2014 Annual Report - The Police Credit Union

Taking Care of Our Own
Annual Report 2014
2 The Police Credit Union Annual Report 2014
Contents
Board of Directors Report
..... 03
Message from the CEO
..... 06
Comparative Highlights
..... 15
Mentions & Milestones
..... 16
Audit Committee Report
..... 18
Independent Auditor’s Report
..... 19
Financial Statements
..... 20
Staff
..... 23
The Police Credit Union Annual Report 2014 3
Message from the
Chair of the
Board of Directors
Overview
I am pleased to report on the Police Credit Union’s accomplishments and ongoing initiatives in
meeting the challenges of 2014 and beyond. The continued success of our Credit Union is the
result of the support and loyalty of our members and our hard working staff; both management
and front line personnel working together with your Board of Directors.
Low interest rates continue to persist globally and with no end in sight have impacted the
profitability of all financial institutions around the world. With the Bank of Canada’s surprise
lowering of its prime interest rates recently to ¾ of a percent, the profitability of Canada’s
financial institutions have been further squeezed and has resulted in varied strategies to ensure
the profitability of these institutions is not further eroded.
In the Credit Union sector, we are seeing many mergers as economies of scale are a solution for
some organizations to ensure profitability and their member services not being affected.
The Police Credit Union has remained vigilant in these challenging times and recently updated
its Corporate Strategic Plan including key strategies focusing on our own organic growth plans.
Our Police Credit Union is unique in that we are a closed bond financial institution which, as you
know, requires our members to be directly from or related to police organizations. Those who
have witnessed the historic growth of our Credit Union will remember when we were exclusively
for members of the Toronto Police Service. Over time our bond of membership was expanded to
include all police personnel from Ontario and branches were established in Durham, York and
(most recently) Peel in support of our core police services. We will continue to explore any and
all methods to grow our membership and expand to other police organizations to help ensure the
viability of our Credit Union and pursue our goal of being the premier financial institution for all
police organizations in the province.
Improving our operating efficiencies is another strategy we have undertaken to address
profitability. This would be defined as the difference between total operating incomes and total
operating expenses. The lower the percentage, the greater the level of efficiency. Today, our
operating efficiency is close to 96% and our plan is to reduce this to 85% within 5 years. There is
always room for improvement and a continuous detailed review of what we are doing, how much
it costs and ultimately the benefits of these endeavours is essential.
4 The Police Credit Union Annual Report 2014
Operating efficiency is
close to 96% and our plan
is to reduce this to 85%
within 5 years.
A great example of improving efficiencies is how we are
changing the operations of our ATMs. ATMs are a necessary
service offering for our members but an expensive one. The
management team recently completed a thorough review: a
number of changes were instituted that involved moving the
operation of our cash dispensers to a specialist third party
and changing service providers for daily ATM maintenance.
The result - annual savings of $150,000
to $200,000.
Another strategy to ensure members have a cost effective way to get access to their money is
through the Exchange Network; an ATM network which involves the participation of Credit Unions
working cooperatively to better serve our members. The Exchange Network is one of the most
extensive banking networks across Canada and provides banking transactions at no additional
service charge to our members. The Exchange is also affiliated with the Accel network in the
United States and provides access to Accel Debit -- a network that allows cash withdrawals at
point of sale. Additionally, the Exchange has applications which can be downloaded to your
Smartphone as well as a website that will assist you in finding the nearest no fee ATM location.
These types of network relationships are more cost effective and efficient for our organization,
far more expansive then independent systems and ultimately provide better services to our
members.
The Credit Union has completed a thorough examination of its occupancy costs in support
of improving operating efficiency. As part of this review, extensive research was undertaken
including demographic analysis of our membership, needs assessments, branch location
assessments, square footage requirements and property ownership versus leasing.
A comprehensive branch strategy is currently in development and when completed will determine
optimum service locations to better provide for our members.
As noted previously, like every other financial institution, profitability continues to be squeezed
in these austere times of shrinking interest rates. The Police Credit Union is fortunate thus far
in that every year we continue to show a profit -- something that cannot be said for some other
institutions. The aforementioned strategies are just a few examples of how we are committed to
maintaining a positive revenue position. With foresight, planning and strategic execution we will
continue to grow, be profitable, overcome future challenges and always be there for our members.
Acknowledgements
On the Board’s behalf, I would like to express our sincere appreciation to all of our staff. The
Board works closely and collaboratively with the CEO and senior management team in designing
policy and strategy for the benefit of our members and staff and to ensure the sustainability
and viability of the Police Credit Union. In particular, I would like to recognize our front line
representatives who execute their daily responsibilities in a professional, friendly and diligent
manner. They are the face of our organization and it is the personalized individual service
that they provide to our members which helps maintain member loyalty and distinguishes our
organization.
I would also like to thank my colleagues on the Board. The Board’s business discussions are
conducted in an open and professional manner. Inevitably, we will on occasion have differing
opinions -- a principal indicator of a healthy and functioning Board! These discrepancies are
The Police Credit Union Annual Report 2014 5
always resolved amicably and for the optimum benefit of our members and the Credit Union.
It is a pleasure to work with such dedicated and competent individuals and I thank them for their
continued guidance and friendship.
I reserve my final acknowledgement for our members. Without your loyalty and commitment
this organization would cease to exist. The Police Credit Union was conceived by a few Toronto
Police employees in the basement of one of their homes in 1946 to provide financial services
not available to many on the job back then. We are able and proud to continue that very same
tradition today, taking care of our own, thanks to our members continuing trust and support.
George Tucker
Chair – Board of Directors
Back row L to R: Stan Colley; Ian Russell; Rod Fraser Front row L to R: George Tucker; Gary Leitch; Bob Spafford; Gary Rossitter
6 The Police Credit Union Annual Report 2014
Message from
the CEO
The Police Credit Union reached another milestone during
2014 as assets exceeded $248 million at year-end! This was
accomplished by taking care of our own members with low
interest rates on loans and very competitive rates on savings.
Financial Focus
The historic low interest rate environment continued throughout 2014 and members took
advantage of these low rates to borrow for home purchases and to use the equity in their home
for improvements and “wish list” purchases. As a result, total mortgages held by members
increased by $6.36 million (3.2%). To stimulate growth, automobile loan campaigns were
launched during the year and with the return of recruit hiring to the Toronto Police Service
personal loan balances to members increased by $0.8 million (4.3%). Total growth in loans to
members was $7.14 million (3.3%).
As a result of a very competitive interest rate position adopted for members’ deposits, deposit
balances increased by $7.55 million (3.4%) during the year. Tax-Free Savings Accounts have
continued to capture the attention of members as balances in TFSAs closed the year at $13.5
million, up $3.2 million or 31.3% over the previous year. Term deposit balances exceeded
$78.5 million, an increase of $3.1 million or 4.1% over the previous year-end, while holdings in
registered products decreased slightly by $0.1 million. The balance of deposit growth was due
to increases in members’ chequing and savings accounts, which were up $1.3 million over the
previous year-end.
Assets under management, which include off-balance sheet wealth management assets, rose by
$3.21 million to $17.24 million, while total assets increased by $5.5 million to $248.14 million
(2.3%) as of year-end.
This year Operating revenues, which is interest earned on loans and investments, finished at
$8.22 million, which is a slight increase when compared to the previous year. However the effect
of low interest rates and significant competitive pressures impacted overall returns on new
lending volumes.
Although the Credit Union continued to offer members very competitive interest rates for their
deposits, the low rate environment resulted in member deposits earning $2.74 million in 2014;
a slight decline compared to 2013 when members earned $2.77 million.
The Police Credit Union Annual Report 2014 7
Financial margin results, which is the difference between operating revenues and interest
expense, were relatively flat compared to 2013, up by only $23,031 (0.4%) to $5.36 million as
continued low interest rates were assimilated into operations.
Provision for loan losses required $69,228 from operations this year, while 2013 losses were
only $29,712.
Revenues derived from other income sources decreased by $100,652 (7.3%), the loss of the
Toronto Police Paid Duty program which the Credit Union administered on behalf of Toronto Police
Service impacted results in this area.
Year in Review
The Police Credit Union (TPCU) is guided by a number of 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 supplemented by the deployment of ATM devices.
•
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 for
members.
•
And invest in technology to ensure efficient
use of staff resources.
Assets exceeded $248 million
and Wealth Management Assets
under Administration exceeded
$17 million.
This year TPCU continued to implement activities
in pursuit of our strategic principles as more
members choose 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.
In 2014, a number of municipalities saw their hiring freezes come to an end as a significant
number of recruits were hired by police services and the credit union was able to provide recruits
financing to cover the cost of tuition at Ontario Police College.
During November of 2014, the credit union’s website underwent a major upgrade as the old
platform was replaced by Central 1 Credit Union’s MemberDirect Integrated platform. Members
will notice enhanced service, information and added convenience. This upgrade was a necessary
first step in order to provide mobile banking apps for smartphones.
Loan Report
Loan demand from members increased this year with a 17.6% increase in loan requests compared
to the previous year, marking the return in the hiring of police recruits for the City of Toronto.
However, total loans advanced and lines approved to members were $61.46 million, which falls
short of the amount approved in the previous year of $64.50 million. This was largely due to fewer
mortgages funded in a very competitive market space.
8 The Police Credit Union Annual Report 2014
Total loans to members are $221.33 million, an increase of 3.3% over the previous year-end when
loans to members totalled $214.21 million.
During the year, the loan allowance decreased to $115,608 with recoveries on loans previously
written-off equal to $18,622. Loan write-offs during the year amounted to $97,924. Throughout
2014 a total of thirteen members filed for bankruptcy or consumer proposals.
2014
Total Lending Activity
Number
Number
6,656,088
347
14,146,114
298
Amount
Personal Loans
471
Lines of Credit
380
Mortgages
134
40,657,479
168
49,218,720
Total
985
61,459,681
813
64,501,172
Total Loans Not Approved
117
3,809,654
99
4,928,208
1,102
65,269,155
912
69,429,380
19
34,769
16
46,952
Total Above
$
2013
Amount
$
5,064,822
10,217,630
Loan Allowance
Specific
Non Specific and General
Total above
80,839
78,790
115,608
125,682
Recruits
The 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. In 2014 the tuition for the
Ontario Police College increased significantly from $7,500 to $11,065 for each recruit. In addition,
recruits are now required to attend the College with their own computer. The Police Credit Union
reaffirmed its commitment to provide all new recruits attending OPC with an automatically preapproved, low rate, recruit training loan. The pre-approved amount was increased to fund the new
tuition costs and required computer costs if necessary. The term of the loan was also increased to
5 years for more manageable payments.
We were pleased to see municipal hiring freezes lifted and a return to hiring recruits in 2014,
this resulted in 220 new recruits joining the Police Credit Union. Of the new recruit members,
160 (73%) 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. And it gives Credit Union staff a chance to learn more about
each member in order to determine which financial services are the right fit. We are proud to
report that throughout the history of the program, we have assisted 4,438 recruits with their
dream of becoming a police officer.
Product, Services and Technology Enhancements
The 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
The Police Credit Union Annual Report 2014 9
Retirement Income Funds, Tax Free Savings Accounts and Registered Education Savings Plans. All
of our registered plans are trusteed by Concentra Trust.
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
The Continuing Education line of credit was introduced in 2013 and gained further traction
within the membership this year. 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.
The Police Credit Union 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 CUET’s Financial.
Blocking of foreign ATM and Point of Sale (POS) transactions began this year. In response to the
growing trend of foreign based fraudsters attempting unauthorized access to our member’s
accounts, transaction restrictions were put in place for transactions originating beyond the
borders of Canada and the United States. Members who travel beyond the borders of Canada and
the United States and wish to conduct ATM and or POS transactions abroad have the ability to
contact the credit union before traveling and arrange to have temporary access permitted.
Wealth Management Services are 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 while Credential Direct provides members with on-line Brokerage
Services. Growth in wealth assets was particularly strong this year reflecting net sales and market
appreciation of $3.21 million, Assets under Administration increased to $17.24 million up 22.9%
from $14.03 million at the end of 2013.
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.
Home and Auto insurance protection is available through the Co-operators Insurance Company
of Canada.
Members of the Police Credit Union continue to use the services of Car Choice Canada, an
Automotive Advisory Service who 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 are able to 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.
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. In 2014 the Credit Union undertook a major overhaul to its website. The
corporate website has received a fresh new look which is more in line with our corporate branding
10 The Police Credit Union Annual Report 2014
and our police service relationships and has been integrated with online banking. Now members
can access the corporate website and online banking seamlessly all in one location.
The Credit Union improved its online banking for members with Online Banking Alerts. Online
Banking Alerts are text or email messages (or both) that notify you of a wide range of online
banking account conditions. Most importantly Online Banking Alerts are a convenient way for
you to be alerted of any suspicious or fraudulent activity involving your online banking activity
and will serve to reduce online banking fraud. You can choose which alerts to receive and how to
receive the alert and can easily set up which alerts you wish to receive.
Work continues on our Document Management project and a successful pilot was completed
in 2014. Further implementation work is planned for 2015 for this large project. The Credit Union
is also investigating such technology improvements as electronic signatures, and Interac
Online Payments.
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 Education
Credit 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 2014, 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. Four $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 leadership program in 2014. Co-operative Young Leaders is
a summer experience unlike any other. The week-long program brings young people together
from all 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 training
The 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 in order to provide the credit union with a competitive advantage.
Successfully addressing these business challenges requires that all staff demonstrate specific
skills, capabilities and behaviours that will drive sustainable business success.
By demonstrating these sets of behaviours, employees in all roles will contribute to effectively
addressing the Credit Union’s mission, goals and business priorities while having the capability
to overcome the key challenges facing the credit union and harnessing new opportunities
successfully.
The Police Credit Union Annual Report 2014 11
The Police Credit Union employs a performance management system that is designed to evaluate
responsibilities and measure the core and job related competencies for each employee. The
system promotes coaching, staff development and regular interaction between managers and
their employees.
All of our training is designed to ensure we are “taking care of our own” and aim towards
providing an exceptional member service experience. At our annual Staff Development day
held in November all employees participated in a full day training workshop exploring
communication skills and the fundamentals of extraordinary sales and service in order to better
serve our members.
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. As has been our practice, we selected
an employee in a management position to enroll in the Schulich School of Business to further
develop their management skills.
All employees have met all required legislative
requirements by completing training sessions in
Money Laundering and Terrorist Financing (FINTRAC);
Integrated Accessibility Standards (AODA); Canadian
Anti-Spam Legislation (CASL) and Occupational Health
and Safety Awareness. Selected staff have completed
their annual requalification in CPR and First Aid to
continue to ensure that each of the credit unions’
locations have trained staff on-hand to assist in an
emergency.
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.
Marketing and Business Development
The 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. With monthly statement and
promotion emails to those members with valid email addresses on file, we are able 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. We also use
regular mail to introduce the range of products and services to new members over a period of
time.
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. Recently the credit union has gained
permission to provide police personnel with our latest campaigns and promotions through some
Police Service Intranets and as screen savers on their computers.
At the beginning of 2014, we joined with Credit Unions across Ontario to raise awareness about
the many benefits of co-operative banking. An exciting creative campaign launched to get the
word out, with ads on TV and the web, a brand-new website and a strong social media presence on
Facebook and Twitter. You’re encouraged to “Join the conversation and support the Co-operative
Banking Movement!” A stronger Credit Union movement in Ontario has far reaching benefits for
everyone involved.
12 The Police Credit Union Annual Report 2014
In 2014, we introduced a series of flash specials to intrigue and inspire our members. Members
were provided some very exciting deals on rates that were available for just a week or two. These
“pop-up” specials were provided to members throughout the year and included term deposit
campaigns, auto loans specials and great rates on mortgages.
Retail Branches and Community Activities
Toronto
The Toronto branch serves the largest number of members with 4,721 benefitting from a variety
of financial services. Assets finished the year at $121.0 million, which includes a deposit portfolio
of $109 million and loan portfolio of $38.2 million.
The Toronto Branch operates with a staff of nine in 2014 and is focused on fostering relationships
and meeting the financial needs of its members, the Toronto Police Service (TPS) and The
Toronto Police Association (TPA). The branch supports many policing initiatives including golf
tournaments, pensioner functions, and other charitable events. Gifts were provided for the TPA
picnic and holiday party, and a $500.00 charitable donation was made to the Law Enforcement Torch
Run for Special Olympics.
College
Our 40 College Branch is conveniently located inside
Toronto Police Headquarters. During the month of
February we promoted the newly renovated branch
with a grand re-opening featuring a week of festivities
and special offers. The revitalized branch is a modern,
inviting space, well equipped to take care of all our
members’ financial needs. The sleek front counter
provides convenient access for banking transactions
and two new offices were designed for privacy. The
State-of-the-art digital screens keep our members informed of our products and promotions. Our
members working at Toronto Police Headquarters and Courts at College Park have convenient
access to all services provided by our Credit Union at 40 College Branch. The location is also ideal
for assisting new TPS recruits.
Successfully addressing these
business challenges requires
that all staff demonstrate
specific skills, capabilities
and behaviours that will drive
sustainable business success.
The branch is staffed by two employees and currently serves 726 members and holds $9.6 million
in assets, $4.8 million in deposits and $7.9 million in loans.
Durham
The branch maintains $56.1 million in deposits for members and provides members with loans of
$46.8 million. The branch serves 2,931 members with their financial needs, and has assets of $57
million. The branch is serviced by eight staff focused on fostering relationships with its members,
the Durham Regional Police Service and Durham Regional Police Association (DRPA).
Durham branch contributed gifts to the annual summer picnic and holiday parties of the DRPA. In
addition the branch donated and participated to the Durham Regional Toy and Food drive, which
was supported and matched by the Ontario Credit Union Charitable Foundation. The Credit Union
also sponsored and participated in the 5th annual Ontario Memorial Police Golf Tournament.
York
Today, 1,926 members are provided with financial services at the branch, which has grown to
$43.4 million in assets. The branch maintains deposits for members of $29.2 million and loans
exceeding $43.3 million. We have a staff complement of five who are all dedicated to building
The Police Credit Union Annual Report 2014 13
relationships with their members, the York Regional Police (YRP), and York Regional Police
Association (YRPA), South Simcoe Police, Orangeville Police, and personnel of the RCMP “O” division.
In 2014, York Branch continued to support our Police Services and associations. We participated
in several events hosted by the YRPA including the YRPA Memorial Golf Tournament, Plunkett
Memorial Golf Tournament, and the Annual Canada’s Wonderland Picnic, and the Annual Kids
Party. We continue to support the Annual summer and Christmas events hosted by South Simcoe
Police and Orangeville Police Service. In addition we sponsored the Holiday Heroes program run
by the YRP, and attended the Great Lakes Police Motorcycle Training Seminar. We participated
in the annual International Women’s Day event hosted by YRP and the Ontario Women in Law
Enforcement Training Day. Charitable contributions were made to Holiday Heroes and the Ontario
Police Memorial Foundation.
Peel
The Peel branch services 1,870 members with a staff complement of six. Assets have grown
to $85.2 million and, while deposits for members are only $29.5 million, loans to members
have grown to $85 million and reflect the borrowing characteristics of the branches younger
demographic. The branch continued to be successful with significant increases in loans and
mortgages, with notable increases in the deposit portfolio. The branch is currently the second
largest branch in our Credit Union. The dedicated branch staff and support from the Peel Regional
Police Services (PRPS) and the Peel Regional Police Association (PRPA) have contributed to this
success.
Relationships continue to be developed with the Peel Region, with new relationships fostered
with Halton and Niagara Police Associations. We continue to support our policing communities
assisting Peel Regional Police with their open house events at 180 Derry Road, 11 Division and 12
Division, as well as gifts for the Peel Regional Police Association Canada Day Picnic and Children’s
Christmas Party. Gift certificates were also provided to Halton Regional Police Association
summer picnic and Holiday Party. Gift donations were provided for the Peel, Niagara, and Halton
Police Golf tournaments and Peel Police Mother’s Day brunch for special victims.
Into the future
As we enter our 70th 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 close 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.
Investment and resources will be made available to further expand the credit union’s digital
channel offering for members. The Credit Union recognizes the importance of our on-line
presence to ensuring members have unlimited access to financial information including banking
information. With our integrated website operational, implementation plans are well underway to
launch a Mobile App for banking access and “Deposit Anywhere” remote cheque deposit services
to provide additional convenience to members.
In May of 2015, we will be replacing our aging infrastructure that supports the credit unions
telephone banking services. Members will note a new telephone number and will be able to take
advantage of additional functionality added to the telephone banking services.
14 The Police Credit Union Annual Report 2014
With 2015 well underway, the low interest rate environment that has been present over the last
six years is expected to remain through to 2016 and quite possibly beyond, and will continue
to apply downward pressure on interest rate margins. We’ve already experienced an unplanned
prime rate reduction from the Bank of Canada in February and this has already fueled the
competition for mortgage rate reductions, a practice not typically felt until the spring/summer
mortgage season is well underway.
Financial margins are also expected to trend lower this year as the full year effect of lost
commission streams from the loss of the Toronto Police Paid Duty program will work its way
through our operations.
In response to the continued downward pressure on our financial margins, the credit union
has completed a thorough review of its operations and identified a number of strategies that
when fully implemented will result in an overall improvement to our operating efficiency ratios,
improve profitability and increase capital levels.
The credit union’s strategic direction will aim at improving capital levels to exceed 5% in the near
term and to increase to 6% over the next five years.
To accomplish our capital goal, operating efficiency improvements will be required. Management
has developed options to improve either operating income or operating expenses. All of the
options considered were discussed in detail with the Board at their 2014 Planning Session.
The credit union’s strategic direction will aim at improving operating efficiency levels to 90%
within 3 years and its 5 year goal is to improve to 85%. At the end of 2013, efficiency levels were
at 97.8% this improved to 95.6% at the end of 2014.
A healthy bottom line will enable the organization to grow its business, meet its capital
requirements and plan for expansion opportunities over the next few years.
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 the Police Credit Union the successful organization it is, 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
Back row L to R: Greg Anderson; Dale Pettit; Karen Zwarych Front row L to R: Bess Kominos-Estrela; Andy Doak
The Police Credit Union Annual Report 2014 15
Comparative
Highlights
Years Ended
December 31
Operating Revenue
Interest on
Members’ Deposits
- amount
- percent
Financial Margin
- amount
- percent
Comprehensive
Income
- amount
- percent
Loans to Members
2014
2013
2012
2011
2010
$
8,217,816
8,165,510
8,307,932
8,568,199
8,413,425
$
2,741,095
33.4%
2,769,477
33.9%
2,992,181
36.0%
3,095,136
36.1%
3,125,900
37.2%
$
5,356,233
65.2%
5,333,203
65.3%
5,275,730
63.5%
5,439,777
63.5%
5,256,932
62.5%
$
293,319
3.6%
215,751
2.6%
244,427
2.9%
440,499
5.1%
673,704
8.0%
214,219,033 200,724,946
189,514,130
171,678,929
$ 221,355,935
Membership Shares $
1,214,681
1,207,243
1,200,468
1,193,956
1,197,707
Members’ Deposits
$ 230,126,991 222,578,054
216,387,324
207,083,001
195,704,220
Total Assets
$ 248,136,296
242,625,151
229,062,987
219,649,677
207,987,800
Asset Growth - %
2.30%
5.90%
4.81%
4.79%
5.60%
.
5.07%
4.90%
Leverage Ratio - %
4.30%
.
4.98%
BIS Ratio - %
13.73%
14.10%
14.17%
14.10%
14.26%
Liquidity - %
8.83%
9.53%
9.86%
10.46%
14.15%
5.17%
16 The Police Credit Union Annual Report 2014
Mentions and Miletones
•
Total Assets increased by $5.5 million to
$248.1 million as at December 31, 2014.
•
Total Loans to members increased by $7.1
million (3.3%) while at the same time the
provision for impaired loans increased
from $29,712 to $69,228.
•
A 17.6% increase in loan requests
compared to 2013.
•
Increase of $6.4 million (3.2%) in
mortgage growth.
•
Members’ Deposits increased by more
than $7.6 million ($222,578,055 to
$230,126,991).
•
Net Income after taxes increased by
$150,407 to $249,278 which was the
result of a reduction in Operating
Expenses.
•
Members’ Equity is now $10,639,266 up
from $10,345,946 in 2013; an increase of
2.84% and exceeding regulatory capital
requirements.
•
Financial Margin (the funds available
after interest expense is deducted from
revenue) increased by $23,031 as a result
of an increase in lending.
•
While Recruits have not rebounded to the
high of 476 in 2006 we did see Recruits
strengthen in 2014 to 220.
•
Wealth Management Services - Assets
under Administration increased to $17.24
million an increase of $3.21(22.9%).
Market Penetration
Penetration
Market
Retirees
80%
Civilian
Uniform
70%
60%
50%
40%
30%
20%
10%
$0
Toronto Durham
York
Peel
South
Simcoe
Halton
Membership
Branch
Membership
byby
Branch
Toronto
College
Durham
York
Peel
Assets by Branch
Assets by Branch
Toronto
College
Durham
York
Peel
The Police Credit Union Annual Report 2014 17
AssetGrowth
Growth
Asset
Recruit
Hires
Recruit
Hires
600
$260 M
2014
Toronto
Durham
York
Peel
500
$240 M
400
$220 M
300
102
28
27
63
$200 M
200
$180 M
100
$0
$0
2010
2011
2012
2013
2010
2014
Police
Services
Personnel who are members
Total
PCU Membership
Retirees
8000
Civilian
Uniform
7000
2011
2012
2013
2014
Total Police Services Personnel
Total Police Services Personnel
Retirees
14,000
Civilian
Uniform
12,000
6000
10,000
5000
8000
4000
3000
6000
2000
4000
1000
2000
0
Toronto Durham
York
Peel
South
Simcoe
Halton
0
Toronto Durham
York
Peel
South
Simcoe
Halton
Branches
Toronto
Members Assets Deposits Loans 4,721
$121.0 million
$109.0 million
$38.2 million
College
Members726
Assets $9.6 million
Deposits $4.8 million
Loans $7.9 million
Durham
Members Assets Deposits Loans 2,931
$57.0 million
$56.1 million
$46.8 million
York
Members Assets Deposits Loans 1,926
$43.4 million
$29.2 million
$43.3 million
Peel
Members Assets Deposits
Loans
1,870
$85.2 million
$29.5 million
$85.0 million
18 The Police Credit Union Annual Report 2014
Audit Committee Report
The Audit Committee’s function is to assist the Board of Directors in fulfilling its oversight
responsibilities. It accomplishes this by reviewing the integrity of the Police Credit Union
Limited’s financial statements, financial information, and reporting processes including the risks
and controls related to those processes, which management and the Board have established.
The Audit Committee is composed of Board Members (Rod Fraser, Gary Leitch, Bob Spafford
and Ian Russell), and has adopted a mandate that includes all of the tasks specified for Audit
Committees contained in the Credit Unions and Caisses Populaires Act, 1994 and the associated
Regulations.
Our reputation – the Police Credit Union - and its financial soundness are of fundamental
importance to us and to you, our members and staff.
In fulfilling its responsibilities, the Audit Committee met bi-monthly during the 2014 fiscal year to
complete its responsibilities that also include values of trust, teamwork and accountability.
The key activities included:
•
Review the financial statements and the results of the year-end audit with the external auditor,
•
Review the performance of the Auditors and their proposed engagement letter,
•
Ensure that regulatory filings were submitted on time,
•
Review the Credit Union’s policies, procedures and controls for legislative compliance,
•
Review the disaster recovery plan,
•
Review outstanding (if any) legal issues,
•
Review accounting issues,
•
Review risk management issues, and
•
Review director and officer expense claims.
The brief overview outlined above is supplemented in great detail by a very dedicated group
of individuals; the Sub-Audit Group, which works in close concert with our internal auditor, Rick
Belsby. The Sub-Audit Group is chaired by Gary Glaze and assisting him are Vaughan Weddell and
Gary Billington. This Group met on 36 occasions during the year, which included meeting with the
internal auditor nine times, the Audit Committee six times, 20 branch visits plus attendance at the
Annual Meeting and training sessions.
Management has implemented recommendations the Committee put forth and there are no
matters other than those contained in the Notes to the Financial Statements, which the Committee
believes should be reported to the members or which are required to be disclosed pursuant to the
Act or the Regulations.
This report has been adopted and approved by the members of the Audit Committee, Rod Fraser,
Gary Leitch, Bob Spafford and Ian Russell, Chair.
Ian B. Russell
Chair, Audit Committee
The Police Credit Union Annual Report 2014 19
Independent
Auditor’s Report
To 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, 2014. We expressed an unmodified opinion on those financial statements in our
report dated February 23, 2015.
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 Responsibility
Our 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”.
Opinion
In our opinion, the summarized financial statements derived from the audited financial
statements of The Police Credit Union Limited for the year ended December 31, 2014 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 Accountants
February 23, 2015
St. Catharines, Ontario
20 The Police Credit Union Annual Report 2014
Financial Statements
Balance Sheet
December 31
2014
2013
Assets
Cash
$
Investments
Loans to members
Other assets
Property and equipment
3,532,908
$
2,634,907
21,130,462
23,413,113
221,355,935
214,219,033
674,216
596,319
1,442,776
1,761,780
$
248,136,297
$
242,625,152
$
230,126,991
$
222,578,055
Liabilities and Members’ Equity
Members’ deposits
Borrowings
5,181,783
7,500,000
Other current liabilities
661,476
649,808
Provisions
312,100
344,100
1,214,681
1,207,243
Membership shares qualifying as liabilities
$
237,497,031
$
232,279,206
Members’ Equity
Undivided earnings
Accumulated other comprehensive income
$
On behalf of the board
G. Tucker
Chair
R. Spafford
Director
10,298,549
10,049,271
340,717
296,675
10,639,266
10,345,946
248,136,297
$
242,625,152
The Police Credit Union Annual Report 2014 21
Statement of Operations
For the year ended December 31
2014
2013
Operating Revenue
Interest on loans
$
Investment income
7,874,916
$
7,788,777
342,901
376,734
8,217,817
8,165,511
2,741,095
2,769,478
Member rebates
34,168
32,755
Other interest expense
86,320
30,075
2,861,583
2,832,308
5,356,234
5,333,203
Interest Expense
Interest on members’ deposits
Financial Margin
Other Operating Items
Provision for losses on loans
$
Other income
Operating Margin
(69,228)
$
1,277,390
$
6,564,396
(29,712)
1,378,042
$
6,681,533
Operating Expenses
Administrative
2,440,330
2,691,258
Amortization of property and equipment
439,533
398,811
DICO Insurance
242,060
232,841
3,156,512
3,242,860
6,278,435
6,565,770
285,961
115,763
Salaries and benefits
Income Before Income Taxes
Income Tax Recovery (Expense)
Current
(36,683)
Deferred
Net Income for the Year
3,308
$
249,278
(20,200)
$
98,871
22 The Police Credit Union Annual Report 2014
Statement of Comprehensive Income
For the year ended December 31
2014
Net Income for the Year
$
249,278
2013
$
98,871
Other Comprehensive Income
Unrealized gain on investment classified as
available for sale
44,042
Related current income tax expense
138,322
-
(21,440)
44,042
Comprehensive Income for the Year
$
293,320
116,882
$
215,753
Statement of Changes in Members’ Equity
Accumulated
Other
Comprehensive
Income
Undivided
earnings
Balance,
December 31, 2012
$
Comprehensive Income
Balance,
December 31, 2013
Comprehensive income
Balance,
December 31, 2014
$
9,950,400
$
179,793
Members’
Equity
$
10,130,193
98,871
116,882
215,753
10,049,271
296,675
10,345,946
249,278
44,042
293,320
10,298,549
$
340,717
$
10,639,266
1. Basis of Presentation
These financial statements are a summarized version of the audited financial statements for the year ended December
31, 2014, which have been approved for issue by the Board of Directors on February 23, 2015. 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, 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, 2014.
Corporate Office
Chief Executive Officer
Executive Secretary
Human Resources
& Training Manager
Member Credit
& Investment Manager
Investment Specialist
Controller
Financial Accountant
Accounting Clerk
Computer Services Manager
Manager of Retail Services
Administration Supervisor
Payroll Clerk
Electronic Funds Transfer Clerk
Clearing Clerk
ATM Clerk
Call Centre Representative
Call Centre Representative
Toronto Branch
Manager
Member Service Officer
Member Service Officer
Member Service Officer
Senior Member
Service Representative
Teller
40 College St. Branch
Member Service Officer
Teller
Durham Branch
Manager
Member Service Officer
Member Service Officer
Member Service Officer
Senior Member
Service Representative
Part Time Teller
Part Time Teller
Part Time Teller
Andy Doak
Linda Fernandes
Karen Zwarych
Dale Pettit
Horst Scheibelt
Greg Anderson
Sandra Blair
Elizabeth Kunter
Robert Mitchell
Bess Kominos-Estrela
Brenda Wilson
Arlie Cruz
Sandra Costanza
Carmencita Canivel-Sibug
Tamara Pitter
Jennifer Seerattan
Judy Riley
David Merrifield
Cyndi Grenke
Lila Jacob
Cindy Cohen
Bernice Muradali
Sandie Loder
Adam Nikolaus
Roya Ghahremani
Peter Giftakopoulos
Jackie McCulloch
Cari Brothers
Lianne Balasingham
Denise Lombardo
Rocchina Correia
Tammy Smedley
Brenda Field
York Branch
Manager
Member Service Officer
Member Service Officer
Teller
Part Time Teller
Sheila Carvalho
Susan Van Winckle
Lynn Wine
Teresa Horvat
Jeanette Wood
Peel Branch
Manager
Member Service Officer
Member Service Officer
Member Service Officer
Teller
Part Time Teller
Donna Aleksovski
Katarina Rakic
Tony Brar
Julia Figueroa
Paulette Maye
Maureen Winata
Call Centre
1.800.561.2557
callcentre@tpcu.on.ca
ExpressLine
416.223.8728 / 1.800.360.8728
Corporate Office
3650 Victoria Park Avenue, Suite 303
Toronto, Ontario
T 416.226.3353
F 416.226.1565
tpcu.on.ca
Toronto Branches (ATMs on site)
3650 Victoria Park Avenue, Suite 103
Toronto, Ontario
T 416.226.3353 / 1.800.561.2557
40 College Street, Room 101
Toronto, Ontario
T 416.961.2107
Durham Branch (drive-thru ATM)
962 Kingston Road, Pickering, 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)
85 Aventura Court, Unit C
Mississauga, Ontario
T 905.795.2286 / 1.866.899.8728
Full Service ATMs
TPS 32 Division
Cash Dispensers
Ontario Police College
York Regional Police HQ
York Regional Police Association
TPS Traffic Services
TPS 23 Division
Toronto Police College
YRP Investigative Support Services