VANCOUVER, British Columbia – Central 1 Credit Union (Central 1) today announced strong financial results and balance sheet growth in the quarter ended September 30, 2016.
“The continued success of the credit union network this year is reflected in the increased deposits placed with Central 1, together with increased transaction volumes,” said Don Wright, President and CEO of Central 1. “Favourable financial markets also contributed positively to financial income, and all our business lines reported strong growth in the quarter.”
For the quarter ended September 30, 2016, Central 1 recorded a profit of $21.5 million, up $8.8 million or 69.3 per cent from the same period in 2015. Central 1’s Mandatory Liquidity Pool, Wholesale Financial Services, Digital & Payment Services, and Trade Services business lines all recorded higher profits than the same quarter last year.
The future of the Canadian credit union network’s second tier continued to be a focus at Central 1 during the third quarter. Central 1 continued to consult with member credit unions to explore the best options for the future of the network. It released “If not now, when?”, a report which recognizes the requirements of credit unions and sets out some of the challenges to be addressed as the network moves forward.
“As our network moves toward creating a long-term structure for the second tier, work is under way to eliminate duplication and reduce costs for members,” Wright said. “Teams from Central 1, Canadian Credit Union Association (CCUA) and Credit Union Central of Saskatchewan have been reviewing what trade association functions would be most appropriate to integrate into CCUA. In addition, the National Payments Strategy is nearing the completion of its recommendations toward the national consolidation of the payments function. Central 1 will evaluate any recommendation in consultation with our members.”
Financial highlights for the third quarter of 2016, compared to the same period in 2015, are:
Central 1’s interest margin has increased in the quarter compared to the prior year, reflecting growth in the balance sheet and an increased allocation of assets to lending. Central 1 also recorded strong financial gains driven by declining credit spreads in the quarter. Other income grew across most categories, but decreased in total due to a one-time litigation settlement recorded last year. Operating expenses were broadly unchanged.
As at September 30, 2016, Central 1's ratio of regulatory capital to risk-weighted assets for provincial capital adequacy purposes was 35.2 per cent. Central 1’s borrowing multiple for federal capital adequacy purposes was 14.3:1. Central 1 was in compliance with all regulatory capital requirements throughout the third quarter.
After the end of the quarter, on October 14, Central 1 issued $200.0 million principal amount of 3.06 per cent Series 6 subordinated Tier 2 capital notes due October 14, 2026.
Assets of the B.C. system, or network, totalled $72.1 billion at the end of the third quarter of 2016, up 9.7 per cent from a year earlier. The B.C. network’s net operating income was $94.9 million, compared to $85.5 million a year earlier. Asset growth was led by residential and commercial mortgages. Liability growth was led by non-registered demand deposits and non-registered term deposits.
The B.C. network's regulatory risk-weighted capital ratio was 14.6 per cent at the end of the third quarter, down slightly from 14.8 per cent a year ago.
Assets of the Ontario credit union network totalled $43.6 billion at the end of the third quarter of 2016 compared to $39.0 billion a year earlier. The Ontario network’s net operating income was $41.1 million compared to $41.4 million in the prior year. Asset growth was led by residential mortgages and 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 13.3 per cent at the end of the third quarter, up from 12.8 per cent a year ago.
With offices in Vancouver, Mississauga and Toronto, Central 1 holds on balance sheet approximately $16.6 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 72 Ontario member credit unions. Our members represent a consumer-oriented, full-service retail financial system that collectively serves 3.3 million members and holds more than $115.7 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