At Cornerstone Credit Union, we are committed to meet the needs of you, our members. We are very proud of our accomplishments over the past year, and our success would not be possible without the loyalty and support from our stakeholders. We are proud to be your credit union! Kevin Lukey, CEO
table of
CONTENTS 01
Vision, Mission and Values
03
2016 Highlights
05
Corporate Structure and Governance
09
Management Discussion and Analysis for 2016
10
Our Business Environment & 2016 Operational Review
12
2016 Performance Measurement
13
2016 Financial Performance Review
18
Enterprise Risk Management
20
Summary
21
Co-operative Principles
22
Deposits Fully Guaranteed
23
Summarized Financial Statements
Cornerstone Credit Union | Annual Report 2015
1
Vision, Mission and Values
Trust - We continue to earn
Our Vision
Creating an amazing experience and tailoring financial solutions at every point along life’s journey.
Our Mission
We enrich our members. Everyone has a life story. We partner to achieve members’ financial success along their journey. We are a professional, caring credit union that demonstrates excellence and innovation in all we do.
the trust of our members, our communities and our staff. People are treated with honesty and respect. We are their trusted financial services provider.
Integrity - We have high
standards, ethics and personal accountability. We adhere to our values.
Leadership - We
demonstrate and inspire leadership in our people. We are empowered to make decisions and are responsible and accountable in our actions.
Excellence - We are
Our Values
Values are the high road that we take. Values are the cornerstone of our interactions, our decision making and our steps forward. We value trust, integrity, leadership, excellence, community and our co-operative principles. These values reflect who we are as a credit union. Helping each other to succeed is not just how we do things, it is who we are. We are a family, and we work together for common goals and successes. We constantly learn. We grow from our experiences. We always take the high road.
Cornerstone Credit Union | Annual Report 2016
recognized for our excellence. “Being good enough” is not acceptable. We add value to our members’ experience.
Community - Community
creates a sense of belonging, regardless of geographical and tangible boundaries. We accept our responsibility for the economic and social well being of our communities. We are a good corporate citizen.
Co-operative Principles - As a credit union we are distinct among financial institutions by our commitment to the co-operative principles. As a member – owned organization, we partner with our members, our community and the credit union system.
“Our mission is to not simply be in the community, but to be stewards of the community.�
Cornerstone Credit Union | Annual Report 2016
3
2016 Highlights
Highlights As we reflect on 2016, Cornerstone Credit Union is very proud of our accomplishments and successes over the past year. This success would not be possible without the loyalty and support of our many stakeholders. We
thank our staff, Board of Directors, and you, our members, for your business and support throughout the past year – you continue to be the reason for our existence. It is the commitment and support of these stakeholders that make
Over $1 billion in managed assets.
Offer a No-Fee Personal Chequing account; no fees, no minimum balance, no strings attached!
Serves approximately 26,000 members & non-members. Have branches in 11 Saskatchewan communities & also provide accessibility at our member’s fingertips; whether on the phone, through our mobile app or our website. Employs 179 local people. At Cornerstone we take great pride in the work we do within our communities. Cornerstone was the recipient of the Saskatchewan Chamber of Commerce’s 2016 ABEX Community Involvement Award. We invested approximately $185,000 back into the communities we serve. PLUS, staff volunteered over 6,700 hours in our communities. (that’s how important it is for us!)
Cornerstone Credit Union | Annual Report 2016
We continue to focus on ‘MemberFirst’ and elevating the member experience at every interaction. We put our members’ needs first. In 2016 we worked with like-minded credit unions to enhance your experience in ways we couldn’t achieve on our own. This provided more benefits to our members through better products and services, more efficient use of resources and a clearer understanding of member needs. At Cornerstone Credit Union, deposits are fully guaranteed. Cornerstone partnered on a new Wealth Management CUSO to deliver a world class wealth management experience; focused on developing and sustaining our members’ financial well-being.
2016 Highlights
4
Cornerstone Credit Union the great organization that we are today. On behalf of Cornerstone Credit Union, we thank you for your business and look forward to working with you and for you in the future.
Banking became easier with the implementation of our simplified accounts. Just another example of how Cornerstone is committed to providing world-class financial solutions so you can achieve more!
6,734 staff invested over 6,734 hours of their time back to their communities.
Part of a credit union network that offers ding freeÂŽ transactions to our members at any participating credit union ATM in the country surcharge-free. Achieved efficiencies throughout the year to keep our operating costs in line so that we can continue to provide value to our members every day by offering competitive rates and fees to our members.
We’re the fifth largest credit union in Saskatchewan.
$185,000 we invested approximately $185,000 back into the communities we serve.
Cornerstone Credit Union | Annual Report 2016
5
Corporate Structure & Governance
Corporate Structure & Governance Board of Directors
The governance of Cornerstone Credit Union is anchored in the co-operative principle of democratic member control. Cornerstone Credit Union’s philosophy on corporate governance
BOARD OF DIRECTORS MANDATE AND RESPONSIBILITIES
The Board of Directors of Cornerstone Credit Union is responsible for the strategic oversight, business direction and supervision of management of Cornerstone Credit Union. In acting in the best interests of the Credit Union and its members, the Board’s actions adhere to the standards set out in The Credit Union Act 1998; the Credit Union Regulations, 1999; Standards of Sound Business Practices; Credit Union bylaws and policy; and other applicable legislation. The Board directs the affairs of the Credit Union and maintains policies which are responsive to their needs and the needs of the Credit Union for sound operations. The key roles of the Board include formulation of strategic business plans; setting goals, evaluating the performance of the CEO; approving corporate mission, vision and values; monitoring corporate performance against strategic business plans; oversight of operations; ensuring compliance with laws and regulations; keeping members informed regarding plans, strategies and performance of the Credit Union; and other important matters. During the financial year 2016, the Board of Directors held six meetings.
GOVERNANCE PRACTICES
Larry Malinowski, Cheryl Denesowych, Nicole Campbell, Lonnie Kaal, Jack Powell, David Bone, James Knudson, Bonnie Derkatz- Olson, Robert Wilson, Orest Shular, Harold Sigfusson, Guy Carrier Cornerstone Credit Union | Annual Report 2016
Starting in 2013, the Board of Directors initiated a thorough review of its governance practices. This review touched all aspects of board governance functions including committee structure, board meeting structure and schedule, director recruitment and renewal, director development, director representation (i.e. hybrid model) and more. In 2014, the Board of Directors began the process of implementing the recommendations from this review. In 2015 & 2016 we continued this multi-year process that will ensure the Board is using current governance practices that comply with emerging regulatory guidelines.
Corporate Structure & Governance
is to practice transparency in operations and maintain a professional approach and accountability in dealing with our members. The Credit Union has always focused on
BOARD COMPOSITION
The Board is comprised of twelve individuals elected via a hybrid model with 9 directors elected by district and 3 representing the membership at large. Terms are three years in duration. In accordance with the bylaws, the Governance Committee is responsible for the nomination process and election of directors. Voting is by paper ballot during inbranch elections and election results are announced at Cornerstone Credit Union’s annual general meeting. The Board of Directors elected for the terms and districts in 2016, as set forth in the Credit Union bylaws are as follows: District One – Archerwill / Bjorkdale / Rose Valley / Tisdale David Bone Bonnie Derkatz-Olson James Knudson District Two – Ituna / Kelliher / Wynyard *Guy Carrier Harold Sigfusson
6
maintaining the highest standards by conducting its affairs ethically and lawfully and by sustaining a culture of integrity and professionalism.
EVALUATION
The Board of Directors conducts an evaluation bi-annually to assess the effectiveness of board operations. A formal evaluation was conducted in late 2016.
DIRECTOR TRAINING
It is the policy of the Board of Directors to provide opportunities for personal and professional selfdevelopment of the Board. Cornerstone Credit Union has a director development policy in place that pertains to the training, education, and development of directors. This may be obtained by attending meetings, conferences and educational sessions that will provide training and understanding of both broad and technical issues, which will assist board members in fulfilling their role and responsibilities as directors. In 2016, formal personal development plans were prepared for each director to provide guidance on training and development opportunities that will enhance their ability to fulfill their role as a director.
Distict Three – Yorkton / Theodore / Saltcoats / Springside Nicole Campbell Cheryl Denesowych Jack Powell Larry Malinowski At Large Lonnie Kaal Orest Shular Robert Wilson *Note – Guy Carrier resigned from the board in October, 2016. Cornerstone Credit Union | Annual Report 2016
7
Corporate Structure & Governance
BOARD COMMITTEES
The responsibilities of the board of a modern financial services organization involve an ever-growing list of duties. Cornerstone Credit Union maintains a number of committees comprised of directors. This partitioning of responsibilities enables a clear focus on specific areas of activity vital to the effective operation of the Credit Union. Cornerstone Credit Union has four standing committees to assist in fulfilling board responsibilities: • The Audit and Risk Committee, which met four times in 2016, is comprised of six members from the Board at large. The purpose of the Audit and Risk Committee is to ensure an independent review of the Credit Union's operation on areas deemed necessary to maintain the integrity of financial data, adequacy of internal controls and adherence to requirements of The Credit Union Act, 1998, The Credit Union Regulations, 1999, The Credit Union Insurance Business Regulations, and the Standards of Sound Business Practice and provide
oversight for the Credit Union's enterprise risk management framework and policy. • The Governance Committee, which met five times in 2016, is comprised of five members from the Board at large. The purpose of the Governance Committee is to ensure that an appropriate governance system is in place through corporate governance policies, the nominations and election process, the board committees’ structure, and board assessment and development processes. The Nominating Committee is a Governance sub-committee and is comprised of Board Members that are not up for re-election that year. In 2016 this committee met once and consisted of 3 members.
Director
Board Meetings
• The Conduct Review Committee, which met one time in 2016, is comprised of five members from the Board at large. The purpose of the Conduct Review Committee is to ensure that all proposed related party transactions with the Credit Union are fair to the Credit Union and that best judgment is exercised in all matters of related party relationships. This also includes approving the Code of Conduct annually. Committee Meetings
David Bone
5 of 6 (83%)
7 of 7 (100%)
Nicole Campbell Conduct Review Chair
6 of 6 (100%)
5 of 7 (71%)
Guy Carrier •Resigned October 2016
2 of 2 (100%)
2 of 2 (100%)
Cheryl Denesowych Governance Chair
6 of 6 (100%)
11 of 11 (100%)
Bonnie Derkatz-Olson
6 of 6 (100%)
7 of 7 (100%)
Lonnie Kaal Audit & Risk Chair
5 of 6 (83%)
4 of 4 (100%)
James Knudson
6 of 6 (100%)
9 of 9 (100%)
Larry Malinowski Board of Directors Chair
6 of 6 (100%)
Ex Officio 15 of 15 (100%)
Jack Powell
4 of 6 (67%)
2 of 4 (50%)
Orest Shular
6 of 6 (100%)
7 of 8 (87%)
Harold Sigfusson
5 of 6 (83%)
5 of 5 (100%)
Lorne Tarasoff *Retired April 2016
2 of 2 (100%)
1 of 1 (100%)
Robert Wilson
6 of 6 (100%)
4 of 4 (100%)
Cornerstone Credit Union | Annual Report 2016
• The HR / Executive Committee, which met five times in 2016, is comprised of the President, the VicePresident, and two elected Board members at large. The purpose of the HR / Executive Committee is to assist the Board of Directors in discharging its oversight responsibilities relating to board stewardship; employment and performance management of the CEO; succession planning for the CEO and the Executive Management team; organizational culture and compensation; as well as assist with extended decision making authority to act in the capacity of and on behalf of the Board of Directors in times of emergency or if the business continuity plan is activated.
Corporate Structure & Governance
8
EXECUTIVE MANAGEMENT
Cornerstone Credit Union has an experienced executive management team. Executive management is responsible to oversee the operations of the Credit Union within the context of strategies and policies approved by the Board, and for developing processes that identify, measure, monitor and control risks. Management reports performance in key areas to the Board on a regular basis. The Asset Liability Management Committee (ALCO) is comprised of select executive management and senior management of Cornerstone. The ALCO is responsible for understanding and monitoring liquidity risk, interest rate risk, credit exposure and overall balance sheet structure of the Credit Union. The Committee ensures balance sheet activities and measures are within acceptable limits included, but not necessarily limited to capital adequacy; lending and investment limits; liquidity risks; and interest rate risk. Furthermore, the Committee sets and approves balance sheet operational strategies with a focus on achieving financial targets, managing market and liquidity risk and optimizing the use of capital. ALCO met four times in 2016. The Information Technology Governance Committee (ITGC) is comprised of all executive management and IT Leadership. The ITGC plans, approves, prioritizes, and directs Cornerstone Credit Union information technology (IT) initiatives to ensure that internal and external customer needs and expectations for IT solutions are met, IT risks are identified and mitigated, and best value is secured as measured by functionality, efficiency, timing, and cost to meet both business and IT needs. The IT Governance Committee met three times in 2016. The Executive Credit Committee (ECC) is comprised of select executive, credit risk and senior lending management. The ECC is responsible for understanding the Credit Union’s credit risk and for monitoring and oversight of the Credit Union’s policies and risk tolerance levels for credit including, but not limited to, delinquency, portfolio mix, leases, write-offs, credit profiling, loan analysis and loan approvals. As part of its mandate, the ECC reviews, assesses and approves, declines or defers certain credit applications. The ECC is responsible for approving, monitoring, and assessing the effectiveness of ongoing strategies related to loan growth, portfolio mix, and credit risk management and reviewing and discussing environmental conditions impacting the financial position and performance of the Credit Union, specific to lending including; economic conditions, interest rate outlook, competition, market conditions and market intelligence. The ECC reviews and approves strategies for effective loan portfolio management and provides recommendations to ALCO. The Executive Credit Committee met four times in 2016.
Kevin Lukey
Chief Executive Officer
Bryan Furber VP of Finance
Lori Walsh
Cliff Trombley
VP of Risk & Corporate Services
Corvyn Neufeld
VP of People Solutions, Governance and Strategy
Doug Jones
VP of Marketing & Strategic Solutions
VP of Retail Services
Jodi Chambers
Carissa Yaholnitsky
Collaboration Leader
Executive Assistant
Cornerstone Credit Union | Annual Report 2016
9
Management Discussion and Analysis for 2016
Management Discussion an d Anal ys is
This Management Discussion & Analysis (MD&A) is presented to enable readers to assess material changes in the financial condition and operating results of Cornerstone Credit Union (the Credit Union) for the year ended December 31, 2016, compared with prior years. This MD&A is prepared in conjunction with the Consolidated Financial Statements and related Notes for the year ended December 31, 2016, and should be read together. Unless otherwise indicated, all amounts are expressed in Canadian dollars and have been primarily derived from the Credit Union’s annual Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS). Management is responsible for the
underlying reliability of the information included in this MD&A and for the controls systems and procedures that help to ensure that reliability. This MD&A may contain future-looking statements concerning Cornerstone Credit Union’s future strategies. These statements involve uncertainties in relation to prevailing economic, legislative and regulatory conditions at the time of writing. Therefore, actual results may differ from the futurelooking statements contained in this discussion.
Our Business Environment Although Cornerstone Credit Union is focused on serving the needs of its members in Saskatchewan, the economic and business conditions in Canada and abroad can impact the trading area of the Credit Union and its financial position. National and international economic conditions can impact currency rates, interest rates, and monetary policy of the Bank of Canada. These factors, combined with fluctuations in capital markets and competition, can impact the market share and price for the Credit Union’s products and services and, in turn, affect its performance. Canada’s economy remained depressed in 2016 by a number of unprecedented global events. Oil prices improved slightly in 2016 partly due to OPEC members agreeing to cut production. However, the increase in the price of oil was not enough for the economy to improve and cause the Bank of Canada to consider increasing rates any time soon. The Canadian dollar continued to struggle Cornerstone Credit Union | Annual Report 2016 2016
against the US dollar throughout 2016. Because of these two factors, which are anticipated to remain for some time, Cornerstone does not expect a rate increase in Canada during 2017. The economy in the United States outperformed many others throughout 2016 as it continues to recover from financial crises. As a result, on December 14, 2016 the Federal Reserve decided to raise the US overnight range by 0.25% to a range of 0.5% to 0.75%. This took into consideration the increasing inflation from higher fiscal spending under President Donald Trump. Some members expect the Federal Reserve will need to quicken interest rate hikes, however the majority expect more of a gradual pace of hikes to be sufficient. Canada did not follow suit and for the first time since 2007 Canada has a lower central bank rate than the US. The Bank of Canada based their decision to hold rates on the possibility of continued
Our Business Environment & 2016 Operational Review 10
economic slow down or continued anemic economic growth. The Bank of Canada continues to be concerned about the Canadian housing market and household debt levels. Therefore, Cornerstone’s expectation is that the overnight rate will continue to rise south of the border, but at a slow pace. Saskatchewan has also felt the impact of the continued economic slowdown. In 2015, Saskatchewan had the lowest unemployment rate in the country however at the end of 2016 it had fallen to the fourth lowest in the country with an increase of just over 1.0%. Housing starts, manufacturing shipments and retail trade showed modest increases in 2016. The provincial government will be challenged to deal with
Operational Review Cornerstone Credit Union provides world-class financial solutions so our members can achieve more. As a member-owned institution, our members are the focus of everything we do. At Cornerstone, we are committed to MemberFirst. Members are the reason we exist, and therefore are placed at the core of everything we do. 2016 was a successful year for Cornerstone, we improved loyalty scores, evolved our service delivery model to deepen relationships with members, implemented processes to streamline the member experience, explored and introduced several new innovations to better serve members, and collaborated on many unique ventures. Throughout 2016, Cornerstone worked with Conexus
its budget deficit in 2017. It is expected that there will be numerous changes in the 2017 budget that will have varying impact on the Credit Union and the members that it serves. Much of the trading area served by Cornerstone was impacted by late harvest rains effecting quality and creating challenges for some to complete the annual harvest. Some crops did not get harvested and will create cash flow and debt servicing challenges for many producers in 2017. We anticipate that the continued slowdown in Canada and in Saskatchewan in particular will result in modest growth and profitability levels for 2017. Nonetheless, we are confident that we will be able to continue to serve the needs of our members and maintain adequate capital and asset quality.
and Innovation credit unions to enhance the experience and create benefit for all stakeholders – members, communities and employees.
Members are the reason we exist, and therefore are placed at the core of everything we do. Through collaboration we were able to deliver new initiatives faster, cheaper and more effectively than we could alone to better position our credit unions for the future while enhancing the member experience. We simplified banking for our members by implementing a new simplified consumer demand and investment suite. Through our collaboration partnership, we established a Wealth Management credit union service organization. This wealth management entity delivers a world-class
We say we care, and we mean it. Cornerstone Credit Union | Annual Report 2016
11 2015 Operational Review
wealth management experience; focused on developing and sustaining our members’ financial well-being. This wealth model is designed to raise the profile of credit union wealth management services in Saskatchewan and provides our members with access to wealth professionals throughout the province. We created a shared Internal Audit team which results in expanded audit knowledge and expertise and it will generate efficiencies for all three credit unions over time as we will be able to do more with the same resources and more in-depth audits through enhanced auditor expertise. To remain relevant in the marketplace, we continue to evolve our service delivery to meet the changing needs of our members. The technology or digital revolution is impacting all areas of our industry. It impacts the way consumers research their choices, access their products, how products and services are delivered and purchased, and the underpinnings of the entire financial marketplace. Cornerstone implemented new self-serve options through MemberDirect online banking offering members additional convenience such as push alerts which enable members to stay informed by email or text message when an online event occurs on their account and the ability to suppress paper statements online. We launched Cornerstone FX, a premium online foreign exchange trading platform that provides members with a user-friendly self-serve portal to conduct foreign transactions online. We want our members to grow and prosper and we want the same in our communities. At Cornerstone we take great pride in the work we do within our communities; community involvement is engrained in our organization and our culture. Cornerstone Credit Union supported hundreds of community groups, events and organizations in 2016 by investing over $185,000 back into the communities we serve. In addition to the financial contributions that we made, our staff invested over 6,730 hours of their own personal time back into their communities. Staff also volunteered countless hours of corporate time as well. Cornerstone’s commitment to community was recognized provincially through the 2016 Saskatchewan Chamber of Commerce ABEX Awards. The ABEX Awards recognize and honor Saskatchewan businesses with outstanding achievements in business excellence. Cornerstone Credit Union was the recipient of the 2016 Community Involvement ABEX Award.
Cornerstone Credit Union | Annual Report 2016
Cornerstone takes pride in serving its communities through volunteerism, financial investment, and staff involvement. Giving back and showing leadership in our communities is an integral part of who we are - we do it because we want to, not because we have to! We are very proud of the culture and work environment we have at Cornerstone Credit Union. We believe a positive and constructive culture is a required element for a high performing organization. Cornerstone’s employee engagement score for 2016 was 76%, placing us in the top quartile of businesses in Canada. We have been recognized as a Best Employer nationally for small & medium sized businesses by Aon Hewitt. The dedication, commitment and passion our employees contribute to our organization truly make Cornerstone a great place to work!
“
Cornerstone’s employee engagement score for 2016 was 76%, placing us in the top quartile of businesses in Canada
“
The financial performance of our credit union is directly impacted by what is going on around us; the economic and business climate in Saskatchewan and abroad, heightened competition, new market entrants and the low margin environment are issues we continue to face. As a result, Cornerstone Credit Union has a strategic focus on collaboration and efficiencies. The focus is on finding new and improved ways of doing things that create efficiencies that can be deployed through better rates, fees and other operations of the organization. Cornerstone continues to evolve our collaboration and efficiency efforts in order to remain competitive and to develop innovative solutions to better serve our members. The efficiencies gained will continue to be reinvested back into the organization in ways that will better serve both our members and communities.
2016 Performance Measurement 12
2016 Performance Measurement
Cornerstone Credit Union uses a balanced scorecard framework to measure and monitor our progress towards achieving our strategic objectives. The scorecard utilizes both financial and non-financial measures along four strategic themes: Culture, People and Community; Member and Client Solutions; Organizational and Financial Strength; and Business and Management Processes.
2016 BALANCED SCORECARD Strategic Themes
Performance Measures
Actual
Target
• Sustain a dynamic constructive organizational culture.
Community Investment (% Pretax)
2.97%
2.75%
Volunteer Time Hours
6734
5500
Learning & Development (hours per employee)
52.61 hrs
30.0 hrs
Employee Engagement Cultural Assessment
76%
Top Quartile
Net Promoter Score
42.3%
39%
Deposit Growth
2.56%
6%
Loan Growth
3.78%
6.8%
Retail Off Balance Sheet Growth
10.05%
20%
• Ensure a balanced approach for long term growth and viability.
Operating Return on Average Assets
0.63%
0.69%
• Ensure the organization has a capital and liquidity position that enables it to implement the business plan.
Total Capital to Risk Weighted Assets
12.49%
12.20%
Delinquency
0.43%
<0.75%
• Standard Procedures and Practices to ensure corporate effectiveness.
Efficiency Ratio
77.36%
76.80%
• Lever / maximize technology to enhance our member experience and create organizational efficiencies.
Audit Reports (Rating)
Acceptable+
Acceptable
• Develop people (members, employees, board).
Culture, People & Community
• Empower people and support leadership. • Recruit and retain the best people. • Instill a sense of engagement, ownership and pride in the work we do for the benefit of our members. • Contribute to and strengthen our communities • Build and strengthen member relationships through a full-service relationship servicing approach.
Member & Client Solutions
• Demonstrate a proactive needs-based sales and service culture by knowing the member’s story and offering value-added solutions at every opportunity. • Our members receive a consistent ‘Amazing’ experience, at every point of contact through all of our delivery channels. • Our suite of products and services is simple for members and employees to understand and meets the needs of our members. • Proactively positioned to pursue emerging business needs as an early adopter.
Organizational & Financial Strength
• Enhance organizational efficiencies.
Business & Management Processes
• We employ an effective risk and compliance regime that is cascaded throughout the Credit Union. • We recognize what we do well and partner with others to do the rest.
(Actual calculations are performed by using internal financial reporting.)
Cornerstone Credit Union | Annual Report 2016
13 2016 Financial Performance Review
2016 Financial Performance Review Growth
Deposit Growth
Cornerstone Credit Union ended December 31, 2016 with on book assets of $984 million compared to $964 million in 2015, representing growth of 2.12%.
The Credit Union’s liabilities consist primarily of member deposits. Deposits totaled $879 million at December 31, 2016, an increase of approximately 2.5% from prior year. No-Fee chequing balances grew and members continued to direct funds to fixed length term deposits. In particular, laddered investments and tax free savings accounts continued to generate growth and the Credit Union also attracted some larger commercial deposits in the year.
Total assets under administration by the Credit Union at December 31, 2016 were approximately $1.244 billion, representing annual growth of approximately 3.5%. This includes on book assets, wealth management assets, Credit Union owned investments managed through our branch of Credential Securities and interest rate swaps. Off book wealth management assets grew at an annual rate of 9.42% to $188 million and the notional value of interest rate swaps remained at $50 million. As part of its interest rate risk management processes, Cornerstone routinely considers when and if additional swaps should be added.
Asset Growth 1400 $1.202B
1200
$ Millions
1000
$986M
$1.066B
$1.244B
$1.126B
With a slower economy, deposit growth was lower than forecast and, while we didn’t achieve our organizational deposit growth target of 6%, we did manage to help our depositors shift from lower yielding demand or savings products to higher yielding investment or term deposits. The Credit Union’s on book deposits are 100% guaranteed by the regulator of credit unions in Saskatchewan, Credit Union Deposit Guarantee Corporation (CUDGC).
“Dedicated to creating meaningful financial solutions that address the challenges our members face.”
800 600
Loan Growth
400 200 0 2012
2013
On Book Assets
2014
2015
2016
Off Book Assets
Cornerstone Credit Union | Annual Report 2016
Accounting for 83% of total on book assets, loans amounted to $817 million at December 31, 2016; an increase of $29 million or approximately 4% over 2015. The following illustrations show the breakdown of our total loan portfolio by sector. With lower than expected deposit growth, less funds were available to deploy to loans, resulting in lower than targeted loan growth for 2016.
2016 Financial Performance Review 14
Consolidated Loans by Sector 900 800 700
$766M
$788M
2014
2015
$817M
$720M $652M
$ Millions
600 500 400 300 200 100 0 2012
2013
2016
Commercial Non-Mortgage
Commercial Mortgage
Consumer Non-Mortgage
Consumer Mortgage
Ag Non-Mortgage
Ag Mortgage
Investments Investments totaled $115 million at December 31, 2016, an increase of $2.76 million or 2.4% from prior year. The increase was planned as Cornerstone chose to increase its liquidity position before directing additional funds to purchased loans. The majority of the Credit Union’s investments are held with SaskCentral or Concentra Financial Services (a credit union company). Credit unions are required by CUDGC to maintain on deposit with SaskCentral for the Provincial Liquidity program an amount equal to 10% of their member deposit liabilities. In addition to these Statutory Liquidity Investments, the Credit Union maintains a high quality, liquid pool of investments to satisfy payment obligations and protect against unforeseen liquidity events. In addition to its securities held with SaskCentral and Concentra Financial Services, investments are also largely held in securities that are guaranteed by the “big five” chartered banks.
Credit Quality As a credit granting organization, credit quality is a key risk management area of Cornerstone Credit Union. Despite the potential impacts of the ongoing financial crises and economic conditions, the Credit Union’s standard credit quality measures have remained very strong. Delinquency greater than 90 days was 0.43% of loans at December 31, 2016, a 0.12% increase from the prior year. This compares favorably to the levels anticipated by credit granting organizations and our peer group in Saskatchewan. The Credit Union monitors its exposure to potential credit losses and maintains both specific and collective loan allowances accordingly. Specific allowances are reviewed regularly by examining the individual loans and estimating the likelihood of realizing the full carrying value. Collective allowances are calculated using management’s judgment while considering current economic conditions and historical losses. The quality of the credit portfolio was also confirmed by both internal and external audit processes conducted in 2016. Even though Cornerstone’s delinquency is low and quality of credit is high, issues in a specific industry and location caused us to allocate larger than normal allowances however this is comparable to the prior year. Cornerstone’s 2016 charge for loan impairment was 0.09% of assets compared to 2015 at 0.11% and budget at 0.04%.
Liquidity One of Cornerstone Credit Union’s primary objectives is to prudently manage liquidity to ensure that the Credit Union is able to generate or obtain sufficient cash or cash equivalents in a timely manner and at a reasonable price to meet commitments as they come due, even under stressed conditions. The Credit Union maintains a liquidity plan in support of its liquidity policy and regulatory guidance. The liquidity plan undergoes regular reviews and is approved by the Board of Directors. As per the plan, the Credit Union maintains a stock of liquid assets while regularly measuring and monitoring its available liquidity and performs stress tests to identify sources of potential liquidity strain. The Credit Union also maintains external borrowing facilities to complement its liquidity management process. An additional source of liquidity for the Credit Union is the sale of mortgage pools under the National Housing Authority Mortgage Backed Securities (NHA MBS) program. The Credit Union’s securitization debt balance is $16 million at December 31, Cornerstone Credit Union | Annual Report 2016
15 2016 Financial Performance Review
2016 compared with $20 million at the end of 2015. The Credit Union’s liquidity is measured by an operating liquidity ratio which considers projected cash inflows as a percentage of projected cash outflows. At December 31, 2016, the ratio was 59%; for 2015 fiscal year end it was 69%. The Credit Union targets a range of 50% to 110% for this measure. Throughout 2016, loan demand was funded primarily by deposits from Credit Union members. The Credit Union maintains a line of credit with SaskCentral to help manage clearing and settlement and unforeseen funding needs. At December 31, 2016 the credit facility was not in use. During 2016, CUDGC introduced liquidity standards which would require all Saskatchewan credit unions to meet liquidity coverage ratios calculated in approximately the same format as is required by the Office of the Superintendent of Financial Institutions for Canada. These standards come into effect for years starting on January 1, 2017. Based on work completed to date, Cornerstone anticipates exceeding the minimum standards. Cornerstone’s liquidity position is less favorable than had been the case in the recent past. However, we are purposefully managing a tight liquidity ratio in order to support a LTA ratio at the top end of our optimal target to maintain margin and profitability. We will continue to carefully manage our loan to asset ratio and our investment portfolio to ensure we remain able to meet member loan demand and revised regulatory requirements.
Capital Management
5.0% for total eligible capital (eligible capital divided by total assets), with total assets adjusted for deductions from capital and the addition of certain off balance sheet items. Cornerstone exceeded the statutory requirements with both a common eligible tier 1 capital ratio and total tier 1 capital ratio of 11.21%, compared with 10.78% in 2015, a total eligible capital ratio of 12.5% compared with 12.15% in 2015 and a capital leverage ratio of 8.32% compared with 8.03% in 2015. In addition to the standards prescribed by CUDGC, the Credit Union also undertakes an internal capital adequacy assessment process (ICAAP) quarterly. The ICAAP helps credit unions determine the amount of capital they should hold for their specific risk profiles. Cornerstone’s December 2016 ICAAP suggests that, at this time, it would be prudent to hold an additional 2.18% of capital above the regulatory minimum plus buffer, for a total eligible capital ratio of 12.68% (vs. our 12.5%). Cornerstone is working toward building the additional capital suggested appropriate by its ICAAP. The additional capital suggested by ICAAP will continue to change as Cornerstone’s book of business changes.
2016 Capital Measures 14.00% 12.00%
12.15%
2014
2015
12.5%
10.94%
10.00%
One of the primary measures of financial strength of any financial institution is its capital position. Credit unions measure capital adequacy using both risk-weighted and leverage tests.
8.00%
Credit unions operate in a highly regulated environment where CUDGC sets regulatory guidelines to which credit unions must adhere. The standard segregates between two types of capital – tier 1 and tier 2, with tier 1 capital being the primary capital and having the highest quality. The standards require that each credit union hold a minimum common equity tier 1 capital ratio of 7.0% of risk weighted assets, a total tier 1 capital ratio of 8.5% of risk weighted assets and a total eligible capital ratio of 10.5% of risk weighted assets. In addition, credit unions are currently required to maintain a minimum ratio of
4.00%
Cornerstone Credit Union | Annual Report 2016
11.83%
6.00%
2.00% 0.00% 2013
Minimum standard Additional
2016
Buffer
2016 Financial Performance Review 16
Retained Earnings (Including Contributed Surplus & Member Held Equity) 90 $79.9M
80
$85.2M
$75.2M $68.8M
70 $63.9M
Income before allocations (Income Tax & Member Patronage) and other comprehensive income for the year was $6.23 million in comparison to $6.21 million in 2015. For 2016 our return on assets before income tax and patronage allocations was 0.63%, compared to 0.64% in 2015.
Income Before Allocations
60 50
8
40
7
30
6
20
5
$ Millions
$ Millions
Profitability
10 0 2012
2013
Retained Earnings
2014
2015
2016
Member Held
$7.4M $6.9M $5.8M
$6.2M
$6.2M
2015
2016
4 3 2 1
Cornerstone Credit Union manages capital in accordance with its capital management plan and Board approved capital policies, both of which are reviewed on a regular basis. The capital plan is developed in accordance with the regulatory capital framework and is regularly reviewed and approved by the Board of Directors. Capital is managed in accordance with the capital plan with a goal to achieve and exceed regulatory minimums, maintain an optimal level of capital, meet operational requirements, absorb unexpected losses, implement long term strategic plans and signal financial strength. The Credit Union relies on profitability to grow its capital position and holds the majority of its total capital in retained earnings. Both balance sheet growth and profitability affect the Credit Unionâ&#x20AC;&#x2122;s capital ratios. The Credit Union retains a portion of its annual earnings in order to meet its capital objectives. Once these capital objectives are met, additional earnings may be allocated to members through the Credit Unionâ&#x20AC;&#x2122;s member equity program. Member equity accounts are included in the determination of capital adequacy as tier 2 capital. Cornerstone completed its review from the member equity program in 2016 and will be working on the implementation plan for changes to be made in 2017. Following the current capital plan and desire to build capital to the level suggested appropriate by our ICAAP, there was no allocation to member equity in 2016.
0 2012
2013
2014
Gross Financial Margin The Credit Unionâ&#x20AC;&#x2122;s profitability is largely dependent on interest margins. The Credit Union continues to be assetsensitive, which ultimately means that profitability will increase as interest rates rise. As discussed above, the interest rate environment in Canada holds a large degree of uncertainty at this time. Interest rates are expected to remain unchanged. Even if this flat scenario occurs, the Credit Union still anticipates a lower net interest margin in 2017 as a result of loans repricing at lower rates and continued competition for deposits.
Other Income Includes fixed asset revenue, commissions and service charges. Non-interest revenue ended 2016 at $5.5 million compared to $5.0 million in 2015. As a percentage of assets, non-interest revenue increased from 0.52% in 2015 to 0.56% in 2016. The Credit Union anticipates that 2017 non-interest revenue will increase slightly in comparison to 2016. Cornerstone Credit Union | Annual Report 2016
17 2016 Financial Performance Review
Operating Expenses Includes various operating expenses such as personnel, occupancy, security, governance, community development and general business. Operating expenses ended 2016 at 2.48% of assets or $24.4 million compared to 2.46% of assets or $23.7 million in 2015. Personnel costs decreased year over year. Salary levels increased for cost of living adjustments and the Credit Unionâ&#x20AC;&#x2122;s individual variable incentive pay program for staff was enhanced and delivered. However, like 2015, profitability results did not trigger a corporate profit share payment under the current program. Cornerstone expects 2017 personnel costs to approximate the 2016 results as continued efficiencies are expected to offset cost of living increases. Member security costs increased slightly as a function of growth and are expected to increase marginally in 2017 for the same reason. As deposits and membership grow, the fees assessed to ensure the overall health of the Saskatchewan credit union system also grow. Organization costs are expected to slightly decrease in 2017. 2016 occupancy costs were reduced from 2015 and 2017 are anticipated to approximate the 2016 results. General business costs increased slightly in 2017 as a result of technology, depreciation and wealth service costs. Cornerstone expects general business costs to increase slightly in 2017 as well.
Income Tax Expense The 2013 federal budget removed a special deduction for credit unions over a five year phase in period for current taxes payable. The impact will be to increase the Credit Unionâ&#x20AC;&#x2122;s tax rate over that five year period. Therefore, a higher percentage of earnings were expensed as tax in 2016 than in prior years. It is anticipated that the provincial government will be reviewing taxation levels in early 2017 and that credit unions may be impacted by increased corporate taxation at the provincial level.
Cornerstone Credit Union | Annual Report 2016
Enterprise Risk Management 18
Enterprise Risk Management Each year Cornerstone Credit Union spends significant resources measuring and assessing risks and ensuring we are adequately prepared to serve our members and communities now and in the future. This process is called enterprise risk management (ERM) and is mandated by CUDGC as a requirement of all credit unions in Saskatchewan. As a financial institution, Cornerstone Credit Union is exposed to a variety of risk. Risk is the downside that exists in almost every component of the Credit Union’s activities. Risk represents the potential negative impact to the Credit Union’s ability to achieve important goals. Risk can also cause financial loss and harm to a credit union’s reputation. Managing, or appropriately balancing, risk with business opportunities is the top priority for the Board of Directors and Management of Cornerstone Credit Union. Building sound policies and operational processes, risk based audit practices and capital and liquidity management strategies, all supported by strong human resources, is the heart of our strategic objectives. The Credit Union’s primary risk offset is its capital position. An adequate capital position allows the Credit Union to absorb unexpected losses, implement long term strategic plans and signal financial strength. The capital position of the Credit Union can be impacted by high levels of growth, low profitability or losses incurred in any of the key risk areas identified below. The Credit Union maintains a capital management plan and establishes capital policies to ensure capital adequacy is maintained. Capital measures are regularly reported to and reviewed by the Asset Liability Management Committee (ALCO), the Audit and Risk Committee (ARCO) and the Board of Directors. Annual and long term operating forecasts are developed and reviewed regularly with results stress tested and compared to capital plans and policies to ensure proactive management and capital planning is ongoing. The Credit Union’s operations undergo regular independent assessment through external audit, internal audit and regulatory reviews to ensure that key risks are being mitigated and any potential impacts to capital are reported accordingly.
We are with you every step along the way.
Cornerstone Credit Union | Annual Report 2016
19 Enterprise Risk Management
The following key risk categories form part of the Credit Union’s overall ERM approach:
Credit Risk
Cornerstone Credit Union is exposed to credit risk, which is the risk of financial loss resulting from a borrower or counterparty’s inability to meet its obligations. Due to the relative size of our internal loan portfolio, the majority of this risk derives from our direct lending activities. We are also exposed to credit risk through our holdings of investment securities, derivatives and purchased loans (credit product purchased, but not administered by the Credit Union). Lending and credit risk management is performed in accordance with approved policies, procedures, standards and controls. The Executive Credit Committee oversees credit risk exposure and management. Risk concentration limits have been designed to reflect our risk tolerance. Surplus liquidity is invested in accordance with investment policy and regulatory approved investment criteria. Credit risk is further mitigated through in-depth and ongoing training of loans personnel and independent adjudication of larger, potentially higher risk loan applications and regular monitoring and reporting. The Credit Union’s credit portfolio and lending practices undergo regular and ongoing independent assessment through external audit, internal audit and regulatory reviews. Reports are provided to Management directly and the Board of Directors through the ARCO.
Liquidity Risk
Liquidity risk is the risk of having insufficient cash resources or equivalents to meet demand for loans or depletion of deposits. Liquidity risk arises from general funding activities and through managing assets and liabilities. The Credit Union’s liquidity risk management strategies seek to maintain sufficient liquid resources to continually fund our balance sheet commitments and to ensure we can meet the day to day cash needs and growing loan demands of our members. Liquidity risk management requirements are defined by policies and regulatory standards and limits. The ALCO and the finance team oversee liquidity risk exposure and management. Cornerstone’s liquidity risk management framework operates under approved policies and processes. We monitor actual and anticipated inflows and outflows of funds daily. We assess the adequacy of liquidity using Cornerstone Credit Union | Annual Report 2016
potential outflow modeling and stress testing and report results to Management monthly and to the Board of Directors quarterly through the ARCO. We hold a portfolio of liquid assets and have established borrowing facilities with SaskCentral. We also research, make recommendations and enter into alternative sources of funding when appropriate.
Market Risk
Market risk is the risk that financial position or earnings will be adversely affected by changes in market conditions such as interest and foreign exchange rates. Cornerstone’s market risk arises primarily from movements in interest rates. The Credit Union employs comprehensive management processes around our market exposures and risk taking activities. We have defined policy around numerous risk measures which we actively monitor and upon which we regularly report to the ALCO, the ARCO, the Board of Directors and system regulators. We employ dynamic modeling and income simulation for scenario and stress testing based on changes in interest rates. We implement mitigation strategies, including the use of interest rate swaps, where and when deemed necessary to strategically manage risks.
Strategic Risk
Strategic risk is the risk that adverse decisions, ineffective or inappropriate business plans or failure to respond to changes in the competitive environment, customer preferences, product obsolescence or resource allocation will impede the ability of the Credit Union to meet its business objectives. The Credit Union has formal planning processes which result in a strategic business plan and a balanced scorecard that focus on strategic objectives. The Credit Union also uses a comprehensive reporting process to monitor performance relative to plans.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or external events. Exposure to this risk arises from deficiencies in internal controls or employee integrity, technology failures, human error or natural disasters. Operational risk is managed through the use of policies and procedures, controls and monitoring. The Credit Union mitigates operational risk through internal audit programs, business continuity planning, appropriate insurance coverage and secure technology solutions.
Summary 20
Legal and Regulatory Risk Legal and regulatory risk is the risk of loss arising from potential violation of, or nonconformance with, laws, rules, regulations, prescribed practices, or ethical standards. Cornerstone Credit Union operates in a heavily regulated environment. Our structure, policies, and procedures aid us in complying with laws and regulations. Compliance managers are in place to manage and report on compliance on a regular basis. We also undergo regular review by internal, external and regulatory audit.
Summary As we reflect on the year past, 2016 had its challenges and we are proud of the accomplishments of Cornerstone Credit Union. While we continue to focus on serving the needs of our members, the economic and business conditions we face have an impact to the performance of our Credit Union. Despite the challenges we encountered throughout the past year, we were still able to grow our organization, expand the service delivery provided to our members, and find efficiencies that could be reinvested back into our organization for the benefit of our members, and owners. Thank you to our Board of Directors and Staff for the commitment and hard work put forth over the past year. We also wish to acknowledge and show appreciation to our members for their continued support as our organization evolves. We look forward to meeting all of your financial needs in the future.
Credit Union Market Code Cornerstone Credit Union voluntarily adheres to the Credit Union Market Code. This code has been jointly developed by Saskatchewan credit unions, SaskCentral and Credit Union Deposit Guarantee to ensure the protection of credit union members. The code sets forth guidelines for the following areas: •
Complaint handling, which outlines the process for dealing with all complaints regarding the service, products, fees or charges of Cornerstone Credit Union.
•
Fair sales by outlining the roles and relationship of staff to all members/clients and in accordance with the financial services agreement.
•
Financial planning process to advise members/ clients on the risks and benefits associated with financial planning services.
•
Privacy to protect the interests of those who do business with Cornerstone Credit Union. Privacy is the practice to ensure all member/client information is kept confidential and used only for the purpose for which it was gathered.
•
Professional standards to preserve a positive image of Cornerstone Credit Union among our members, clients and communities.
•
Capital management to ensure our capital structure aligns with our risk philosophy.
•
Financial reporting to adhere to business and industry standards.
•
Governance practices to adhere to the intent and stipulation of our corporate bylaws, which are approved by the membership of Cornerstone Credit Union.
•
Risk management to ensure all risks are measured and managed in an acceptable fashion.
Cornerstone Credit Union | Annual Report 2016
21 Co-operative Principles
Co-operative Principles As a true co-operative financial institution, Cornerstone Credit Union acts in accordance with internationally recognized principles of co-operation: Voluntary and Open Membership Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. Democratic Member Control Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner. Member Economic Participation Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting
Cornerstone Cornerstone CreditCredit Union Union | Annual | Annual ReportReport 2015 2016
other activities approved by the membership. Autonomy and Independence Co-operatives are autonomous, self-help organizations controlled by their members. If they enter to agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy. Education, Training and Information Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation. Co-operation among Co-operatives Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures. Concern for Community Co-operatives work for the sustainable development of their communities through policies approved by their members.
Deposits Fully Guaranteed 22
Deposits Fully Guaranteed Credit Union Deposit Guarantee Corporation (the Corporation) is the primary regulator and deposit guarantor for Saskatchewan credit unions. The Corporation is given its mandate through provincial legislation, The Credit Union Act, 1998, for the main purpose of guaranteeing the full repayment of deposits held in Saskatchewan credit unions. The Corporation has successfully guaranteed the repayment of deposits held in Saskatchewan credit unions for over 60 years. By guaranteeing deposits and promoting responsible governance, the Corporation contributes to confidence in Saskatchewan credit unions. Continuing to respond to regulatory changes at the international and national levels was a key focus for the Corporation in 2015. At the provincial level, in support of the Standards of Sound Business Practice, work continued on the development of additional standards and guidance that align with current international standards. In addition, the Corporation was actively involved in discussions with provincial and federal authorities in relation to developments associated with the shift in federal policy direction. These efforts will ensure the Corporation is positioned to continue to deliver on its mandate of protecting credit union depositors which, in turn, contributes to the strength and stability of Saskatchewan credit unions. In 2016 the Corporation will continue to focus on the implications of the changing regulatory environment in addition to carrying forward its preventive efforts to support credit unions as an effective first level of deposit protection. Maintaining constructive relationships with credit unions and investing in programs that reduce risk to the Deposit Guarantee Fund will continue to be a key priority.
A better way to bank
For more information about deposit protection, the Corporationâ&#x20AC;&#x2122;s regulatory responsibilities and its role in promoting the strength and stability of Saskatchewan credit unions, talk to a representative at the Credit Union or visit the Corporationâ&#x20AC;&#x2122;s website at www.cudgc.sk.ca. Cornerstone Credit Union | Annual Report 2016
23 Summarized Financial Statements
Summarized Financial Statements Report of the Independent Auditors’ on the Summary Consolidated Financial Statements To the Members of Cornerstone Credit Union Financial Group Limited, The accompanying summary consolidated financial statements of Cornerstone Credit Union Financial Group Limited, which comprise the summary consolidated statement of financial position as at December 31, 2016, the summary consolidated statements of income and comprehensive income, changes in members’ equity and cash flows for the year then ended are derived from the audited consolidated financial statements of Cornerstone Credit Union Financial Group Limited for the year ended December 31, 2016. We expressed an unmodified audit opinion on those consolidated financial statements in our report dated February 9, 2017. Statements
The summary consolidated financial statements do not contain all disclosures required by International Financial Reporting Standards. Reading the summary consolidated financial statements, therefore, is not a substitute for audited consolidated statements of Cornerstone Credit Union Financial Group Limited. edit Unionreading Financial the Group Limited and its subsidiary,financial which
r 31, 2015, the summary consolidated statements of or the year then ended are derived from the audited Management's Responsibility mited for the year ended December 31, 2015. We for the Summary Consolidated Financial Statements in our report dated February 2016. Management is 11, responsible for the preparation of a summary of the audited consolidated financial statements in
accordance with International Financial Reporting Standards.
uired by International Financial Reporting Standards. Auditors’ Responsibility ute for reading the audited consolidated financial
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 ments Report on Summary Financial idated financial statements in accordance with Statements. International ”
Opinion In our opinion, the summary consolidated financial statements derived from the audited consolidated financial statements based on our procedures, which were conducted statements ofStatements." Cornerstone Credit Union Financial Group Limited for the year ended December 31, 2016 are a ort on Summary Financial fair summary of those consolidated financial statements, in accordance with International Financial Reporting Standards.
dited consolidated financial statements of Cornerstone fair summary of those consolidated financial statements, in
Chartered Professional Accountants
Chartered Professional Accountants February 9, 2017 800 - 119 4th Avenue South Saskatoon, Saskatchewan S7K 5X2
Cornerstone Credit Union | Annual Report 2016
Full financial statements can be obtained upon request from any branch of Cornerstone Credit Union or by visiting cornerstonecu.com
Summarized Financial Statements 24
Summary consolidated statement of financial position
Cornerstone Credit Union Financial Group Limited
Summary consolidated statement of financial position
As at December 31 ($ thousands) Assets Cash and cash equivalents Investments Member loans receivable Other assets Property, plant and equipment Intangible assets Liabilities Member deposits Securitization debt Other liabilities Membership shares Members' equity Retained earnings Contributed surplus Accumulated other comprehensive income
2016
2015
33,134 114,618 817,335 3,223 15,058 718 984,086
43,707 111,863 787,777 3,563 15,872 873 963,655
878,643 15,620 4,608 8,111 906,982
856,634 19,546 7,522 8,382 892,084
74,401 2,379 324 984,086
69,128 2,379 64 963,655
A full set of audited consolidated financial statements is available from the Credit Union
A full set of audited consolidated financial statements is available from the Credit Union.
Cornerstone Credit Union | Annual Report 2016
25 Summarized Financial Statements
Summary consolidated statement of income and comprehensive income
Cornerstone Credit Union Financial Group Limited
Summary consolidated statement of income and comprehensive income
Year Ended December 31 ($ thousands) Interest income Interest expense Gross financial margin Provision for impaired loans Net financial margin Other income Net interest and other income Operating expenses Income before income taxes Provision for income taxes Net income Other comprehensive income (loss), net of income tax Total comprehensive income
2016
2015
35,248 9,192 26,056 918 25,138 5,464 30,602 24,377 6,225 952 5,273 260
35,461 9,516 25,945 1,023 24,922 5,034 29,956 23,745 6,211 895 5,316 (281)
5,533
5,035
A full set of audited consolidated financial statements is available from the Credit Union
A full set of audited consolidated financial statements is available from the Credit Union.
Cornerstone Credit Union | Annual Report 2016
Summarized Financial Statements 26
Summary consolidated statement of changes in membersâ&#x20AC;&#x2122; equity
Cornerstone Credit Union Financial Group Limited
Summary consolidated statement of changes in members' equity Year Ended December 31 ($ thousands)
Balance December 31, 2014 Net income for the year Other comprehensive loss for the year Balance December 31, 2015 Net income for the year Other comprehensive income for the year Balance December 31, 2016
Accumulated Other Comprehensive Income
Retained Earnings
Contributed Surplus
63,812
2,379
5,316 -
-
69,128
2,379
64
71,571
5,273 -
-
260
5,273 260
74,401
2,379
324
77,104
345
Total 66,536
(281)
5,316 (281)
A full set of audited consolidated financial statements is available from the Credit Union
A full set of audited consolidated financial statements is available from the Credit Union.
Cornerstone Credit Union | Annual Report 2016
27 Summarized Financial Statements
Summary consolidated statement of cash flows Cornerstone Credit Union Financial Group Limited
Summary consolidated statement of cash flows
2016
2015
Operating activities Financing activities Investing activities
5,189 17,691 (33,453)
7,440 47,410 (29,585)
Increase (decrease) in cash and cash equivalents
(10,573)
25,265
Cash and cash equivalents, beginning of year
43,707
18,442
Cash and cash equivalents, end of year
33,134
43,707
Year Ended December 31 ($ thousands) Cash flows provided by (used for) the following activities:
A full set of audited consolidated financial statements is available from the Credit Union
A full set of audited consolidated financial statements is available from the Credit Union.
Cornerstone Credit Union | Annual Report 2016
cornerstonecu.com