1
Annual Information Meeting
Réunion d’information annuelle
April 28, 2016
Le 28 avril 2016
2
Steve BlakelyChair of the Board
Président du Conseil
3
DICO’s Board of DirectorsConseil d’administration de la SOAD
From L to R Top Row: John Ferreira, Gail Di Cintio, Steve Blakely, Jim Houston, Don Dalicandro
Bottom Row: Helen Young, Carmen Rossiter, Monique Tremblay
4
2015 Highlights2015 – Faits saillants
All depositor funds were protected
Maintained confidence in the sector
Sector experienced solid growth and profitability
Consolidation continued – down by 7 credit unions
Continued to enhance prudential oversight processes Insurance fund at $205.6 M (78 bps of insured
deposits)
5
DICO Strategic ObjectivesObjectifs stratégiques de la SOAD
Proactive and balanced regulation and risk managementRéglementation proactive et équilibrée et la gestion des risques
Sound Corporate GovernanceBonne gouvernance corporative
Effective Public and Stakeholder Awareness Sensibilisation efficace du public et des intervenants
Strong PartnershipsPartenariats solides
6
DICO InitiativesInitiatives de la SOAD
Focus on Governance: ICAAP and Stress Testing Corporate Governance Director Training, Qualification and Competency
Expectations and Assessment
Deposit Insurance Reserve Fund (DIRF) Recoveries on past claims Revised Differential Premium System 2015 DIRF target – 100 bps of insured deposits in 2020
7
DICO Initiatives (con’t) Initiatives de la SOAD (suite)
Proactive risk based prudential regulation Establishing guidance and expectations Examining regularly and providing feedback Avoiding potential losses by intervening early Assisting boards in long term strategic planning
Working with stakeholders
Continued focus on credit union sustainability & sector stability
8
Beryl RobertoDICO OmbudsmanOmbudsman de la SOAD
Ombudsman’s ReportRapport de l’ombudsman
9
Regulation and Risk ManagementRéglementation et Gestion des Risques
Guy HubertVice President, Regulation and Risk ManagementVice-président, Réglementation et Gestion des risques
10
Sector Consolidation 1980 - 2015Consolidation du secteur 1980 - 2015
0
50
100
150
200
250
300
350
400
450
0
150
300
450
600
750
900
1050
1200
1980 1985 1990 1995 2000 2005 2010 2015
$ mill
ions
Numb
er of
credit
unio
ns/ca
isses
popu
laires
Number of credit unions/caisses populairesAverage Assets
Chart1
19801980
19811981
19821982
19831983
19841984
19851985
19861986
19871987
19881988
19891989
19901990
19911991
19921992
19931993
19941994
19951995
19961996
19971997
19981998
19991999
20002000
20012001
20022002
20032003
20042004
20052005
20062006
20072007
20082008
20092009
20102010
20112011
20122012
20132013
20142014
20152015
110424
Number of credit unions/caisses populaires
Average Assets
Number of credit unions/caisses populaires
$ millions
1092
3
1049
4
999
5
952
6
925
7
906
8
862
9
833
10
795
11
734
12
696
13
656
16
598
18
563
20
529
23
501
25
474
27
445
29.3
407
32.8
378
36.4
343
37.3
321
47.6
302
54.9
276
65.2
258
82.9
240
92.5
235
102.2
220
112.8
210
126.6
198
142.3
186
158.3
167
185.6
152
222.1
143
255.9
127
307
117
362.8
Sheet1
Column119771979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015
Number of credit unions/caisses populaires120010921049999952925906862833795734696656598563529501474445407378343321302276258240235220210198186167152143127117110
Average Assets134567891011121316182023252729.332.836.437.347.654.965.282.992.5102.2112.8126.6142.3158.3185.6222.1255.9307362.8424
11
Sector PerformanceRendement du secteur
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Retu
rn on
Ass
ets
Tota
l Ass
ets
Total Assets Return on Assets
Chart1
19971997
19981998
19991999
20002000
20012001
20022002
20032003
20042004
20052005
20062006
20072007
20082008
20092009
20102010
20112011
20122012
20132013
20142014
20152015
Total Assets
Return on Assets
Total Assets
Return on Assets
13.3
0.0042
13.8
0.0058
14
0.0038
15.4
0.0047
16.7
0.004
17.9
0.0039
21.3
0.0031
22.3
0.003
23.4
0.0029
24.7
0.004
26.2
0.0033
27.9
0.0015
29.6
0.0025
31
0.0048
33.8
0.0051
36.6
0.0037
38.991
0.0043
42.45
0.0035
46.626
0.0028
Sheet1
yearTotal AssetsReturn on Assets
1997$13.300.42%
1998$13.800.58%
1999$14.000.38%
2000$15.400.47%
2001$16.700.40%
2002$17.900.39%
2003$21.300.31%
2004$22.300.30%
2005$23.400.29%
2006$24.700.40%
2007$26.200.33%
2008$27.900.15%
2009$29.600.25%
2010$31.000.48%
2011$33.800.51%
2012$36.600.37%
2013$38.990.43%
2014$42.450.35%
2015$46.630.28%
12
Number of Credit Unions/Caisses Populaires
Assets($ Billions)
ROA(bps)
British Columbia 42 66.7 36
Alberta 28 23.8 51
Saskatchewan 49 20.8 61
Manitoba 36 27.7 46
Québec 335 148.0 87
Ontario 110 46.6 28
Other ProvincesAutres provinces
13
Ontario Sector Profile 4Q15Profil du secteur de l’Ontario au 4T15
Credit Unions
Caisses Populaires Total Ontario
Number of Institutions 84 26 110
Assets ($Billions) $ 40.1 $6.5 $46.6
Capital (% assets) 7.10% 8.72% 7.32%
ROA (bp % assets) 20 75 28
ROA before dividends 30 79 36
Efficiency Ratio 86.4% 69.5% 83.7%
14
Capital Composition 2002 - 2015 Composition du capital entre 2002 – 2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Membership Shares Investment Shares Retained Earnings Other Capital
Chart1
2002200220022002
2003200320032003
2004200420042004
2005200520052005
2006200620062006
2007200720072007
2008200820082008
2009200920092009
2010201020102010
2011201120112011
2012201220122012
2013201320132013
2014201420142014
2015201520152015
Membership Shares
Investment Shares
Retained Earnings
Other Capital
0.067348838
0.2123222149
0.6530690083
0.0672599388
0.0569856822
0.20258473
0.5857039615
0.1547256262
0.0531862802
0.2122648507
0.573869466
0.1606794031
0.0471516305
0.2197247198
0.5457571507
0.187366499
0.0446819263
0.2206979991
0.5568782863
0.1777417883
0.0418762432
0.2194507327
0.5646703894
0.1740026347
0.040084807
0.2259252868
0.5566833283
0.1773065778
0.0367745605
0.2627735895
0.5464033944
0.1540484556
0.0324294452
0.2452601357
0.5629778798
0.1593325393
0.0318379069
0.2270740693
0.6146125953
0.1264754285
0.0291358214
0.2524512224
0.60160398
0.1168089763
0.0269
0.24159
0.6213
0.1102
0.0246
0.24
0.621
0.11
0.021
0.25
0.611
0.11
Sheet1
YearMembership SharesInvestment SharesRetained EarningsOther Capital
20027%21%65%7%
20036%20%59%15%
20045%21%57%16%
20055%22%55%19%
20064%22%56%18%
20074%22%56%17%
20084%23%56%18%
20094%26%55%15%
20103%25%56%16%
20113%23%61%13%
20123%25%60%12%
20133%24%62%11%
20142%24%62%11%
20152%25%61%11%
To resize chart data range, drag lower right corner of range.
15
Sector Profile by Risk Level (% of assets)Profil du secteur selon le niveau de risque (% de l’actif)
0.5%
3.6%
36.9%
39.1%
19.9%
2015
High Moderate-High Moderate Low-Moderate Low
Chart1
High
Moderate-High
Moderate
Low-Moderate
Low
2015
2015
0.005
0.036
0.369
0.391
0.199
Sheet1
2015
High0.5%
Moderate-High3.6%
Moderate36.9%
Low-Moderate39.1%
Low19.9%
16
Examination Findings: By-law #5 Résultats des examens : Règl. No 5
Governance: Board
Directors Training & Qualification Overall Adequate
Governance: Audit Committee
Enterprise Risk Management Overall Adequate
Internal Audit Some Improvement Needed
Governance: Management
Commercial Lending Some Improvement Needed
Capital & Liquidity management Some Improvement Needed
17
Intervention Levels by Program Niveaux d’intervention selon le programme
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015Watchlist Supervision Administration Liquidation
Chart1
2007200720072007
2008200820082008
2009200920092009
2010201020102010
2011201120112011
2012201220122012
2013201320132013
2014201420142014
2015201520152015
Watchlist
Supervision
Administration
Liquidation
29
6
3
8
26
7
3
10
21
4
2
16
18
4
1
20
23
2
1
25
23
1
1
26
14
1
0
13
11
0
0
12
13
0
0
10
Sheet1
YearWatchlistSupervisionAdministrationLiquidation
200729638
2008267310
2009214216
2010184120
2011232125
2012231126
2013141013
2014110012
2015130010
To resize chart data range, drag lower right corner of range.
18
Number of Failed Credit Unions/Caisses PopulairesNombre de faillites Caisses Populaires/Credit Union
0
5
10
15
20
25
Chart1
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
# of Failures
10
8
20
15
11
10
4
11
3
2
2
0
1
1
0
0
1
0
3
2
2
2
1
0
0
0
0
Sheet1
Column11988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015
# of Failures19108201511104113220110010322210000
19
Losses to the Fund(Severity - By Year $M)Pertes au Fonds(Gravité - par année en millions $)
-70
-60
-50
-40
-30
-20
-10
0
10
20
■ Loss to the Fund ■ Recovery to the Fund
Chart1
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
■ Loss to the Fund■ Recovery to the Fund
Net Provision for Losses
-69
-22.7
3.2
2
-4.6
-18
-28
-2.4
-1.4
-10.8
1.3
5.5
2.2
3.8
5.1
6.6
1.3
-2.7
-0.5
-10.8
-25.3
-29.3
-1.5
0.1
16
-2
-0.14
0.246
Sheet1
Column119871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015
Net Provision for Losses-29-69-22.73.22-4.6-18-28-2.4-1.4-10.81.35.52.23.85.16.61.3-2.7-0.5-10.8-25.3-29.3-1.50.116-2-0.140.246
RED = Loss to the Fund
GREEN = Gain to the Fund
20
Current Deposit Profile: 2008 - 2015 Profil des dépôts : 2008 - 2015
0
5
10
15
20
25
30
35
40
2008 2009 2010 2011 2012 2013 2014 2015Insured Deposits Uninsured Deposits
$ bi
llion
s
Chart1
20082008
20092009
20102010
20112011
20122012
20132013
20142014
20152015
Insured Deposits
Uninsured Deposits
19.4
5.3
20.6
5.8
21.6
6.3
22.3
7.1
23.1
8.2
24.155
8.82
25.25
9.833
26.575
11.008
Sheet1
Year20082009201020112012201320142015
Insured Deposits19.420.621.622.323.124.15525.2526.575
Uninsured Deposits5.35.86.37.18.28.829.83311.008
21
Reserve Fund Comparison with Other Provincial Jurisdictions (Dec. 31, 2015) Fonds de réserve : comparaison avec celui des autres provinces (31 déc. 2015)
0
20
40
60
80
100
120
140
160
180
BC AB SK MB QC ON
Basi
s Po
ints
of I
nsur
ed D
epos
its
Actual Target
Chart1
BCBC
ABAB
SKSK
MBMB
QCQC
ONON
Actual
Target
Basis Points of Insured Deposits
82
90
123
150
157
160
107
115
90
90
77
100
Sheet1
ActualTargetTarget2
BC829088
AB123150150
SK157160160
MB107115115
QC909090
ON77100100
22
Deposit Insurance Premium Comparison Comparaison des primes d'assurance-dépôts
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
BC AB SK MB QC * ON
* Estimated rate for AMF (bottom portion) deposit insurance fund and Fonds de sécurité Desjardins (upper portion) stabilization fund
Chart1
BCBC
ABAB
SKSK
MBMB
QC *QC *
ONON
DI Rate
Stab Fund Rate
0.74
0
1.42
0
0.9
0
0.88
0
0.22
0.57
1.1
0
Sheet1
DI RateStab Fund Rate
BC0.740
AB1.420
SK0.900
MB0.880
QC *0.220.57AMF/FSD
ON1.100
To resize chart data range, drag lower right corner of range.
BC***ABSKMB*ON*QC AMF**
0.074%0.14%0.09%0.09%0.110%0.022%
23
Key Strategies for 2016 Principales stratégies pour 2016
Support the Ministry with the Legislative and Mandate reviews
Develop guidance on IT Governance/Cybersecurity and Securitization
Enhance Liquidity Guidance Enhance examination practices Provide regulatory guidance and interpretation
24
The FutureL’Avenir
Andy PoprawaPresident & CEO
Président et chef de la direction
25
-0.80%
-0.60%
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
-200
-150
-100
-50
0
50
100
150
200
250
300
350
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
DIRF ($) DIRF as a % of Current Coverage Insured Deposits
$m
illion
s
Perc
enta
ge
Trend in Reserve Fund Évolution du Fonds de réserve
DIRF Projections ($) DIRF Projections as a % of Current Insured Deposits
DIRF Target of 100 bps projected to be reached in 2020
26
Long Term Sector Strategy Stratégie à long terme pour le secteur
What strategies will make the sector stronger, more vibrant and sustainable? Focusing on member satisfaction and delivering a
differential experience Building a credit union/caisse populaire brand Constructing a sustainable business model and executing
on it Creating an ownership culture within the credit union Collaborating within the sector
27
Legislative and Mandate ReviewsExamens du mandat et des mesures législatives
Legislative Review Initiated November 2014 Consultations Recommendations February 2016
Key Proposals Increase deposit insurance coverage to $250,000 Adopt capital rules based on BASEL III principles Permit inter-provincial credit union loan syndications Permit wholly owned insurance brokerages Remove differentiated rules for smaller credit unions Enhance corporate governance and consumer
protection
28
Legislative and Mandate ReviewsExamens du mandat et des mesures législatives
Mandate Review Initiated February 2015 with consultations Preliminary Report November 2015 Final Report Due Spring 2016
Key Preliminary Proposals Integrated single regulatory agency – Financial
Services Regulatory Authority (FSRA) Distinct functions – market conduct, pensions and
prudential regulation Regulate all aspects of financial services in Ontario DICO’s prudential regulatory functions to be
transferred to FSRA
29
Questions and Discussions Questions et dialogue
Steve BlakelyChair of the Board
Président du Conseil
30
Closing RemarksRemarques de clôture
Steve BlakelyChair of the Board
Président du Conseil
31
Thank you.
Merci.
Slide Number 1Slide Number 2Slide Number 32015 Highlights�2015 – Faits saillantsDICO Strategic Objectives�Objectifs stratégiques de la SOADDICO Initiatives�Initiatives de la SOAD DICO Initiatives (con’t) �Initiatives de la SOAD (suite)Slide Number 8Slide Number 9Sector Consolidation 1980 - 2015 �Consolidation du secteur 1980 - 2015Sector Performance �Rendement du secteurOther Provinces�Autres provinces Ontario Sector Profile 4Q15 �Profil du secteur de l’Ontario au 4T15Capital Composition 2002 - 2015 �Composition du capital entre 2002 – 2015 Sector Profile by Risk Level (% of assets)�Profil du secteur selon le niveau de risque (% de l’actif) Examination Findings: By-law #5 �Résultats des examens : Règl. No 5 Intervention Levels by Program �Niveaux d’intervention selon le programmeNumber of Failed Credit Unions/Caisses Populaires�Nombre de faillites Caisses Populaires/Credit UnionLosses to the Fund (Severity - By Year $M)�Pertes au Fonds (Gravité - par année en millions $)Current Deposit Profile: 2008 - 2015 �Profil des dépôts : 2008 - 2015Reserve Fund Comparison with Other Provincial Jurisdictions (Dec. 31, 2015) �Fonds de réserve : comparaison avec celui des autres provinces (31 déc. 2015)Deposit Insurance Premium Comparison ��Comparaison des primes d'assurance-dépôts �Key Strategies for 2016 �Principales stratégies pour 2016Slide Number 24Trend in Reserve Fund �Évolution du Fonds de réserveLong Term Sector Strategy �Stratégie à long terme pour le secteurLegislative and Mandate Reviews�Examens du mandat et des mesures législativesLegislative and Mandate Reviews�Examens du mandat et des mesures législativesQuestions and Discussions �Questions et dialogueClosing Remarks�Remarques de clôtureThank you. ��Merci.