In The News

Strong financial results, new products and leadership mark Central 1’s third quarter

VANCOUVER, B.C., November 22, 2018­ – Continued growth in profit, higher return on average equity, and increased assets highlight Central 1 Credit Union’s (Central 1) performance in its third-quarter 2018 financial results announced today.

Key results compared to the same period last year:

  • Profit after tax of $19.3 million, up $3.6 million from $15.7 million.
  • Return on average equity of 6.4 per cent, compared to 5.5 per cent.
  • Net financial income of $27.3 million, up $5.6 million from $21.7 million.
  • Assets of $19.2 billion, up 8.5 per cent from $17.7 billion.
  • Tier 1 capital ratio of 35.1 per cent, compared to 33.1 per cent.

“We continue to make progress on our goals of delivering flexible digital platforms and robust financial products to our credit union members and clients,” said Mark Blucher, President and CEO of Central 1. “We’re engaging partners and clients in our transformation to meet the changing expectations of Canadians, we have the leadership team to execute our strategy and we’re investing in digital solutions to lead credit unions into the future.”

During the quarter ended September 30, 2018, Central 1 announced several new products, added senior executives in key roles and moved forward on many fronts with its focus on client and member-based initiatives such as the new digital banking User Experience (UX) Platform, which was unveiled in October with its official name: Forge.

In July, Central 1 launched Canada’s first Small Business Payroll system integrated with online banking with pilot client Prospera Credit Union, and in early November launched with general availability to all financial institutions in Canada. This product is expected to transform how small businesses operate by integrating payroll with online banking. Following last year’s launch of Small Business Invoicing, these fully-integrated solutions simplify the processes for small and medium-sized businesses, which fuel a large portion of the Canadian economy.

A first in Canada, Central 1 launched authenticated voice-banking service using Amazon Alexa in August with two pilot clients: Innovation Credit Union and Conexus Credit Union. In October, the product launched fully Canada-wide. Financial institutions using the service enable their customers to check account balances, pay bills and transfer funds between accounts, using only their voice.

Central 1 announced three additions to its executive team in the third quarter. The leadership team is now in place to execute and deliver Central 1’s commitments to members and clients with a refined strategic plan and investments in technology and organizational health.

In September, Central 1 signed the United Nations-supported Principles for Responsible Investment (PRI), joining more than 2,000 other organizations around the world that have publicly demonstrated their commitment to including environmental, social and governance (ESG) factors in investment decision making and practices. PRI signatories voluntarily commit to a set of ESG investment principles and contribute to developing a more sustainable global financial system.

On October 29, Central 1 launched the UX Platform under its new name, Forge, a digital banking platform that transforms the banking experience in Canada. Built on Backbase’s global-leading digital platform, Forge puts control in the hands of clients, providing the flexibility to design and configure their digital branch with an unparalleled user experience. Through the third quarter, the program progressed on schedule in anticipation of the fall 2018 launch of the mobile app with champion client Alterna Bank, a wholly owned subsidiary of Alterna Savings and Credit Union, and the public website capability with FirstOntario Credit Union. Forge will be the foundational platform of Central 1’s digital services going forward.

Central 1 and Canadian Credit Union Association (CCUA) agreed in September to transfer responsibility for government relations services for B.C. and Ontario credit unions from Central 1 to CCUA, effective October 7, 2018.

Financial Results

Profit after tax for the third quarter of 2018 was up $3.6 million from the same period last year. Net financial income increased by $5.6 million, driven by balance sheet growth and widening of net interest spreads resulting in a higher interest margin. This was partially offset by increased costs incurred to support strategic initiatives, leading to an overall increase in this quarter’s profit before tax.

The $1.5 billion increase in total assets from a year ago, for a total $19.2 billion, resulted primarily from an increase in mandatory deposits reflecting the growth within the B.C. and Ontario credit union systems.

B.C. and Ontario credit union system results

In the third quarter of 2018, net operating income of the B.C. system was $108.2 million, down $1.5 million or 1.4 per cent from the same period in 2017. Net interest income was up $13.7 million, non-interest income increased $6.2 million and non-interest expense climbed $21.4 million. Combined assets of the B.C. system at the end of September 2018 rose nine per cent year-over-year to reach $82.4 billion.

The Ontario system reported net operating income of $73.8 million in the third quarter of 2018, up 33.0 per cent from the same period in 2017. Growth in residential mortgages and commercial loans led to a $24.1 million increase in net interest income. This was partially offset by a $9.1 million increase in non-interest expenses. Combined assets of the Ontario system at the end of September 2018 rose 10.0 per cent year-over-year to $53.8 billion.

Central 1’s third quarter Management’s Discussion and Analysis and Financial Statements have been filed with SEDAR and posted at www.sedar.com and www.central1.com/investor-relations.

About Central 1

Central 1 is a preferred partner for financial, digital banking and payment products and services – fuelling the success of businesses across Canada. With $19.2 billion in assets, we leverage our scale, strength and expertise to power progress for more than 300 credit unions and other financial institutions, enhancing the financial well-being of more than 3.4 million customers from coast to coast. 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
Director, Member & External Communications
Central 1 Credit Union
T 604.754.6581 or 1.800.661.6813 ext. 6581
E nicole.adams@central1.com

Investors:
Brent Clode
Chief Investment Officer
Central 1 Credit Union
905-282-8588 or 1 800.661.6813 ext. 8588
E bclode@central1.com