In The News

Central 1 Credit Union drives transformational change through 2017 for better client and member success

VANCOUVER, BC – Central 1 Credit Union (Central 1) embraced a bold new vision to be the national partner of choice for financial, digital banking and payment solutions in 2017, with a focus on the needs of its clients and members.

“In 2017, Central 1 began transforming its culture to enhance its focus on client service. In 2018, we’ll continue the path of transformation by sharpening our priorities on client-centred solutions, operational excellence and system leadership through engagement, innovation and partnership – for the benefit of all credit unions,” said Mark Blucher, President and CEO of Central 1. “We have made key investments in order to offer innovative, affordable products and services, and invested in the means to deliver these most effectively and transparently to our clients.”

Mark Blucher started as Central 1’s President & Chief Executive Officer on January 22, 2018 following Marilyn Mauritz’s tenure as Interim President & CEO beginning July 2017. In January 2018, Mauritz took on the role of Chief Transformation & Legal Officer.

“The work initiated in 2017 has already begun to have a significant impact on achieving measurable outcomes rapidly and successfully,” said Mauritz. “In order to support our members and clients in their success, we created a Transformation Office as a mechanism to accelerate delivery of key initiatives through sustained focus and functional collaboration.”

Central 1 committed in 2017 to building best-in-class solutions, leveraging consultation and engagement with clients. This approach has created momentum for organizational transformation to accelerate our development of market-competitive products and solutions designed to meet the long-term needs of credit unions and other clients across Canada.

Central 1 has been empowered by our credit unions to make a substantive change to how we develop products and programs, and in 2017 this included:

  • Central 1 partnered with omni-channel digital banking leader Backbase to revamp our digital banking platform to deliver an improved user experience across digital solutions.
  • Central 1 and Collabria announced their intention to integrate Collabria’s credit card solution with both Central 1’s online banking and origination platforms.
  • Everlink and Central 1 have agreed to collaborate to provide all B.C. and Ontario credit unions and other financial institutions access to sophisticated, enhanced and real-time fraud monitoring measures to detect and combat debit card fraud.
  • Financial Institutions Commission of British Columbia (FICOM) amended the Borrowing Multiple limits for Central 1’s Mandatory Liquidity Pool (MLP) and Wholesale Financial Services (WFS) business lines, allowing Central 1 to return $50.0 million in capital to its Class A members in the fourth quarter.
  • FICOM and Central 1 members approved a change to permit tiered pricing for electronic bill payment processing and electronic CCIN bill payment remittance processing.
  • Central 1, together with other provincial credit union centrals, Desjardins and CUMIS announced intention to merge the businesses of their subsidiaries, Credential, Qtrade and NEI, to create a major Canadian wealth management firm, Aviso Wealth. The transaction is expected to close in March 2018.
  • By the end of 2017, commercial lending surpassed $700 million in new loan approvals through collaboration between Central 1 and our clients to deploy excess liquidity, enhance revenue, and diversify investments geographically and by industry.

Financially, Central 1 enjoyed overall strong results in the year ended December 31, 2017, including:

  • Total assets were $18.1 billion, up $0.8 billion from $17.3 billion in 2016.
  • Net financial income was $73.4 million, compared to $67.5 million.
  • Interest margin increased $5.6 million to $53.2 million, compared to the prior year.
  • Profit was $48.6 million, down $8.4 million compared to the prior year.

Profit for the year was $48.6 million. In 2017, Central 1 invested $20.5 million in strategic initiatives, most notably to cover initial development of its User Experience (UX) Platform and external IFRS 9 Loan Loss model. The UX Platform is a digital banking channel that will deepen customer engagement through powerful, market-leading user experience management tools, while the IFRS 9 Reporting & Analytics Platform is a model and tool to calculate loan loss expectations for reporting compliance.

Central 1’s WFS and MLP recorded higher profits than last year, but Digital & Payment Services reported profit down $6.8 million from last year. Following engagement of UX Platform product champion clients in fall 2017, Central 1 and its clients identified a set of priorities for the program. Central 1 is developing a plan for a clear path to success based on this stakeholder input. Central 1 intends to continue to invest in development of innovative products and services and to partner where possible.

B.C. and Ontario credit union networks

The B.C. network reported assets of $77.0 billion at December 31, 2017, compared to $71.8 billion in the prior year. Asset growth in B.C. was driven largely by low ratio personal residential mortgages, while insured personal residential mortgages decreased.

The B.C. network’s net income was $344.4 million, an increase of $81.4 million over the prior year. increases in chequing deposits, term deposits and borrowings led to liability and equity growth last year. Deposits were $66.3 billion, up from $62.5 billion, while loans increased to $65.2 billion from $59.9 billion in 2016.

The B.C. network’s regulatory risk-weighted capital ratio was 14.4 per cent at December 31, 2017, compared to 14.7 per cent from the prior year.

Assets of the Ontario network increased to $49.7 billion at December 31, 2017, compared to $44.9 billion in the prior year. The Ontario network’s net income was $184.5 million, up from $142.8 million in the prior year, driven by an increase in financial margin, partially offset by higher salaries and benefits expense. In 2017, Ontario saw growth in loans, notably in residential mortgages and commercial loans and mortgages.

The Ontario network’s regulatory risk-weighted capital ratio was 13.1 per cent at December 31, 2017, little changed from 13.0 per cent from the prior year.

Central 1’s Year End Management’s Discussion and Analysis and Financial Statements have been filed with SEDAR and posted on www.sedar.com and www.central1.com/about-us/investor-relations.

About Central 1

With offices in Vancouver, Mississauga and Toronto, Central 1 holds on balance sheet approximately $18.1 billion in assets. We provide wholesale financial products, trust services, payment processing solutions and direct banking services to about 300 credit unions and institutional clients from coast to coast.

In addition, Central 1 is the primary liquidity manager, payments provider and trade association for our 42 member credit unions in B.C. and 67 Ontario member credit unions. Our members represent a consumer-oriented, full-service retail financial network that collectively serves 3.4 million members and holds more than $126.8 billion in assets. For more information, visit www.central1.com.

Caution Regarding Forward Looking Statements

This press release contains forward-looking statements based on assumptions, uncertainties and management’s best estimates of future events. These include, without limitation, statements contain the words “may,” “will,” “intends” and “anticipates” and other similar words and expressions. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made. Actual results may differ materially from those currently anticipated. Securityholders are cautioned that such forward-looking statements involve risks and uncertainties. Certain important assumptions by Central 1 in making forward-looking statements include, but are not limited to, competitive conditions, economic conditions and regulatory considerations. Important risk factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include economic risks, regulatory risks and other risks detailed from time to time in Central 1’s periodic reports filed with securities regulators. Given these risks, the reader is cautioned not to place undue reliance on forward-looking statements. Central 1 undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

Contacts

Media

Nicole Adams
Interim AVP, Member & External Communications
Central 1 Credit Union
T 604.754.6581 or 1.800.661.6813 ext. 6581
E communications@central1.com

Investors

Brent Clode
Chief Investment Officer
Central 1 Credit Union
T 905.282.8588 or 1.800.661.6813 ext. 8588
E bclode@central1.com