Board of Director’s Report

Rick Hoevenaars

In 2017, Central 1’s Board and leadership made the bold decision to become the national partner of choice for financial, digital banking and payment solutions, supporting clients and members, and ultimately benefitting the financial well-being of consumers.

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We realize that the word ‘choice’ is key: with this vision comes an obligation to create a clear focus on our clients, their needs, and the products and services that will help them to succeed. We also realize that our clients aren’t a one-size-fits-all entity; Central 1 has an obligation to understand the diverse and specific needs of those we serve.

To become the partner of choice requires trust and a reputation for flawless execution. Establishing the Transformation Office in 2017 focused keen attention on gaps in our delivery to clients and members; we consulted with stakeholders to understand their expectations, and how we can best evolve to provide the leadership needed to support their success.

In 2017, Central 1 continued to build on the engagement process started in 2016 about the desired future of the second tier of the Canadian credit union system, focusing specifically on our response to the CEO Payments Strategy proposal on Payco, and continued to have robust discussions with our membership to determine a payments structure to best benefit the credit union system.

Ultimately, we made the difficult but correct decision that Central 1 can create a successful national payments, financial and digital banking entity that supports the desire of Canadian financial institutions for agility, competitiveness and sustainability.

Our internal analysis and external consultation also confirmed the challenges of the current environment, the needs of our clients and the opportunities the future presents, and importantly helped inform our 2018 to 2020 Strategic Plan.

Central 1 has identified three strategic priorities that represent the high-level goals that are necessary to achieve our vision:

  • Client Centricity
  • Operational Excellence
  • System Leadership

An early outcome of Transformation Office that supports our first strategic pillar is the establishment of Product Advisory Council, and we’ll continue to invest time and attention in understanding the diverse range of our clients, and how to best deliver on their needs; we have committed to delivering what our members and clients have said they want and need, and this is what we will do.

System leadership – will be doing more work in the organization around the ‘landing zone’ for the organization in the next five to 7 years

While we recognize that the credit union system is under significant pressure and faces significant competition from other financial institutions and disruptors, we also recognize that there are opportunities to gain share of business, wallet and untapped margins. We have an opportunity to help credit unions take advantage of the opportunities to become more robust. I believe I speak on behalf of the both the Central 1 Board and leadership when I say we are excited about these opportunities.

2017 was a year of great change, and the Board would like to commend Don Wright and Marilyn Mauritz, along with the Central 1 staff for their continued dedication and hard work, along with serious self-evaluation, towards the goal of greater credit union success.

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President & CEO Message

Mark Blucher

Having joined Central 1 in January, I find myself in the interesting position of commenting on a year whose experiences, accomplishments, and challenges and disappointments have informed my leadership of the company going forward.

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In my first months at Central 1, I have spent a great deal of time speaking with our members, our clients, our employees and our partners to better understand how we can deliver on our commitments to providing key support, and developing innovative products and programs to keep our members competitive.

In 2017, Central 1 set some bold goals for ourselves, including becoming the national partner of choice for financial, digital banking and payment solutions in 2017, with a focus on the needs of its clients and members.

This led to a process of transforming our culture to increase and improve our focus on client service. In 2018, we look forward to refining the priorities of our strategic plan, creating client-centred solutions, operational excellence and system leadership through engagement, innovation and partnership in order to benefit all Canadian credit unions.

Central 1 committed in 2017 to building best-in-class solutions, leveraging consultation and engagement with clients. The cultural and organizational transformation initiated in 2017 continues to accelerate our development of market-competitive products and solutions designed to meet the long-term needs of credit unions and other clients across Canada.

As 2018 progresses, we look forward to seeing increased satisfaction from our members, and see return on the key investments made in order to offer innovative, affordable products and services, and invested in the means to deliver these most effectively and transparently to our clients.

I want to thank Don Wright, previous Central 1 CEO, and Marilyn Mauritz, who acted as interim CEO, for their efforts during 2017. During a year of much change, they led the organization through both challenges and success, and positioned Central 1 to make a real, positive difference in how we show up and deliver.

We look forward to demonstrating our values of courage, collaboration and curiosity in our efforts to execute flawlessly for our members in 2018, and look forward to your continued feedback, input and participation in our network as we move forward.

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2017 Financial Highlights

Central 1 enjoyed overall strong results for the year. Total assets were $18.1 billion, up $0.8 billion from 2016. Central 1’s total equity increased $34.2 million during 2017 to $1,119.1 million. The increase in share capital in the Mandatory Liquidity Pool (MLP) and the earnings retained by Central 1’s other business lines account for most of the increase in equity year-over-year. Return on average equity (ROE) decreased in 2017. Net financial income was $73.4 million, compared to $67.5 million. Interest margin increased $5.6 million to $53.2 million, compared to the prior year. As a wholesale provider of services to its members and clients, Central 1 prices many of its services on a cost-recovery basis, rather than at levels that would enhance profit and improve ROE. Profit was $48.6 million, down $8.4 million compared to the prior year.