The Police Credit Union - Taking Care of Our Own · 2017-04-12 · The Police Credit Union Annual Report 2016 / 7 Operating revenues, which is interest earned on loans and investments,

Taking Care of Our OwnANNUAL REPORT 2016

2 / The Police Credit Union Annual Report 2016

contentsBoard of Directors Report 3Message from the CEO 6Comparative Highlights 17Mentions & Milestones 18Community Involvement 20Audit Committee Report 22Independent Auditor’s Report 23Financial Statements 24Staff 27

The Police Credit Union Annual Report 2016 / 3

Message from the Chair of the Board of Directors

I am pleased to report to the membership of The Police Credit Union the accomplishments, initiatives and strategies that were achieved in 2016.

Before I begin I would like to thank my fellow Board members, our Chief Executive Officer, Andy Doak, his management team, and all staff members for bringing the vision of our Credit Union to life every day. They all embrace our vision of taking care of our own.

What sets our Credit Union aside from all other financial institutions is that we do not just build professional and personal relationships with individuals, we serve whole families. Generations have chosen The Police Credit Union to help guide them financially. These family values will continue, and are an important part in personalizing the service that members receive. When a member choses to be part of our Credit Union, they become part of our financial family.

I would like to extend my thanks to you, our members, for being part of our family. Your loyalty, trust and confidence in your Credit Union are what places us above all other credit unions.

There have been a significant number of changes within The Police Credit Union in 2016. What has not changed, however, is the unique ability of this Credit Union to continue to adapt to a financial environment that remains volatile and challenging. The Police Credit Union is in a strong financial position; the actions that have been taken during 2016, and plans that have been established, are, in my opinion, the benchmark for others in our industry to follow.

One of our actions was to centralize our loan application process. Efficiencies in processes and timelines were achieved that resulted in enhanced customer service to our members seeking loans.

There was a change in the hours of operations of our branches to better reflect the needs of our members and to address changing customer traffic flow patterns.


To enhance our level of customer service, a restructuring of our Call Centre was undertaken in 2016. The immediate benefit to our membership was the extended hours of service offered by our friendly and knowledgeable Call Centre staff.

Key performance goals were established to direct our Credit Union towards achieving continued financial stability. Some of these goals included increasing and diversifying our membership; further developing our relationship with our members, police services and Associations; promoting the benefits of our REWARDS program; attracting new police recruits and civilian employees, and finding efficiencies in our operations. I am pleased to advise the membership that we have achieved our goals and continue to remain a strong and vibrant Credit Union.

To better service our members, encourage membership growth, and to recognize the changing demands placed on our facilities, the corporate headquarters and Toronto branch were moved to their current location on Gordon Baker Road in Toronto. The

former site of our Durham branch was sold and a new branch location was found in Whitby. The Peel branch was reviewed with the intent to upgrade its décor and setup to reflect our current customer-centric service model, and branch expansion to Halton Region was finalized. These actions assisted the Credit Union in achieving some of our key performance goals.

Significant changes have occurred within our staffing team. Promotions, reassignments and new employees can be seen throughout the organization. All of them are key players on the

team whom we rely on to provide superior customer service and knowledgeable financial advice that will benefit the members and the Credit Union. 2016 was an exceptionally challenging year for our staff and I want to once again extend the Board’s appreciation to you for your hard work and dedication.

The Board and Management team reviewed our Strategic and Disaster Recover Plans to ensure that we are prepared to address any risks that may challenge our Credit Union’s operations. I am pleased to advise the members that by identifying and addressing significant risks, the Credit Union has been able to protect and create value for our members.

Our Credit Union was very active within the police community in 2016. We supported numerous Police and Association golf events, attended the Police Association of Ontario annual general meeting, met with Chiefs of Police and Association executive members from our core police services, participated in various police services Christmas toy drives, supported charities sponsored by Police Chief Gala events, donated funds to the Police Memorial Foundation, supported charities designated by each Branch Advisory Committee, supported our members children’s education through our scholarship program, participated at both Provincial and National Police Memorial services, and attended various police recruit class sessions to promote the advantages of being a member of The Police Credit Union.

Despite low interest rates, we continued to provide REWARDS members with a variety of no-fee services.


Our community contacts and relationships are extremely important to our Credit Union as we continue to seek new strategies to improve our services to the membership. We must continue to reach out to the broader police community to ensure continued financial success and stability.

Despite our accomplishments in 2016, our Credit Union faces some challenges. The Toronto Police Service (TPS) seems to be constricting in overall membership. The TPS has been our main source for membership for as long as we have been a Credit Union. Proactive measures are being taken to address this situation. We are continuing to attempt to penetrate existing sworn and civilian markets, and we are establishing relationships with non-core police services to introduce the Credit Union to their members.

Low interest rates are still a fact of life in the financial world. All indicators assume this low rate interest environment will remain in tack. Your Credit Union continues to monitor this situation and continually seeks out ways to adjust and adapt its business practices to address this environment.

Despite the low interest rate climate, we continued to provide REWARDS members with a variety of no-fee services. Although implementing fees is a common practice for other financial institutions, we are proud of our commitment to fee-free services.

I am convinced that with your continued support and loyalty, and the professionalism and dedication of our excellent staff, The Police Credit Union will continue to be a viable and strong financial institution serving all members of our financial family.

Finally, I would like to congratulate staff members whom have retired from our Credit Union. Thank you for your service to our Credit Union. Also, I want to thank our former sub-audit team for their many years of dedicated service. Lastly, I extend my personal thanks to retired Board members Ian Russell and Gary Rossitter whose valued contribution to the Credit Union and personal guidance will be forever appreciated.

Stan Colley Chair – Board of Directors

Back row L to R: Gary Leitch; Rod Fraser;

Mike Sharp; Stan Colley (Chair)

Front row L to R: Bob Spafford; Geri James;

George Tucker

board of directors


Message from the CEO

Results at the end of 2016 finished with assets exceeding $272.8 million, an increase of 5.4% over the previous year end. The Police Credit Union continued to take care of our own with low interest rates on loans and mortgages and with very competitive rates on deposits.

FINANCIAL FOCUSThe historic low interest rate environment continued through 2016 giving The Police Credit Union (TPCU) members the advantage of these low rates to borrow for home purchases and to use the equity in their homes for improvements and “wish list” purchases. As a result, total mortgages held by members increased by $8.5 million (4.0%). Personal loan balances to members decreased slightly by $1.8 million (9.7%) and although automobile loan campaigns were launched during the year recruit hiring practices slowed and resulted in fewer personal loan applications from members. Overall growth in the total loans to members increased $6.6 million (2.9%) compared to 2015.

As a result of a very competitive interest rate position adopted for members’ deposits, deposit balances increased by $17.2 million (7.2%) during the year. Tax-Free Savings Accounts have continued to capture the attention of members as balances in TFSAs closed the year at $19.9 million, up $2.9 million or 17.1% compared to 2015. Term deposit balances increased $4.5 million to $84.4 million which represents an increase of 5.6%, while holdings in registered products increased by $0.4 million. The remaining deposit growth is associated with an increase in members’ chequing and savings account balances, up $9.5 million or 12.1% compared to 2015.

Growth in off-balance sheet wealth management assets improved with an increase in assets under administration of $2.4 million. Assets under administration increased from $21.6 million in 2015 up 11.1% to 24.0 million at the end of 2016.

Total asset growth for TPCU for the year was $16.3 million. This includes the off-balance sheet wealth administered assets as well as the assets management by TPCU. Total asset balances improved from $280.5 million in 2015 to $296.8 million in 2016 an increase of 5.8%.


Operating revenues, which is interest earned on loans and investments, declined from $8.1 million in 2015 to $8.0 million in 2016, the decrease stems from the prevailing low interest rate environment throughout 2016 and significant competitive pressures impacting overall returns on new lending volumes.

Interest expense on member deposits, member rebates and Credit Union borrowings of $2.7 million was $0.2 million below the prior year resulting in interest expense savings.

Financial margin results, which represent operating revenues less interest expense, improved $0.1 million from $5.2 million in 2015 to $5.3 million in 2016. The improved margins are mostly attributed to savings on interest expenses on member deposits.

During the year, the recovery of losses was $16k compared to a provision of losses of $79k in 2015. Revenues associated with other income sources decreased $0.2 million on lower service fee volumes. Foreign exchange losses were $46k during 2016 well below the $254k in 2015.

Operating expenses increased slightly from $5.9 million in 2015 to 6.1 million in 2016. Much of the increase is attributed to the increased provision of the insurance savings program.

Income before taxes from on-going operations improved from $349,957 in 2015 to $387,342 in 2016.

During the year, TPCU recognized a gain of $1.2 million from the sale of land and building of its Durham Branch facility.

YEAR IN REVIEWThe Police Credit Union is guided by several strategic principles:

• “REWARDS membership” is key to our success; this means offering members the best prices upfront on both loans and deposits with lowest service charges possible.

• Develop and enhance our relationships with existing members, our core Police Services and their Associations.

• Develop relationships and provide financial assistance to Ontario Police recruits to attend Ontario Police College.

• Be as convenient as possible by having strategic branch locations within the geographical areas of the main police services we serve.

• Provide banking services through automated processes including computer and mobile banking channels, automated funds transfers, payroll deposit, and ATM networks like Interac® and THE EXCHANGE®.

• Continue to deliver innovative financial products, services and mobile platforms to our members.

• Invest in technology to ensure efficient use of staff resources.

Total asset growth for TPCU for the year was $16.3 million, an increase of 5.8%.


This year TPCU continued to implement activities in pursuit of our strategic principles as more members chose our REWARDS platform and brought more of their borrowing and deposit business to the Credit Union. Our staff worked tirelessly enhancing relationships with all members, our core police services and the police associations.

The Credit Union’s strategic direction aims at improving leverage capital levels to exceed 5% (2016 – 5.01%) in the near term and to increase to 6% over the next five years. While Risk Weighted Capital levels will exceed 12% (2016 13.36%). Our strategic direction also aims at improving operating efficiency levels to 85% within four years.

Loan ReportLoan demand from members decreased 4.9% on lower loan requests compared to the previous year. Total loans advanced and lines approved to members increased $13.2 million from $72.4 million in 2015 to $85.6 million in 2016. This was largely due to an increase in mortgage applications.

Total loans to members are $236.9 million, an increase of 2.68% over the previous year-end when loans to members totalled $230.3 million.

During the year, the loan allowance decreased to $89,244 with recoveries on loans previously written-off equal to $30,885. Loan write-offs during the year amounted to $20,550. In 2016, a total of three members filed for bankruptcy or consumer proposals.

2016 2015

Total Lending Activity Number Amount Number Amount

Personal Loans 264 $ 1,983,500 377 $ 6,343,002

Lines of Credit 277 17,910,000 324 15,520,300

Mortgages 199 65,751,953 154 50,524,662

Total 740 85,645,453 855 72,387,300

Total Loans not approved 147 8,545,359 78 3,640,565

Total above 887 94,145,697 933 76,027,865

Loan Allowance

Specific 8 6,463 7 10,653

Non-Specific and General 82,871 84,319

Total above 8 89,244 7 94,973

RecruitsThe Police Credit Union has been committed to assisting recruits hired by police services in Toronto, Durham, York, Peel, and others in Ontario, since 1996, with financial assistance for the cost to attend the Ontario Police College (OPC) in Aylmer, Ontario. Tuition fees to attend OPC are $11,065 for each recruit. We are committed to providing all new recruits attending OPC with an automatically preapproved, low-rate, recruit training loan along with the costs to purchase a computer (if required), which is now a prerequisite for the program.


This year 100 new recruits joined TPCU, and of the recruit members, 68% became REWARDS members. This is an important first step in building long-term relationships with our newest members. Through the REWARDS program, recruits automatically receive special products and services at preferred rates, which enable them to take full advantage of all their Credit Union has to offer. It also gives our staff a chance to learn more about each member to determine which financial services are the right fit. We are proud to report that throughout the history of the program, we have assisted 4,680 recruits with their dream of becoming a police officer.

Product, Services and Technology EnhancementsThe Police Credit Union offers a full suite of financial products and services to its members. A broad range of personal deposit accounts and services are available for members. Retail products for individuals include Canadian dollar chequing and savings accounts, US dollar chequing and savings accounts, Term deposits, Registered Retirement Savings Plan, Registered Retirement Income Funds, Tax Free Savings Accounts and Registered Education Savings Plans. Concentra Trust provides trustee services for all the Credit Union’s registered products.

Lending products include installment loans, demand loans, lines of credit and overdraft protection on member chequing accounts. The Credit Union also provides conventional and high ratio insured mortgages, bridge financing, and equity lines of credit. Our Continuing Education line of credit was designed to provide financial assistance to members who are beginning the promotional process within their designated police service as many of our police services are placing a greater emphasis on their officers gaining higher levels of education to qualify for higher rank promotions.

A Commercial lending program has been implemented and we are now able to assist members with the purchase or refinance of an investment property. We will also be able to accommodate the police associations we deal with to finance or assist with financing to purchase or construct association premises.

TPCU uses MemberCard card services to provide members access to Automated Teller Machine and Point of Sale services through Interac, THE EXCHANGE and Cirrus® networks. MasterCard® Credit Card and Global Payment Cards are provided to members through an arrangement with CUETS Financial.

Mobile banking services for members include a native mobile banking app for iPhone and Android devices. The app has all the convenient features that members expect including checking their account balances, paying bills, funds transfers, and finding the nearest branch or ATM. It’s a fast and secure way for members to handle everyday banking wherever and whenever it suits them. The mobile banking app now includes Deposit Anywhere™ services – members can quickly and securely deposit their cheques with their smartphone or tablet. Deposit Anywhere is a free service and is just as secure as depositing a cheque at a branch. Members can complete their deposit in less than a minute and can do it from anywhere and at any time.

This year 100 new recruits joined TPCU, and of the recruit members, 68% became REWARDS members.


Wealth management services are also available to members. Financial planning and investment advice is available through Credential Asset Management Inc. with over 3,000 funds to choose from, including Ethical Funds. Credential Direct provides members with online brokerage services.

Creditor insurance products for life, disability and critical illness are available through our partner Credit Union Insurance Services (CUIS). Travel and Term Life insurance products may also be acquired.

TPCU members continue to use the services of Car Choice Canada, an automotive advisory service which assists car shoppers with the purchase of new or used vehicles and leasing. Car Choice Canada saves you time and money without the hassle of negotiating. Members can obtain an unbiased opinion on vehicle comparisons and the service can locate any type of vehicle, new or used, at the best price from over 35 new

car dealers in the GTA who offer vehicles of every make or model, new or used.

Management and the Board of Directors continued to work with our Advisory Committees this year, a group of volunteers who provide the Credit Union with valuable insight from a member’s perspective on how the Credit Union can continue to expand to meet the needs of its membership. We have been able to solicit input and direction on the future of the Credit Union, its products and services, and technology enhancements.

Technological upgrades and enhancements continue to play a critical role in the Credit Union’s strategic direction. Work continued to proceed on a new release of MemberDirect® integrated services which includes new functionality that includes personal financial management tools. Members will be able to access these upgrades in mid-2017.

We will continue our search for new technology that will benefit the members of our Credit Union and expand efficiencies and member service.

Youth Support and EducationCredit Unions are unique in the ways that they conduct business and serve their members. What we celebrate as the credit union difference extends far beyond our financial services. As member-owned co-operatives, credit unions have a long, distinguished history of reflecting the strength of their co-operative values in forging stronger communities.

The Police Credit Union is committed to supporting our young members as they strive to reach their personal and academic goals. It’s one of the many ways that we take care of our own. By investing in accomplished students, we are helping to develop caring and engaged young leaders who will make meaningful contributions to the future of our communities.

In 2016, one of the ways in which we supported our community of young members was to offer a scholarship program for children and grandchildren of our members.

In 2016, five $500 scholarships were awarded to young members of our Credit Union.


Five $500 scholarships were awarded to young members of our Credit Union.

Another initiative to engage youth with our Credit Union was to give four children of members an opportunity to attend a summer program in 2016. Co-operative Young Leaders is a summer experience unlike any other. The week-long program brings young people together from across Ontario to learn about, and practice, communication and leadership through co-operative activities. Every summer, Ontario Credit Unions and Co-ops give 200 young people a chance to attend Co-operative Young Leaders. CYL is a program of the Ontario Co-operative Association. The Police Credit Union is pleased to be an ongoing participant in this important youth initiative.

Human Resources and TrainingThe Police Credit Union is facing an increasingly competitive and changing business environment. The structure and business-focus of competitors continue to evolve. Member expectations are becoming more challenging and there is an increasing urgency in attracting, motivating and retaining high-level talent to provide us with a competitive advantage. To ensure our Credit Union remains competitive in the market place, we commit to reviewing our compensation packages annually for our employees.

New hiring processes were implemented during the year to include more skill and competency based testing to improve the selection outcome. There has also been a focus to refine training programs that ensure new hires have the knowledge and capabilities to contribute to their teams immediately.

Work continued to transition our frontline tellers and call centre staff into roles which can handle more complex transactions, this will enable staff to provide enhanced services. Once the training process is complete, our staff will be able to complete additional services such as registered product transactions and small loan requests.

Staff development resources are provided to allow them to attend training sessions and to register for accredited educational programs provided through CuSource, a national learning and development facility for Canadian credit unions. Resources are also available for the board of directors for training and education. This year, the entire board participated in a training program designed helps individuals and teams identify working and communicating behavioral styles and strength to create effective working relationships and improve communication.

All employees have met all required legislative requirements by completing training sessions in Money Laundering and Terrorist Financing (FINTRAC); new employees complete Integrated Accessibility Standards (AODA); Canadian Anti-Spam Legislation (CASL) and Occupational Health and Safety Awareness to comply with legislative guidelines. Selected staff have completed their annual requalification in CPR and First Aid to continue to ensure that each of TPCU’s locations have trained staff on-hand to assist in an emergency.

We want to be sure that we continue to take care of our most precious resource – our staff, and to this end we have established a program to measure our employees’ engagement with our Credit Union. The purpose of an Employee Engagement process is to measure and assess, annually, both our employees’ satisfaction and commitment to our organization. An engaged employee is one who is fully absorbed by and enthusiastic


about their work and so takes positive action to further the organization’s reputation and interests. We believe that an engaged employee will provide for a better member experience and a win-win situation for us all.

Marketing and Business DevelopmentThe prime purposes of our marketing communications each year are to ensure that the Police Credit Union remains top-of-mind for our members’ financial requirements, and that knowledge of products and services remains current. We use ongoing mail and email programs to supplement personal staff communications with our many loyal members. Monthly statement and promotion emails are used to inform and introduce our products and promotions in a cost-effective manner. Regular mail is particularly effective when reaching out to a select segment of our membership; those who may be interested in a new product that is being launched or a special offer on a current product.

The Police Credit Union awareness campaigns have been in operation for some time now, in addition to the mail and email approach, the Credit Union ensures promotional details are available on our website and on in-branch digital screens. In addition, where permitted the Credit Union has access to some Police Service Intranets and to screen savers on their computers here police personnel are provided with our latest campaigns and promotions.

The Police Credit Union has committed to donating, annually, a percentage of the revenue sharing profits generated by our MasterCard Credit Card product to the Ontario Police Memorial Foundation.

We believe the foundation is near and dear to our members and this program will resonate with our membership group and will be successful within our policing community. The more our members use our MasterCard for their credit card purchases, the greater the annual donation will be. After two years, the Credit Union has donated $15,373 to the foundation.

RETAIL AND CORPORATE BRANCHES TorontoThe largest number of members belong to the Toronto branch, which help 4,432 members with their financial needs. In January of 2016 the branch was relocated to our current 105 Gordon Baker Road location. The bright, new, modern space was designed to better accommodate our members’ needs. The branch operates with a staff of four who are dedicated to assisting members with their financial goals, as well as fostering relationships with the Toronto Policing Community including the Toronto Police Service, the Toronto Police Association Toronto Police Amateur Athletic Association, Toronto Police Widows and Orphans, and the Toronto Police Pensioners Association.

Assets finished the year at $127.2 million, which includes a loan portfolio of $36.3 million and a deposit portfolio of $114.2 million, representing the largest deposit portfolio of all the branches.

CollegeLocated inside Toronto Police Headquarters, our 40 College Branch provides full service and convenient banking to members working at Toronto Police Headquarters and as


well as Court Services at College Park. The branch opens its doors earlier than our other branches closer to shift change. It is a good location for assisting new hires as many attend Toronto Police headquarters for the hiring process including orientation.

The branch is staffed by two employees dedicated to the financial well being of 759 members and holds $7.8 million in assets, $5.3 million in deposits and $7.5 million in loans.

DurhamThe Durham branch has grown to $64.6 million in assets and currently helps 2,949 members with realizing their financial goals. In response to changing needs and banking trends, the branch staff compliment was reassigned to five employees. The branch serves a significant number of retired members, and members from Toronto and Durham Regional Police Services.

The branch maintains $62.3 million in deposits for members and with loans of $51.3 million. The branch continues to grow and foster relationships with its members – the Durham Regional Police Service and Durham Regional Police Association.

With the long-term strategy for the Durham Branch completed, it was decided that a sale of the land and building and moving further east will would offer the best opportunity for future success and result in a significant gain to reserves and improve the Credit Union’s capital position. This sale was completed in August 2016; however, the branch arranged for a leaseback of the facility and would remain in its current location until the construction of a new branch could be finalized into 2017.

The Branch will move further east into Whitby at 3000 Garden Street, a more centralized location for the Durham Regional Police Service, occupy approximately 2,000 square feet and provide ATM services inside the branch. Doors are expected to open in January 2017.

PeelThe Peel branch has grown to be the second largest branch with $98.8 million in assets. The branch provides financial help and guidance to 2,020 members with a staff complement of six. Deposits have grown to $38.1 million, while loans to members has reached the highest of all branches at $98.6 million.

The branch continues to benefit from the borrowing needs of younger members resulting in significant increases to loans and mortgages. The dedicated branch staff continue to deepen and grow relationships with their members, as well as police relationships with the Peel Regional Police Service, the Peel Regional Police Association, Halton Regional Police Association, and the Police Association of Ontario.

Call CentreThe Call Centre was expanded in 2016 and will eventually accommodate four representatives. Currently, three active call centre representatives offer our members

After two years, TPCU has given $15,373 to the Police Memorial Foundation through donating a percentage of profits from the use of our MasterCard.

assistance and solutions for a variety of financial needs. The dedicated representatives provide personalized service over the phone, email, and secure contact via online and mobile platforms.

As a response to member input, the Call Centre hours of operation were increased to provide members with more opportunities to connect with a live representative to assist with requests, solve problems, even taking care of financial transactions. Members can now call earlier in the morning on weekdays, and are assisted later in the evening with extended hours on Thursdays and Fridays, and longer hours on Saturdays. The Call Centre is a great alternative to visiting a branch in person.

YorkThe branch maintains assets of $43.4 million and helps 2,012 members with their financial needs and goals. The branch has grown deposits for members to $35.2 million and loans are now at $43.3 million. A staff complement of four employees are dedicated to building relationships with their members, the York Regional Police, and York Regional Police

Association, South Simcoe Police, Orangeville Police Services, and personnel of the RCMP “O” division.

Corporate Administrative BranchThe branch relocated to 105 Gordon Baker on January 21, 2016. The corporate office is 7,500 square feet and occupies space on both the ground and second floors and is connected through an internal staircase. An expanded call centre and centralized lending department was created within the corporate office and all of the space has been updated with our corporate branding.

The corporate office houses the administration functions of the Police Credit Union and includes

boardroom facilities, space for our administration department, accounting, IT resources and provides office and managerial space for the organization’s management team.

The centralized lending department, established in April 2016, now handles loan adjudication and administrative support to ensure consistent document completion, proper adherence to policy and procedures, and quick and consistent credit approvals for our membership.

COMMUNITY INVOLVEMENT ACTIVITIESThe Police Credit Union actively supports and partners with our policing communities throughout the year. Police Association summer picnics as well as children’s holiday parties are supported with gifts. Our branch staff attend parties for the Toronto Police Association, Peel Regional Police Association, and Halton Regional Police Association. In addition to these functions, support is also provided to several Association Golf tournaments for their charitable endeavours including attending the tournaments, sponsoring holes, and providing giveaways.


Call Centre hours of operation were increased this year to provide members with more opportunities to connect with live help for their financial needs.

Charitable events sponsored by our police services, organizations and Associations are supported with Blue Jay tickets to help with fundraising. Blue Jay tickets have been well received and helped to generate good donations for the charity involved. Some of these events are golf tournaments, others are special functions such as Peel’s Mother Day Brunch for Special Victims, International Women’s Day, and Ontario Women in Law Enforcement. Board and staff also attend gala events organized by our police services, including the Toronto Police’s Chief’s Gala in support of Victims, and the York Regional Police Appreciation night.

In 2016, branches donated to charities important to their core police communities, such as the Law Enforcement Torch Run for the Special Olympics. In December, all our branches partnered with their core police services as a drop-off point for the toy drive in their respective regions.

INTO THE FUTUREAs we enter our seventy-second year of supplying financial services to our policing communities, our plans include safe growth of our business by acquiring a greater share of our member’s wallets leading to REWARDS membership status and by increasing our membership base through active pursuit of new recruits and civilian hires of Police Services, and their family members. In addition, we will continue to nurture existing relationships with the Police Services and Police Associations to which our members belong and explore new relationships with other Police Services and their employees within proximity to the GTA.

We will continue to offer our best possible prices on all our products and services, ensure that we have the latest in product offerings, and provide our members with the newest technological advancements made available by financial institutions.

The Police Credit Union remains committed to ensuring the lending products we offer meet our member’s needs. In 2017 a new readvanceable mortgage product, CreditMaster©, will be introduced and allow members to have a choice in what products they hold in their mortgage.

The Credit Union will continue its path to improve its capital position, aiming to exceed 5% in the near term and to increase to 6% over the next five years. To reach these levels we expect to undertake an investment share offering.

TPCU will be expanding to Halton Region as plans are underway with the Halton Regional Police Association (HRPA) to develop a branch location within their new association facility. This will be a full-service facility occupying approximately 1,600 square feet. Opening is expected to commence mid-2017 and will be located off highway 407 at 4671 Palladium Way between Walkers Line and Appleby Line in Burlington.

The Credit Union’s strategic direction is to gradually improve operating efficiency levels to 85%. Management has developed options to improve either operating income or operating expenses and will continue to implement these throughout 2017. It is expected that Operating Efficiencies will be negatively impacted in 2018 before settling down and trending in a more efficient direction due to the full year effects of branch expansion into the Halton market place.


ACKNOWLEDGEMENTS Thank you to the Board, Sub-Audit Group, Advisory Committee members, and Liaison Officers for their hard work this past year and, of course, to the staff of the Credit Union. You do a great job in making us the successful organization we are, and your efforts are appreciated by all. To the membership, thank you for putting your faith in the Police Credit Union.

Andy Doak Chief Executive Officer

From L to R:Denzil D’Mello, Sheila Carvalho, Bess Kominos-Estrela, Andy Doak (CEO), Karen Zwarych


Andy Doak Chief Executive Officer

Denzil D’Mello Controller

Karen Zwarych Human Resources & Training Manager

Bess Kominos-Estrela Manager of Retail Services

Sheila Carvalho Member Credit Manager

senior management team


Years Ended December 31

2016 2015 2014 2013 2012

Operating Revenue $

8,028,637

8,092,751

8,217,816

8,165,510 8,307,932

Interest on Members’ Deposits

- amount $ 2,621,137 2,794,504 2,741,095 2,769,477 2,992,181 - percent 32.6% 34.5% 33.4% 33.9% 36.0%

Financial Margin- amount $ 5,339,908 5,211,094 5,356,233 5,333,203 5,275,730 - percent 66.5% 64.4% 65.2% 65.3% 63.5%

Comprehensive Income

- amount $ 1,373,064 359,062 293,319 215,751 244,427 - percent 17.1% 4.4% 3.6% 2.6% 2.9%

Loans to Members $ 237,022,226 230,408,948 221,355,935 214,219,033 200,724,946

Membership Shares

$ 1,216,709 1,220,509 1,214,681 1,207,243 1,200,468

Members’ Deposits $ 257,424,759 240,228,040 230,126,991 222,578,054 216,387,324

Total Assets $ 272,781,195 258,876,916 248,136,296 242,625,151 229,062,987

Asset Growth 5.41% 4.33% 2.30% 5.90% 4.30%. .

Leverage Ratio 5.01% 4.75% 4.81% 4.79% 4.98%

BIS Ratio 13.63% 13.11% 13.73% 14.10% 14.17%

Liquidity 11.17% 8.52% 8.83% 9.53% 9.86%

Comparative Highlights


• Total Assets increased $13.9 million from $258.9 million to 272.8 million as at December 31, 2016.

• Total Loans to members increased $6.6 million or 2.9%. During the year, TPCU recorded a recovery charged to operations of $16,064 for personal loans compared to a provision for impairment of personal loans of $79,219 in 2015.

• Loan request applications from members was down 4.9% compared to 2015.

• Increase of $8.5 million or 4.0% in mortgage growth.

• Members’ Deposits increased $17.2 million from $240.2 million in 2015 to $257.4 million in 2016.

• Net Income after taxes increased substantially from $324,985 to $1,361,957. The proceeds recognized from sale of the Durham facility was the primary reason for the increase in overall earnings.

• Members’ Equity grew from $10,998,328 in 2015 to $12,371,392 in 2016; an increase of 12.5 % and exceeding regulatory capital requirements.

• Financial Margin (the funds available after interest expense is deducted from revenue) increased $128,814 mostly from lower interest expense on member deposit activity during the year.

• This year 100 new recruits joined TPCU, of the new recruits 68 became reward members. In comparison, 142 new recruits joined in 2015 with 91 new recruits becoming reward members.

• Wealth Management Services – Assets under Administration increased to $24.0 million an increase of $2.4 million or 11.1%.

Retirees

Civilian

Uniform

Market Penetration

South Simcoe

HaltonPeelYorkDurhamToronto

20%

$0

40%

60%

80%

70%

50%

30%

10%

Assets by Branch

Toronto

College

DurhamYork

Peel

Mentions & Milestones

Assets by Branch

Membership by Branch

Toronto

College

DurhamYork

Peel

Membership by Branch

Market Penetration


Branches

Toronto Members 4,432 Assets $127.2 million Deposits $114.2 million Loans $36.3 million

College Members 759 Assets $7.8 million Deposits $5.3 million Loans $7.5 million

Asset Growth

20162015201420132012

$180 M

$0

$200 M

$220 M

$240 M

$280 M

$260 M

Recruit Hires

20162015201420132012

100

$0

200

300

400

600

Toronto

20163

Durham 13York 24Peel 60

500

Retirees

Civilian

Uniform

Total PCU Membership

South Simcoe


2000

0

4000

6000

8000

7000

5000

3000

1000

South Simcoe


4000

0

8000

12,000

14,000

10,000

6000

2000

Total Police Services Personnel

Retirees

Civilian

Uniform

Durham Members 2,949 Assets $64.6 million Deposits $62.3 million Loans $51.3 million

York Members 2,012 Assets $43.4 million Deposits $29.2 million Loans $43.3 million

Peel Members 2,020 Assets $98.8 million Deposits $38.1 million Loans $98.6 million

Asset Growth Recruit Loans

Total Police Services PersonnelPolice Services Personnel who are members


Community Involvement Activities



Audit Committee ReportThe Audit Committee’s function is to assist the Board of Directors in fulfilling its oversight responsibilities. It accomplishes this by reviewing the Police Credit Union’s financial information, including the risk and controls related to those processes that have been established by the Board and Management.

The Audit Committee is composed of four Directors: Mr. Bob Spafford, Mr. Rod Fraser, Ms. Geri James and Mr. Gary Leitch, acting as the Chair.

The Committee’s mandate includes all of the tasks specified for Audit Committees which are outlined in the Credit Unions and Caisses Popularises Act 1994 and the Associated Regulations.

In the fulfillment of these responsibilities, the Committee met bi-monthly during the past year and completed its duties. Some key activities included:

• Reviewing the financial statements and the results of the year-end Audit with the external Auditor

• Reviewing the performance of the Auditors and their proposed engagement letter

• Ensuring that regulatory filings were submitted on time

• Reviewing the Credit Union policies, procedures and controls for legislative compliance

• Reviewing the Disaster Recovery Plan

• Reviewing any outstanding legal issues

• Reviewing any accounting issues

• Reviewing any risk management issues

• Reviewing Directors and Management expense claims

Management has implemented recommendations and has worked closely with our Internal Auditor. The Committee believes there are no matters, other than those contained in the notes to the Financial Statements, that should be reported to the members or which are required to be disclosed pursuant to the Act or the Regulations.

This overview as outlined was supplemented by our Sub Audit Group and our Internal Auditor.

After many years of service, Mr. Gary Glaze, Chair; Mr. Vaughn Weddell and Mr. Gary Billington have retired from the Sub Audit Group. Their responsibilities have now been incorporated into Mr. Rick Belsby’s Internal Audit Plan.

Mr. Ian Russell has retired from the Board of Directors after more than 25 years of service. During his service as a Board Director, he also spent several years as Chair of The Audit Committee.

Thank you to each of them for their loyal, dedicated service to our Credit Union.

I submit this report on behalf of the Audit Committee.

Gary Leitch Chair, Audit Committee


Independent Auditor’s ReportTo the Members of The Police Credit Union Limited:The accompanying summarized financial statements, which include the balance sheet and the statements of changes in members’ equity, operations and comprehensive income are derived from the audited financial statements of The Police Credit Union Limited for the year ended December 31, 2016. We expressed an unmodified opinion on those financial statements in our report dated February 27, 2017. These summarized financial statements do not contain all the disclosures required by International Financial Reporting Standards. Reading the summarized financial statements is not a substitute for reading the audited financial statements of The Police Credit Union Limited.

Management’s Responsibility for the Summarized Financial Statements Management is responsible for the preparation of the summarized financial statements in accordance with criteria that management has determined will represent a fair summary of the audited financial statements.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the summarized financial statements based on procedures, which were conducted in accordance with Canadian Auditing Standards (CAS) 810, “Engagement to Report on Summary Financial Statements”.

OpinionIn our opinion, the summarized financial statements derived from the audited financial statements of The Police Credit Union Limited for the year ended December 31, 2016 are a fair summary of those financial statements on the basis of criteria that management has determined will represent a fair summary of the audited financial statements.

Readers are cautioned that these summarized financial statements may not be appropriate for their purposes. For more information on the entity’s financial position, financial performance and cash flows, reference should be made to the related audited financial statements that are available from management upon request.

Jones & O’Connell LLP Chartered Professional Accountants Licensed Public AccountantsFebruary 27, 2017 St. Catharines, Ontario


Financial Statements

Balance SheetDecember 31 2016 2015

Assets

Cash $ 12,316,175 2,118,915

Investments 20,406,736 22,775,770

Loans to members 237,022,226 230,408,948

Other assets 1,520,798 1,493,823

Property and equipment 1,515,260 2,079,460

$ 272,781,195 $ 258,876,916

Liabilities and Members’ Equity

Members’ deposits $ 257,424,759 $ 240,228,040

Borrowings – 5,000,000

Other current liabilities 1,376,935 1,144,939

Provisions 391,400 285,100

Membership shares qualifying as liabilities 1,216,709 1,220,509

$ 260,409,803 $ 247,878,588

Members’ Equity

Undivided earnings 11,985,491 10,623,534

Accumulated other comprehensive income 385,901 374,794

12,371,392 10,998,328

$ 272,781,195 $ 258,876,916

On behalf of the board

R. Spafford Director

S. ColleyChair


Statement of OperationsFor the year ended December 31 2016 2015

Operating Revenue

Interest on loans $ 7,677,421 $ 7,743,390

Investment income 351,216 349,361

8,028,637 8,092,751

Interest Expense

Interest on members’ deposits 2,621,137 2,794,504

Member rebates 34,255 33,041

Other interest expense 33,337 54,112

2,688,729 2,881,657

Financial Margin 5,339,908 5,211,094

Other Operating Items

(Provision for) recovery of losses on loans $ 16,064 $ (79,219)

Foreign exchange (45,817) (254,178)

Other income 1,205,981 1,361,603

Operating Margin $ 6,516,136 $ 6,239,300

Operating Expenses

Administrative 2,505,949 2,410,843

Amortization of property and equipment 303,780 308,350

DICO Insurance 176,933 176,977

Salaries and benefits 2,988,832 2,993,173

Savings insurance adjustment 153,300 –

6,128,794 5,889,343

Operating Income Before Other Item and Income Tax Expense 387,342 349,957

Other Item

Gain on disposal of property and equipment 1,242,464 –

Income Before Income Tax Expense 1,629,806 349,957

Income Tax Recovery (Expense)

Current (143,073) (24,972)

Deferred (124,776) –

Net Income for the Year $ 1,361,957 $ 324,985


Statement of Comprehensive IncomeFor the year ended December 31 2016 2015

Net Income for the Year $ 1,361,957 $ 324,985

Other Comprehensive Income

Unrealized gain on investment classified as available for sale 11,107 34,077

Comprehensive Income for the Year $ 1,373,064 $ 359,062

Statement of Changes in Members’ Equity

Undivided earnings

Accumulated Other

Comprehensive Income

Members’ Equity

Balance, December 31, 2014 $ 10,298,549 $ 340,717 $ 10,639,266

Comprehensive Income 324,985 34,077 359,062

Balance, December 31, 2015 10,623,534 374,794 10,998,328

Comprehensive income 1,361,957 11,107 1,373,064

Balance, December 31, 2016 $ 11,985,491 $ 385,901 $ 12,371,392

1. Basis of Presentation

These financial statements are a summarized version of the audited financial statements for the year ended December 31, 2016, which have been approved for issue by the Board of Directors on February 27, 2017. A copy of the audited financial statements is available upon request from management of the credit union.

Management and the board of the credit union have determined that presentation of the credit union’s balance sheet and statements of changes in members’ equity, operations and comprehensive income in these summarized financial statements provides sufficient information to allow members to assess the financial position and financial performance of the credit union for the year ended December 31, 2016.

Corporate OfficeChief Executive Officer Andy Doak

Executive Secretary Linda FernandesInvestment Specialist Horst Scheibelt

Human Resources & Training Manager

Karen Zwarych

Member Credit Manager Sheila CarvalhoLoans Officer Lila Jacobs

Loans Adminstration Clerk Sandie LoderController Denzil D’Mello

Financial Accountant Elizabeth KunterComputer Services Manager Robert Mitchell (retired)

Network & Systems Administrator Arvin EvangelistaAdministration Supervisor Brenda Wilson

Payroll Clerk Arlie CruzElectronic Funds Transfer Clerk Sandra Costanza

Clearing Clerk Carmencita Canivel-SibugManager of Retail Services Bess Kominos-Estrela

Call Centre Representative Jennifer SeerattanCall Centre Representative Judy RileyCall Centre Representative Tamara Pitter

Toronto Branch Manager Peter Giftakopoulos

Financial Services Officer Cyndi GrenkeFinancial Services Officer Lila JacobFinancial Services Officer Lianne Balasingham

Senior Member Service Representative

Bernice Muradali

40 College St. BranchFinancial Services Officer Tommas Tammark

Teller Roya Ghahremani

Durham Branch Manager Anna Gomes

Financial Services Officer Jackie McCullochFinancial Services Officer Cari Brothers

Senior Member Service Representative

Denise Lombardo

Part-Time Teller Tammy Smedley

York Branch Manager Diane Gelinas

Financial Services Officer Susan Van WinckleTeller Jeanette WoodTeller Teresa Horvat (retired)

Peel Branch Manager Donna Aleksovski

Financial Services Officer Katarina RakicFinancial Services Officer Vince Sacino

Teller Paulette MayePart-Time Teller Nelia Abdullah

Call Centre 1.800.561.2557 [email protected]

Telephone Banking 1.888.434.3511

Corporate Office 222 – 105 Gordon Baker Road Toronto, Ontario T 416.226.3353 F 416.226.1565 tpcu.on.ca

Toronto Branches (ATMs on site) 103 – 105 Gordon Baker Road Toronto, Ontario T 416.226.3353 / 1.800.561.2557

40 College Street, Room 101 Toronto, Ontario T 416.961.2107

Durham Branch (ATMs on site) Unit 101B – 3000 Garden Street Whitby, Ontario T 905.839.2693 / 1.888.354.8728

York Branch (drive-thru ATM) 18025 Yonge Street, Newmarket, Ontario T 905.836.4998 / 1.877.242.8728

Peel Branch (drive-thru ATM) Unit C – 85 Aventura Court Mississauga, Ontario T 905.795.2286 / 1.866.899.8728

Documents

The Police Credit Union - Taking Care of Our Own · 2017-04-12 · The Police Credit Union Annual Report 2016 / 7 Operating revenues, which is interest earned on loans and investments,