Annual Review 2020 A Society dedicated to our Members Annual Review 2020 CHIEF EXECUTIVE SUMMARY “We’ve continued to prepare I signed off last year’s summary with the following words: “we’ve continued to prepare ourselves for a new decade and enhanced capability in our people, our financial security, ourselves for a new decade systems and processes and our customer proposition”. Little did I know at that point how and enhanced capability in our severely my claims would be tested by Covid-19, but I’m very pleased to report the Society people, our financial security, has remained safe, strong and operationally resilient in the most challenging of times. systems and processes and our Many of our more senior Members will no doubt have faced much tougher external environments before I was born, but the worldwide pandemic of 2020 was the most customer proposition”. challenging in my memory. My thoughts and condolences to our Members who lost loved ones during the last year. The first lockdown in March, over 12 months The other single biggest enabler in being able ago, meant we had to radically change to continuously offer a full range of services, operational processes to comply with the was the improved technology capacity and government instruction to only go to work capability. This was as a direct result of the if necessary. As a financial services provider investment we have made over the last two whose business activities assist the money years including IT infrastructure, employee supply, the Society was designated as an training and the addition of key personnel into “essential business”. We responded to the the technology team. This investment allowed challenge of government, the needs of our us to continue to service customer requests customers and the safety of our employees as effectively by homeworkers as office based by; reducing branch opening hours in all employees and to consequently improve many Steve Fletcher locations whilst keeping all six branches existing internal processes, forever. Chief Executive Officer accessible; creating safe branch employee “bubbles”; revising processes to make it Thanks largely to our people and technology, easier for customers to deal with us without after a difficult first half of the year which the need to visit branches; and asking all included two Bank of England base rate non-branch employees to work from home reductions, we were well placed to take wherever possible. advantage of a strong housing market in the second part of the year. We then followed As the year progressed, we continued to the strong lending performance by taking in review our processes and procedures in good levels of new deposits from existing and line with all subsequent changes to advice, new Members towards the end of the year, always prioritising adherence to government with new Fixed Rate Bonds and ISAs proving guidelines, the safety of our people and the very popular. As a result, we have managed to needs of our customers. grow our year on year deposit and mortgage balances by a very pleasing 15%. Our ability to continue operating was made possible by the flexibility, adaptability and Being at the heart of our communities is very commitment of our people who performed important to the Society. It was therefore with distinction in 2020. Like all businesses disappointing not to be able to further expand we had our share of positive Covid cases and the financial education programme in local necessary isolation periods but thankfully schools or to be as active with employee none of our colleagues were seriously ill. volunteering days, but hopefully as restrictions We also managed to keep all employees on ease during 2021 there will be more full pay throughout the year and although opportunities. However, we still managed to four employees were furloughed, they were deliver an outstanding Community Awards brought back into the Society and the event which showcased and rewarded many furlough money repaid. “local heroes”. The second “Vernon and 2 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 3 Annual Review 2020 CHIEF EXECUTIVE SUMMARY HIGHLIGHTS OF THE YEAR Imagine Radio Toy Appeal” was also a huge within all internal and external expectations, success at Christmas and something we’re for the long-term sustainability of the keen to keep supporting. The introduction of Society and its Members. The Common charitable budgets for all our branch teams Equity Tier 1 Capital ratio (CET1) stands at Mortgage highlights also proved very popular with colleagues, a very healthy 18.3% (20.7% in 2019) and allowing them to support local good causes. our Leverage Ratio is 6.5% (7.0% in 2019) In such a difficult year we felt it more reflecting the growth in the balance sheet. £74.5m important than ever to do everything we can, At the end of the year our liquidity remains no matter how small, to show support within strong at 19.7% compared to 20.1% in 2019, in new mortgage lending the communities we serve. providing adequate flexibility to take any Community and potential growth opportunities within our We were delighted for the second year risk appetite and remaining significantly Charity highlights running to be voted “Best Savings Provider” ahead of regulatory requirements. 15.1% Community Awards 14 at the British Banking Awards. We attempt Increase in mortgage charities - £10,500 to make it a hat-trick this year where we There’s no doubt the events of 2020 have lending from 2020 have once again been nominated, in addition changed the course of the 21st century Toy Appeal - £6,000 to a nomination for Best Regional Lender. in what has been described by world Nominated Charity COVID In customer survey feedback independently economists as a “one in three hundred” year. Helped 114 first time Relief Fund - £3,000 collated by Smart Money People, we Having been able to withstand the storm and buyers are proud to score five stars for savings, improve our position during such extreme Primary school kit sponsorship mortgages and insurance. The majority of external environmental circumstances, Helping 55 people build 4 local schools the feedback suggests we are continuing to demonstrates the underlying strength of the their own home £145 raised in calendar sales for live and breathe our brand values, Personal; organisation. We look forward to building 20 students chose our Buy for Authentic; Empowering, which is of great upon this strong foundation in 2021 and Stockport Mind Uni product importance to the Leadership Team. I offer my thanks to all colleagues and Members for their support throughout 2020. 65% of Members stayed with us Customer highlights 1495 Finalist for Best Specialist pieces of feedback collected in 2020 Mortgage Provider A customer experience score of 98.4% Despite the challenging year the Society managed to improve Profit Before Tax to As ever, we Over 6,000 Members signed up to our £891k, up from £613k in 2019. The profit Savings highlights regular newsletter was significantly assisted by good cost look forward control during the year, primarily through deferring recruitment whilst the market to serving all remain subdued, and an adjustment to 244 interest income of £220k in relation to our Members, new savings Members the measurement of loans and advances to customers under the effective interest contributing to method which offset the bad debt charge of £225k which was taken as an estimate of our Stockport £35.9m the impact of Covid on payment arrears. The growth in savings Net Interest Margin was 1.81% compared to communities and balances during 2020 1.72%, excluding the change in accounting adjustment. being an employer 1,642 savings accounts opened We continued to foster a healthy relationship with our Regulators during the year and of choice. Winner of Best Savings remain focused on managing the Society Provider 2020 4 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 5 Annual Review 2020 OUR APPRENTICES JOURNEY OUR APPRENTICES JOURNEY “How are you enjoying your roles at “What support did you receive at the At the Vernon we have a 97-year heritage as the Vernon so far”? Vernon, to make sure you were able to a well-known employer where we always put our people and Members first. Shaun meet your study requirements”? “I have really enjoyed my time so far at the Shaun As part of our growth strategy over the Vernon. I have learnt a huge amount up to this last few years’ we set up an Apprenticeship “I still managed to set aside the required point by working across the Operations Team amount of time I needed to complete my programme to invest in the talent of our and being involved in a multitude of projects apprenticeship work by clear and regular young people. So, we teamed up with which has enhanced my hunger to develop communication with my people leaders to Damar, a local training company who is a and progress in the Society. I feel that there organise my workload”. leading national provider of apprenticeships are many great opportunities for me here”. in business and professional sectors. Callum Callum “I have received comprehensive support In 2019 we endeavoured to find 2 suitable “I am enjoying my role a lot at Vernon due to from many different colleagues during candidates, and here’s our Apprentices the personal and empowering environment in my apprenticeship. Whether it be support journey so far… which I operate. The varied range of activities in understanding the structure of the and tasks I have been involved in has led to a apprenticeship or understanding the tasks”.