focus groups
• Community and town hall meetings regarding service delivery
• Sponsorships and donations
• Community events
• Elected officials’ election process and planning meetings
• Youth involvement (Youth Ambassadors)
• Annual General Meeting
• Representing Affinity and volunteering on external boards and committees
• Formal meetings and reports with regulators
DECEMBER 31, 2015
19
Member Service
& Innovation
As a member-focused and values-based organization, 2015 saw Affinity continue
its pursuit of a better overall experience for our members while maintaining our
commitment to delivering our products and services in an ethical manner.
Looking to the future
In 2015, we opened a different kind of branch
location that transforms the way we interact with
our members and provides a new and enhanced
member experience. Located in Stonebridge,
Saskatoon, the branch is technology-based
and has remote network connections that
allow members to connect with our specialists
regardless of where they are located. For
20
example, if a member wants to speak to an
estate planning specialist located in Regina,
they can, using video technology.
This branch will be used to pilot new
technologies and business approaches
that could potentially be rolled out to other
locations in the future.
DECEMBER 31, 2015
Enhanced Contact Centre
We enhanced our member contact centre services to allow members to speak to representatives
via video-enabled ATMs who could then guide them through their transactions. These videoenabled ATMs are in two of our Saskatoon branches.
Video-enabled ATMs allow members to:
Connect to a
Contact Centre
representative
Deposits
without
envelopes
DECEMBER 31, 2015
Make
payments
Use as an
ATM 24/7
21
A modern look for Westwiew branch
New Location for
Westview Branch
In April, we re-opened a brand new Westview branch located adjacent to the original site
that was housed in the Westview Co-op Food Store on the corner of Avenue P and 33rd
Street, Saskatoon. The new 5,500 square foot facility is a full-service branch. The modern
design features a comfortable member waiting area, open member service area, private
offices and floor to ceiling windows making for a bright and welcoming space for both
members and staff alike. The new branch includes services that are familiar to our members
paired with new and cutting-edge technology that will enhance the member experience.
The branch is open Monday to Saturday and is also equipped with a drive-thru ATM and
two video-enabled ATMs.
Affinity mobile transactions jumped by 125% in 2015
New Look
Mobile App
We were excited to announce the launch of our newly
renovated mobile app in 2015. We added some great new
and improved features that enhanced the overall member
experience – and a fresh new look. New features include:
• View detailed transaction histories and
other information for all investment, loan
and demand accounts
• Live chat with our Contact Centre
• Update your contact information
Member Deposits are Guaranteed
All deposits held in Affinity Credit Union are fully guaranteed by Credit Union Deposit Guarantee Corporation. The Corporation
was the first deposit guarantor in Canada and has successfully guaranteed deposits held in Saskatchewan credit unions since
1953. For more information about the Corporation and the guarantee, talk to any one of our employees or visit www.cudgc.sk.ca.
38% of members use electronic banking
Engaging Employees
At Affinity, we strive to be an employer of choice and focus on creating an engaged,
diverse and educated workforce.
Employee Engagement Survey
In 2015, employees were given the opportunity to take part in an employee engagement
survey that was conducted through an independent third party specializing in these
types of surveys.
We are very pleased to report that 84% of our employees participated in the survey,
which was a great response rate.
Our overall employee engagement score was 75%, which compares well to the
financial services benchmark of 73%. Given the significant changes in our organization
during the past while – mergers, banking system conversions, branch network
restructures and changes to operating processes – it is a relatively good outcome.
The survey also identified the three main areas that drive employee engagement at
Affinity: professional growth, teamwork and senior management clearly communicating
goals and direction.
Going forward, feedback from the survey will be invaluable in developing strategies
for continued improvements.
24
84%
86%
89%
of employees say they
are proud to tell others
they work for Affinity
Credit Union
of employees feel that
learning is an important
objective in their day
to day work
of employees say they
can make a positive
impact at work
89%
93%
96%
of employees believe
that member satisfaction
is a primary focus of the
organization
of employees
understand what is
expected of them
at work
of employees recognize
the importance of
community involvement
to Affinity
DECEMBER 31, 2015
Brendon Lee, Relationship Banking Manager, 8th Street branch
Xu, Wen (Irene), Financial Services Representative, Westview branch
Employee Diversity
We aim to build a strong foundation for our employees right across the credit union and
remain strongly committed to a diverse workforce.
In 2015, all of our 155 people managers received diversity training. This group is key
in making hiring decisions, are key influencers in staff behaviour and are primarily
responsible for the member experience.
2015
2014
Total employees
906
916
Full time
712
712
Part time
194
204
Working in urban locations
53%
53%
Working in rural locations
47%
47%
Positions filled internally
78.9%
73.4%
Voluntary turnover
9.44%
9.15%
Unionized
20.6%
20.1%
New hires of Aboriginal ancestry
5.62%
7.83%
New hires from diversity groups
15.73%
24.35%
Management: average age
46.21
45.3
Management: male/female
33.5% male
66.5% female
32.7% male
67.3% female
Non-management: average age
40.96
40.6
Non-management: male/female
9.5% male
90.5% female
9.9% male
90.1% female
0
0
Demographics
Hiring Practices
Workplace Diversity
Human Rights
Complaints of discrimination
DECEMBER 31, 2015
27
Employee Development
We recognize the importance of individual employee’s personal and professional growth
and encourage individual employee development.
In 2015, we invested a total of $606,672 in learning, including educational support, tuition
reimbursement, training and workshops to support individual employees’ personal and
professional growth.
Investment in training and developing
our people
2015
2014
$606,672
$519,499
To support a smoother transition of our mergers with Hudson Bay and Shaunavon, we
carried out comprehensive training in areas such as the banking system, performance
management and sales and service processes.
2015 also saw the continued development and implementation of our electronic
performance management system. During 2015, the performance planning, coaching
and review modules were rolled out to all employees.
From left: Helen Mazurek, Controller; Lana Neufeld, Accounting Supervisor; and Shane Yonkman, Assistant Controller, all based in Saskatoon
Social Impact of Our
Financial Services
Guided by our co-operative principles, we continue to deepen our commitment to values-based banking
and corporate social responsibility. Our goal is to foster healthy communities and productive economies. To
achieve this, we re-invest member deposits in our communities through loans that help other Affinity members
achieve their goals. We increase access to credit for individuals and organizations that face barriers to gaining the
financing they need and provide capital for initiatives that have a social or environmental benefit.
In June 2015, the Truth and Reconciliation Commission released its Call to Action, and Section 92 called
on corporate Canada to adopt the UN Declaration on the Rights of Indigenous Peoples and take action to
promote education and understanding, as well as efforts of reconciliation with indigenous peoples. As valuesbased credit unions, Affinity, Assiniboine and Vancity Boards together have committed to pursue meaningful
reconciliation characterized by inclusion, justice and sustainability.
Where We Invested Members’ Money
We are an economic engine for Saskatchewan. In 2015, 70,646 individual member loans, with a value of
$3.95 billion, were outstanding in our communities. All of these loans were financed by deposits from our
135,000 members. These included micro-loans, business start-ups, community development loans, affordable
housing and green loans.
Purpose of Loans
(Total outstanding December 31, 2015)
Balance (in thousands of dollars)
Type of Loan
2015
2014
Business Loans
$1,025,864
$885,265
Consumer Mortgages
$1,721,103
$1,578,361
Consumer Loans
$447,579
$444,462
Agricultural Loans
$486,715
$410,194
Other Loans, Adjustments and Accrued Interest
$239,091
$227,160
$3,950,352
$3,545,442
TOTAL
Social Finance Loan Programs
(Total outstanding December 31, 2015)
Balance (in thousands of dollars)
Type of Loan
# of Loans
2015
2014
2015
2014
Accessible Home-Ownership Loan Programs
$34,783
$32,131
290
265
Community/Non-Profit Loans
$36,496
$21,319
76
56
First Nations Lending
$25,065
$18,595
29
29
$877
$629
42
31
$97,221
$72,674
437
381
Micro-Loans (Small Business Start-ups)
TOTAL
DECEMBER 31, 2015
29
Affinity member Jeff Alport, owner of Nokomis Craft Ales
Help for Small Businesses
Small businesses are the engines of our local
economy, yet they often have the hardest time getting
financing. Affinity Credit Union’s BusinessCents
Micro-Loans provide an opportunity for new
entrepreneurs who may not qualify for conventional
financing because of a limited business history, lack
of collateral, low income level or a weak credit history.
Being local and sourcing ingredients locally enabled
Jeff to create different styles of beer that were fresh
and proved popular with his customers. “You don’t
get that kind of freshness when beer is made in large
volumes, at a distant location and then warehoused
and transported to retail stores where it sits for months
on end,” he explained.
Jeff Alport, owner of Nokomis Craft Ales, is one
such entrepreneur. He needed a small loan to get
his micro-brewery business off the ground.
Jeff produces 800 litres per week, selling growlers
and kegs out of his brewery to Nokomis customers
and then travels to farmer’s markets in Saskatoon
and Regina each week.
A former Vancouver resident and home brewer,
Jeff moved to Nokomis a couple of years ago to
run a carpentry business. But, when liquor laws
in the province were changed to allow nano-scale
commercial breweries, he decided to make the jump
from hobby brewer to professional.
He approached Affinity Credit Union for financing
and, soon after, his business took off. “It’s lucky I
found a banker, an individual at Affinity who took a
personal interest in my project. Without their help, I
think I would have had a much harder time getting the
business off the ground,” said Jeff.
30
One year in, Jeff is already two years ahead of
business plan projections and is running at full
capacity. He now plans to expand his business
to double his current capacity, begin growing his
own hops (one of the four ingredients of beer) and
establish a micro-malting facility using locally-grown
barley. “It would then be a completely Nokomis
product,” he added.
DECEMBER 31, 2015
Flexible Financing
At Affinity, we offer accessible and flexible financing
through community loans to organizations and
co-operatives that may not normally qualify for
conventional credit, but are making a difference
in Saskatchewan communities.
St. Michael’s Camp, located on the shores of Madge
Lake, in Duck Mountain Provincial Park, welcomed
150 children of all ages last summer after 10 months
of refurbishment and construction.
Owned and run by the Ukrainian Catholic Church
Camps of Saskatchewan Inc (UCCC of Sask Inc),
the camp offers a range of outdoor sports, campfires
and crafts in a Christian-based setting. Myron Derow,
President of UCCC of Sask Inc, said, “It’s been a
long time coming and we are delighted with the
improvements. We are also deeply grateful to our
150+ volunteers who worked endlessly to help
make our dream a reality.”
“We raised 65% of the funding required from donations
and sponsorships,” said Myron, “but needed a loan
for the remainder. That’s where Affinity came in. They
provided excellent service, made the process so easy
and we were approved for a mortgage right away. It
couldn’t have worked out better.”
Throughout the construction process and
beyond, the camp created local jobs, boosted
the local economy and now hopes to provide a
memorable summer camp for young people and
a positive environment for family reunions and
other community-based activities.
“It’s rewarding to help local organizations achieve
their goals and enrich the lives of people in their
community,” added Chelsey Puchala, Affinity
Commercial Account Manager.
Plans to refurbish the camp started seven years ago
after it was decided to provide better facilities so that
the camp could be used all year round for family
reunions, outdoor educational outings, as well as a
summer camp, and would be accessible to people
with disabilities.
Creating memories at St. Michael’s Camp
DECEMBER 31, 2015
31
Strengthening
Local Communities
We support, or partner with, a variety of organizations, projects and
programs that benefit and improve Saskatchewan communities.
In 2015, we provided a total of $2.5 million – or 6.6% of our pre-tax
profits – to 1,626 initiatives or organizations, as well as scholarships
to 114 young members across the province through our community
investment programs. This exceeded our 2015 community investment
target of 6% of our pre-tax profits.
affinitycu.ca
For more details on our programs and application timelines,
visit our website under Your Community/Community Funding.
Total Investments by Funding Program
(as at December 31, 2015)
# of Investments
Program
2015
Total $
2014
2015
2014
District Council Community
Development Funding
204
197
$1,026,562
$814,812
Corporate & Branch Level
Donations/Sponsorships
294
300
$1,196,533
$996,709
Youth Scholarships – Build a
Better World & Elwood Harvey
114
101
$109,000
$93,000
1,014
976
$202,800
$195,200
1,626
1,678
$2,534,895
$2,139,172
Community Spirit Fund –
Employee Giving
TOTAL
32
DECEMBER 31, 2015
$1,026,562
$109,000
$202,800
in District Council funding
including $1,500 to Muskoday
First Nation Community School
in scholarship funding including
$500 to the Affinity Build a Better
World Scholarship winner in
Minton-Gladmar
in Community Spirit Funding
including $2,000 to the Birch
Hills School playground project
Throughout 2015, our District Council Delegates worked
to keep us connected with our members in the communities
we serve. This included decisions about how and where we
allocated funding in each local community.
Funding by District
(as at December 31, 2015)
District
2015 Total $
2014 Total $
1North
$31,907
$34,383
4Central
$61,881
$100,623
5South
$188,750
$111,116
6East
$104,580
$29,333
7Langham
$28,436
$33,873
8Shellbrook
$28,654
$86,162
9 First Nations
$10,055
$54,884
10 Advantage North
$50,120
$83,760
11 Advantage North East
$133,679
$94,153
12Spectra
$205,845
$317,251
13Shaunavon
$102,831
–
23Saskatoon
$533,370
$668,756
Province-wide initiatives
$175,284
$197,228
DECEMBER 31, 2015
33
Strategic Focus Areas
There are many important needs, initiatives and organizations in our communities and we know that we
cannot meaningfully support them all. To strengthen the impact of our investments and contribute to tangible
improvements in economic and social well-being in our communities, we are targeting a growing portion of our
community investments into four strategic focus areas:
1. Local economic development
2. Economic self-reliance
3. Environmental sustainability
4. Building community assets and facilities
In 2015, 77% of our district council and corporate funding was invested into initiatives that contributed to the
goals of these areas. We increased investment in these strategic areas by 4% over our 2014 investment, which
met our target of 4-6%.
Total Funding by Strategic Focus Area
Strategic Focus Area
2015 Total $
2014 Total $
Local Economic Development
$206,006
$50,494
Economic Self-Reliance
$413,843
$385,726
Environmental Sustainability
$155,296
$154,729
Building Community Assets and Facilities
$799,534
$811,073
$1,574,679
$1,402,022
TOTAL
$2,500
$1,500
$2,000
$1,500
to purchase an aqua
wheelchair for Watrous
Swimming Pool
to Borden Care Home to
provide a shade-giving
pergola for residents, their
friends and families
to Star City School to
expand their shop area
for Practical and Applied
Arts courses
to Li’l Vikings Co-operative
Preschool in Langham
34
DECEMBER 31, 2015
FOCUS AREA:
Economic Self-Reliance
We think it is important to provide opportunities for all members of the community to be able to achieve a good
quality of life and realize their goals and full potential. We help them achieve this by supporting initiatives that
enhance their financial literacy skills, create employment opportunities, reduce poverty and social exclusion and
improve educational outcomes for vulnerable populations and youth.
Promoting Financial Literacy
Affinity worked with public, private and non-profit partners to launch a financial literacy network across the
province. The goal is to improve financial literacy among key target groups, including Aboriginal people, seniors,
youth, people with disabilities, immigrants, entrepreneurs and employees.
Members of the network will develop an action plan for the next five years and will promote financial literacy
through awareness campaigns and workshops.
Saskatchewan Financial Literacy Network Planning Committee with Jane Rooney (centre), Financial Literacy Leader at the Financial
Consumer Agency of Canada
ID Clinics for Inner City Residents
By partnering with Community Legal Assistance Services for Saskatoon Inner City (CLASSIC),
Affinity provided funding and volunteers to attend three half-day Identification Clinics
in Saskatoon.
These ID clinics helped vulnerable people to obtain the identification they needed to access
sources of income, such as pensions and others services, and to find employment.
A total of 201 birth certificates and 31 SGI identification applications were made – all paid for
by Affinity.
DECEMBER 31, 2015
35
Teaching Money Management Skills
Through Affinity’s partnership with Junior Achievement Canada,
our employees delivered the Dollars with Sense program to over 300
students in the Saskatchewan Rivers and Northeast School Divisions.
Dollars with Sense gives junior high school students personal money
management skills while challenging them to apply these concepts
in their own life.
In 2015, our employees and community partners
delivered 50 financial literacy presentations or
workshops through local schools and communitybased organizations, reaching 1,167 individuals
in 14 communities across the province.
Partnering with Junior Achievement Canada
Developing Life Skills Through 4-H
Affinity contributes to the 4-H program in many communities across
the province, which strive to encourage individual growth in young
people by developing self-confidence, the ability to make wise
decisions and a responsible attitude toward community service.
Partnering with First Nations
At Affinity, we believe arts and cultural experiences should be
accessible to all. That’s why we sponsor pow wows and other
First Nations arts and cultural events across the province, including:
Beatty 4-H Club near Melfort
•$8,000 to the Circle of Voices program at the Gordon Tootoosis
Nikaniwin Theatre – Saskatoon
• $1,000 Northern Lights Casino Thanksgiving Pow Wow – Prince Albert
• $2,500 to First Nations University of Canada 37th Annual Spring Celebration Pow Wow – Regina
• $5,000 to Ochapowace 2015 Saskatchewan First Nations Summer Games – Whitewood
• $5,000 to FSIN Spirit of Our Nations Cultural Celebration and Pow Wow – Saskatoon
FOCUS AREA:
Environmental Sustainability
The long-term social and economic well-being of our communities depends on the health of the environment,
locally and globally. We address environmental concerns and promote environmental sustainability by investing
in initiatives that reduce our environmental footprint and promote ecologically responsible practices.
Saskatchewan Living Green Expo
To help our members and the general public to live a greener life at
home and at work, Affinity sponsored the first-ever Saskatchewan
Living Green Expo at Prairieland Park in Saskatoon. Hosted by the
Saskatchewan Environmental Society, this two-day event welcomed
66 exhibitors who showcased Saskatchewan's best green products
and services and offered information sessions with experts in
sustainable and healthy living.
It was attended by over 1,300 people with 149 Affinity members
and their guests enjoying 50% off admission through our Member
Perk program.
During the event, Affinity gave away over 700 Paper Birch seedlings to the attendees and exhibitors.
Saving Trees
During 2015, we aimed to reduce our use of photocopy paper by 15% and made a decision to purchase
at least 50% of this paper with 50% recycled content.
To achieve these goals, in January we switched printer defaults to double-sided printing and began an
employee education campaign. This resulted in a 22.2% reduction in page usage, exceeding our goal.
Purchasing more recycled paper started later in the year. To ensure we met our targets, we decided to purchase
100% of our photocopying paper with recycled content instead of 50%. As a result, we saw an increase in the
amount of recycled paper over non-recycled paper used and exceeded our goal by 8%.
Total weight of paper
used (lbs)
Total paper containing 50%
recycled content purchased
2014
2015
2015 Target
2015 Outcome
51,992 lbs
40,428 lbs
15% reduction
in paper use
Exceeded target:
22.2% reduction
in paper use
0%
100% of paper
purchased
contained 50%
recycled content
50% of paper
purchased to contain
50% recycled content
Exceeded target:
58% of paper
purchased contained
50% recycled content
(from June to December)
DECEMBER 31, 2015
(from January to December)
37
Reducing Greenhouse Gases
In order to reduce greenhouse gas emissions that are polluting our environment and contributing to climate
change, we aimed to decrease work-related travel by 5% in 2015.
Despite introducing video conferencing, webinar training and encouraging carpooling across the organization,
we fell short of our goals. We were challenged by our large geographical footprint, the increase in staff and
travel following a merger with Shaunavon and Hudson Bay credit unions and the need for more community
outreach following branch reorganization. As well, the 2014 calculation for work-related mileage was based on
an estimate before tracking processes were clearly established. This may account for the somewhat significant
differences in work-related mileage, which was tracked accurately during 2015.
We are determined to continue our efforts in 2016 and to achieve the 5% reduction in work-related mileage. This
will be achieved through the use of additional video-conferencing technology installed in key locations and a
heightened awareness of our impact on the environment following awareness campaigns held internally in 2015.
Work-Related Travel
Employees
2015
2014
2015 Outcome
1,384,447 kms
1,113,125 kms (estimate)
24% increase
Greenhouse gas emissions
384 tonnes
309 tonnes
24% increase
Elected officials
230,239 kms
Not available
–
64 tonnes
Not available
–
Greenhouse gas emissions
1
1
1
Based on average sized car using average fuel consumption of 9 km per litre.
1
35,546
Affinity members
use e-statments
Green initiatives in the workplace
Affinity works to create a healthier environment by:
• Participating in Bike to Work Day
• Reducing energy consumption in branches
• Using online surveys instead of paper surveys for employee feedback
• Adding environmental features in every new and renovated building
• Recycling office supplies and furniture between locations and with non-profit organizations
• Reducing the amount of non-reusable kitchen supplies like plastic cutlery or cups
• Providing bike racks at many Affinity locations
•Providing grants and sponsorships for community projects, programs and events that focus on protecting
the environment
50 employees from Affinity’s Wealth Strategies and Investment Specialist teams volunteered to help create a local community garden
FOCUS AREA:
Local Economic Development
As a local financial institution, we know we have a strong role to play in facilitating economic development in our
urban and rural communities. We take this role seriously, but can’t do it alone. We work closely with our members
and community partners who help us make positive changes.
Business for Good
At Affinity, we look for new and engaging ways to work with our
members and communities to promote economic development.
Following our success in 2014, we held the Business for Good
Social Venture Challenge once again and expanded its focus to
include two competitions: one in Saskatoon and one in Regina.
The challenge invited members and the community to co-invest
with Affinity to support social enterprises that aim to address
specific social or environmental issues. A prize of $50,000 in
grant funding would go to the winners in each area.
$50,000 to First Steps Wellness in Regina
Our members and the general public selected the winner by
donating at least one dollar whenever they voted, thereby
making a contribution to the social enterprise finalists they
believe had the most potential to build a better world.
The organization that received the most support in Regina was
First Steps Wellness. They will use the $50,000 prize money
to expand their services to include a new innovative exercise
therapy program for children with cerebral palsy.
The winner in Saskatoon was too close to call so we declared
a tie! Crocus Co-op and New Community Youth Development
Corporation shared first place and $50,000 in prize money.
$25,000 to the Crocus Co-op in Saskatoon
Crocus Co-operative will use the prize money to continue their
support of individuals with mental health issues and hope to
increase their capacity and expand their services to a larger
customer base.
New Community Youth Development Corp works with, and
educates, some of the most at risk young people in Saskatoon.
They will use the funds to open a take away café in Pleasant Hill
that will be partially student run.
In addition to Affinity’s prize money of $100,000, the six finalists
raised a total of $75,865 through the crowdfunding challenge.
Each social enterprise, regardless of whether they won or not,
was able to keep the funds raised through this process.
DECEMBER 31, 2015
$25,000 to New Community Youth Development
Corp in Saskatoon
39
Great member perks
In 2015, we continued to team up with like-minded organizations to boost the local economy and provide
great member perks for events in and around the community. These included:
•Souris Valley Theatre, Estevan – $5 off tickets
•Regina International Fringe Festival –
2 for 1 admission vouchers
•Shakespeare on the Saskatchewan, Saskatoon –
$5 off tickets
• Golden Apple Theatre, Regina – $5 off tickets
•Saskatchewan Living Green Expo, Saskatoon –
$5 off admission
•Winter Green Fine Craft Market, Regina –
free admission
Facilitating Economic Development
Throughout the year, we co-ordinated and hosted educational workshops that provided valuable advice
and information to our consumer, agriculture, business and non-profit members.
40
DECEMBER 31, 2015
FOCUS AREA:
Building Community
Assets and Facilities
A healthy community has the facilities and infrastructure it requires
to meet the economic, social and cultural needs of its residents.
We help our communities to develop, improve or expand buildings
and other facilities that benefit the whole community and support
economic, cultural and social vitality.
In 2015, we invested heavily in the development, repair and
renovation of community assets and facilities that are critical to
community well-being. This investment totaled $799,534. The
following provides a snapshot of just some of the many initiatives
we have supported.
35
18
recreation centres,
sport complexes
or rinks
playgrounds, parks
and trail facilities
7
41
childcare centres
community halls,
libraries, museums,
fire halls and
cultural centres
4
12
housing facilities
health-care facilities
$1,300 to Milestone Swimming Pool to help
purchase a new pump
$4,200 to the Watrous Rotary walking
trail expansion
$10,000 to the Grand Coteau Heritage and
Cultural Centre to restore the cenotaph in
Shaunavon’s Memorial Park
DECEMBER 31, 2015
41
Management
Discussion
and Analysis
43 Risk Management
47 Financial Overview
48 Financial Highlights
50 Operating Summary
52 Financial Position Summary
53 Capital and Liquidity Management
54Outlook
42
DECEMBER 31, 2015
Risk Management
Risk Culture
Overview
The Board of Directors, supported by the detailed
work of the Audit and Risk Committee, approves the
risk framework, sets risk appetite, monitors risk levels
and risk mitigation and reviews emerging risk factors.
We manage risk to safeguard and ultimately increase
value for the organization and its members.
At Affinity, we consider risk from the perspective
of achieving our business objectives as expressed
through our strategic and business plans. Our key risks
are common to our industry: credit, market, liquidity
and a strong focus on capital, as well as strategic,
customer, operational, and regulatory and legal. We
understand that the potential to impact reputation
is embedded in all key risk areas and throughout
all business conditions and lines of business.
Top and Emerging Risk
Top risks include: strategic implications of the
operating model on our competitive position,
competitive options arising from federal legislation,
the strength of the brand and product offering, living
out and differentiating on our values, implications
for liquidity and the interplay of growth, efficiency,
and return.
We monitor the business environment for factors that
could cause our results to be significantly different
from our plans. Currently we are attentive to a
number of key themes: interest rate cycles, regulatory
and legislative developments, fraud and security,
technological developments and cyber-security,
changing demographics and market trends, and
the activities and results of competitors.
At Affinity, we understand that our risk culture is
influenced by the actions of our people, the means by
which work is done and the manner in which decisions
are made. Our risk culture is fostered and supported
through strong board oversight, an interactive risk
governance structure, awareness and education, risk
appetite, policies and procedures, and a variety of tools
that support identification, measurement, analysis and
risk informed decision-making.
Governance and Design
The design of our risk program is intended to
support the Board in understanding and speaking
knowledgeably about our key risks and our activities
to manage them. We strive for plain language, clear
communication of the business implications of our
risk exposures and risk management activities that
improve outcomes and contribute to the successful
achievement of our business objectives. This starts
with the Board and Audit and Risk Committee and
is fostered at all levels of the organization through
our executive risk owners and our risk governance
committees.
The Strategic Risk Committee (SRCO), comprised of
all members of executive management, evaluates and
monitors key risks with a dual focus on alignment with
risk appetite and implications for business success.
The Strategic Development Manager and the Chief
Internal Auditor are in attendance.
Under the direction of the CEO and guided by
executive risk owners, business lines are accountable
for understanding and managing the risks related
to their business activities. As such, they make
judgments and decisions to ensure business plans
and associated risk levels are appropriate and
managed within the approved risk appetite and
risk management policies.
Risk Philosophy
Affinity Credit Union balances risk and reward to meet
goals for members, community, employees, growth
and financial sustainability. In pursuit of these goals,
we accept risks we understand and can manage
within prudent levels.
DECEMBER 31, 2015
43
Reporting to the CEO, the Executive Vice President
Governance and Risk has executive accountability
for the design, implementation and effectiveness of
the enterprise risk program. The conceptual design of
the program recognizes that leaders of business lines
are the risk owners and ultimately accountable for
the risks related to their functional areas. Congruent
with a three lines of defense model, the organizational
structure distinguishes between management control
functions that own and manage risk, functions that
oversee risks and functions that provide independent
assurance. The risk function works in concert with
other elements within the management and control
structure, including compliance and internal audit.
The result promotes transparency and contributes
to risk informed decision-making.
Board of Directors
Audit & Risk Committee
Strategic Risk Committee
Operational Risk
Committee
Asset Liability
Committee
The Board provides oversight to the risk program
and its integration with strategic and capital planning.
The Board approves the risk framework, the risk
appetite framework and key risk policies and limits.
The quarterly risk report to the Board is a summary
of the status, direction and projected trend of key
risks relative to approved risk appetite, business
implications and risk mitigation activities. The
report also comments on economic conditions and
emerging risks. The Board receives a risk analysis to
support decision-making, such as the approval of the
business plan, and as an input to strategic planning.
Awareness and education sessions are conducted
throughout the year, including an orientation for new
Board members.
The Audit and Risk Committee of the Board reviews
risk matters coming before the Board, including the
effectiveness of the risk program, status of key risks
and strategic implications of risk conditions.
44
Credit Risk
Committee
The Chief Internal Auditor reports independently to
the Board (through the Audit and Risk Committee)
on the effectiveness of the risk governance structure
and risk management framework.
The Strategic Risk Committee includes all members
of executive management. It reviews and evaluates
key risk levels relative to the Board approved risk
appetite and discusses potential implications to
the achievement of business and strategic plans.
Monitoring of risk levels and risk mitigation activities
are conducted according to an established protocol.
The Asset Liability Committee provides high-level
oversight and strategic direction to balance sheet
management within the Board approved risk appetite
and policy. It reviews economic trends, interest rate
forecasts, investment portfolio risk and performance,
liquidity, foreign exchange exposures and capital
adequacy. The committee approves and monitors
balance sheet risk management tactics.
DECEMBER 31, 2015
The Credit Risk Committee develops and recommends
credit strategies and operating policy within the
Board approved risk appetite and policy. It monitors
conditions affecting credit procurement and
performance, monitors portfolio concentrations
and performance, and approves and monitors
credit risk management tactics.
The Operational Risk Committee combines dialogue
and case studies to increase awareness and
identify solutions to cross-functional operational
risk challenges. It creates synergy and improves
outcomes regarding the management of operational
risk across all functional areas.
The Risk Framework
The Board reviews and approves the risk framework
annually. The framework describes risk management
at Affinity: purpose, governance, risk appetite, key
program elements, control structure, roles and
responsibilities, and risk process and tools. It provides
policy direction to the organization, influences the
risk culture, helps to provide confidence to key
stakeholders that Affinity understands and actively
manages its risks in order to meet business objectives.
The Risk Framework
• Government
• Regulators
• Board
• Audit and Risk Committee
Set objectives
Provide legislation
Set regulatory standards
Conduct examinations
Establish risk culture
and program
Monitor, manage,
and report key risks
Approve risk framework,
philosophy, appetite
and policy
Oversee key risks
Identify opportunities,
take and manage risks
to deliver services
Ensure adequacy
of compliance
and controls
• Senior Management
• Management Risk Committees
• Control Functions
• Business Operations
DECEMBER 31, 2015
45
Risk Appetite
Risk Tools
The Board sets risk appetite for the organization
through annual review and approval of the risk
appetite framework. The components of the
risk appetite framework are the risk philosophy,
the risk appetite statements and the target risk
appetite, which includes both the selection of target
risk levels and quantitative ranges and points. Risk
reporting includes current risk levels relative to the
approved risk appetite. Executive risk owners provide
input to the selection of risk appetite measures and
target ranges.
The organization employs a variety of specific tools to
manage its key risks, including policy and procedure,
risk identification and assessment, analysis processes
and stress testing, and risk measurement, monitoring
and reporting. Further, the organization has in place
an Internal Capital Adequacy Assessment Process
(ICAAP), which is reviewed by the Board.
Index of Key Risk Exposures
Affinity Credit Union is exposed to several types of
key risks specific to financial institutions. We have
chosen to organize them according to the following
categorization, to which all risks are mapped:
Category Name
Short form definition (risk of loss arising from)
Strategic Risk
Inability to adapt to changes in the business environment through
appropriate business plans, decision-making, resource allocation
or implementation of effective strategies
Customer Risk
Inability to meet needs and expectations of customers or prospective
customers, resulting in loss of customers/volume/revenues
Operational Risk (sub-categories:
people, process, technology)
Problems or failures in the performance or controls of business functions
or processes
Credit Risk
Counterparty inability or unwillingness to meet contractual obligations
Market Risk
Decreases in the value of a financial instrument or portfolios of financial
instruments due to movements in interest rates and timing differences in
the repricing of assets and liabilities, changes in movements and volatility
in foreign exchange rates and credit spreads.
Liquidity Risk
Inability to meet current and future demands on cash in a timely manner
and at reasonable prices
Regulatory and Legal Risk
Non-compliance with governing laws and regulations or failure to meet
legal obligations
46
DECEMBER 31, 2015
Financial Overview
With falling oil prices and a decline in business capital
investment, the Canadian economy slipped into a
recession in 2015. As the economy cooled, the Bank
of Canada reacted by lowering the prime bank rate
by 25 basis points in January and a further 25 basis
points in July. The banking industry partially followed
each change to the extent of 15 basis points. The
change in the lending rate was felt immediately in
currency markets and the Canadian dollar began
a downward slide to end the year at US $.72.
Over the year and as a result of the devalued dollar,
exports picked up, as did consumer spending,
resulting in an overall increase in real gross domestic
product. Households received federal government
support through transfer payments to families with
children. Employment gains overall were better
than the 2014 result. The economy grew overall
by approximately 1.2% in 2015, the weakest increase
since 2009.
The nationwide performance was not uniform across
all regions. Saskatchewan’s economy was badly hurt
by troubles in the oil and gas industry. This has led to
the delay or cancellation of projects in the province
and the impact has had wide economic implications.
Weak commodity prices have contributed to a marked
decline in non-residential construction and an even
higher negative impact on investments in exploration.
The job loss in the oil and gas sector caused the
overall unemployment rate to rise during the year,
even though small gains were made elsewhere
(recreation, hospitality and health care).
Prices in the agriculture sector remained strong for
grains, oil crops and cattle, but not for hogs. The
overall price stability in agriculture caused a higher
year over year level of cash receipts across livestock
and crops.
While total exports were up nationally, this was not the
case in Saskatchewan, particularly for ores, minerals,
energy and consumer goods. The same news was
experienced in the agriculture sector, with lower than
expected exports of slaughter and feeder cattle.
The fall in oil prices dictated the decrease in retail
sales. The price of oil was a key contributor, but the
impacts were also felt across the automotive and
housing sectors.
At Affinity, we would expect to experience a number
of business impacts from a provincial recession. The
decline in the bank rate caused deposits to remain
an unattractive offer to investors. The unemployment
increase caused an inability for some borrowers to
pay for existing credit or qualify for new credit. The
increase to commercial and residential vacancy rates
caused commercial borrowers to delay new projects
and consumer property owners to stay put.
Throughout 2015 we have noticed the impacts of
the economy on our business. The growth in our
consumer and commercial mortgage portfolios
declined year over year. Financing our growth
through deposits was a challenge. We saw a limited
increase in loan delinquency and loan write off levels,
generally in keeping with a weakened economy.
The drop in oil prices caused several other economic
impacts in 2015. Office vacancy rates in both Regina
and Saskatoon increased, as did residential vacancy
rates, causing a lease rate correction. Housing starts,
completions and sales also declined over the year
and the available inventory of housing has climbed.
DECEMBER 31, 2015
47
Financial Highlights
Efficiency Ratio (%)
At Affinity, our overall financial plan was based on
sustainable growth and generating a strong return
on equity from that growth. Through a capital plan,
we determined the appropriate amount of capital the
credit union should carry for its unique risk profile.
We considered the optimum efficiency results that
covered both essential costs and returned value back
to the member through very competitive rates and
fees. We modelled a variety of growth scenarios to
arrive at the optimum balance between growth and
return on members’ equity. This became our 2015
financial plan roadmap.
The highlights represent the consolidated results
for the credit union and its wholly-owned subsidiary
companies: insurance, property, employee services,
investments and student loan administration and a
holding company.
Return on Member Equity (%)
12
9
6
3
0
15
15 Target
14
13
The Return on Member Equity of 8.88% far surpassed
the 7.53% budget target. Careful cost control, low
loan loss levels and strong non-interest revenue
contributed to the result.
48
81
78
75
72
69
15
15 Target
14
13
The credit union expected to generate a cost to
revenue spend of 77.23%. The overall operation was
still reaching its equilibrium post large partnerships
and we were not optimistic that necessary changes
would come so quickly. Our result of 74.62% was
much better than the budget target and was due to
our ability to weather rate declines, control our costs
and generate meaningful non-interest revenue. Over
the last three operating periods, Affinity has posted
successive efficiency improvements.
In the midst of an uncertain economy, Affinity
continued making progress toward an improved
member experience. Ultimately, the goal was to
command a much higher market share, both in
memberships and wallet share per member. To that
end, we continued to develop our branch, mobile
and online channels. Over the course of 2015, we
worked with an external consultant to identify primary
strategic segment opportunities and where continued
channel development and back office betterments
would best serve those goals.
DECEMBER 31, 2015
Local Financing (%)
Tier 1 Capital/RWA (%)
98
13.0
95
12.5
92
89
12.0
86
11.5
83
80
15
15 Target
14
11.0
13
Affinity Credit Union is a sustainable financial
institution and a member of the international Global
Alliance for Banking on Values. We are proud to say
that we provide financial intermediation services to
the real economy whereby we take local deposits
and provide local loans predominantly within the
Province of Saskatchewan. Over the last several years,
our deposits have made up over 90% of our financing
requirements with the remainder coming from
retained earnings.
15
15 Target
14
13
Affinity’s capital position improved in 2015, through
a stronger than expected bottom line and lower
balance sheet growth. The target was 12.42%,
and 12.37% was achieved.
DECEMBER 31, 2015
49
Operating Summary
Net Interest Margin
Net interest margin represents our net earnings from
balance sheet loans and investments and funding.
We ended the year at the budget target of 2.65%
margin to average assets. We generated $124 million
in net interest margin, approximately $.5 million under
budget but $9.9 million more than 2014. As rates fell
and the margin % compressed, the % return on the
growth in our balance sheet also declined. Rates at
2014 levels would have produced an additional
$3 million in margin dollars. However, it was our
intention to provide very competitive pricing to
members and we expected to incur a margin decline
in % and dollars to achieve this.
Comprehensive Income
50
($ millions)
40
32.8
30
31.5
27.6
21.6
20
Net Interest Margin (%)
10
0
2.90
15
15 Target
14
13
2.83
Comprehensive income was $1.3 million higher
than 2014. This was particularly significant when we
enjoyed a number of one-time items in the prior year
that provided a $4.9 million pre-tax benefit to our 2014
results. In 2015, the anomalies were very limited and
the $32.8 million amount was far ahead of our 2015
target of $27.6 million. Although the two rate cuts
were unexpected, we were able to reach our margin
dollar budget through managing rates for deposits
and loans and receiving additional investment income
from our credit union partners. We earned more than
expected fee income through subsidiary companies,
and we had additional staff attrition opportunities that
we took advantage of. At the same time, we chose to
return more to communities than the annual operating
plan target. The following discussion addresses the
major categories of income and expense.
50
2.75
2.68
2.60
15
15 Target
14
13
We were significantly behind budget in loan interest
revenues due to the two unanticipated rate cuts and
a smaller balance sheet than expected. We felt the
largest margin impact on our consumer loan portfolio,
which made up more than 60% of our loan base. In
response to rate cuts, actual deposit costs were also
well behind budget. Again, cost was also impacted
by the lower than expected balance sheet size. Net
interest margin included investment interest and our
return from one credit union sector investment was
well above expectations.
DECEMBER 31, 2015
Credit Loss Provision
The loan loss provision is determined by the extent to
which delinquent loans are security short. The result
of this gap is represented as credit loss expense.
Overall, we assessed specifically delinquent loans
for our ability to recover principal. We also created
an allowance and offsetting provision cost on a
collective basis for delinquency we believe is inherent
in our loan portfolio that hadn’t yet occurred. The
overall cost for 2015 was $1.7 million or $1 million
less than budget. Our target for the year was created
on a conservative basis as we expected that any
combination of economic changes to the province
would impact our loan loss experience.
Affinity’s credit quality remained high at the end of
2015. Overall, the delinquency as a percentage
of outstanding loans was 25 basis points.
Loan Delinquency (%)
0.8
0.6
Other Income
We achieved better than expected results for 2015,
generating $42.7 million or $4.6 million than the
budget amount. Other income represented two
key categories: revenues from traditional financial
intermediation and revenues from our diversification
initiatives. From traditional sources, we had high levels
of success in our merchant program and received
paper statement revenues in excess of budget.
Through diversification, we continued to grow
revenues from our insurance subsidiaries, of which
we have several throughout the province. In recent
years, we have relocated three agencies and, in each
instance, post-move revenues have surpassed what
was achieved in the former locations. In addition to
our success in insurance, our mutual fund brokerage
provided more than expected revenues in 2015.
The off balance sheet mutual fund portfolio has
now passed the $1 billion mark. Finally, we realized
significant gains through Saskatchewan venture
capital investments.
Operating Expenses
0.4
Affinity’s operating expenses for the year were .26%
more than 2014. The 2014 results included an accrual
in excess of $1.0 million for banking system migration
of incoming partners. We were able to recover much
of this cost in 2015 and this led to some variability in
expense year over year. In addition to this recovery,
2015 also included unplanned cost for a major
consulting contract for strategy development.
0.2
0.0
outstanding loans. We carefully monitor delinquency
levels and write off trends as indicators of how the
economy is performing and the resulting impact
on our borrowers’ ability to deal with credit.
15
14
13
Agricultural
Commercial
Consumer
By individual portfolio, we experienced the highest
delinquency levels in the agricultural portfolio, but
this area actually realized substantial decline in 2015.
The consumer portfolio delinquency increased from
18 basis points in 2014 to 26 basis points in 2015 and
the increase was exclusively in non-mortgage loans.
The weakening in this portfolio was also evident in
the number of loans written off in 2015, which was
more than double the amount from the prior year. The
commercial portfolio delinquency also increased by
11 basis points to end the year at 16 basis points of
Personnel cost was behind budget by $2.2 million
and the variance came from reduced salaries and
benefits. The 2015 budget anticipated a level of staff
attrition and timing lags in hiring for vacant positions
and we were able to achieve a better result than
planned. Occupancy cost approximated budget
as did member security cost. We had more general
business cost than expected as a result of unplanned
consulting fees, and the savings in computer costs
somewhat mitigated this overspend. Organization
costs were $250 thousand more than 2014 and over
budget by $230 thousand. The budget for community
initiatives was based on a preliminary year end pre-tax
bottom line and the actual 2014 result was higher
than expected, leaving more dollars to share.
DECEMBER 31, 2015
51
Deposit Growth (%)
Affinity’s $32.8 million in Other Comprehensive
Income for 2015 represented a strong bottom line
from a regulatory perspective. Credit Union Deposit
Guarantee Corporation expects a return of 50 basis
points per average assets, and Affinity achieved 72
basis points, far ahead of the 59 basis point target.
12
9
Financial Position
Summary
6
3
The Affinity Capital Plan sets out an appropriate level
of balance sheet growth for the credit union. We seek
growth that best leverages capital but does not erode
capital and modelled 8-9% as ideal. Asset growth was
set for 8.3% for 2015. We had a strong first quarter,
but as the economy began to slip and interest rates
fell, our growth targets followed suit and we were
unable to achieve our plan. Asset growth for 2015 was
10.3% and although that appeared to meet the mark,
that result included a January 1st partnership with
Shaunavon and Hudson Bay credit unions (combined
assets of $220 million). Excluding these partnerships,
organic year over year asset growth was 5.23%. We
continued to have solid loan demand over the course
of 2015, but insufficient financing to match. We had
to turn to our excess investments as a funding source
and, as we effectively traded one asset for another,
overall balance sheet growth was limited.
Deposits
We are unable to grow without appropriate financing
and our chief financing avenue was member deposits.
In 2015, the credit union deposit base was 90.67% of
assets and this was consistent with prior years.
The budget for the year was based on the robust
deposit growth in the prior two years. As rates fell in
2015, deposits were less attractive to investors and
we struggled to achieve the financing necessary for
our desired 8-9% asset growth. Late in the year, we
developed a nominee deposit relationship, which is
a variety of brokered deposits. This channel provided
approximately $200 million in additional financing
opportunity from large institutional or corporate
depositors. By the end of 2015, we had sourced
$26 million through this nominee platform.
0
15 Target
14
13
Overall, deposits grew by 4.9% or $194 million
(excluding new partners), far less than the 8.33%
target. We were off plan in both fixed and demand
deposits. We were able to secure deposits from local
corporate investors over the course of the year and
this helped to subsidize the growth we didn’t get
through our individual membership base.
Loans
Loans make up the majority of Affinity’s asset base.
The target of 8.66% for 2015 was largely based on
what was achieved in the year prior. The outcome
was 7.24% or $257 million, and we lagged behind
budget in several areas of the portfolio.
Loan Growth (%)
15
12
9
6
3
52
15
DECEMBER 31, 2015
15
15 Target
14
13
Consumer loans were less than expected for nonmortgage and auto loans. Residential mortgages
were growing at a steady pace until late in the fall
when the housing market weakened in Regina and
Saskatoon. Mortgage growth fared much better
in the agricultural and commercial sectors and
we exceeded budget targets.
Affinity has a number of loan syndication relationships
with third parties. Throughout 2015, we sold
$39 million in commercial mortgages to better
manage our liquidity position. Had we not sold,
loan growth would have been 8.3%. We ended
the year with on-balance sheet loans of $3.9 billion.
Capital and Liquidity
Management
The final phase of the capital plan involved testing
a number of balance sheet growth scenarios
against performance targets and capital adequacy.
Appropriate growth would cause capital positions
to slowly build over and above the target minimum.
On a regular basis, we monitor our capital position
and forecast changes in our business model
against capital adequacy to ensure we’re making
the right business decisions. And finally, as our
risk management framework reaches maturity, we
constantly adjust the capital we require for existing
and emerging risks. We refresh the capital plan each
year by reconsidering performance metrics and the
appropriateness of business plans and growth goals
against capital.
At the end of 2015, our capital to risk weighted
assets were 12.52%, just slightly above our
minimum requirement.
Capital Monitoring and Management
As a financial institution, Affinity requires an adequate
level of capital in reserve to mitigate risk, measured by
way of member capital to risk weighted assets. Risk
is imbedded in our current balance sheet position,
in operations and from our business environment.
Controlling risk encompasses more than what is
known at a point in time. We also need to consider
unforeseen future risk and our capital position has to
measure up accordingly. Our regulator, Credit Union
Deposit Guarantee Corporation, has an expectation
that Affinity will hold capital that includes a base
regulatory level plus a buffer.
Because the measure is based on assets, capital
needs to increase as the balance sheet grows. We
will always need additional capital if we’re to consider
future expansion, either within our traditional business
lines or through further diversification. The measure
is also based on member capital, and its growth is
dependent upon efficient and consistently strong
operating results.
I nternal Capital Adequacy Assessment
Process (ICAAP)
In addition to meeting a regulatory capital base and
buffer requirement, the credit union also measures
capital adequacy in relation to its unique risk profile.
On a regular basis, the credit union’s key risk map
is refreshed. We re-evaluate the current risks and
consider emerging risks. Once we’ve established
the likelihood of unmitigated risk occurring and its
impact on capital, we establish a base internal capital
requirement. We meet with risk owners to stress
test each risk for plausible but remote scenarios.
During this exercise, we determine what capital
buffer needs to be added to the base internal capital
requirement. The aggregate becomes our internal
capital requirement for the credit union. If the internal
capital requirement is greater than the regulatory
requirement, we will raise our minimum capital
standard. At the end of 2015, the internal capital
requirement for our significant risks was less than
the regulatory requirement.
Over the course of 2015, Affinity refreshed its rolling
5 year capital plan. This plan comes into effect on
January 1, 2016. We tested a capital buffer against our
current risk profile and established a 12.5% minimum
target, which represents a base of 10.5% plus a
2% buffer. Through testing and market research,
we arrived at appropriate performance targets for
efficiency and return on equity over the next five years.
DECEMBER 31, 2015
53
Liquidity Management
Liquidity management is the constant monitoring of
current, near and far term expected cash positions to
ensure that Affinity can satisfy demands on cash. The
Board and management have set targets of necessary
surplus liquidity over a one year time horizon that
provide a generous liquidity buffer to withstand the
stress of unusual events and contemplate current
expected cash flow. Intermediate targets have also
been established to oblige action long before any
critical shortfalls are experienced.
Throughout 2015, Affinity experienced a tightening
of its liquidity position as interest rates fell and our
members continued to move away from deposits as a
lucrative investment. As a result, we financed a portion
of our loan growth in 2015 by using excess liquidity
investments.
Because our balance sheet strategies are
underpinned by liquidity management, we have
arranged for a number of backup sources in addition
to raising deposits. We carry a line of credit with Credit
Union Central of Saskatchewan (SaskCentral), and
two further debt facilities with two different financial
institutions. Throughout 2015, we kept these facilities
largely unused and available. In 2014, we began an
application to access a nominee deposit channel and
secured this relationship by the third quarter of 2015.
The channel was tested and by year end, we raised
$26 million of an available $200 million limit.
Another liquidity source is leveraging our existing
balance sheet through loan securitizations. At the end
of 2015, we began an application to enter a residential
mortgage securitization platform and we expect to
use this in 2016. As well, we have the option to sell
loans to raise cash to continue lending. This is our
last liquidity resort as our aim is to continue to grow
our balance sheet and leverage our capital position.
In 2017, we expect that our regulator will begin to
phase in new Basel Liquidity Standards. Over the
course of 2015, the credit union had tested its
position against these new standards and
consistently met them.
54
Outlook
The further deterioration in oil prices and the
weakness in the energy sector is expected to spread
to other areas of the economy. It is anticipated that
oil firms will cut their budgets by another 16% after
incurring cuts of 24% in 2015. Both the energy and
non-energy mining sectors will continue to face
a decline in raw material prices. Machinery and
equipment spending will fall due to weak business
confidence. Very few jobs will be added to the
economy. The depreciation of the Canadian dollar
is no longer expected to increase exports. Finally,
consumers are overstretched and their spending
is showing signs of weakening.
The bright spot in the economy could be the potential
injection of significant federal government dollars
toward infrastructure growth. There is also belief
that the Bank of Canada will not announce any
further interest rate cuts and rates will remain at
current levels until 2017.
The changing economy will undoubtedly increase
the risk profile for Affinity. We will monitor and be
prepared for an increase to credit risk both through
default and security values for 2016. While any
softening in our credit positions could have a liquidity
effect, we may also benefit from surplus cash coming
to us from non-performing markets as investors look
for deposit safety.
Throughout 2015, Affinity undertook to recognize
gaps within its service channels, back office
processes and customer segments to paint a picture
of required action. We have created a map of very
specific initiatives that will close these gaps. The
project list around these initiatives is extensive and
we have incorporated this work into the 2016 annual
operating plan.
The member experience will be our focus for
2016 and beyond. This will include member-centric
changes to service standards, further innovations in
technology and re-visioning our member interface
through call centres, mobile capabilities and our
branch network.
DECEMBER 31, 2015
Summary
Consolidated
Financial
Statements
for the year ended December 31, 2015
56Management’s Responsibility for Financial Reporting
57 Independent Auditors’ Report
58Summary Consolidated Statement of Financial Position
59Summary Consolidated Statement of Comprehensive Income
60Summary Consolidated Statement of Changes In Equity
61Summary Consolidated Statement of Cash Flows
62Note to the Summary Consolidated Financial Statements
DECEMBER 31, 2015
55
MANAGEMENT’S RESPONSIBILITY FOR
FINANCIAL REPORTING
The accompanying consolidated financial
statements of Affinity Credit Union were
prepared by management, which is responsible
for the integrity and fairness of the information
presented, including the many amounts that
must of necessity be based on estimates and
judgments.
These consolidated financial statements were
prepared in accordance with financial reporting
requirements prescribed by the Credit Union
Act, 1998 of the Province of Saskatchewan,
Credit Union Deposit Guarantee Corporation,
and by statute. The accounting policies followed
in the preparation of these financial statements
conform to international reporting standards
(IFRS).
Financial and operating data elsewhere in the
annual report are consistent with the
information contained in the financial
statements. In discharging our responsibility for
the integrity and fairness of the consolidated
financial statements and for the accounting
systems from which they are derived, we
maintain the necessary system of internal
controls designed to ensure that transactions
are authorized, assets are safeguarded, and
proper records are maintained. These controls
include quality standards in hiring and training
of employees, policies and procedures manuals,
a corporate code of conduct and accountability
for performance within appropriate and welldefined areas of responsibility.
The system of internal controls is further
supported by a compliance function, which is
designed to ensure that we and our employees
comply with appropriate legislation and conflict
of interest rules, and by an internal audit staff,
which conducts periodic audits of all aspects of
our operations.
The Board of Directors oversees management’s
responsibilities for financial reporting through
an Audit and Risk Committee, which is
composed entirely of independent directors.
This Committee reviews our consolidated
financial statements and recommends them to
the Board for approval. Other key
responsibilities of the Audit and Risk Committee
include reviewing our existing internal control
procedures and planned revisions to those
procedures, and advising the directors on
auditing matters and financial reporting issues.
Our Senior Compliance Manager and Chief
Internal Auditor have full and unrestricted
access to the Audit and Risk Committee.
Further monitoring of financial performance and
reporting is carried out by the Credit Union
Deposit Guarantee Corporation. It is given its
responsibilities and powers by provincial statute
through the Credit Union Act. Its purpose is to
guarantee members’ funds on deposit with
Saskatchewan Credit Unions and provide
preventative services. Preventative services
include ongoing financial monitoring, regular
reporting and consultation.
KPMG LLP, Chartered Professional Accountants
appointed by the members of Affinity Credit
Union upon the recommendation of the Audit
and Risk Committee and Board, have performed
an independent audit of the consolidated
financial statements and their report follows.
The auditors have full and unrestricted access
to the Audit and Risk Committee to discuss their
audit and related findings.
Mark Lane
Chief Executive Officer
Lise de Moissac
Executive Vice President
and Chief Financial Officer
Saskatoon, Saskatchewan
February 22, 2016
2
56
DECEMBER 31, 2015
KPMG LLP
500 – 475 Second Avenue South
Saskatoon Saskatchewan S7K 1P4
Canada
Telephone (306) 934-6200
Fax
(306) 934-6233
www.kpmg.ca
INDEPENDENT AUDITORS’ REPORT
To the Members of Affinity Credit Union:
The accompanying summary consolidated financial statements of Affinity Credit Union, which
comprise the summary consolidated statement of financial position as at December 31, 2015, the
summary consolidated statements of comprehensive income, changes in equity and cash flows for
the year then ended, and related note, are derived from the complete audited consolidated financial
statements, prepared in accordance with International Financial Reporting Standards, of Affinity
Credit Union as at and for the year ended December 31, 2015.
We expressed an unmodified audit opinion on those complete consolidated financial statements in
our auditors’ report dated February 22, 2016.
The summary consolidated financial statements do not contain all the requirements of International Financial
Reporting Standards applied in the preparation of the complete audited consolidated financial statements of
Affinity Credit Union. Reading the summary consolidated financial statements, therefore, is not a substitute for
reading the complete audited consolidated financial statements of Affinity Credit Union.
Management’s Responsibility for the Summary Consolidated Financial Statements
Management is responsible for the preparation of the summary consolidated financial statements in
accordance with the basis described in Note 1.
Auditors’ Responsibility
Our responsibility is to express an opinion on the summary consolidated financial statements based
on our procedures, which were conducted in accordance with Canadian Auditing Standard (CAS)
810, "Engagements to Report on Summary Financial Statements."
Opinion
In our opinion, the summary consolidated financial statements derived from the complete audited
consolidated financial statements of Affinity Credit Union as at and for the year ended December 31,
2015 are a fair summary of those complete consolidated financial statements, in accordance with
the basis described in Note 1.
Chartered Professional Accountants
February 22, 2016
Saskatoon, Canada
KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
KPMG Canada provides services to KPMG LLP.
DECEMBER 31, 2015
57
AFFINITY CREDIT UNION
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31 (in thousands of dollars)
2015
2014
(Note 1)
(Note 1)
ASSETS
Cash and cash equivalents
Financial investments
Loans
Other assets
Fair value of derivative assets
Property and equipment
Intangible assets
Total Assets
$
22,942
693,375
3,950,352
13,464
1,839
72,647
20,871
$
41,881
630,314
3,545,442
14,387
3,510
73,172
20,930
$
4,775,490
$
4,329,636
$
4,329,777
2,066
46,203
1,905
2,036
$
3,934,945
2,101
42,943
3,510
3,208
LIABILITIES
Deposits
Loans and borrowings
Other liabilities
Fair value of derivative liabilities
Membership equity
Total Liabilities
4,381,987
3,986,707
393,580
263
393,843
343,003
142
343,145
EQUITY
Retained earnings
Accumulated other comprehensive income
Equity attributable to owners
(340)
Non-controlling interest
(216)
393,503
Total Equity
$
Total Liabilities and Equity
4,775,490
342,929
$
4,329,636
The accompanying notes are an integral part of these consolidated financial statements.
APPROVED BY THE BOARD
..................................................... CFO
..................................................... Director
58
DECEMBER 31, 2015
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended December 31 (in thousands of dollars)
2015
(Note 1)
PROFIT OR LOSS
INTEREST INCOME
Loans
Investments
$
INTEREST EXPENSE
Deposits
Borrowings and investment shares
153,882
11,973
165,855
2014
(Note 1)
$
143,432
10,356
153,788
42,145
196
42,341
39,809
355
40,164
NET INTEREST
123,514
113,624
PROVISION FOR CREDIT LOSSES
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
1,751
121,763
865
112,759
OTHER INCOME
NET INTEREST AND OTHER INCOME
42,659
164,422
49,139
161,898
74,918
31,791
9,764
3,496
4,022
123,991
72,120
35,734
9,157
3,244
3,420
123,675
40,431
38,223
7,757
6,494
32,674
31,729
OPERATING EXPENSES
Personnel
General business
Occupancy
Organizational
Security
PROFIT BEFORE INCOME TAX
PROVISION FOR INCOME TAXES
PROFIT
OTHER COMPREHENSIVE INCOME
ITEMS THAT WILL NOT BE CLASSIFIED TO PROFIT AND LOSS
Actuarial gain (loss) on employee benefits, net of tax
238
(172)
ITEMS THAT MAY BE CLASSIFIED TO PROFIT AND LOSS
Unrealized gain (loss) on available-for-sale financial assets, net of tax
(96)
(20)
RECLASSIFICATION OF GAINS (LOSSES) ON
Available-for-sale financial assets disposed of in the year
(21)
(17)
121
OTHER COMPREHENSIVE INCOME (LOSS)
TOTAL COMPREHENSIVE INCOME
Profit attributable to:
Affinity Credit Union
(209)
$
32,795
$
31,520
$
32,798
$
32,345
$
(124)
32,674
$
(616)
31,729
Non-controlling interests - Minority shareholders of 101188741
Saskatchewan Ltd.
DECEMBER 31, 2015
59
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2015
(Note 1)
Retained
earnings
including
contributed
surplus
Balance, beginning of year
$
343,003
Accumulated other
comprehensive
income
$
142
Equity
attributable to
owners
$
343,145
Addition to contributed surplus
17,779
-
17,779
Total profit or (loss)
32,798
-
32,798
-
121
121
Other comprehensive income, net of tax
Balance, end of year
$
393,580
$
263
$
393,843
Non
controlling
interest
$
(216)
Total equity
$
-
17,779
(124)
32,674
$
(340)
342,929
121
$
393,503
2014
(Note 1)
Retained
earnings
including
contributed
surplus
Balance, beginning of year
$
Addition to contributed surplus
Total profit or (loss)
$
$
351
$
311,009
-
-
-
32,345
-
32,345
-
Other comprehensive income, net of tax
Balance, end of year
310,658
343,003
(209)
$
142
Non
controlling
interest
Equity
attributable to
owners
Accumulated other
comprehensive
income
$
400
343,145
DECEMBER 31, 2015
31,729
$
(216)
311,409
-
(616)
60
$
-
(209)
$
Total equity
(209)
$
342,929
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
2015
(Note 1)
CASH FLOWS FROM (USED IN) OPERATING
ACTIVITIES
Total profit
Adjustments for
Non-controlling interest
Provision for credit losses
Depreciation of property and equipment
Amortization of intangible assets
Other income
Amortization of premium/discount on held-for-trading investments
Amortization of premium/discount on held-to-maturity investments
Amortization of premium/discount on available-for-sale investments
Amortization of premium/discount on loans and receivables
Interest revenue
Interest expense
Income tax expense
$
Changes in operating assets and liabilities (excluding Cash and cash equivalents)
Loans
Deposits
Other assets
Other liabilities
Cash interest received
Cash interest paid
Cash income taxes paid
CASH FLOWS FROM (USED IN) INVESTING
ACTIVITIES
Dividends received from associates
Net cash and cash equivalents attributed to minority shareholders
Net cash and cash equivalents acquired through business combinations
Proceeds from maturity of liquidity and term investments
Purchases of liquidity and term investments
Proceeds from maturity of available-for-sale investments
Purchases of available-for-sale investments
Proceeds from maturity of held-to-maturity investments
Purchases of held-to-maturity investments
Proceeds from maturity of held-for-trading investments
Purchase of investment property
Purchase of property and equipment
Purchase of intangible assets
Proceeds from disposal of property and equipment
Proceeds from disposal of investment property
CASH FLOWS FROM (USED IN) FINANCING
ACTIVITIES
Repayment of loans and borrowings
Issuance of new loans and borrowings
Repayment of membership equity
Issuance of new membership equity
Sale of loans
Repurchase of loans
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS
32,674
2014
(Note 1)
$
124
1,751
5,320
2,036
(931)
(46)
23
75
12
(165,855)
42,341
7,757
616
865
5,349
1,712
(7,491)
(305)
62
1,074
137
(153,789)
40,164
6,505
(74,719)
(73,372)
(289,453)
187,984
(897)
2,341
(174,744)
(288,187)
337,343
2,366
10,407
(11,443)
165,506
(43,535)
(5,104)
(57,877)
153,361
(38,623)
(7,390)
95,905
168
(124)
6,002
242,616
(244,568)
27,336
(23,128)
3,057
(1,000)
3,096
(12)
(3,974)
(1,665)
145
7,949
150
(616)
467,879
(589,609)
15,026
(970)
7,777
(1,740)
2,783
(267)
(6,476)
(1,588)
8,179
18,180
(81,292)
(35)
(1,496)
49
37,959
(5,488)
30,989
(4,862)
182
(221)
51
2,099
(2,751)
(18,939)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
11,862
41,881
CASH AND CASH EQUIVALENTS, END OF YEAR
$
31,729
22,942
30,019
$
41,881
DECEMBER 31, 2015
61
Note to the Summary Consolidated Financial Statements
December 31, 2015
1. Basis of the summary consolidated financial statements
The criteria applied by management in the preparation of these summary
consolidated financial statements are as follows:
a)
The information in the summary consolidated financial statements is in
agreement with the related information in the Credit Union’s December 31,
2015 audited consolidated financial statements (the “Audited Financial
Statements”); and
b)
The summary consolidated financial statements contain the information
necessary to avoid distorting or obscuring matters disclosed in the Audited
Financial Statements, including the notes thereto.
c)
The Audited Financial Statements can be obtained at any Affinity Credit Union
branch or on-line at:
https://www.affinitycu.ca/YourCreditUnion/About/Pages/AnnualReportsandSta
tements.aspx
d)
62
The detailed notes included in the Audited Financial Statements are not
included in the summary consolidated financial statements as these notes are
available in the Audited Financial Statements which can be obtained as
described above.
DECEMBER 31, 2015
AFFINITY CAMPUS
902 7th Avenue North
Mail to: PO Box 1330
Saskatoon SK
S7K 3P4

Looking to the future - Affinity Credit Union

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