29/10/10 9:17 AM 9:17 29/10/10 noventis_envelope_print.indd 2 noventis_envelope_print.indd Larry Davey CIM Chief Executive Officer Box 1139 Gimli, Manitoba R0C 1B0 T 204 642 6454 F 204 642 6476 E [email protected] noventis_business_cards_print.indd 3 29/10/10 1:46 PM Box 428 Riverton, Manitoba R0C 2R0 R0C Manitoba Riverton, 428 Box Noventis Credit Union Credit Noventis blank Inside Mission Statement and Core Values. 2 Message from the Board. 3 Our People. 8 Products and Services. .9 Committed to our Communities. 10 Auditors Report. 12 Financial Statements. 13 2011 1 Mission Our Mission at Noventis Credit Union is to provide quality financial services and support for our members and communities. Core Values In achieving our Mission, we are guided by these Core Values and Principles: • Integrity: We pursue the highest standards of ethics and respect. We earn trust through our honest, open and transparent practices. • Excellence: We strive for superior performance, and consistently provide professional, innovative and quality service. • Accountability: We are accountable for our actions. We demonstrate responsive and innovative leadership to ensure the strength of our organization. • Cooperation: We work together in the spirit of teamwork, collaboration and cooperative principles. • Sustainability: We are committed to the long term well-being of our communities. 21 2011 Board of Directors Report ANNUAL REPORT The melding of four credit unions into one new entity is an extensive endeavor. This first year of operation of Noventis Credit Union has been a productive one, for both the directors and the employees. Each of the four legacy Credit Unions had very strong brand loyalty in their respective communities. It is our challenge to build that same loyalty within the membership of Noventis Credit Union. To aid in accomplishing this, we drafted a Mission Statement and a set of Core Values that provides direction for the new organization to adhere to. Our Mission Statement is: Our Mission at Noventis Credit Union is to provide quality financial services and support for our members and communities. Our Core Values are: Integrity: We pursue the highest standards of ethics and respect. We earn trust through our honest, open, and transparent practices. Excellence: We strive for superior performance and consistently provide professional, innovative, and quality service. Accountability: We are accountable for our actions. We demonstrate responsive and innovative leadership to ensure the strength of our organization. Cooperation: We work together in the spirit of teamwork, collaboration, and cooperative principles. Sustainability: We are committed to the long-term well being of our communities. Reflecting on these statements, we developed a corporate social responsibility (CSR) policy. The five top priorities that we identified were: 1. Develop a CSR strategy that formalizes Noventis Credit Union’s CSR commitments as part of the overall Business Strategic Plan. 2. To continually educate Noventis Credit Union’s members and other community members on our ongoing CSR initiatives and business practices. 3. NCU wishes to be an “employer of choice” in our communities. 4. NCU will be identified as a leader in community support and development. 5. Develop Noventis Credit Union’s equity position strategy. This last point is explained in more detail further in the report under redemption of shares. Business This past year has been a tumultuous year in the financial markets across the globe, with not only financial institution failures, but also some countries teetering on the brink of insolvency looking for bailouts from the International Monetary Fund. Although Canada’s financial situation is stable, this global instability plays on the human psyche to save more and be more cautious in risk taking. continued next page 3 Board of Directors Report (continued) Contrary to the global market, the first year of operation for Noventis has been a successful one. Asset growth for Noventis in this first year of operation was just under 8% which was slightly lower then the rest of the Manitoba Credit Union system, which grew over 10%. Demand for loans decreased this year with loan growth at 6.32%, which lowered the percentage of assets lent out from 81.69% at the beginning of the year to 80.44% at year-end. This same scenario of lower loan growth is being faced by most of the rural Credit Unions in Manitoba. The Ashern branch was previously housed in a rented building. The operation had out grown that location, and this year saw new construction, which is double the size from the previous location with 5,060-sq. ft. of workspace. The new branch, which includes a drive through and walk up ATM, will provide an efficient and modern facility to serve the Ashern area members into the future. The new facility cost $2.2 million and demonstrates our commitment to the community. This year, the board declared a patronage refund of $247,520 based on service charges paid by members as outlined in note 12 of the annual report. This refund will be used to purchase additional member surplus shares. Banking System The financial service industry continues to change at a rapid rate and as we grow and strive to be your financial institution of choice, we attempt to keep pace with technological changes, and at the same time keep the costs in line for you, the members. This is not always an easy task, but we do our best to find a balance between your needs and your costs for those services. One of the decisions we had to make this year in that regard was to choose a common banking system. A committee was struck, and given the task to study the options and make a recommendation to the board. After much deliberation, the decision was made to employ the Infonancial banking platform. This led to the process of converting first the Riverton and Arborg branches during the summer, and lastly Eriskdale’s branches in the fall. This was an immense task and the board would very much like to thank the management and staff for all the extra effort they provided to complete the conversion. There are always some complications and issues with every banking system conversion and this instance were no exception. We ask our members for their understanding and to be patient while the problems encountered during the conversion process are corrected. The board is confident that selecting Infonancial for our banking platform was the right choice, and that it will translate to very significant monetary advantages for Noventis in the years ahead. Share Redemption One of the primary responsibilities of the board is to ensure that the Credit Union remains viable. In doing so, we must assess potential risk exposure that the Credit Union could encounter. One of those risk management strategies is to maintain adequate capital to ensure the stability of the Credit Union. The minimum requirement by law is 5% of assets. The legacy Credit Unions all had an equity base above the legal requirement, composed of a mixture of retained earnings and member’s shares. The new board policy on equity is that Noventis will maintain a minimum equity level of 5.875% of assets. The plan is to repay the members’ portion of share capital over the next five to seven years and replace that equity 4 2011 Board of Directors Report (continued) ANNUAL REPORT portion with revenue from retained earnings. This policy is keeping in line with the recommendations that are being prescribed by the new global standard for capital requirement, (Basel III), which suggests that equity held from retained earning is the preferred form of capital retention. After the member share capital has been redeemed, all further allocation for patronage dividends will be paid in cash to the members. To adhere to this policy, with year-end assets of $460.5 million, we must maintain $27.05 million in retained earnings to sustain the 5.875% equity level. This year, we are paying out $384,000 from surplus shares to estates, members over 65, and those who have moved out of the province. We are also paying out an additional $662,000 of surplus shares in cash, back to members. As a result, Noventis Credit Union will have paid out a total of $1,046,000, in cash, back to members in the first year of operations. Community Involvement As a board, we believe that Noventis Credit Union has responsibilities to the community that extends beyond the goal of providing excellent financial services at a reasonable cost to our members. One of the Noventis Credit Union CSR priorities is to be identified as a leader in community support and development. Over the last year, we have donated financial support to 159 organizations for a total amount of $138,000. NCU awards bursaries to members from our regions that are continuing their education after high school graduation. This year, there were $500 bursaries given to 14 students, for the total of $7,000. The bursary recipients this year were: Taylor Sigurdson and Kiah Stoyanowski from Arborg, Bradey Collins and Megan Johnson from Riverton, Kaly Devlin, Cole Torfason, Tabby Luprypa and Sarah Husluk from Gimli/ Winnipeg Beach, Kelsey Sigfusson and Michelle Paulson from Ashern, Erica Jobling and Jade Parkes from Lundar, Quinn Vandersteen and Lindsay Imlah from Fisher Branch. This year’s community donations have increased approximately 30% compared to what was given by the four legacy Credit Unions in the previous year. Wealth Management Wealth management is a service that members of the legacy Credit Unions have been asking about for many years, but the individual Credit Unions were not of sufficient size to employ a wealth management person on their own.