VANCOUVER, BC – Central 1 Credit Union (Central 1) today announced its third quarter financial results, including continued growth in assets from credit unions during the quarter ended September 30, 2017.
Central 1 reported a profit of $15.7 million for the quarter, down 27.0 per cent from the same period in 2016. For the nine months ended September 30, 2017, Central 1 reported a profit of $40.8 million, down 5.8 per cent from the same period in 2016, driven by higher operating loss partially offset by $4.9 million increase in net financial income. Total assets closed at $17.7 billion, up 6.6 per cent from a year ago.
“In the third quarter, we launched a transformation strategy and we’re accelerating steps to shape the organization to meet the evolving needs of our members and clients,” said Marilyn Mauritz, Interim President and CEO of Central 1. “We will continue to focus on building a competitive portfolio of client-centred solutions through stakeholder engagement, innovation and partnerships.”
Deposits from Central 1’s member credit unions decreased by $0.3 billion or 2.6 per cent compared to the prior year. Mandatory deposits from credit unions increased $0.4 billion, reflecting growth among B.C. and Ontario credit unions. Non-mandatory deposits from credit unions decreased $0.7 billion from a year ago.
Financial highlights for the third quarter of 2017, compared to the same period in 2016:
- Profit of $15.7 million, down 27.0 per cent from $21.5 million
- Return on average equity of 5.5 per cent, compared to 8.2 per cent
- Assets of $17.7 billion, up 6.6 per cent from $16.6 billion
- Tier 1 capital ratio of 33.1 per cent, compared to 35.2 per cent
The operating loss was primarily driven by increased costs to support strategic initiatives including the development of the digital banking product roadmap on the UX Platform Program, which is expected to drive increased future revenue.
As at September 30, 2017, Central 1’s ratio of regulatory capital to risk-weighted assets for provincial capital adequacy purposes was 49.6 per cent. Central 1’s borrowing multiple for federal capital adequacy purposes was 12.1.
During the quarter, the Financial Institutions Commission of British Columbia amended the Borrowing Multiple limits for Central 1’s Mandatory Liquidity Pool and Wholesale Financial Services business lines. These changes allow Central 1 to return $50.0 million in capital to its Class A members, which was announced on September 8, 2017. Central 1 redeemed $30.0 million Class A shares and paid $5.0 million dividends on September 29, 2017 and reacquired $15.0 million Class E shares on October 27, 2017.
In September 2017, Central 1 announced its national digital and payments solutions strategy, which is designed to meet the long-term needs of the credit unions and other clients across Canada. To achieve this, Central 1 created a Transformation Office, whose work during the fall will drive the change to build a client-centred, integrated organization that brings innovative solutions for customers, supporting the sustainability of Canadian credit unions.
The search for a new President and Chief Executive Officer is well underway and is expected to be concluded in the early part of 2018.
B.C. and Ontario credit union networks
Assets of the B.C. network totalled $75.6 billion at the end of the third quarter of 2017, up 4.9 per cent year-over-year, due to strong growth in personal and commercial mortgages. The B.C. network’s net operating income was $112.1 million, compared to $94.9 million a year earlier. This increase was driven primarily by robust gains in employment, consumption and income as well as a rise in short term interest rates. Non-interest income decreased by $2.8 million compared to the same period last year, attributed to lower member service fees.
The B.C. network’s regulatory risk-weighted capital ratio was 14.4 per cent at the end of the third quarter, a slight decrease of 19 basis points from a year earlier.
The Ontario network reported net operating income of $55.5 million in the third quarter of 2017, up $14.4 million or 35.0 per cent from the same period in 2016. The increase was mainly driven by growth in residential mortgages and commercial loans, offset by higher salary and employee benefits expense. Net interest income increased $30.2 million over the same period last year, also driven by growth in residential mortgages and commercial loans. Combined assets of the Ontario network at the end of September 2017 rose 12.1 per cent year-over-year to reach $48.9 billion.
The Ontario network’s regulatory capital as a percentage of risk-weighted assets was 13.3 per cent at the end of September 2017 compared to a year earlier.
About Central 1
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 $124.5 billion in assets. For more information, visit www.central1.com.
Interim AVP, Member & External Communications
Central 1 Credit Union
T 604.754.6581 or 1.800.661.6813 ext. 6581
Chief Investment Officer
Central 1 Credit Union
T 905.282.8588 or 1.800.661.6813 ext. 8588