VANCOUVER – Central 1 Credit Union (Central 1) today announced strong growth in assets and deposits from credit unions during the quarter ended June 30, 2017.
Central 1 reported a profit of $10.5 million, down 21.6 per cent from the same period in 2016. Net financial income decreased $3.5 million year-over-year, due to lower realized and unrealized gains.
Deposits from Central 1’s member credit unions increased by $1.6 billion or 15.4 per cent compared to the prior year. Mandatory deposits from credit unions increased $0.8 billion, reflecting the growth within the B.C. and Ontario credit union networks. Non-mandatory deposits from credit unions increased by $0.8 billion, due to increased liquidity in the B.C. and Ontario credit union networks.
On May 19, 2017 Don Wright, Central 1’s CEO, informed Central 1’s Board of Directors that he intended to step down and the Board subsequently formed a committee to search for his replacement. Mr. Wright stepped down as CEO on July 7, 2017 and the Board appointed Marilyn Mauritz, who was Central 1’s SVP, General Counsel & Corporate Secretary, as Interim CEO while the search for a permanent CEO continues.
In the second quarter, after extensive review, analysis, and member consultation, the Board concluded that there was an opportunity to create a national payments organization supporting the Canadian credit union network more quickly and with less disruption by not proceeding with the recommendations of the CEO Payments Strategy Committee (CEOPSC). An Ad Hoc Digital & Payments Future State Committee of the Board was established to direct the work underway to build on the important work of the CEOPSC, and the critical mass of experience, innovation and success achieved within Central 1, and create a National Payments Strategy.
“We are making progress on many fronts to meet the changing needs of our members,” said Marilyn Mauritz, Interim President and CEO of Central 1. “We are developing a National Payments Strategy that will serve the credit union network and our Digital & Payments Services team is working with our partner, Backbase, to deliver a significantly enhanced MemberDirect® platform.”
Financial highlights for the second quarter of 2017, compared to the same period in 2016:
Operating expenses exceed non-financial income resulting in an operating loss of $0.3 million, compared to an operating income of $0.2 million. The second quarter operating loss was primarily due to investments to support strategic priorities and to develop the MemberDirect® roadmap on the Backbase platform, which is expected to drive increased future revenue. It was partly offset by a $1.1 million final litigation settlement received during the quarter.
As at June 30, 2017, Central 1's ratio of regulatory capital to risk-weighted assets for provincial capital adequacy purposes was 35.2 per cent. Central 1’s consolidated borrowing multiple for capital adequacy purposes was 11.7:1. Central 1 was in compliance with all regulatory capital requirements and all risk appetite limits.
On August 14, 2017, FICOM issued a notice of its consent to Coast Capital Savings Credit Union (Coast), a member of Central 1, applying to the federal Minister of Finance to continue under the federal Bank Act, subject to certain conditions, including that Coast will be required to transfer its mandatory liquidity deposits held with Central 1 out of Central 1 within 30 days of receiving Letters Patent to continue under the Bank Act.
Effective August 16, 2017, the British Columbia Financial Institutions Commission (FICOM) amended Central 1’s borrowing multiple from the February 2014 requirements to no more than 17.0:1 for the mandatory liquidity pool segment, and no more than 15.0:1 for the wholesale financial services segment.
Assets of the B.C. network totalled $74.4 billion at the end of the second quarter of 2017, up from $69.8 billion a year earlier. The B.C. network’s net operating income was $94.2 million, compared to $81.3 million a year earlier, mainly driven by growth in securitizations and commercial mortgages. Non-interest income increased by $11.2 million.
Asset growth was led by residential and commercial mortgages, and securitized assets. Liability growth was led by non-registered demand deposits, non-registered term deposits, and borrowings against securitized assets.
The B.C. network's regulatory risk-weighted capital ratio was 14.5 per cent at the end of the second quarter, a slight decrease of five basis points from a year earlier.
Assets of the Ontario network totalled $47.2 billion at the end of the second quarter of 2017 compared to $42.4 billion a year earlier. The Ontario network’s net operating income was $47.6 million compared to $47.2 million in the prior year. Net interest income increased $15.8 million over the same period last year, driven by growth in mortgages and commercial loans. Asset growth was led by residential mortgages, commercial mortgages, and loans. Liability growth was led by non-registered demand deposits.
The Ontario network's regulatory capital as a percentage of risk-weighted assets was 12.7 per cent at the end of June, a decrease of 79 basis points from a year ago.
With offices in Vancouver, Mississauga and Toronto, Central 1 holds on balance sheet approximately $17.7 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 70 Ontario member credit unions. Our members represent a consumer-oriented, full-service retail financial network that collectively serves 3.3 million members and holds more than $121.6 billion in assets. For more information, visit www.central1.com.
Media Relations Manager
Central 1 Credit Union
T 905.282.8534 or 1.800.661.6813 ext. 8534
Chief Investment Officer
Central 1 Credit Union
T 905.282.8588 or 1.800.661.6813 ext. 8588