Doing More. Together. 1

Annual Report Doing more. 2014 to Members Together.

View online at noventis.ca Contents

1 Introduction 2 Message from the Board of Directors 4 Message from the CEO 5 How our members benefit 6 Community commitment 7 Filling bellies & building communities 8 Financial services that helps the whole community thrive 9 Building world class dreams in our communities 10 Results

Financial Statements

12 Independent Auditors’ Report 13 Summary Consolidated Statement of Financial Position 14 Summary Consolidated Statement of Comprehensive Income 15 Summary Consolidated Statement of Changes in Members’ Equity 16 Summary Consolidated Statement of Cash Flows 16 Note to the Summary Consolidated Financial Statements Noventis Credit Union | 2014 Annual Report to Members Doing More. Together. 1

Welcome to the new Report to Members. Some parts of it might look like your typical annual report but don’t be fooled. Yes, you will still find the familiar charts, graphs and financial statements, but open it up and you’ll find something more.

You will find the stories behind the numbers. You will be introduced to the people and their dreams. The community projects. This year, our goal was to create a report that reflects what matters most to you. We wanted to show what having community-based financial services really means.

That’s why you might see some familiar faces, in places you recognize. This is what happens when decisions are made close to home by people you know- instead of by strangers in a distant city. We don’t look at life as something that should fit into a convenient formula.

Instead, we look at how we can do more. Together. 2 Doing More. Together. Noventis Credit Union | 2014 Annual Report to Members

Message from the Board of Directors

The Board of Directors are community members who put their names forward to represent your interests. They have terms of 3 years and help set the overall direction of Noventis Credit Union.

s a board, our government to re-establish a competitive number one goal is balance between credit unions and the always looking out for big banks. To do that, we are supporting Board of Directors your interests. That’s a new tax credit to counteract the The 12 person Board of what we were elected increased federal tax rate for credit Directors comes from four to do, and it is the key unions. The way we see it is that credit districts (Gimli, Riverton, principle that guides all of our decisions. unions shouldn’t be treated the same as Arborg, Eriksdale) within ABut how does that look in practice? banks because we aren’t the same. the regions we serve.

Well, it all starts with a strong And finally, it looks like staying true to Arborg commitment to our communities. the commitment of re-investing money Bragi Simundsson back into our communities- to make It looks like moving forward with the Nolan Sigvaldason them stronger. same bold spirit that built our founding Ashern credit unions. We’ve carried that In 2013/14, our Corporate Social Sandra Falk pioneering spirit forward into plans to Responsibility program provided more Clayton Gibson open a new-concept branch in Selkirk than $170,000 for community projects Marlene Michno in 2015. including school breakfast programs, scholarships and building restorations It also looks like advocating on your Fisher Branch (read more on page 6). Lee Gregory (Chair) behalf when regulations and taxes affect our ability to lend to both the local Finances can seem complex but when Gimli families and the small businesses that you have your communities’ best Paul Cuthbert are the lifeblood of our communities. interests at heart, it provides a strong Ken Krulicki guidepost for decisions – now and well That’s why we are adding our voice into the future. to hundreds of other credit unions Riverton John Sigurdson (Vice Chair) across the country to ask the federal – Board of Directors Jonas Thorarinson Peggy Vigfusson Winnipeg Beach Joanne Warwick (Secretary) Noventis Credit Union | 2014 Annual Report to Members Doing More. Together. 3

Community members 140+ employed 8 Branches Arborg Farm-related accounts Ashern + Eriksdale 600 supported Fisher Branch Gimli Moosehorn Regional business Riverton 550 owners served Winnipeg Beach

22,000+ Members Selkirk Opening 2015 4 Doing More. Together. Noventis Credit Union | 2014 Annual Report to Members

Message from the CEO

he past year has been marked by a transition from planning to action.

As a financial institution, the reality Tis that we are in a more competitive environment than ever before. Regulations are squeezing our ability to create member profits. New technology and new players challenge us to bring more creativity and innovation into the services we offer you and the way we look at, and do business.

In short, standing still is not an option.

That’s meant many things for you, our members. We built on your ability to bank from This investment has generated an anywhere with the introduction of excellent return on investment for It means we’ve come out with a number the Noventis mobile App, which our membership. In the past year, the of ways to make your experience better complements mobile text banking, new building in Riverton represented and more convenient. e-transfers and online banking. an important investment in that community’s future while a new real It means our business model is estate location in Selkirk meant an sustainable, and we have retained our opportunity to grow and prosper. Executive Team commitment to building and investing in from left to right: our communities. It means your voice is being heard every day – in our branches and through our Kathy Sauerborn It’s why we offer outside-the-box online member satisfaction survey. Your VP of Operations thinking when it comes to how we input is providing the direction to create service members – people like Robyn Philip Bauernhuber an experience that’s better than just Bjornson (featured on page 9). It means VP of Lending and Credit ordinary. our commitment to servicing families, Mark Jeffers farmers and businesses in the region Our team – more than 140 members of VP of Finance and CFO remains strong- something reflected in our communities – are here with your Kevin McKnight our solid growth. best interests at heart. Chief Executive Officer Missing from photo: It means we’ve adopted a diversified We’re working to make your experience a Dick Arnason approach that includes investment in great one – now and well into the future. insurance and real estate – specifically VP Insurance and Real Estate Kevin McKnight, Interlake Insurance and Real Estate. Chief Executive Officer Noventis Credit Union | 2014 Annual Report to Members Doing More. Together. 5

How our members benefit

You are the shareholders… You can break free from fees…

Share redemption We call it Member Value Pricing We’re redeeming shares. In 2013/2014 the board approved a This program was conceived with one thing in mind: lightening plan to redeem members’ surplus shares over time. the load of fees paid by you – our members.

In 2013/2014 we paid out shares to estates, members at retirement age, and common shares to members in Eriksdale and Gimli. It all worked out to a total of $825,251 redeemed Members can have up to 75 per shares and this is how it broke down: cent of their fees rebated under this program. In 2013/2014 $196,000 found its way back into $37,977 members’ pockets. We make it basic common shares redeemed to estates convenient by paying the rebate directly to accounts each month. $345, 513 subscription common shares redeemed to members You belong to a CU that doesn’t take risks with your money…

$441,761 Capital requirements surplus shares redeemed to estates There’s no doubt. We face extensive regulation. One of our and members over 65 requirements is that the amount of capital we have to hold is at least 5 per cent of our assets. Last year we exceeded the requirement with a year-end position of 6.32 per cent.

It sounds complicated but boils down to one thing: taking precautions by having a strong capital position means your money is safe during market shifts. 6 Doing More. Together. Noventis Credit Union | 2014 Annual Report to Members

Community commitment

We’re optimistic about the future

We believe in supporting the communities we serve. It’s actually The CSR program funds: the cornerstone of our philosophy and mission. So besides • Community renewal our financial services, we are big on volunteering and funding • Cooperative development community projects. • Environmental sustainability The majority of the funding comes through our Corporate Social • Family and social connections • Health and well-being Responsibility (CSR) program. • Youth and education If you see our name on the back of a jersey or on the side of a Zamboni, it’s because we provide sponsorships to sports teams and events too. And, if you’ve attended a local grad recently, you’ll know that we provide bursaries to help teens reach their education dreams. In 2014, we gave more than $170,000 through the CSR program and corporate sponsorships to community events and projects across our member regions.

Projects included funding for: • School playgrounds and play structures • Supporting minor hockey teams • Re-roofing a local arena (Ashern) • Riverton Friendship Centre special programming • 13 school breakfast programs • Family and Youth Regional Support Program • Moosehorn Community Club • A Sno Coach Ambulance

As well as: • Educational bursaries • Special financing for community projects like a new daycare in Arborg

Find out more about the CSR or download an application at noventis.ca/about Noventis Credit Union | 2014 Annual Report to Members Doing More. Together. 7

Filling bellies & building communities

“As a credit union, we recognize that we are in a unique position that gives us the opportunity to be a real catalyst for growth in development in the communities we serve,” she said.

Vigfusson says that looks varied and diverse in the community.

It looks like support for 13 breakfast programs across the Interlake. It looks like support for some of the regions hockey programs and a troupe of Ukrainian Dancers. And it looks like new roofs on arenas, play structures at schools, support for very morning, dozens of network of schools across the province community events and programs. children- some bleary-eyed that has a full-fledged breakfast program. and some bounding with Breakfast programs like theirs are excitement- get off the bus funded through a variety of sources – “Without the support and make their way into the including the Noventis Credit Union Ashern Early Years School. of the credit union and Corporate Social Responsibility Program the community, we ESome of them rode for more than (CSR). The funding is vital according couldn’t afford to feed an hour, and many are starting to the school secretary, Kurby Short. the day with an empty tummy. them well. This allows “We just really appreciate the support- us to buy fresh fruit and That’s why teachers and volunteers because we would be feeding the kids cheese and milk. ” come in early to prepare an assortment but taking the money from another place- of breakfast foods – things like toast, like the school budget,” Short said. fruit, cereal, oatmeal, and yogurt. “Without the support of the credit “Building communities can be “Breakfast is an important first meal union and the community, we couldn’t about supporting bricks and mortar of the day,” says Karen Carmichael, afford to feed them well. This allows development but it can also be related school principal. “The kids need the us to buy fresh fruit and cheese and to supporting all the great work that energy to learn and this is a place milk. Before they were getting a the people living here do to ensure for them to get that. It gives them granola bar or something like that.” our communities are happy, healthy a chance to get something in their That’s music to the ears of the and vibrant,” Vigfusson said. belly before they start learning.” Riverton-area director Peggy Vigfusson “We’re just happy to be able Several years ago, the school decided it who chairs the Noventis CSR. to be a part of it all.” had to take action to make sure each and Vigfusson says helping communities every child started the day nourished. stay healthy and strong is at the Today, Ashern Early Years is one of a heart of the CSR’s mandate. 8 Doing More. Together. Noventis Credit Union | 2014 Annual Report to Members

Financial services that help the whole community thrive

We spend a lot of time thinking about how we can help you meet your goals. No matter what they are. Here’s some of what we’ve come up with along the way.

Member Value Pricing (MVP) We Help You Live Rich, Your Way Tired of fees? Then this is the program Whether that’s saving for the farm for you. Our members are automatically you always wanted, or designing the eligible for tiered fee rebates when retirement of your dreams, our wealth carrying anything over $40,000 in total management team has the expertise business. That includes mortgages, loans to guide you as you meet your goals. and deposits! Best of all? It’s automatic so you don’t even have to apply. A Solution-Based Approach to Lending Your life doesn’t plug nicely into a A Fee-Free Youth Account bank algorithm? We get it. We look Let’s get them started early. Open an for solutions that can help you take account and get a free gift. Yes! You the trip you want, build a home, or can make financial literacy FUN. buy the horse trailer of your dreams.

We Know and Love Our Ag Members Lot Purchase Program That’s why you’ll sometimes find We make it extra affordable to buy that us making a special trip out to the land you’ve had your eye on so you can farm to meet with them. Whether build the home you’ve always wanted. it’s town or country, we support the Our lot purchase program offers some farm and farm-related financial needs of the most favourable terms around! of more than 600 plus members.

Special TLC for Our Business Members We service everyone from fresh start-ups, to 100-year old businesses with deep roots in the community. Noventis Credit Union | 2014 Annual Report to Members Doing More. Together. 9

Building world class dreams in our communities

Robyn’s story

For as long as Robyn Bjornson can remember, she’s loved horses.

Now, Bjornson has been training horses for more than 20 years. She is good at what she does. Good enough to take home a title at Canadian Nationals in Brandon, Manitoba with her yearling Appaloosa, Abel. Yet, despite her skill, attending competitions further afield was never an option.

“I definitely have an ambition of going to a world show but you can’t go without a trailer that will house you,” Bjornson said, noting that a live-in/travel horse trailer can range from $50,000 to $200,000.

“I can’t see a big bank helping

me the way they did” indoor arena, you need the horse and the equipment. Without a bank that understands what you are trying to do, you pretty much can’t even start to put your foot in the door.” So, when the trailer of her dreams became available in the US, With several branches across the Interlake, Noventis prides she knew she had to act quickly. But admits she was worried itself on recognizing the needs of the community, the people about what such a large purchase might mean to her finances. there, and helping fuel dreams like Bjornson’s with an outside- “I asked (my financial services representative) what my options the-box approach. were to make the trailer affordable for me,” Bjornson said. “To “We believe financial services should be accessible for everyone. have a 10-year loan on that amount of money- I would never be Not just some,” notes CEO Kevin McKnight. “And that shows able to pay that. up in the types of products we offer- like one-of-a-kind accounts “But we wanted to shoot for the stars with this trailer. I knew that rebate fees- to the way we approach lending. this was a trailer that was for the whole family as they grew up.” “At the heart of what we do is the knowledge that your life may Bjornson credits Noventis with helping make the purchase a not fit into an algorithm. You’re not just a balance sheet here. reality. Because of her relationships with the people there and You’re our neighbor.” because of service that went above and beyond. That’s a sentiment that resonates with Bjornson who still gets “I can’t see a big bank helping me the way they did at emotional talking about the day she pulled into her driveway (Noventis),” Bjornson said. “Not only from the financial aspect with the new trailer in tow. of it but all the preparation of it- the paperwork, the money “The trailer is so much more than a piece of tin. It’s everything wiring, the cashiers note, and the bank draft. that goes with it- like the memories of taking your kids and “To be a world-class athlete. I needed the facilities. Noventis’s going out to all kinds of horse shows across the country. I can story with me includes the place where I live now. You need the do that now.” 10 Doing More. Together. Noventis Credit Union | 2014 Annual Report to Members

Results

We take a balanced approach to growth. What does balance look like? It looks like considering a multitude of factors 85% Member before making a decision. Satisfaction

Things like • What members want and what they could benefit from • The financial implications • The effect on staff and our existing infrastructure Putting members first • Learning and growth Members report on how we are doing by telling us about the quality of service we provide.

We’ve made it easy to be heard by posting a link to member Assets satisfaction surveys right on our website. The mystery $529 Million shop program has been a good way to gather insight about 87% Loans individual experiences.

8% Investments Last year, our member satisfaction target was 80 per cent. 4% Funds on hand We’re happy to report we exceeded that by reaching 85 per cent.

1% Property

Loan Portfolio Sustainable Financial Growth $459 Million Member Deposits grew by 3.8 per cent and lending grew by 10.2 per cent. This positive trend in asset 53% Consumer growth is expected to continue and we target to achieve 26% Commerical a 7 per cent growth rate per year. Financial margins 21% Agriculture are tighter due to the low interest rate environment.

Results Target Loan Growth 10.2% 7% Deposit Growth 3.8% 7% Efficiency 77.9% 78.4% Gross Operating Margin 0.57% 0.57%

In 2013-14 Noventis assets $ reached $529 million. Noventis Credit Union | 2014 Annual Report to Members Doing More. Together. 11

Growth 550 500 Assets 450 Deposits 400 Loans 350

300

250

200

150

100

$ Millions 2009 2010 2011 2012 2013 2014

Tapping into technology to create a better, more convenient Diversification that makes sense and keeps experience for members services in the community Technology is moving at warp speed. Our approach is to adopt Not putting all your eggs in one basket. It’s an old adage that still technology and services that make members’ experience better and holds true today. That’s why Noventis provides insurance and real more convenient and maybe just a touch cooler. estate services through Interlake Insurance and Real Estate in the communities of Arborg, Gimli, Peguis, Riverton and Selkirk. That includes mobile, text, online and ATM services. We get the feeling this is just the beginning… Diversification in areas that make sense improves our sustainability over the long term. It also ensures the stability of insurance Investing in our people services in the communities we serve.. We believe in our people. It’s the reason we offer a great compensation and benefits package and why we invest so heavily Interlake contributed $392,888 of net income in 2013-14 to in staff development. Happy, thriving staff translates into a happy, Noventis Credit Union. thriving business.

They’re a self-motivated bunch. In addition to their mandatory training, Noventis staff took an additional 1,552 of training hours during the year on their own time to upgrade their skills.

We’re giving credit where credit is due! 12 Doing More. Together. Noventis Credit Union | 2014 Annual Report to Members

Independent Auditors’ Report

To the Members of Noventis Credit Union Ltd.: Auditors’ Responsibility Our responsibility is to express an opinion on the The accompanying summary consolidated financial summary consolidated financial statements based on our statements, which comprise the summary consolidated procedures, which were conducted in accordance with statement of financial position as at September 30, 2014, and Canadian Auditing Standard (CAS) 810, “Engagements the summary consolidated statements of comprehensive to Report on Summary Financial Statements”. income, changes in members’ equity and cash flows for the year ended September 30, 2014 are derived from the audited Opinion consolidated financial statements of Noventis Credit Union In our opinion, the summary consolidated financial Ltd. for the year ended September 30, 2014. We expressed statements derived from the audited consolidated an unmodified audit opinion on those consolidated financial financial statements of Noventis Credit Union Ltd. for statements in our report dated November 21, 2014. the year ended September 30, 2014 are a fair summary of those consolidated financial statements. The summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Winnipeg, Manitoba – November 21, 2014 Standards. Reading the summary consolidated financial statements, therefore, is not a substitute for reading the audited consolidated financial statements of Noventis Credit Union Ltd. Chartered Accountants Management’s Responsibility for the Summary Consolidated Financial Statements Management is responsible for the preparation of the summary consolidated financial statements in accordance with International Financial Reporting Standards.

A copy of the complete consolidated financial statements including significant accounting policies and other explanatory information is available from the credit union or at noventis.ca Noventis Credit Union | 2014 Annual Report to Members Doing More. Together. 13

Noventis Credit Union Ltd. Summary Consolidated Statement of Financial Position For the Year Ended September 30, 2014

Year 2014 2013 Assets Funds on hand and on deposit 19,250,792 28,585,969 Investments 34,721,759 47,507,209 Members’ loans 459,021,455 416,661,146 Other assets 2,123,402 1,302,647 Property and equipment 7,227,242 7,031,971 Goodwill and intangible assets 6,782,561 7,196,539 529,127,211 508,285,481 Liabilities Members’ savings and deposits 490,492,727 472,638,388 Accounts payable and other liabilities 4,643,943 3,459,293 Income taxes payable 48,291 85,109 Deferred taxes 667,415 658,815 495,852,376 476,841,605 Members’ equity Members’ shares 6,649,076 7,458,617 Retained surplus 26,625,759 23,985,259 33,274,835 31,443,876 529,127,211 508,285,481

Approved on Behalf of the Board Signed “Lee Gregory”, Director Signed “Joanne Warwick”, Director

A copy of the complete consolidated financial statements including significant accounting policies and other explanatory information is available from the credit union or at noventis.ca 14 Doing More. Together. Noventis Credit Union | 2014 Annual Report to Members

Noventis Credit Union Ltd. Summary Consolidated Statement of Comprehensive Income

For the Year Ended September 30, 2014

Year 2014 2013 Financial income Interest from members’ loans 17,563,096 16,516,509 Investment income 1,436,314 1,973,784 18,999,410 18,490,293 Cost of funds 8,393,279 8,506,425 Financial margin 10,606,131 9,983,868 Operating expenses Administration 3,685,815 2,975,460 Member security 498,716 506,542 Occupancy 1,054,817 1,011,305 Organizational 350,016 346,573 Personnel 6,615,201 6,162,121 Gross operating expenses 12,204,565 11,002,001 Other revenue Banking service charges, fees, and commissions (3,007,643) (3,218,072) Insurance commissions (2,134,124) (832,330) Gain on equity investment – (602,198) 5,141,767 4,652,600 Net operating expenses 7,062,798 6,349,401 Income from operations before provision for impaired loans, patronage 3,543,333 3,634,467 refund and income taxes Provision for impaired loans 396,233 140,000 Income before patronage refund and provision for income taxes 3,147,100 3,494,467 Patronage refund – 252,729 Income before provision for income taxes 3,147,100 3,241,738 Provision for income taxes 506,600 372,765 Income and comprehensive income for the year 2,640,500 2,868,973

Noventis Credit Union Ltd. Summary Consolidated Statement of Changes in Members’ Equity

For the Year Ended September 30, 2014

Members’ shares Retained surplus Total Balance, September 30, 2012 7,942,588 21,116,286 29,058,874 Income and comprehensive income – 2,868,973 2,868,973 Issuance of member shares 303,354 – 303,354 Redemption of member shares (787,325) – (787,325) Balance, September 30, 2013 7,458,617 23,985,259 31,443,876 Income and comprehensive income – 2,640,500 2,640,500 Issuance of member shares 15,710 – 15,710 Redemption of member shares (825,251) – (825,251) Balance, September 30, 2014 6,649,076 26,625,759 33,274,835

A copy of the complete consolidated financial statements including significant accounting policies and other explanatory information is available from the credit union or at noventis.ca 16 Doing More. Together. Noventis Credit Union | 2014 Annual Report to Members

Noventis Credit Union Ltd. Summary Consolidated Statement of Cash Flows

For the Year Ended September 30, 2014

Year 2014 2013 Cash provided by (used for) the following activities Operating activities Interest received from members’ loans 17,583,270 16,474,485 Interest received from investments 1,542,624 2,041,148 Income taxes paid (534,818) (282,943) Interest paid to members (8,486,747) (8,603,545) Net operating expenses paid (10,906,110) (11,003,250) Other income received 5,141,767 4,050,402 4,339,986 2,676,297 Investing activities Net change in members’ loans (42,776,716) (25,883,256) Net change in investments 12,679,140 1,716,308 Purchase of property and equipment (715,853) (451,146) Business acquisition - (3,556,409) (30,813,429) (28,174,503) Financing activities Net change in members’ savings and deposits 17,947,807 26,645,938 Issue of members’ shares 15,710 50,625 Redemption of members’ shares (825,251) (787,325) 17,138,266 25,909,238 Increase (decrease) in funds on hand and on deposit (9,335,177) 411,032 Funds on hand and on deposit, beginning of year 28,585,969 28,174,937 Funds on hand and on deposit, end of year 19,250,792 28,585,969

Noventis Credit Union Ltd. Note to the Summary Consolidated Financial Statements

For the Year Ended September 30, 2014

1. Compliance with minimum capital and liquidity requirements Readers of the summary consolidated financial statements are advised that in order to appropriately interpret the Noventis Credit Union Ltd. (the “Credit Union”) is in Credit Union’s capital and liquidity, the reader must compliance with the capital and liquidity reserve requirements refer to the audited consolidated financial statements at September 30, 2014 established by the Regulations to The and notes for the year ended September 30, 2014, which Credit Unions and Caisses Populaires Act of Manitoba. contain the information detailing the calculation.

A copy of the complete consolidated financial statements including significant accounting policies and other explanatory information is available from the credit union or at noventis.ca

Arborg Moosehorn 250 Main Street 11 Railway Avenue Box 328 Box 190 Arborg, MB R0C 0A0 Moosehorn, MB R0C 2E0 204-376-2798 204-768-2437

Ashern Riverton #4 Highway #6 51 Main Street Box 580 Box 428 Ashern, MB R0C 0E0 Riverton, MB R0C 2R0 204-768-2733 Tel. 204-378-5121

Eriksdale Winnipeg Beach 4 Railway Avenue 23 Stitt Street Box 99 Box 429 Eriksdale, MB R0C 0W0 Winnipeg Beach, MB R0C 3G0 204-739-2137 204-389-2550

Fisher Branch Selkirk – Opening early 2015 48 Tache Street Unit 1 - 1012 Manitoba Ave. Box 299 Selkirk, MB Fisher Branch, MB R0C 0Z0 204-372-8411

Gimli 34 Centre Street Box 1139 Gimli, MB R0C 1B0 204-642-6450