2014 ANNUAL REPORT - Quinte First · Minutes of Annual General Meeting March 18, 2014 The 60th Annual General Meeting of QuintEssential Credit Union Limited was held at the Bay of

2014 ANNUAL REPORT

My Credit Union My Community My Future

Co‐operative Banking. Where putting you first and

improving banking go hand in hand.

www.qcu.ca

1

AGENDA 61st ANNUAL GENERAL MEETING

Page

1. WELCOME Bill Headon

2. REPORT ON REGISTRATION Alex Shatford

3. REMEMBRANCE OF DECEASED MEMBERS Bill Headon

4. APPROVAL OF AGENDA Bill Headon 2

5. APPROVAL OF 2014 AGM MINUTES Bill Headon 3‐6

6. REPORT OF THE BOARD OF DIRECTORS Bill Headon 7

7. REPORT OF THE NOMINATING COMMITTEE William Burns 8

8. REPORT OF THE CHIEF EXECUTIVE OFFICER Carrie Gregoire 9

9. REPORT ON LENDING SERVICES Carrie Gregoire 10

10. REPORT OF THE SOCIAL RESPONSIBILITY COMMITTEE Eric Hovinga 11‐12

11. REPORT OF THE CONTROLLER Dawna White 13‐14

12. REPORT OF THE AUDITOR Brian Kehoe

13. REPORT OF THE AUDIT & RISK COMMITTEE David Clarke 15

14. APPOINTMENT OF AUDITOR David Clarke

15. BOARD & STAFF RECOGNITION Carrie Gregoire/

Bill Headon 16

16. DRAWS Craig Ervine

17. ADJOURNMENT Bill Headon

2

QuintEssential Credit Union Limited

Minutes of Annual General Meeting

March 18, 2014

The 60th Annual General Meeting of QuintEssential Credit Union Limited was held at the Bay of Quinte Country Club, Highway # 2 West, Belleville, Ontario on Tuesday March 18, 2014.

The Chair, Bill Headon called the meeting to order at 7:00 pm.

Registration Report: Alex Shatford, Corporate Secretary advised there were 39 members and 3 guests in attendance. Bill Headon, Chair declared that there was a quorum and the meeting could proceed.

Bill Headon welcomed all members and guests and thanked them for their interest and support of the Credit Union. Bill introduced the head table members Ron Harrison, President & CEO and Alex Shatford, Corporate Secretary.

Bill also introduced our 3 guests: Melanie Antifave from Fiserv, Thomas Tennian from The CUMIS Group Limited and Brian Kehoe from Wilkinson and Company, LLP.

Bill Headon asked all members to observe a moment of silence to honour those members who had passed away in 2013.

Approval of Agenda:

Bill Headon, Chair asked for a motion for approval of the agenda as printed in the Annual Report (page 2).

Moved by Eric Hovinga and seconded by William Burns

All in favour Motion Carried

Minutes from 2013 AGM:

Bill Headon asked for a motion to approve the Minutes of the 2013 AGM as printed in the Annual Report (page 3 to 5)

Moved by Chris Lesage and seconded by Dianne Hadley


Board of Directors Report:

Bill Headon, Chair of the Board of Directors presented his report. Bill spoke of the changes in the credit union since it was formed 60 years ago. Change in services provided, change in the way those services are provided and the need to manage change as we move forward. The credit union had positive net income and made a modest profit. Bill reported the Board was very impressed by the initiatives put forward by the staff as we move into 2014. See complete report on page 6 of the 2013 Annual Report.

Nominating Committee Report:

Chris LeSage, Chair of the Nominating Committee presented the Nominating Committee Report and declared that the election process would begin for four Board of Director positions; three of the positions are for 3‐year terms, one is for a 1 year term. Chris asked the five candidates to

3

address the membership for up to two minutes to introduce themselves and present their qualifications. Chris outlined the procedure for voting and explained how to fill out the ballots.

Candidate Addresses:

Candidates for director positions, in alphabetical order are: David Clarke, Dianne Hadley, Eric Hovinga, Bonnie Lloyd and Paul Osborne. Each candidate addressed the audience in turn. Ballots were distributed, collected and turned over to the scrutineers for counting and reporting.

Chris LeSage indicated that our scrutineers would be: Tom Tennian and Melanie Antifave.

The scrutineers then retired to the back of the hall to count the votes. Chris LeSage will give a report on results of the count later on in the agenda program.

Report of the President & CEO:

Ron Harrison, President & CEO, presented his report and provided a brief rundown of the 60 years history of QuintEssential Credit Union. Especially the multiple name changes, with the name QuintEssential coming in 2004. In 1961 (earliest available record) there were 683 members and $230,000 in assets. At the end of 2013 there are 8,114 members and $94 million in assets. See complete report on page 8 of the 2013 Annual Report.

Report on Lending Services:

Ron Harrison, President and CEO, presented his report and highlighted several items. Ron reported on the improving relationship between staff and borrowers resulting in reduced volume of loans losses in 2013. See complete report on page 9 of the 2013 Annual Report.

Report of Social Responsibility Committee:

Eric Hovinga, Chair of the Social Responsibility Committee, presented the report of the Social Responsibility Committee. Eric highlighted the activities of the committee and their activities during 2013. Of particular notice is the involvement of staff and directors in community volunteering with 1,595 hours in 2013 compared to 1000 hours in community involvement during the previous year. On page 11 of the 2013 Annual Report is a list of all of the various community projects that are associated with the Social Responsibility Committee. See complete report on page 10 of the 2013 Annual Report.

Report from the Chief Financial Officer:

Carrie Gregoire, Chief Financial Officer, reviewed the financial results for 2013. Her review included the Balance Sheet and Statement of Comprehensive Income for 2013. The credit union performed above average considering the low interest rates and squeezed margins during 2013. Carrie reported that despite a year of continued caution with a non‐aggressive approach to attracting deposits the credit union finished 2013 in a strong financial position with an increase in assets and increase in retained earnings. See the Balance Sheet on page 12 and the Statement of Comprehensive Income on page 13 of the 2013 Annual Report.

4

Motion to accept Committee Reports:

Bill Headon asked for a motion to accept the Report of the Board of Directors, the Report of the Nominating Committee, the Report of the Chief Executive Officer, the Report on Lending Services, the Report of the Social Responsibility Committee and the Report of the Chief Financial Officer.

Moved by Chris LeSage and seconded by William Burns


Report from the External Auditor:

Brian Kehoe, our external auditor representing Wilkinson and Company LLP, highlighted several items on their report. Brian reported that the audit evidence is sufficient and appropriate to form an opinion that the statements are accurate and fairly reflect the financial position of the credit union. See complete report in the 2013 Document handout.

Motion to accept the Auditors report was moved by Craig Irvine and seconded by Dave Clarke.


Report of the Audit & Risk Committee:

Dave Clarke, Chair of the Audit & Risk Committee presented the Audit & Risk Committee Report and highlighted the activities of this committee during the 2013 year. The committee reviewed all external and internal audit documents and is pleased to report that all proposed recommendations to the board were implemented, or are currently in the process of implementation. See complete report on page 14 of the 2013 Annual Report.

Motion to accept the Audit & Risk Committee report was moved by Lovon Telford and seconded by Bonnie Lloyd.


Appointment of Auditors:

Dave Clarke reported that the Board of Directors approved and recommended the firm of Wilkinson and Company LLP be retained as External Auditor for 2014.

Motion to retain Wilkinson and Company LLP as External Auditor for 2014 moved by Dave Clarke and seconded by Dianne Hadley.


Recognition of Directors and Staff:

Staff Recognition by Ron Harrison Brook Thompson, hired in 2013, was introduced by Ron. Ron read a letter from the United Way of Quinte acknowledging the fund raising efforts by the staff at QuintEssential Credit Union. Certificates of Appreciation from the United Way of Quinte were presented to our two team captains, Trisha Waite and Kim Lee. Ron thanked the 60th Anniversary Committee for efforts in arranging to have food and cake prior to the meeting.

5

Election Results:

Chris LeSage presented the election results. Chris explained that those candidates who received the highest number of votes received the longest director terms. She reported there was 39 ballots cast with one spoiled ballot. The successful candidates were as follows:

3 year term Dave Clarke 3 year term Dianne Hadley 3 year term Eric Hovinga 1 year term Paul Osborne

Chris LeSage thanked all of the candidates for running in the election.

Motion that the ballots be destroyed was moved by Trisha Waite and seconded by Karen Hovinga.


Motion that the scrutineers be discharged was moved by Eric Hovinga and seconded by Craig Ervine.


Door prizes:

Craig Ervine conducted the draw for the many door prizes. Prizes were provided by Concentra Financial, CUETS (MasterCard), The CUMIS Group, Credential Securities, D & H Cheque Printing, Central 1, Threshold Financial Technologies, The Exchange, Stanley Security, Fiserv, Wilkinson & Co. LLP and QuintEssential Credit Union.

Open Time:

Bill Headon declared that all business was concluded and thanked all members for attending this meeting. Bill invited all attendees to visit with the staff and directors and to enjoy the refreshments provided.

Adjournment:

Moved by Cindy Grills that the meeting be adjourned


The meeting adjourned at 8:00pm

_________________________ __________________________ Board Chair Corporate Secretary Recorder: Alex Shatford

6

REPORT OF THE BOARD OF DIRECTORS

It is my pleasure, on behalf of the Board of Directors, to present the 2014 Annual Report to the membership. Management and staff have successfully moved our credit union forward with tenacity and momentum through a committed approach to promoting growth in a challenging interest rate environment. The efforts of this team have resulted in increased assets, membership, deposit and loan growth. Because of our hard working and dedicated staff, QuintEssential remains a positive influence in our community. Budgets and projections incorporated in the Board approved 2014 Business Plan have been realized, allowing confidence in future planning. Capital Reserves remain well above regulatory requirements ensuring that we sustain a strong, viable credit union. In 2014 QuintEssential celebrated our 60th year in business. We celebrated throughout the year with many events in the community and at the credit union to thank our members, staff and community for their support for the past 60 years. After nine years of service, on December 31 of this past year, the previous CEO Ron Harrison retired from QuintEssential. Your Board was faced with the responsibility of ensuring a suitable replacement. We believe we have found the right person in Carrie Gregoire, CPA, CGA. Carrie has been employed with QuintEssential for nine years; most recently as the CFO. Carrie brings a wealth of knowledge, commitment and focus to the CEO position. The credit union’s operations continue to receive a good rating from our deposit insurer, the Deposit Insurance Corporation of Ontario (DICO).

I am pleased to report that all of your Directors have achieved the required competencies to be a Credit Union Director in Ontario as required by the Deposit Insurance Corporation of Ontario. Your board members are committed to achieve a strong governance model on your behalf.

Board and management held our annual planning session to confirm our vision, mission, values, future direction and strategic goals as we prepare for 2015 and beyond. Our future direction includes a focus on profitable growth that is obtained through high quality knowledgeable service to our members, employee training and development, relevant products, and care for our community.

I would like to extend a thank you to our members for your continued support, to our dedicated board members and to management and staff, for their commitment to high quality knowledgeable service.

Sincerely,

Bill Headon

Chair of the Board

7

REPORT OF THE NOMINATING COMMITTEE There are three (3) director positions available in 2015. The term of office for William Headon, Christina Lesage and Paul Osborne has expired and all are seeking re-election. The by-laws of the Credit Union permit that any member in good standing may stand for election to the Board of Directors subject to restrictions imposed by the Credit Unions and Caisses Populaires Act and the by-laws of the credit union. The credit union by-laws further require that members who wish to be considered as candidates for election must submit a written application to be received by the Nominating Committee 30 days prior to the Annual General Meeting. Nominations from the floor will not be accepted. The Notice of Elections was posted at both offices 60 days prior to the AGM in accordance with QuintEssential Credit Union by-law 7.12. The notice was also posted on the QuintEssential Credit Union website, on the members statements and in the newspapers. Board information packages for candidates were available at both offices and on our website. Three (3) members submitted completed packages. The applications were reviewed by the Nominating Committee and have satisfied the requirements under the Credit Unions and Caisses Populaires Act and the by-laws of the credit union. The applicants are as follows: William Headon Christina Lesage Paul Osborne As we had three (3) applicants for three (3) available positions, all applicants are acclaimed. William Burns Chair of the Nominating Committee

8

REPORT OF THE CHIEF EXECUTIVE OFFICER

The end of 2014 saw the retirement of Ron Harrison as the CEO. Ron was with QuintEssential for nine years. The smooth transition and the 2014 financial results are evidence to the strong team we have in place at QuintEssential and to the commitment of the Board.

2014 proved to be another challenging year for the Canadian economy. It was another year of low interest rates and squeezed financial margins for the financial industry. We continued to see the same caution and uncertainty that has plagued the world’s economy for almost 6 years. Commodity prices fell, markets were unpredictable and interest rates remained low throughout the year putting continued pressure on earnings. 2015 promises to continue to bring economic uncertainty. In early January we got a big surprise when the Bank of Canada decreased its overnight rate which will put further pressure on earnings in 2015. The plunging oil prices, down more than 50% since June, have been joined by record low yields for 10-year Canadian bonds, a six-year low for the loonie and declines in a host of other commodities. The sour start to 2015 is prompting more economists to push back their forecasts for a Bank of Canada rate hike and lower their forecasts for growth and the Canadian dollar. Despite the challenging interest rate environment and uncertain economic conditions, QuintEssential had a strong financial year in 2014. Thanks to the commitment of our staff we saw an increase in assets, membership and deposit and loan growth.

During the year assets increased by 6.95% or $6.5 million to $100.6 million with deposits increasing by 7.32% or $6.2 million and loans grew by 14.32% or $10.6 million. Comprehensive income was $356,371 which was invested back into retained earnings. For the first time since 2007, the Board has declared a dividend in the amount of $50,000 to be returned to our members from our 2014 profit. Retained earnings and share capital as a percentage of assets are now at 8.33%. With the mandatory minimum regulatory capital set at 4.00%, your Credit Union is in a very strong financial position to meet both our members’ needs and any economic challenges that may be in our future.

Throughout 2014 we celebrated our 60th year in business. We held many events at both branches and within our communities to celebrate with our members, staff and communities.

2015 is the year of the staff. We will be ensuring all of our staff receive the proper resources and training required to ensure we can achieve our vision of “advisor” status. In 2015 we will be redesigning our website and introducing Deposit Anywhere. We will be introducing both a 3 year Escalator product and a Credit Master product to our members. 2015 will be an exciting year with many new initiatives that will allow us to make a difference with our staff, members and community.

The success of QuintEssential is a team effort. On behalf of the Board and management, I want to sincerely thank our dedicated staff for their commitment to QuintEssential’s success. To our members, we thank you for your ongoing support. We will continue to do our best to earn your trust, earn your business and make you proud to be a member of QuintEssential.

Carrie Gregoire, CPA, CGA

President & CEO

9

REPORT ON LENDING SERVICES

Despite the persistent stagnant economy and challenging interest rate environment we continued to manage credit risk and had a year of 14.32% growth within our lending portfolio. In 2014 we saw an increase of $10.6 million in our outstanding loan balances year to year. Personal loan balances saw an increase of $384,729 and although it is a small growth this is the first time we have seen an increase in our personal loan balances since 2011. Our commercial portfolio increased by $3.9 million and mortgages increased by $6.4 million. As at year end, personal loans comprised 15.32% (17.00% in 2013) of our total loan business, mortgages 67.91% (69.06% in 2013) and commercial 16.77% (13.94% in 2013).

A recap of our lending activity over the past year is as follows:

Loans/Mortgages Granted # 2014 # 2013

Personal Loans 438 $6,111,956 390 $5,062,149

Residential Mortgages 112 $14,070,913 70 $7,936,143

Commercial Loans 15 $433,360 6 $733,881

Commercial Mortgages 16 $4,137,139 4 $243,198

581 $24,753,368 470 $13,975,371

Total applications received in 2014 for consumer/commercial credit - 715. (610 - 2013)

Total declined applications in 2014 for consumer/commercial credit for - 134. (140- 2013)

Written Off Loans

The Credit Union wrote off unpaid loans totaling of $97,655 in 2014 ($70,846 - 2013).

During 2014 our co-operative partner The CUMIS Group paid out $202,146 ($176,195 in 2013) in insurance claims to support our members and their families through difficult times such as loss of employment, disability, critical illness and death.

Our staff take the time to ensure that they understand our members’ needs and strive to provide solution options that make sense. Building long-lasting relationships with our members and assisting them in achieving their financial well-being is our goal.

Carrie Gregoire, CPA, CGA

President & CEO

10

REPORT OF THE SOCIAL RESPONSIBILITY COMMITTE

On behalf of the Social Responsibility Committee I would like to thank all the QuintEssential members, staff and board members for the hours they have invested into community involvement initiatives. Through your commitment to the community in 2014 you have managed to raise the bar another 16%! In 2013 we had 1,595 hours in community service; in 2014 we have hit 1,853 hours. As in previous years QuintEssential will be donating a total of $1,000 to the charities of our top 3 contributors for 2014 to recognize their dedication to our community. Our top three for 2014 were: Gino Leone (QCU Staff), Chris Lesage (QCU Board) and Paul Osborne (QCU Board). We appreciate all the hours and hard work everyone has put into making 2014 a year of dedication, involvement and community. We encourage you, our members, to join us in our community efforts. The cash donations are important but we are very proud of our volunteer hours from our staff, board and members. If you would like to volunteer as part of the QuintEssential team, please email Carrie Gregoire at [email protected] In 2014, QuintEssential donated a total of $25,981 into the local community. This funding went into charities such as: Gleaners Food Bank, Habitat for Humanity, Operation Red Nose, Bursaries for Students, Junior Diabetes, All-Together Affordable Housing, Ontario Credit Union Charitable Foundation, United Way, and the Quinte Humane Society. Curtis Bright was selected as the recipient of the QuintEssential Credit Union Ron Koppmann Memorial Bursary at Loyalist College. In addition, 3 high school students received $1,000 bursary each to assist with their education. This bursary program is exclusive to members’ children or grandchildren who are entering or who are already in a post-secondary program. We encourage you to apply and “spread the word” to family and friends. QuintEssential Credit Union is committed to community social responsibility and the committee would like to remind our staff and members that applying for a donation is a simple process which can be found on our website www.qcu.ca. We review all requests as they are submitted in order to respond in a timely fashion. Eric Hovinga, Chair, Social Responsibility Committee

11

2014 COMMUNITY INVOLVEMENT DISBURSEMENTS

Quinte West Soccer $ 500 Gleaners Foodbank (Quinte) Inc. $ 900 Continuing on in Education $ 200 All-Together Affordable Housing Corp. $ 5,000 Habitat for Humanity – Women Build $ 2,500 QCU Community Bursary Awards $ 3,000 Ontario Credit Union Charitable Fund $ 831 Junior Diabetes Research Foundation $ 350 Operation Red Nose- Quinte $ 500 Canadian Red Cross $ 600 Quinte Humane Society $ 600 Quinte Bay Gymnastics Club $ 1,000

Total $ 15,981 Proceeds from Eastern Ontario Alliance of Credit Unions Charitable Golf Tournament organized & hosted by QuintEssential Credit Union were donated to: Ontario Credit Union Charitable Foundation $ 7,000 United Way of Quinte $ 3,000

Total $25,981

12

QuintEssential Credit Union LimitedBalance Sheet as at December 31, 2014

ASSETS 2014 2013

$ $

Cash and short-term deposits 5,590,907 9,734,357

Investments 6,929,950 6,706,279

Loans to members 85,044,316 74,392,178

Property, plant & equipment 1,958,605 2,048,845

Intangible assets 581,569 695,583

Investment property 2,935 5,870

Other assets 535,615 517,984

100,643,897 94,101,096

LIABILITIES

Income taxes payable 14,946 13,380

Members' deposits 91,463,509 85,222,430

Accounts payable and accrued liabilities 800,639 861,217

Deferred commercial fee revenue 42,708 16,978

Deferred tax liability 67,531 83,531

Members' shares 324,589 329,956

92,713,922 86,527,492

MEMBERS' EQUITY

Retained earnings 7,772,339 7,430,696

Accumulated other comprehensive income 157,636 142,908

7,929,975 7,573,604

100,643,897 94,101,096

13

QuintEssential Credit Union LimitedStatement of Comprehensive Income

For the Year Ended December 31, 2014

2014 2013

REVENUE $ $

Interest on members' loans 3,782,230 3,595,194

Investment income 184,729 210,562

3,966,959 3,805,756

INTEREST AND LOAN RELATED EXPENSES

Interest on members' deposits 1,177,094 1,194,669

Impairment losses 100,130 55,466

1,277,224 1,250,135

GROSS FINANCIAL MARGIN 2,689,735 2,555,621

OTHER INCOME 1,067,495 1,001,499

EXPENSES

Administrative 1,416,674 1,370,718

Depreciation of property, plant and equipment and intangibles 267,615 279,255

Depreciation of investment property 2,935 5,870

Deposit Insurance Corporation of Ontario Assessment 73,442 72,335

Salaries and employee benefits 1,563,921 1,594,405

3,324,587 3,322,583

INCOME BEFORE DISTRIBUTION TO MEMBERS AND INCOME TAXES 432,643 234,537

Dividend on members' shares 50,000

INCOME BEFORE INCOME TAX EXPENSE 382,643 234,537

INCOME TAX EXPENSE (RECOVERY)

Current 57,000 40,000

Deferred (16,000) (16,000)

41,000 24,000

NET INCOME FOR YEAR 341,643 210,537

OTHER COMPREHENSIVE INCOME ‐ net of tax 14,728 46,677

COMPREHENSIVE INCOME FOR YEAR 356,371 257,214

14

REPORT OF THE AUDIT & RISK COMMITTEE

Audit & Risk Committee Members: David Clarke, Chair; Alex Shatford, Member; William Burns, Member; Eric Hovinga, Member. The Audit & Risk Committee is a Committee of the Board of Directors and is formed in accordance with the Credit Union and Caisses Populaires Act. The Audit & Risk Committee confirms that it is conducting its affairs in accordance with the Act and the regulations. During 2014, the Committee met 7 times. The Committee arranged its agenda to ensure all required responsibilities as set-out in its Term of Reference were completed in a timely manner. One of many duties of the Audit & Risk Committee is to review Credit Union policies on an annual basis. In addition, the Committee continues to oversee the ongoing process of Enterprise Risk Management (ERM) that was initiated in 2008. Effective ERM is critical to the Credit Union’s ability to remain strong and profitable. The Committee met with both the External Auditor and the Internal Auditor (Both teams are from Wilkinson and Company, LLP, but are independent of each other). The Committee reviewed their reports and was responsible for the review and approval of the appropriate management replies. Based on its findings, the Committee issued reports and made recommendations to the Board. All recommendations made by the Committee have either been implemented or are in the process of being implemented. In March of 2014 QuintEssential Credit Union had a desk audit by The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). FINTRAC is an independent agency, reporting to the Minister of Finance, who is accountable to Parliament for the activities of the Centre. It was established and operates within the ambit of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations. The audit covered the period of June 1, 2013 to November 30, 2013. Nothing of significance was uncovered by the audit. The Committee wishes to report to the membership that, in its opinion, the current financial position of QuintEssential Credit Union is very strong. This is a reflection of the professionalism and dedication of our management and staff and the responsible manner in which it has conducted the affairs of your Credit Union. We wish to thank senior management for their assistance and expert guidance as we completed our duties. Respectfully submitted on behalf of the Audit & Risk Committee, David Clarke, Chair

15

BOARD TERM EXPIRY

2015

Bill Headon Chris LeSage Paul Osborne

2016

William Burns Craig Ervine Alex Shatford

2017

David Clarke Dianne Hadley Eric Hovinga

Staff (as of December 31, 2014)

Under Five Years of Service Alanna Doolittle* Amber Bryden* Brook Thompson Brooke Sheppard* Cheryl Duhig* Cheyenne De Jong* Chris Molleson* Dawna White* Demiah Fisk Gino Leone Greg Rupnow* Jason Lott Meagan Gray Megan Collins Randalyn Knight* Tanya Burley*

Five Years of ServiceBonnie Boyd * Carrie Gregoire Crystal Hinze Jeff Flower* Kim Lee Laurie Golden Ron Harrison Ten Years of Service Debbie Armstrong Kim Johnson Linda Normand Margaret Chabassol* Tammy Uens‐McCambridge Fifteen Years of Service Cindy Grills

Twenty Five Years of Service Lovon Telford Thirty Years of Service Valerie Hamilton

* New to this service level

16

Documents

2014 ANNUAL REPORT - Quinte First · Minutes of Annual General Meeting March 18, 2014 The 60th Annual General Meeting of QuintEssential Credit Union Limited was held at the Bay of