Ontario Credit Unions and Caisses Populaires

Ontario Credit Unions and Caisses Populaires SYSTEM OUTLOOK 4Q05

INSIDE

Summary Results……………….….……………………………………………Page 3

Financial Highlights………….. ………………………….……………….…. ..Page 4

System Financial Statements………………………………………………….Pages 5 and 6

April 2006 The information presented in this report has been prepared using a variety of sources, including unaudited reports submitted to DICO by Ontario’s credit unions and caisses populaires. While DICO believes that the information contained in this report would be useful to readers, and considers the financial statements to be reliable, their accuracy and completeness cannot be guaranteed. Ce document est également disponible en français. Electronic Publication:

The System Outlook is available in PDF format (portable document file format), which can be read using Adobe Acrobat Reader. It can be downloaded from the Member Institution section on DICO’s website at www.dico.com, or you can subscribe for an electronic copy by e-mailing us at [email protected]. Financial Highlights 4Q05

Selected Aggregate System Performance Indicators As at December 31st 2005 2004 Regulatory Capital 7.04% 7.02% Liquidity (Gross) 13.36% 14.39% Asset Growth 4.8% 4.6% Delinquency (greater than 30 days) 0.99% 0.93% Latest Twelve Months Financial Margin 2.67% 2.55% Other Income 0.86% 0.85% Return on Average Assets (ROAA) 0.29% 0.29% Return on Regulatory Capital 5.34% 5.35% Efficiency Ratio 88.8% 88.5% Capital Aggregate capital increased by $82 million during the latest twelve months and the aggregate capital (leverage) ratio increased marginally from 7.02% to 7.04%. Aggregate risk weighted capital as reported was 13.78%. Growth Assets increased by $1.08 billion or 4.8 per cent in the latest twelve months to $23.4 billion. Total loans increased $1.7 billion or 10 per cent while deposits increased by $720 million or 3.6 per cent in the same period. The increase in loans over total assets and deposits contributed to the further decline in gross liquidity. Profitability Return on average assets (after accruals for taxes and dividends) remained unchanged at 0.29% compared to the same period in 2004 although declined from 0.30% from 3Q05. While there was increase in the financial margin and other income over the latest twelve month period, this was offset by higher loan costs and operating expenses. Improvement in the the financial margin is the result of higher aggregate loan income and lower aggregate interest expense on deposits. Credit Risk Loan costs increased to 0.14% from 0.12% in the latest quarter and 0.11% at 4Q2004. Delinquency also increased to 0.99% from 0.95% in th elatest quarter and 0.93% at 2Q2004. As interest rates rise further we can expect to see a further increase in delinquency. Loan Mix: Growth in commercial and agricultural loans continue to exceed growth in other loans. This has resulted in a change in loan mix with a 1% increase in commercial loans and corresponding 1% decrease in personal loans as a percentage of total loans. Product % of loan portfolio Change % Change in 2005 2004 ($millions) Outstanding Loans Personal Loans 16% 17% $105 4% Mortgage Loans 57% 57% $922 10% Commercial Loans 22% 21% $524 15% Aricultural Loans 4% 4% $101 16% Loan Yields: The overall loan yield declined marginally on a year over year basis as a result of a change in the loan mix and lower yields on mortgage and agricultural loans. Selected Loan Yields As at December 31st 2005 2004 Latest Twelve Months Total Loans 5.83% 5.85%  Personal Loans 8.19% 7.78%  Mortgage Loans 4.99% 5.10%  Commercial Loans 6.45% 6.33%  Agricultural Loans 5.52% 5.75%

4Q05 SYSTEM OUTLOOK, April 2006 Page 3 Financial Highlights 4Q05

Selected Bank Information 4Q05 3Q05 4Q04 4Q05 PROFITABILITY* % average assets** Net Interest and Investment Income 2.81% 2.76% 2.66% 1.65%

Loan Costs 0.14% 0.12% 0.11% 0.09%

Other (non-interest) Income 0.86% 0.87% 0.85% 2.11% (Fees and Commission Income)

Total Income 3.53% 3.51% 3.40% 3.67%

Total Non-Interest Expenses (Operating Expenses) 3.13% 3.11% 3.01% 2.73%

Net Income/(Loss) before Taxes and 0.40% 0.40% 0.40% 0.93% Non-recurring & Extraordinary items

Efficiency Ratio (% Operating Expenses to Total Income) 88.8% 88.5% 88.5% 74.6% Return on Average Assets (ROA) 0.29% 0.30% 0.29% 0.64% Return on Regulatory Capital 5.34% 5.42% 5.35%

CREDIT RISK

Gross Delinquency greater than 30 days (% of total loans) 0.99% 0.95% 0.93%

Gross Delinquency greater than 90 days (% of total loans) 0.54% 0.55% 0.49%

OFF BALANCE SHEET ACTIVITY Off balance Sheet Assets ($millions) $3,432 $3,434 $2,589 (Includes mutual fund sales and administered loans etc.) Income on Off Balance Sheet Activity ( % Other Income) 8.39% 8.15% 6.88%

OTHER INDICATORS

Total Number of Active Member Institutions 227 232 240

Total Assets ($millions) $23,421 $23,244 $22,341 $1,856,410 Average Assets per member institution ($millions) $102.3 $100.2 $93.1

Median Assets ($millions) $31.8 $30.8 $29.4

Regulatory Capital (as per Ont Reg 76/95) 7.04% 6.97% 7.02% (as a percentage of net assets)

Number of Member Institutions below 5% Capital 3 1 0

Gross Liquidity as per Sections 16-18 of Ont Reg.76/95 13.36% 14.17% 14.39% * Based on latest 12 months results ** Unless otherwise indicated

4Q05 SYSTEM OUTLOOK, April 2006 Page 4 System Balance Sheet 4Q05

Percentage of Total Assets 4Q05 4Q04 4Q05 4Q04 ($000) ($000) ASSETS Cash and Investments 4,507,532 5,122,467 19.2% 22.9% Personal Loans 2,939,073 2,834,352 12.5% 12.7% Residential Mortgage Loans 10,493,797 9,571,959 44.8% 42.8% Commercial Loans 4,101,967 3,577,890 17.5% 16.0% Institutional Loans 107,556 82,334 0.5% 0.4% Unincorporated Association Loans 6,364 7,982 0.0% 0.0% Agricultural Loans 724,893 624,007 3.1% 2.8% Total Loans 18,373,649 16,698,524 78.4% 74.7% Total Loan Allowances (92,388) (89,001) -0.4% -0.4% Capital (Fixed) Assets 349,320 332,685 1.5% 1.5% Intangible & Other Assets 283,360 276,069 1.2% 1.2% Total Assets 23,421,473 22,340,743 100.0% 100.0%

LIABILITIES Demand Deposits 7,613,813 7,164,743 32.5% 32.1% Term Deposits 7,314,519 7,134,609 31.2% 31.9% Registered Deposits 5,600,068 5,513,272 23.9% 24.7% Other Deposits 231,221 226,616 1.0% 1.0% Total Deposits 20,759,621 20,039,240 88.6% 89.7% Borrowings 552,932 306,114 2.4% 1.4% Other Liabilities 411,359 380,173 1.8% 1.7% Total Liabilities 21,723,912 20,725,526 92.8% 92.8%

MEMBERS' EQUITY & CAPITAL Membership Shares 80,181 85,922 0.3% 0.4% Retained Earnings 945,360 926,670 4.0% 4.1% Other Tier 1 & 2 Capital 672,019 602,625 2.9% 2.7% Total Members' Equity & Capital 1,697,561 1,615,217 7.2% 7.2%

Total Liabilities, & Members' Equity 23,421,473 22,340,743 100.0% 100.0% & Capital

Totals may not agree due to rounding

4Q05 SYSTEM OUTLOOK, April 2006 Page 5 System Income Statement 4Q05 (with Industry Comparison)

ONTARIO SYSTEM* Canadian Chartered Banks** Percentage of Average Assets* 12 Months to 4Q05 4Q04 4Q05 4Q04 4Q05 ($000) ($000) Interest and Investment Income Loan Interest Income 1,023,325 932,119 4.46% 4.26% 2.72% Investment Income 158,359 166,828 0.69% 0.76% 1.07% 1,181,684 1,098,947 5.15% 5.02% 3.79%

Interest Expense Interest Expense on Deposits 483,988 469,492 2.11% 2.15% 1.53% Other Interest Expense and Dividends 53,060 48,638 0.23% 0.22% 0.61% 537,048 518,130 2.34% 2.37% 2.14%

Net Interest & Investment Income 644,636 580,817 2.81% 2.66% 1.65%

Loan Costs 31,632 22,999 0.14% 0.11% 0.09% Net Interest & Investment Income after 613,004 557,819 2.67% 2.55% 1.56% Loan Costs Other (non-interest) Income 196,819 185,520 0.86% 0.85% 2.11% Net Interest, Investment & Other Income 809,822 743,339 3.53% 3.40% 3.67%

Non-interest Expenses Salaries and Benefits 373,594 337,532 1.63% 1.54% 1.35% Occupancy 62,560 55,758 0.27% 0.25% Computer, office & other equipment 79,071 76,782 0.34% 0.35% Advertising & Communications 49,130 41,725 0.21% 0.19% Member Security 32,444 30,248 0.14% 0.14% Administration 78,269 70,313 0.34% 0.32% Other 43,658 45,682 0.19% 0.21% 1.38% 718,726 658,040 3.13% 3.01% 2.73%

Net Income/(Loss) Before Taxes and Non- 91,097 85,299 0.40% 0.40% 0.93% recurring & Extraordinary items Non-recurring & Extraordinary (3,500) 206 -0.02% (0.00%) 0.00% gains/(losses) Taxes 21,532 21,020 0.09% 0.10% 0.27% Minority Interests 0.02% Net Income/(Loss) 66,064 64,485 0.29% 0.29% 0.64%

Average Assets -$000 22,926,025 21,874,050 1,798,174,939

* Based on latest 12 months results. Totals may not agree due to rounding. Ontario figures exclude leagues. ** Source: Canadian Bankers Association, Detailed Financial Statistics. Consolidates all subsidiaries, such as investment dealers.

4Q05 SYSTEM OUTLOOK, April 2006 Page 6