Members’ Review

Members’ Review A year in view 2016 Members’ Review 2016 3

Welcome to your Members’ Review Another successful year for the Marsden and we continue to drive the ambition of the Society forward to ensure we remain modern, relevant and continue to deliver a high quality of service to you, our members. I touched on the plans we had for the future in last year’s Members’ Review and I’m pleased to say that we have made some great progress with many. During the year we’ve spent time reviewing both our member and intermediary ‘experience’ and developing transformation plans that will shape the Marsden and its future through our four pillars; our members, our people, our intermediaries and our financial strength. These plans will be important to help support the future requirements of our members, to demonstrate the continued relevance of a mutual and the positive impact we will continue to have on individual members and the local communities that we have a presence in. We continue to celebrate the input of our members into the Society, our recent figures highlight that 96% of our members would recommend us to their friends and family which is a figure our teams are immensely proud of. We have again been recognised for our service and innovation, being nominated for the ‘Be Inspired Business Awards’ and receiving ‘Highly Commended’ awards from Mortgage Finance Gazette for our Customer Service and Mortgage Product Innovation. Contents So, what’s changed in 2016? Welcome 3 It’s been a year packed with change both internally and externally, the obvious being Brexit and the of England base rate 2017, Our Strategy 4 change which have impacted on both our savers and our Your Marsden 5 borrowers. The Society continues to review the impact of these but will shield our members as much as possible from any Supporting our Members 6-7 substantial impact. Life Planning 8-9 Our branch estate has changed, introducing two new Summary Financial Statement 10-15 branches in Poulton-le-Fylde and Clitheroe and closing the four remaining agency offices. We remain committed to the Auditor’s Statement 15-16 local communities we hold branches in and are focused Summary Directors’ on delivering excellence across our branch teams and 16-18 Renumeration Report supporting members with local faces, expert knowledge and a competitive range of products and services. Other Information 19 With this in mind, your Society has also introduced new services; Estate Planning and Funeral Plans (you can find more information on these services later in this Members’ Review booklet).

we continue to celebrate the input “ of our members into the Society, our recent figures highlight that over 96% of our members would recommend us to their friends and family which is a figure our teams are immensely proud of. ” Rob Pheasey, Chief Executive

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Our plans for 2017 2017 Turning to the year ahead, our ambition to evolve the Society into a modern, relevant, member focused our strategy mutual will continue. In many ways, the transformation programme that we have set for the business is our most challenging in my time as Chief Executive. our members Our plans to widen our digital operations to support are at the heart of your Society a members have now been set. For our members, this mutual; your changing needs and will lead to a widening of engagement. During 2017, behaviours continue to develop the our online savings customers will transition to a new way in which we can serve you as online savings platform. Our future plans will allow for a building society. We service over the widening of online access to all members, across 40,000 members via our branches savings, mortgage retention and savings retention, or remotely and we’re looking transforming the way our members in the future use to continue to grow this number complementary distribution, whether in branch, online further each year or over the phone. I see 2017 as an exciting and challenging year of % transformation for the Society, to be delivered by a our people committed and professional team. When I look back are committed to driving the on the past year’s achievement, I am very confident 96 Marsden forward and delivering an that we can deliver a programme of change that will of our members would award winning ethos of continued improvement, underpin our future, one where we remain modern, recommend us to their family best financial member focus and future relevance. relevant and continue to deliver long term value to our We have just under 100 members of members. and friends services provider in staff working to deliver the Marsden I have outlined our plans for investment, but equally Lancashire service and have successfully important areas of focus are maintaining competitively delivered a number of programmes priced mortgage and savings rates and delivering an across 2016 and remain supportive appropriate focus on operating costs. of our ambition I extend my thanks to those to whom we hold a special relationship, our members. The Marsden is operated for our intermediaries your benefit, by maintaining our financial strength and support over 95% of our lending with your support I am confident that we will continue business and allow us to achieve to grow your Society. We have high aspirations and we our lending ambition. With the hope you will continue to be part of that future. 2,398 introduction of Older Borrower new branches mortgages, increased resourcing new members welcomed to and developed efficiencies across opened in our services we’ve increased our the Marsden Lancashire lending by 39.2% this year Rob Pheasey 2 Chief Executive

our financial strength continues to be built upon and we remain one of the top strongest building societies in the UK. Our financial strength underpins our £ strategy for 2017 and ensures that members know their money is safe new borrowers new savers with the Marsden to the Marsden to the Marsden

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How do we support our members? No matter what stage in life you are at, we’re always on hand with a range of products to support your financial needs. This year, we’ve introduced ‘Life Planning’ support which includes funeral plans and a range of estate planning services such as Will writing, Probate, Trusts and Lasting Powers of Attorney. If you need more information about any of our products and services, please get in touch or pop into your local branch to speak to a member of our team.

Savings Home We know everyone saves for different Your insurance is individual to you and your reasons and we believe we’ve got something needs, which is why we offer a modular for everyone. What’s more, we make it easy policy ensuring you’re covered for the things to help you find the right product and help that are important to you at a price that fits. you manage your savings easily. You start with Core Cover, then pick and choose your Extra Cover options and only • Everything from every day easy access pay to protect the things that matter most through to locking your savings away for to you. a fixed time • Access you savings in branch, online or • Only pay for what you need over the phone • Buildings and contents cover available • Accidental damage available

NEW NEW Mortgages Landlord insurance Estate planning Funeral plans We have plenty of experience supporting If you’re a landlord, you will need different You are never too young to start planning A funeral plan is a simple and our members with life in their own home. cover for your property. Our landlord ahead for life’s ups and downs; it not only straightforward way to cover the cost of a Whether it be for the first time, looking for insurance is designed to protect you and makes financial sense, it also helps to funeral in advance and put arrangements in remortgage options or investing in your your investment. ensure that your wishes are met and helps place. property, we can help. Don’t just take our make a difficult time a lot easier for your word for it though, we have won awards for • Buildings cover family. • Buying a funeral plan now, guarantees our service and product ranges… • Contents cover as standard you pay today’s prices • Member rate on the cost of Protects against unexpected events • A plan can save your loved ones money • First time buyers • your Will and worry in the future • Moving home • Free review of existing plans • The plan is guaranteed to everyone aged • Remortgaging • Support with Will writing, Lasting Powers 50 or over with no health restrictions or of Attorney, Trusts and Probate medical questions

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About Funeral Plans Our partnership with Dignity supports you About Estate Planning with prepaid funeral plans. If you would like Through our partnership with The Will Writing more information about this product, please Company, we can arrange an appointment for speak to a member of our team. We have you to discuss your needs or provide you with highlighted some of the key reasons you may more information. Here’s some of the ways you want to consider the product; can benefit: Guaranteed services in the plan Member rate on your Will The funeral director and cremation As a member of Marsden you receive services specified in your plan will be fully covered. Estate planning a discount on the price of your Will. Funeral plans You are never too young to start planning ahead. Free review of existing plans A Prepaid Funeral Plan lets you pay for a future Burial contribution increases Estate planning doesn’t just involve writing a Will, Ensure that your existing plans are up funeral at today’s price, protecting you against rising with Retail Price Index it can also include a Lasting Powers of Attorney to to date and meet your current needs. funeral costs and helping you to leave more behind If you opt for a burial service, Dignity protect your affairs if you were to lose mental capacity, for your loved ones. Did you know that the average provides a contribution towards burial Flexible appointments Trusts to safeguard your assets and beneficiaries from cost of a funeral is £3,937† and this is expected to costs that increases each year in line The appointments are flexible threats such as sideways disinheritance through reach more than £5,200† in just five years. with the market index. and hold no obligation. They can be re-marriage and Probate services. arranged in your local branch or in the By taking out a plan today, you are freezing the Security One of the main purposes of planning your estate comfort of your home. costs of the services in the plan and removing the Your money is secure - held in a is to ensure that you get to choose who is to benefit; financial worry. completely independent Trust Fund. No hidden costs whether it is family, friends, charities or other All pricing is fixed, giving you the The plan is guaranteed to everyone aged 50 Accessible services organisations. • comfort that you know exactly what or over with no health restrictions or medical Your loved ones will be able to access Estate planning service includes: you’re looking at. questions. support - 24 hours a day, 365 days a year. • Will writing Complete honesty • You can pay with a lump sum or spread the cost If we don’t think you need any of our Your plan is portable Lasting Powers of Attorney with instalments*. • services, The Will Writing Company If you move location, your plan will • Trusts tell you. • The money you pay for your plan goes straight move with you to another Dignity into a secure, independent Trust Fund. Funeral Director - at no extra cost. • Inheritance and legacy protection No technical jargon The estate planners take the time to A weight off your mind Probate and estate administration • make sure you understand everything †2011-2016: Matter Communications independent research. Once you’ve paid for your plan, that’s before you proceed. 2021: Forecast based on average annual compounded growth rate it. There will never be any more to pay of 5.79% each year between 2011 and 2016. for the services detailed in it. *Plans paid over a period greater than 12 months will incur a fee.

How we choose our partners We have helped our members with savings and mortgages since we first opened our doors in 1860. Over time, the needs of our members have changed and we realise the importance of supporting you with other products and services to help you achieve your financial goals. Our focus remains on delivering the very best service to our members which is why we’ve formed partnerships with other trusted organisations that are experts in their fields too. We select them based on key criteria:

Products Transparency Great value for money, competitive pricing and quality of product. Once we are satisfied that the partner is right for you, we will support you with all the information you need in order for you to make your own decisions, in your own time. If you ever have a problem, Customer service you can talk to us and we can work with our partners on your behalf to resolve your issue. We monitor the service that our partners provide to ensure they deliver the same excellent quality Financial strength of service that we do. We always check the financial status of organisations to ensure our members are protected. Our Home Insurance and Funeral providers hold all premiums in trust which is guaranteed to pay out claims no matter what happens to the organisation.

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Summary Financial Statement for the year ended 31 December 2016 Summary Directors’ Report Our financial performance We have delivered a strong performance across Mortgage arrears performance is consistently better both our lending and savings business and continue than the industry as a whole. At the end of 2016, only to make excellent progress on our transformation 0.10% (2015: 0.10%) of residential mortgage balances journey to deliver a modern and relevant building were 3 months or more in arrear or impaired. society to better support the needs of our members. Reviewing our savings activity Our strategy remains focused on strengthening In 2016, our overall growth in share balances was our capability, maintaining the competitiveness of £12.2m, a 3.7% increase in year. Today, our total our savings and mortgage products, as well as retail savings balances, including deposit balances, broadening our products and services to include are £351.4m (2015: £341.5m). We remain focused later life planning and digital platforms. We want to on maintaining our commitment to the high street help more people to save and to live in their own supporting both our existing members and welcoming home. Our business model is substantially built on new savers too. This resulted in net growth in share this simple purpose, if we can lend responsibly balances of £12.2m to £344.6m, up 3.7% (2015: and in the volume required, we will seek to be more £22.6m to £332.5m, up 7.3%). ambitious in our plans to grow our support for savers. Our plans to see the level of retail savings growth Reviewing our lending activity reduce to support the requirement to reduce the Our record lending in year of £120.5m was a excess liquidity were substantially achieved. Whilst significant achievement that supported our planned there is a balance to be struck between slowing our reduction in overall liquidity. For members this had a growth and our ability to increase our lending volumes number of benefits; it supported the improved profit to support the better utilisation of excess funding, the performance, provided an opportunity to maintain our progress we have made in the year by growing our competitive retail saving rates and further support for gross lending and at the same time growing our our future investment plans. base has been extremely positive. We plan to revisit our ambitions to grow the savings business, but this During the year the Society continued to grow the will be tempered by our ability to also grow our lending residential loan book. New advances exceeded the business. level in 2015 by some margin with new residential mortgage advance growth of £33.9m to £120.5m, Profitability & financial strength up 39.2% This contributed to loan book growth of In 2016, the Society returned a profit after tax of £40.5m to £342.4m, up 13.4% (2015: £301.9m). £1.029m (2015: £0.915m). Our current and projected Summary Financial Today the composition of the book remains financial performance combined with our significant concentrated around lower risk residential assets: capital strength - core tier 1 capital ratio1 of 25.26% 75.4% residential, 24.6% buy to let plus a modest (2015: 26.56%) remain one of the highest of any UK Statement 2016 portfolio of legacy commercial . building society, means we will comfortably meet foreseeable regulatory capital requirements.. Asset quality remains high with residential loans having an average indexed loan to value (LTV) of We anticipate modest growth in our net interest margin This financial statement is a summary of information in the audited annual accounts, 41.7% (2015: 44.1%) and less than 8.3% (2015: in the coming years, accepting this will require careful the Directors’ report and the annual business statement, all of which will be available to 9.2%) with a current LTV in excess of 80%. The management given the downward trend in funding members and depositors free of charge on demand at every office of Marsden Building Society currently has limited appetite for commercial costs and the competition within the mortgage market. Society from 31 March 2017. lending and continues to manage down its existing Net interest income for the year was £6.000m (2015: exposures in this market. £5.555m). Our net interest margin (NIM) increased to Approved by the Board of Directors on 2 March 2017 and signed on its behalf by: 1.46% (2015: 1.41%).

R W Barlow R M Pheasey N Walker Chairman Chief Executive Finance Director & Chief Risk Officer 1Explanation of core tier 1 can be found in our Annual Report and Accounts.

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Summary Financial Statement (continued) for the year ended 31 December 2016 Reviewing our cost of operation 5 year financial highlights Long-term value for members also requires an The medium term objective remains to continue to grow ongoing focus on the cost of our operations and the balance sheet to maintain and improve economies Year ended 31 December 2016 2015 2014 2013 2012 our control of risk. The underlying management of scale given the pressure on both costs and the net Net interest income (£000) 6,000 5,555 5,558 5,150 4,790 expense ratio net of other income increased to interest margin. Net interest margin (%) 1.46% 1.41% 1.50% 1.49% 1.46% 1.19% (2015: 1.16%), reflecting increased employee Looking ahead Administrative expenses headcount and costs and the ongoing investment in 4,866 4,570 3,857 3,549 3,646 the business, in particular change management, IT Our strategy remains focused on strengthening our net of other income (£000) investment and the refurbishment and expansion of capability, maintaining the competitiveness of our Administrative expenses the branch estate. savings and mortgage products, broadening our net of other income (%) 1.19% 1.16% 1.04% 1.03% 1.11% products and services to include later life planning and Looking forward, upward pressure on cost continues digital platforms and in growing the business leading Operating profit before impairment losses 1,246 1,121 1,775 1,596 1,144 from a number of sources. During 2017 investment to an anticipated improvement in the underlying trading and provisions in IT architecture will be made to deliver a new performance of the Society. framework for running and delivery of IT moving Impairment losses on loans and advances 16 6 141 251 90 forward; the continued investment in our people and We will maintain our focus on reviewing the ‘member Provisions for liabilities – FSCS (£000) 87 210 216 295 171 experience’ and developing transformation plans that the cost of regulation that also continues to escalate Profit on sale of properties (£000) 122 205 91 97 - affecting smaller financial institutions such as the will shape the Marsden and its future. These plans will Society to a greater extent. be important to help support the future requirements of Profit before tax (£000) 1,279 1,122 1,420 1,147 883 our members, to demonstrate the continued relevance Profit after tax (£000) 1,029 915 1,175 927 618 Asset growth of a mutual building society and the positive impact we Growth in Society assets is a key factor in improving will continue to have on individual members and the efficiency arising from economies of scale to communities at large. As at 31 December 2016 2015 2014 2013 2012 provide increased value for members, subject to an Share balances (£000) 344,610 332,452 309,889 286,979 263,287 appropriate risk reward relationship to ensure the value of members’ capital is not placed at undue Loans to customers (£000) 342,414 301,928 290,218 262,699 241,766 risk. During the year the Society continued to achieve Total assets (£000) 416,004 403,517 384,139 358,221 333,786 asset growth in excess of inflation with an increase of £12.5m to £416.0m, up 3.1% (2015: £19.4m to Liquidity (£000) 67,169 93,867 85,767 88,266 83,838 £403.5m, up 5.0%). Wholesale funding (£000) 26,453 24,207 25,153 23,649 22,088 Loan to deposit ratio (including reserves) (%) 111.81% 122.87% 120.53% 124.25% 125.20% Core tier 1 solvency (%) 25.26% 26.56% 26.14% 26.56% 25.35%

Key performance highlights • Gross Residential Mortgage Advances grew £33.9m to £120.5m, up 39.2% with mortgages arranged for 846 new borrowing members • Residential Mortgage Balances grew £40.5m to £342.4m, up 13.4% • Share Balances grew by a net £12.2m to £344.6m, up 3.7% involving new accounts for 1,552 new We have delivered a strong performance across both our lending investing members “ and savings business and continue to make excellent progress • Total Assets grew £12.5m to £416.0m, up 3.1% on our transformation journey to deliver a modern and relevant • Net Interest Margin increased by 5bps to 1.46% as a result of substitution of liquidity for mortgage lending building society to better support the needs of our members. and an improved lending mix • Administrative Expenses net of Other Income up 3bps to 1.19% as a result of investment in people ” • Profit after Tax of £1.03m, up £0.12m Roger Barlow, Chairman • Strong Core Tier 1 Solvency Ratio of 25.26%, down 1.30% as a result of growth in mortgage assets • Society Leverage Ratio of 8.51%, up 0.09%

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Summary Financial Statement (continued) for the year ended 31 December 2016 Results for the year Gross capital compromises general and revaluation reserves 2016 2015 The gross capital ratio gives an indication of the as a proportion of the Society’s total average assets £000 £000 extent to which a society is funded by retained during the year. The Society maintains a reasonable Net interest receivable 6,000 5,555 earnings and other reserves compared with shares level of profit each year in order to keep its capital and borrowings. Gross capital provides a financial ratio at a suitable level to protect investors. Other income and charges 422 396 cushion against any losses which might arise from Fair value gains on financial instruments 112 135 the Society’s activities to safeguard the interests of Management expenses represent the total cost of investors. administrative expenses and depreciation. They Administrative expenses (5,288) (4,965) constitute the cost of employing staff, complying with Provisions for bad and doubtful debts 16 6 The liquid assets ratio is a measure of the proportion legislation, advertising and maintaining the Branch Provisions (87) (210) of a society’s funding covered by cash assets or network and Principal Office. The management those readily convertible into cash. Liquid assets are expenses ratio measures the proportion that these Operating profit 1,175 917 by their nature realisable to allow the Society to meet expenses bear to the simple average of total assets at Profit on sale of properties 104 205 withdrawals by investors, make new mortgage loans the beginning and end of the financial year. Profit on the year before taxation 1,279 1,122 and fund its business activities. Taxation (250) (207) Profit for the year as a percentage of mean total Profit for the year 1,029 915 assets measures the profit after taxation for the year Independent auditor’s statement to the members and depositors of Financial position at the end of the year 2016 2015 Marsden Building Society Assets £000 £000 We have examined the summary financial statement Basis of opinion Liquid assets 67,169 93,867 of Marsden Building Society (‘the Society’) for the Our examination of the summary financial statement year ended 31 December 2016 set out on pages 10 Mortgages 346,229 306,917 consisted primarily of: to 15. Fixed and other assets 2,606 2,733 Agreeing the amounts and disclosures included This auditor’s statement is made solely to the • Total assets 416,004 403,517 in the summary financial statement to the Society’s members, as a body, and to the Society’s corresponding items within the full annual Liabilities depositors, as a body, in accordance with section accounts, Annual Business Statement and Shares 344,610 332,452 76 of the Building Societies Act 1986. Our work Directors’ Report of the Society for the year ended has been undertaken so that we might state to the Borrowings 33,234 33,213 31 December 2016, including consideration Society’s members and depositors those matters we of whether, in our opinion, the information in Derivative financial instruments 385 1,027 are required to state to them in such a statement and the summary financial statement has been Other liabilities 2,052 2,056 for no other purpose. To the fullest extent permitted summarised in a manner which is not consistent by law, we do not accept or assume responsibility Reserves 35,723 34,769 with the full annual accounts, the Annual Business to anyone other than the Society and the Society’s Statement and Directors’ Report of the Society for Total liabilities 416,004 403,517 members as a body and the Society’s depositors that year; as a body, for our work, for this statement, or for the opinions we have formed. • Checking that the format and content of the Summary of key financial ratios summary financial statement is consistent with 2016 2015 Respective responsibilities of directors and the requirements of section 76 of the Building auditors % % Societies Act 1986 and regulations made under it; The Directors are responsible for preparing the and Gross capital as a percentage of shares and borrowings 9.45 9.51 summary financial statement within the Members’ Liquid assets as a percentage of shares and borrowings 17.78 25.67 Review, in accordance with applicable United • Considering whether, in our opinion, information Profit for the year as a percentage of mean total assets 0.23 0.23 Kingdom law. has been omitted which although not required to be included under the relevant requirements Management expenses 1.29 1.26 Our responsibility is to report to you our opinion of section 76 of the Building Societies Act 1986 Management expenses net of other income 1.19 1.16 on the consistency of the summary financial and regulations made under it, is nevertheless statement within the Members’ Review with the full necessary to include to ensure consistency with annual accounts, Annual Business Statement and the full annual accounts, the Annual Business Directors’ Report and its conformity with the relevant Statement and Directors’ Report of the Society for requirements of section 76 of the Building Societies the year ended 31 December 2016. Act 1986 and regulations made under it.

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Independent auditor’s statement (continued) Summary Directors’ Remuneration Report (continued)

We also read the other information contained in the David Allen Executive directors participate in the Society’s Bonus Procedure for determining remuneration Members’ Review and consider the implications for for and on behalf of KPMG LLP, Scheme. The level of bonus paid is based on criteria Code Principle: There should be a formal and our statement if we become aware of any apparent Statutory Auditor set by the Board each year, linked to the overall transparent procedure for developing policy on misstatements or material inconsistencies with the Chartered Accountants performance of the Society including both business executive remuneration and for fixing remuneration summary financial statement. 1 Sovereign Square and risk management objectives. In addition, packages of individual directors. No director should be Sovereign Street Executive Directors can receive an amount in excess involved in determining his or her own remuneration. Our report on the Society’s full annual accounts Leeds of the Society Bonus Scheme reflecting individual describes the basis of our opinions on those annual West Yorkshire performance in delivering outcomes in excess of The Remuneration Committee is responsible for accounts, the Annual Business Statement and LS1 4DA planned performance of the Society. Any payment determination of policy on the level of remuneration Directors’ Report. 2 March 2017 is taxable but non-pensionable. A 14% bonus, as payable to the senior management team and Chairman. The Chairman takes no part in the Opinion on summary financial statement a proportion of reference salary prior to any salary sacrifice, was payable in respect of 2016 (2015: discussion in respect of his own remuneration. On the basis of the work performed, in our opinion 12.5%), 8% in respect of the Society Bonus Scheme The Committee takes account of information on the summary financial statement is consistent and 6% in recognition of individual performance remuneration payable at comparable building societies with the full annual accounts, the Annual Business (2015: 7.5% plus 5%). and the time commitment and responsibility in respect Statement and Directors’ Report of the Society for of the Chairman. the year ended 31 December 2016 and conforms Executive directors participated in a defined with the applicable requirements of section 76 of the contribution Group Personal Pension Scheme which The Remuneration Committee had two meetings during Building Societies Act 1986 and regulations made is available to all eligible employees of the Society at 2016 at which all members of the Committee were in under it. a contribution rate of 10% of salary per annum. From attendance. The composition of the Committee as at 1 July 2011 the Society introduced a Salary Sacrifice 31 December 2016 was C A Ritchie (Chairman), T T Scheme for all staff, in which the executive directors Brooke and R W Barlow. The Chief Executive attends Summary Directors’ Remuneration Report participate. each meeting by invitation. The Chairman and Chief Executive take no part in the discussion concerning The purpose of this report is to inform members Directors’ Remuneration There are currently no formal service contracts their individual remuneration. about the policy for the remuneration of executive Executive Directors in existence for executive directors at the Society. and non-executive directors. This report also explains The employment of executive directors can be The Terms of Reference of the Remuneration The remuneration of executive directors is basic salary, terminated by either party giving one year’s notice Committee are published on the Society’s website. the extent to which the Society has complied with the an annual bonus (when payable), pension, death in provisions of the UK Corporate Governance Code with compensation for loss of office being 12 months service benefits, company car and private medical remuneration. 2014 relating to Remuneration, were it required to do insurance. so. The Society has adopted a Remuneration Policy Non-executive directors which describes how the Society has complied with Basic salaries are reviewed annually taking into the requirements of the Remuneration Code, as account the following: Remuneration of non-executive directors, excluding defined by the Regulator. the Chairman, is determined by the Chairman and • individual performance the executive directors taking account of the time, We are committed to best practice in corporate • salaries and incentives payable to executives in commitment and responsibility of the role and the governance and will ask members to vote, on an similar roles within building societies and levels remuneration and conditions for non-executive advisory basis, on the Directors’ Remuneration generally within the wider financial services directors at comparable societies and financial Report at the forthcoming Annual General Meeting. industry institutions. The level and composition of remuneration • the Society’s overall performance Non-executive directors do not participate in the Code Principle – Levels of remuneration should be Society’s Bonus Scheme or receive other benefits sufficient to attract, retain and motivate directors of or any pension entitlement. There are no service the quality required to run the company successfully, contracts in existence for non-executive directors of but a company should avoid paying more than the Society. necessary for this purpose. A significant proportion of executive directors remuneration should be structured so as to link rewards to corporate and individual performance. The Society’s policy is that remuneration of executive directors and senior managers should be comparable with that of similar organisations in the financial sector to attract, retain, and motivate individuals with the required skills and competence.

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Summary Directors’ Remuneration Report Other information (continued)

Directors’ remuneration (audited information) Pensions Each year brings some new changes, we wanted to give you a brief overview of these changes and Fees/ Variable and group life Total highlight how they could potentially affect you. 2016 Salary Remuneration Benefits contributions 2016 Non-executive £ £ £ £ £ R W Barlow Chairman 41,106 - - - 41,106 Why your money is safe with us? What happens if my savings rate changes? T T Brooke 22,611 - - - 22,611 • Compensation is currently available We will tell you about changes to the interest C Buchanan To 29 April 2016 7,499 - - - 7,499 on up to £85,000 for sole accounts rate paid on your account either: I J Bullock From 1 March 2016 18,871 - - - 18,871 and £170,000 for joint accounts. • with notices displayed in offices and A M Hope Senior Independent Director 22,611 - - - 22,611 • No investor in a building society has adverts in the press. lost any of their investment since M L Ibbs 22,611 - - - 22,611 records began and probably a long • by writing to tell you about your new rate time before that. (Source: BSA). (the period of notice we give you about C A Ritchie 22,611 - - - 22,611 rate changes will vary depending upon 2016 157,920 - - - 157,920 Your eligible deposits with Marsden Building the type of account you have). Society are protected up to a total of £85,000 alternatively, you can find out about Executive £ £ £ £ £ • by the Financial Services Compensation current interest rates by writing to us, by R M Pheasey Chief Executive 140,271 21,210 19,113 29,269 209,863 Scheme, the UK’s deposit protection scheme. calling us, or by visiting our website. Any deposits you hold above the £85,000 N Walker Finance Director and CRO 105,405 16,968 11,334 32,433 166,140 limit are not covered. Please visit 2016 245,676 38,178 30,447 61,702 376,003 www.fscs.org.uk for more information.

Pensions Fees/ Variable and group life Total contributions 2015 Salary Remuneration Benefits 2015 Non-executive £ £ £ £ £ What’s my ISA allowance this year? R W Barlow Chairman 40,600 - - - 40,600 • If you have a Cash ISA account you can make further subscriptions to your account from 6 April T T Brooke 22,330 - - - 22,330 2017. C Buchanan 22,330 - - - 22,330 • Under Inland Revenue regulations the maximum amount that can be subscribed in the tax year T J Fallon To 22 May 2015 9,240 - - - 9,240 2017/2018 is £20,000. A M Hope Senior Independent Director 22,330 - - - 22,330 Please remember that if you do make further subscriptions to your Cash ISA in the tax year 2017/2018 you may not subscribe to another Cash ISA in the same tax year. You can find out whether M L Ibbs 22,330 - - - 22,330 you subscribed to your Cash ISA in the current tax year by visiting your local branch or by contacting C A Ritchie 22,330 - - - 22,330 Member Services on 01282 440500*. 2015 161,490 - - - 161,490 Executive £ £ £ £ £ R M Pheasey Chief Executive 135,397 18,750 15,999 29,041 199,187 N Walker Finance Director and CRO 102,005 15,000 10,507 31,955 159,467 2015 237,402 33,750 26,506 60,996 358,654

Executive directors’ salaries are disclosed net of salary sacrificed under the scheme available to all staff, within which the executive directors’ participate. C A Ritchie Chairman of the Remuneration Committee 2 March 2017

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Marsden Building Society is a member of the Building Societies Association. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 206050. Principal Office, 6-20 Russell Street Nelson Lancashire BB9 7NJ. *Calls will be recorded and may be monitored. We act as an introducer for estate planning services to The Will Writing Company Limited. The Will Writing Company Limited (3616406) is authorised and regulated by the Solicitors Regulation Authority (SRA) in England and Wales as a licensed body (SRA number 626921). We act as an introducer and our funeral plans are provided by Dignity Pre Arrangement Limited. A company registered in England No. 1862158. VAT Registration No. 486 6081 14. Registered office: 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands B73 6AP. Telephone No: 0121 354 1557. Fax No: 0121 355 8081. We act as an introducer and our home insurance is underwritten by Royal & Sun Alliance Insurance PLC (RSA) (no93792). Registered in England and Wales at St Mark’s Court, Chart Way, Horsham, West Sussex RH12 1XL. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in the Financial Services Register under 202323. 112-17