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Annual Report

73rd Annual General Meeting Monday, March 7, 2016

Vermilion Regional Centre, Vermilion, Alberta

Registration – 6:30 p.m. Business Meeting – 7:00 p.m.

Refreshments & Snacks to Follow

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2015 Annual Report at the 73rd Annual Meeting

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Table of Contents

Notice of Meeting Page 1

Mission Statement/Values/Vision Page 1

Table of Contents Page 2

Annual Meeting Agenda Page 2

Community Involvement & Support Page 3-7

New Products Page 8

Board of Directors Page 9

Employee Service Awards Page 10

Management and Staff Page 11

72nd Annual Meeting Minutes March 2, 2015

Page 12-16

Board Chair’s Message to Membership

Page 17

Operations Report to Membership Page 18

Financial Summary Page 19

Nominating Committee Page 20

Audit & Finance Committee Report Page 21

Credit Committee Page 22

Community Sponsorship Page 23-24

Resolution #1 Page 25

Financial Statements Page 26-33

Agenda Registration: 6:30 p.m.

Program: 7:00 p.m.

Welcome

Introduction of Guests, Officers and Head Table

Staff Long Term Service Awards

Quorum

Call to Order

Approval of Agenda

Presentation of Minutes of the 72nd

Annual General Meeting

Business Arising from the Minutes

Operations Report to the Membership

Nominating Committee Report

Audit and Finance Committee Report

Credit Committee Report

Community Sponsorship

Resolution #1

Auditor’s Report and Financial Statement

New Business

Adjournment

Refreshments & Snacks

To Commemorate our

We contributed $1,000.00 each to 15 organizations within our Community. Thank you to our Corporate and Prize Sponsors, our

Volunteers, Staff and Golfers for their generous support and dedication.

Baking Robots Mannville/Vermilion Highland Dance Clandonald Parent Advisory (Hot Lunch Program) St. Jerome’s Breakfast Program Innisfree Ukrainian Dancers Vermilion 4-H Horse Club Islay Health Centre Auxiliary Society Vermilion Minor Ball Mannville 4-H Clubs Vermilion Nordic Ski Club Mannville Care Centre Vermilion Play Development Mannville Community Fitness Centre Vermilion Soccer Association Mannville Historical Society

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Fat Cat Certificate Recipients of a $100 bill - 2 students, chosen by their school for excellent

participation in the Accelerated Reading Program

Alexis Garnier was the lucky winner of both $100 draws

Clandonald School

Neil Wiebe & Jordan Mitchell of Mannville School

Daniel Sawkew & Jillayne Needham St. Jerome’s Separate School

Teyha Gould & ZiQi Shang Vermilion Elementary School

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Our Bulletin Board of Thank You’s Community Support & Involvement

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Our Community Support/Staff Involvement

Vermilion Fair Parade The Baking Robots

Anti-Bullying

Meals on Wheels Lakeland College Awards

Hot Lunch Programs

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Anti -Bullying

Community Involvement/Fun Stuff/Staff Participation

Minburn Innisfree 4-H Show& Sale

Mannville Kindergarten Tour

Clandonald Fair Canada Day Celebrations

Mannville School Accelerated Reading Celebration

Mannville Historical Society Pancake Breakfast

Santas Anonymous Board, Staff, and VCU Donation $1,690

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Exciting New Products

Deposit Anywhere

New Member Cards

Mobile App

It’s here... Our new

MemberCard debit card with Chip, and INTERACƗ Flash

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Our Board of Directors

Left to Right: Devon Whitten - Vice Chair, TJ Hinton, Maxine Sweeney, Willow Jaremco, Ryan Gibson, Sonia Matichuk, Larry Bingham - Chair, Charlene McFarlane, Wayne Wright

The Board of Directors of Vermilion Credit Union Limited were pleased to announce the distribution of $424,375 in common share dividends and patronage rebates from 2015 profits. Our Credit Union has returned over 4 Million Dollars since the

program inception year of 1999

Employee Service Awards

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10 Years 15 Years

Gail Ruttan

20 Years – Connie Wilkinson

25 Years – Laura Tyner

Brenda Jackson Alta

Matters

Dorie Jackson Janice

Mulgrew

Vermilion Credit Union Ltd. Management & Staff

Management David Eremko Chief Executive Officer Laura Tyner Manager Lending Services Trina Fisher Manager of Operations Mike Myhovich Mannville Branch Manager Roselyn Sikora Manager Finance and Control Brenda Jackson Assistant Manager Lending Services Lyle Worobec Manager Financial Planning

Vermilion Branch Staff Darlene Balash Account Officer Erinn Baldwin Member Service Officer - Casual Carrie Barlow Deposit Administrative Clerk Laurie Barlow Accounting & Finance Admin Officer Skyler Brown Junior Account Manager Wanda Evans Investment Officer Christa Grocock Member Service Supervisor Mitzi Isley Loan Admin Clerk - Security Dorie Jackson Receptionist Jodi Jones Account Manager Alta Matters Loan Admin Clerk - Audit Alysha McNicol Member Service Officer/Investments Janice Mulgrew Marketing Coordinator Elaine Poliakiwski Member Service Officer - Job Share Corrine Rehmann Account Officer Louella Schneider Member Service Officer - Job Share Bailey Snelgrove Investment Officer Tammy Snelgrove Loan Admin Clerk - Documentation Ashton Stuparyk Member Service Officer Carol Therrien Member Service Officer - Casual Makinley Weber Member Service Officer Tanya Westling Member Service Officer Connie Wilkinson Finance Admin/Investments

Mannville Branch Staff

Dawn Jackson Senior Member Service Officer Rebecca Hochhausen Member Service Officer Gail Ruttan Member Service Officer - Casual Holly Staden Member Service Officer - Casual

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Minutes of the 72 ND Annual Meeting

Welcome: Devon Whitten introduced himself and welcomed everyone to the7 2nd Annual Meeting . Introduction of Guests: Devon Whitten requ ested that the guests stand for introduction s . Sean Lesy, Chief Investment Officer Alberta Central Alison Starke, Board Chair Alberta Central Wilmer Rempel, Manager, Regulation and Credit Risk Assessment CUDGC Mickey Mikkelson, Account Executive CRI Canada Dr. Richard Starke, MLA Vermilion - Lloydminster Jim Jackso n, Councilor Village of Mannville Steve Friend, CEO Vision Credit Union Bruce Weinkauf, Sr. VP Operations Vision Credit Union Garth Bradley, VP of Credit Lakeland Credit Union Shirley Mayowski , VP of Finance Lakeland Credit Un ion J udy Cabay, Board Vice Chair Lakeland Credit Union Joe Mohan, Sr. VP Operations Vision Credit Union Ray Styranka, VP Credit Wainwright Credit Union Amy Gertsma, VP Information Services Wainwright Credit Union Introduction of Officers: Devon Whitten introduced the head table and the Board of Directors . Introduction of Staff: David Eremko, CEO introduced the Management and Staff and had them stand as a group. Presentations to the Staff: - David Eremko Christa Grocock – 5 Years Mike Myhovich – 10 Years Mitzi Isley – 5 Years Carol Th errien – 10 Years (was unable to attend) Nicole Warman – 5 Years Lyle Worobec – 10 Years Brian Hodgson – 30 Years Quorum Report: - Larry Bingham Larry Bingham reported 57 members and 14 guests in attendance which represents a quorum. He then ca l led the meeting to order at 7:10 p.m.

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Approval of Agenda: Larry Bingham moved for the Agenda to be accepted as presented. Seconded by Brian Hodgson. All in Favor. Carried. Presentation of Minutes from 71st Annual Meeting: David Eremko moved to adopt the minutes as presented. Gail Ruttan seconded. All in Favor. Carried. Business Arising from the Minutes: There was no business arising from the minutes. Operational Reports: Larry Bingham, Chairman of the Board Larry Bingham, Chairman of the Board, referred to his report and described the challenge of the low interest rate environment and how our Credit Union adapted with another successful year. Larry Bingham highlighted areas, such as the renewed demand in the Loan Portfolio, Net Income showing a 20% increase over the previous year, and the return of $378,885 to the membership in common share and dividend payouts. Larry reported that the Board of Directors continues to place strong emphasis on training and he was pleased to report that the present Board average age is lower than before, which he finds encouraging, going forth into future years of the Credit Union. Larry Bingham said that the Strategic Planning Session, held yearly, is attended both by Directors and the management team and provides a great opportunity to look back at the past, welcome change in the future and to define what the long term goals and vision of the Credit Union will be. Larry reported a welcome change to the Strategic Planning Session by having a Facilitator conduct the session and therefore providing more insights for all in attendance. In closing, Larry Bingham thanked the management team and staff for controlling expenses and providing a secure loan portfolio. David Eremko, CEO David Eremko, CEO thanked everyone for venturing out and braving the cold to share their evening with us and continued by thanking the members for their continued support and endorsement of our Credit Union. While referring to his report, David said that Asset Growth, Deposits, Income before Allocations and Taxes, Net Income, Capital and Retained earnings all improved from last year; reflecting positive growth. David indicated that we have had consistent member growth with good advancement in our youth membership, which bodes well for our Credit Union in the years ahead. David then reported that our credit union is focused on technology with the addition of two ATM’s, Fraud Detection software, improved banking forms, as well as the fact that we are presently working on obtaining a mobile banking app and a Remote Deposit Capture service.

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David commented on the general negative tone of our economy with regard to the oil industry and said that we will continue to promote the safeguarding of the membership. In closing, David thanked everyone for coming, thanked the management, staff and directors. David Eremko moved the Operational Reports for acceptance. The Operational Reports were seconded by Michael Myhovich. All in favor. Carried. Nominating Committee Report: Devon Whitten, Chair of the Nominating Committee, stated that each year there are three Directors whose terms expire and named these Directors as Larry Bingham, Sonia Matichuk, and Maxine Sweeney. Devon reported that the call for nominations notice was published in the Vermilion Standard, Vermilion Voice as well as posted in branch and on the website. There were no new nominees, however; Larry, Sonia and Maxine graciously agreed to complete another term and therefore; were elected by acclamation. In closing, Devon Whitten thanked and was grateful to Larry Bingham, Sonia Matichuk and Maxine Sweeney for allowing their names to stand. Devon Whitten moved that the Nominating Committee Report be accepted. Dorie Jackson seconded the motion. All in Favor. Carried. Audit and Finance Committee Report: Willow Jaremco, Audit and Finance Committee, presented the report on behalf of Sonia Matichuk, who is the Chair of the Committee. Willow reported that the Audit and Finance Committee met independent of the CEO and management, with Credit Union Central of Alberta and Hawkings Epp Dumont to discuss and review the audit process after each audit. Both Credit Union Central and Hawkings Epp Dumont were able to provide position feedback and a clean opinion. In closing, Willow thanked the management and staff for their efforts in producing great audit results. Willow Jaremco moved the report for acceptance. Seconded by Wayne Wright. All in Favor. Carried. Credit Committee Report: Brian Hodgson, Manager Lending Services, confirmed the members of the Credit Committee as being, David Eremko, Brenda Jackson, Michael Myhovich, Roselyn Sikora, Laura Tyner and himself. Brian provided information as he presented statistics for the Lending Department and highlighted that all areas of lending show an increase, with a very low delinquency rate of .09% , representing a dollar value of $113,000. Brian Hodgson moved that the Credit Committee Report be accepted. Lyle Worobec seconded the motion. All in Favor. Carried.

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Community Sponsorship: While referring to the PowerPoint presentation, David Eremko said that Vermilion Credit Union has donated over $35,000 to various organizations in our surrounding communities and that the staff worked over 1000 volunteer hours during the past year. David Eremko said that our participation in the Fat Cat Accelerated Reading Program within our 4 local schools continues to be of major importance. David went on to say that this program is an annual commitment and the Credit Union donated $6,545 in 2014 which allows schools to purchase reading material for the students, encouraging them to read. David added that we held our 14th Annual Charity Golf Tournament; with the beneficiaries being Innisfree Public Library, Mannville Centennial Library and the Vermilion Public Library each being awarded $3,500. David was appreciative of the tremendous support from the sponsorship, from golfers, those who participated, plus the efforts of staff and volunteers for this very worthwhile event. Auditors’ Report and Financial Statement: Michael Epp, CA of Hawkings Epp Dumont began his presentation speaking of the current state of affairs within Alberta and said that his firm works with Credit Unions throughout the Province, including cities and rural towns. Michael stated that it’s hard to even read the news as our Alberta, once having endless opportunities, is now going through tough times. He continued in saying that the positive side after the 50% tumble since June of 2014, the predicted mild recession of 2015 and with home sales down, that the “East”, being Ontario and Manitoba are now beginning to prosper. However; with the inventory decline, the demand is positive and the markets are calm, believing that we are “Suffering temporary pain for long term gain”. Michael continued by giving account of an Alberta family man’s struggle who had just been laid off from his position within the oilfield, who told him that he is curbing spending and concentrating just on the survival of his family. Michael then added that this man could be the spouse of an employee or a member of Vermilion Credit Union and we need to stand by both, which is why the Credit Union involvement in their community, plus their local decision making, has such a huge impact on the people who live within. Michael said that Trevor Dodd has recently became a partner in the company and has played a role in the audit service at Vermilion Credit Union and then thanked Roselyn Sikora, Manager of Finance, Brian Hodgson, Manager of Lending, David Eremko, CEO and all staff for their assistance and sound practices. Michael, then “shed light on the numbers” while referring to his PowerPoint presentation by beginning with Assets, Loans to Members, Member Deposits, Financial Margin Trend, Other Income, Operating Expenses Trend, Operating Expenses as a percentage of Assets, Net Income before Patronage allocation and Income Tax, Patronage & Dividends and ended with Member’s Equity and accentuated on how well managed the expenses of this Credit Union are. In closing, Michael congratulated the Vermilion Credit Union on a successful and respectable year with a clean audit and said that we all must forge ahead, rein in our expenses and adjust to the life style for our new journey and wished all the best for 2015.

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Devon Whitten moved for the Approval of the Auditors’ Report and Elaine Poliakiwski seconded the Auditors’ Report. All in Favor. Carried. New Business: Devon Whitten asked if there was any new business arising and there was none. Thank You’s – David Eremko thanked all presenters and guests for attending, the caterer, the long term staff for their commitment and the management and staff for setting up for the AGM. David then explained the door prize procedure and thanked Celero, CRI Canada and Hawkings Epp Dumont for their door prize donations. Adjournment: Devon Whitten adjourned the Annual General Meeting at 7:45 p.m.

Board Chair’s Message to the Membership

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The on - going low interest rate environment continues to present our institution with challenges. The management and staff of our Credit Union have dealt with this business environment very successfully. The Verm ilion Credit Union achieved excellent results during the past year of operations. The downturn in our local economy beginning in 2015 was evident in a somewhat lower rate of increase in member deposits. Fortunately the slower growth on the deposit side of the business was offset by increased growth in loan demand. Loans increased by more than 5% over the course of the fiscal year. Operating expenses rose by 3% compared to the previous ye ar. Revenues grew sufficiently to offset the rising expenses. Net i ncome increased by approximately $17,000, in spite of the fact that the dividend from Credit Union Central was approximately 26% lower than the previous year. The Credit Union returned more than $424,000 to its members in the form of patronage rebates and dividends on common shares. That is a very significant contribution to the local economy, and is in accordance with our long standing policy guidelines in this area. During the past year, the Boa rd of Directors continued our emphasis on director training as a way of increasing our effectiveness in fulfilling our duties. All of our current directors have met the training standards outlined in our policy. We have an energetic and engaged group of Directors who take an active role in formulating the strategic direction of our Credit Union. I find this to be a very encouraging prospect for this Credit Union as we move forward. In June of 2015, Directors and Management participated in our annual strategic planning session. This enabled us to ident ify both the challenges and the opportunities the Vermilion Credit Union faces. The facilitated workshop was a very positive experience for the Board and Management Team, and we int end to build on the goals identified during the planning session. T he continued depressi on in the energy sector is of concern to us, but we feel that the balanced nature of our Credit Union’s business will help mitigate potential negative effects. The agricultural, commercial, and consumer sectors of our business provide the necessary balance . We continue to appreciate the ability of our manage ment team in managing operating expenses, achieving a commendable net income, and in maintaining a very secure loan portfolio. We would also like to thank our members for their continued support and par ticipation in our Credit Union. Respectfully submitted, Larry Bingham Chairman of the Board of Directors

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Operations Report to the Membership

Thank you to our membership and communities for your continued support and commitment to a better banking alternative that remains focused on providing community based financial services. The last number of months have been challenging for our members and community as the effects of a province wide economic slowdown have taken its toll both financially and personally. We admire the resiliency of our membership as they continue to weather this uncertain and troubling time in our lives. Profitability continued with net income of $1,033,985, a slight increase from the previous year end. Revenues, while up over the fiscal 2014, experienced pressure due to the continued downward movement of interest rates. Expenses were also up over 2014 but were below budget in all areas. This reflects the continued care and attention of the management team and staff to ensure sound and prudent financial management throughout the year. Capital and retained earnings increased to $15,592,701, which meets all provincial regulatory levels for capital and provides continued evidence of strength and security for our membership. The enclosed financial statement will provide further insight into the overall balance sheet and financial results generated by your credit union in the past year. Your credit union continues to focus on adopting technology that will improve the overall member experience, safety and convenience for all of our members. New product offerings saw tap enabled member debit cards, our new mobile banking app for smartphones, as well as remote deposit capture. Our board of directors, continue to provide sound judgment and guidance throughout the year. This is accomplished through ongoing strategic planning, board mandated training and a continued focus on the overall risk profile and of the credit union. To insure accountability and oversight by independent professional bodies, external audits are completed quarterly by Alberta Central and Hawkings Epp Dumont LLP. Thank you to our valued staff whose dedication and efforts have resulted in a positive and successful year for your Vermilion Credit Union. David Eremko Chief Executive Officer

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$-

$100,000

$200,000

$300,000

$400,000

$500,000

2010 2011 2012 2013 2014 2015

Patronage/Dividend Payments to Our Members

PatronageDividends

$- $200 $400 $600 $800

$1,000 $1,200

2010 2011 2012 2013 2014 2015

Thousands

Net Income

Net Income

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

2010 2011 2012 2013 2014 2015

Deposits

Deposits

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

2010 2011 2012 2013 2014 2015

Assets

Assets

$- $200,000 $400,000 $600,000 $800,000

$1,000,000 $1,200,000 $1,400,000

2010 2011 2012 2013 2014 2015

Income before Allocations and Taxes

Income beforeAllocations

$- $2,000,000 $4,000,000 $6,000,000 $8,000,000

$10,000,000 $12,000,000 $14,000,000

2010 2011 2012 2013 2014 2015

Capital and Retained Earnings

RetainedEarningsCommonShares

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Nominating Committee Report

The Vermilion Credit Union Limited Board of Directors is made up of 9 individuals that represent the body of members. Each year the term of 3 Directors expire. This year the terms of Maxine Sweeney, Devon Whitten and Wayne Wright expire. A call for nominations from the membership at large was published in the Vermilion Standard and the Vermilion Voice as well as in both the Vermilion and Mannville branches. As a result of these notices and the work of the Nominating Committee, a list of candidates for the Board of Directors was presented to the membership for consideration. In-branch balloting was then conducted from Feb 11, 2016 to Mar 3, 2016. The results of this election will be revealed during the Annual General Meeting on March 7, 2016 Maxine Sweeney has decided to step down from her position as Director after the completion of three terms. The Nominating Committee would like to express our appreciation to Toland Cochrane, Kellen Snelgrove, Devon Whitten, Patrick Willis and Wayne Wright for allowing their names to stand for election. We look forward to working with the successful candidates in the future. Respectfully submitted, Ryan Gibson Chair of the Nominating Committee

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Audit and Finance Committee Report

During the past year, the Vermilion Credit Union Audit and Finance Committee consisted of Ryan Gibson, Willow Jaremco, Wayne Wright and myself, Sonia Matichuk. The Audit and Finance Committee met on four separate occasions to complete the tasks and responsibilities assigned to it by the board. The committee also reviewed Quarterly Financial Reports prepared by management prior to the board to ensure industry and Vermilion Credit Union benchmarks and goals are being met. On behalf of the board of directors, Credit Union Central of Alberta was engaged to complete Internal Audits for the first 3 quarters of the fiscal year, January, April and July. Hawkings Epp Dumont, the Credit Union’s external auditor, completed the Fourth Quarter Audit and the year-end Financial Statement as of October 31, 2015. The Audit and Finance Committee reviewed all audit reports along with management’s responses and were satisfied with the integrity of systems and controls, which are supported by all external bodies. Meetings were held independent of the CEO and management with Credit Union Central to discuss and review the audit process after each audit. Discussion was held throughout the year on the work of the Enterprise Risk Management committee as well as the credit union’s progress towards complying with the new capital requirements, which our credit union has fully met. On behalf of the Audit and Finance Committee, we thank the staff and management for all their efforts during this past year. The audit reports received are a result of their hard work and attention to following policies and procedures. Thank you to my fellow committee members, Board of Directors, management and staff. Respectfully submitted Sonia J. Matichuk Chair of the Audit & Finance Committee

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As of October 31, 2015 the loan portfolio was $131,523,309, an increase of $6,722,005 or 5.39% from the last fiscal year end.

The overall increase in the portfolio is attributed to our residential mortgages and agricultural portfolios. Loan delinquency as of October 31, 2015 was at .01% of the total loans and authorized overdrafts, which were delinquent in excess of 60 days. This represents a total dollar value of $7,127.

$14,601,248 11%

$57,153,124 44%$26,320,215

20%

$32,953,713 25%

Loan Portfolio Breakdown Oct 31/2015

Consumer

Residential Mortgages

Commercial

Agricultural

Credit Committee Report

$-

$50

$100

$150

2010 2011 2012 2013 2014 2015

Millions

Member Loans

Loans

Respe ctfully Submitted Laura Tyner Manager, Lending Services

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Charity Golf Tournament Recipients Baking Robots Mannville/Vermilion Highland Dance Clandonald Parent Advisory (Hot Lunch Program) St. Jerome’s Breakfast Program Innisfree Ukrainian Dancers Vermilion 4-H Horse Club Islay Health Centre Auxiliary Society Vermilion Minor Ball Mannville 4-H Clubs Vermilion Nordic Ski Club Mannville Care Centre Vermilion Play Development Mannville Community Fitness Centre Vermilion Soccer Association Mannville Historical Society

Sports Islay Curling Club Derwent Curling Club Mannville Curling Club Mannville Minor Hockey Mannville Riverview Golf and Recreation Society St Jerome’s School Carnival Vermilion Curling Club Vermilion Farm Curl Vermilion Golf Club Vermilion Jr. Curling Bonspiel

Vermilion Junior B Tigers Vermilion Lacrosse Vermilion Lions Club Charity Golf Tournament Vermilion Minor Hockey Vermilion Rotary Golf Tournament Vermilion Skating Club Vermilion Soccer Association

Educational Brighter Beginnings Clandonald School Awards Clandonald School Fat Cat Accelerated Reading Program Innisfree Delnorte School Awards J.R. Robson School Awards J.R. Robson Senior High School Awards Kiddie Oasis Lakeland College Awards

Mannville School Awards Mannville School Fat Cat Accelerated Reading Program St. Jerome’s School Awards St. Jerome’s School Carnival St. Jerome’s School Fat Cat Accelerated Reading Program The Baking Robots Vermilion Elementary School Fat Cat Accelerated Reading Program

Our staff, management and directors take pride in the commitment Vermilion Credit Union gives to our community. During the 2015 fiscal year, donations were made to a number of organizations, clubs and groups in the Vermilion and surrounding area. We contributed over $42,000 through community sponsorship, donations, and event participation. Major recipients of financial contributions were the Vermilion, Mannville, Clandonald, and St. Jerome’s Elementary Schools in the amount of $6,665 for the Fat Cat Accelerated Program. One other major recipient was the 4-H Beef purchase in the amount of $1,975. This year was our 15th anniversary of our Annual Charity Golf Tournament. We were pleased to have raised $15,000 and 15 local organizations were recipients of $1,000 each. We are proud that our staff, for the 2015 fiscal year, volunteered in excess of 750 hours to sports teams, school events, and various other organizations within our communities.

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Arts

Vermilion Music Festival Vermilion Ukrainian Cultural Association Vermilion Ukrainian Dance Association Vermilion Dance Festival

Clubs Clandonald Ag Society (Hay Clandonald) Lakeland Agility Club Lakeland Runaway Vermilion Army Cadets Vermilion Golf and Country Club

Vermilion Rotary Club Vermilion 4-H Sheep Club Vermilion 4-H Beef Club

Events Alberta Professional Chuck wagon & Chariot Association Border Cowboys Mounted Shooters Candy Cane Count Down Courage Canada Trail Ride Farm Curl

Home Expo Mannville Canada Days Vermilion Multiculturalism & Canada Days Women’s Conference

Service Groups /Associations Etc. Auberndale Community Centre Citizens on Patrol Communities in Bloom Creighton Women’s Institute Derwent Ag Society Mannville Ag Society Mannville Chamber of Commerce Mannville Cops Society Mannville Fair Group Mannville Feeder Association Mannville Health Care Centre Mannville Welcome Wagon

Pathfinder Community Centre Pink Shirt Day The Good Life Institute Vermilion Ag Society Vermilion Chamber of Commerce Vermilion Heritage Museum Vermilion Legion Vermilion Lions Vermilion Rotary Vermilion Ukrainian Cultural Association

Vermilion Allied Arts Council Vermilion Cin ematic & Performing Arts Association Vermilion Community Art Club

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Resolution #1

SUBMITTED BY: The Board of Directors of Vermilion Credit Union Limited RESOLUTION: Compensation Disclosure

WHEREAS: Compensation of executive managers of the Credit Union is determined by

members serving on the Board of Directors of the Credit Union, and WHEREAS: The Board of Directors in determining compensation considers such factors as

market compensation surveys, the skills and responsibility of staff, and the financial resources and performance of the credit union, and

WHEREAS: The Credit Union has not disclosed senior executive compensation in its financial

statements in order to respect the confidentiality of the employment relationship with its staff and the personal security of those staff, and

WHEREAS: The Province of Alberta in 1995 amended the Credit Union Act to cause credit unions to present to annual general meetings commencing in 1996, and at least every 5 years thereafter, a resolution that provided members the option of requiring the credit union to disclose the individual remuneration of its executive managers in its annual financial statements, and

WHEREAS: A Resolution pursuant to the Credit Union Act was presented to the membership

at the Annual General Meetings held in 1996, 2001, 2006, 2011 and our membership voted to not disclose executive managers compensation.

WHEREAS: The following resolution is presented for the consideration of the members in

accordance with the Credit Union Act and is subject to approval or rejection by a simple majority of the members.

NOW THEREFORE: BE IT RESOLVED THAT Vermilion Credit Union disclose the individual

remuneration and benefits of the following of its executive managers as a notation to its annual financial statements in the form set out in Schedule 3 to the Credit Union (Principal) Regulation:

- CEO & General Manager - Manager of Lending Services - Assistant Manager Lending Services - Manager of Finance & Control - Manager Branch Operations - Manager Financial Planning - Mannville Branch Manager

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INDEPENDENT AUDITORS' REPORT To the Members of Vermilion Credit Union Limited We have audited the accompanying financial statements of Vermilion Credit Union Limited, which comprise the statement of financial position as at October 31, 2015 and the statements of net income and comprehensive income, changes in member equity, and cash flows for the year ended October 31, 2015, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Vermilion Credit Union Limited as at October 31, 2015 and its financial performance and cash flows for the year ended October 31, 2015 in accordance with International Financial Reporting Standards.

Edmonton, Alberta Hawkings Epp Dumont LLP January 28, 2016 Chartered Accountants

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MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING These financial statements were prepared by the management of Vermilion Credit Union Limited (the "Credit Union") who are responsible for their accuracy, completeness and integrity. They were developed in accordance with the requirements of the Credit Union Act of Alberta and conform in all material respects with International Financial Reporting Standards. Systems of internal control and reporting procedures are designed to provide reasonable assurance that the financial records are complete and accurate so as to safeguard the assets of the Credit Union. These systems include establishment and communication of standards of business conduct throughout all levels of the organization to provide assurance that all transactions are authorized and proper records are maintained. Internal control provides management with the ability to assess the adequacy of these controls. Further, they are reviewed by the Credit Union's external auditors. The Board of Directors (the "Board") has approved the financial statements. The Board, comprising of nine directors who are not officers or employees of the Credit Union, has reviewed the statements with the external auditors, in detail, and received regular reports on internal control findings. Hawkings Epp Dumont LLP, the external auditors appointed by the membership, have examined the financial statements of the Credit Union in accordance with Canadian auditing standards. They have had full and free access to the internal audit staff, other management staff, and the Audit and Finance Committee of the Board. Their report appears herein.

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VERMILION CREDIT UNION LIMITED

STATEMENT OF FINANCIAL POSITION

AS AT OCTOBER 31, 2015

2015 2014 ASSETS Cash and cash equivalents (Note 6) $ 32,015,367 $ 35,912,636 Investments (Note 7) 6,828,409 5,270,894 Derivative assets (Note 20) 63,403 125,498 Member loans (Note 8) 131,523,309 124,801,304 Other assets 92,986 87,863 Property and equipment (Note 10) 1,380,750 1,468,063 Intangible assets (Note 11) 186,439 237,119 $ 172,090,663 $ 167,903,377 LIABILITIES Accounts payable and accrued liabilities $ 216,098 $ 247,496 Deferred income tax liability (Note 9) 55,781 115,407 Derivative liabilities (Note 20) 63,403 125,498 Income taxes payable 12,707 41,554 Member deposits (Note 13) 156,012,098 153,897,444 Allocation payable (Note 14) 137,875 72,575 156,497,962 154,499,974 MEMBERS' EQUITY Allocation distributable (Note 14) 286,500 311,150 Common shares (Note 15) 5,834,142 4,434,069 Retained earnings 9,472,059 8,658,184 15,592,701 13,403,403 $ 172,090,663 $ 167,903,377 Commitments (Note 17) ON BEHALF OF THE BOARD:

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VERMILION CREDIT UNION LIMITED

STATEMENT OF NET INCOME AND COMPREHENSIVE INCOME

FOR THE YEAR ENDED OCTOBER 31, 2015

2015 2014 INTEREST INCOME

Interest from member loans $ 5,173,414 $ 5,103,983 Investment income 362,705 393,262 Patronage income 60,308 82,787

5,596,427 5,580,032 INTEREST EXPENSE

Interest on member deposits 1,452,616 1,560,996 Interest on financing 1 514

1,452,617 1,561,510 NET INTEREST INCOME BEFORE PROVISION FOR

LOAN IMPAIRMENT 4,143,810 4,018,522 PROVISION FOR LOAN IMPAIRMENT (NOTE 8) 51,073 11,879 NET INTEREST INCOME AFTER PROVISION FOR

LOAN IMPAIRMENT 4,092,737 4,006,643 OTHER INCOME 933,490 918,429 NET INTEREST AND OTHER INCOME 5,026,227 4,925,072 OPERATING EXPENSES (SCHEDULE I)

Personnel 2,050,340 2,010,960 Occupancy 134,229 130,940 Security 274,839 231,511 Organization 85,973 92,256 General 1,056,149 1,031,120

3,601,530 3,496,787 INCOME BEFORE PATRONAGE ALLOCATION AND INCOME TAXES 1,424,697 1,428,285 PATRONAGE ALLOCATION (NOTE 14) 137,875 72,575 INCOME BEFORE INCOME TAXES 1,286,822 1,355,710 INCOME TAXES (NOTE 9)

Current 312,463 289,898 Deferred (recovery) (59,626) 49,441

252,837 339,339 NET INCOME AND COMPREHENSIVE INCOME $ 1,033,985 $ 1,016,371

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VERMILION CREDIT UNION LIMITED

STATEMENT OF CHANGES IN MEMBERS' EQUITY

FOR THE YEAR ENDED OCTOBER 31, 2015

Allocation Member Retained Distributable Shares Earnings Total Balance, October 31, 2013 $ 160,300 $ 4,528,624 $ 7,879,459 $ 12,568,383

Net income - - 1,016,371 1,016,371 Dividends paid through issuance of

member shares (160,300) 155,656 4,644 - Dividends accrued 311,150 - (311,150) - Income tax recovery, dividends declared - - 68,860 68,860 Issuance of member shares - 70,919 - 70,919 Redemption of member shares - (321,130) - (321,130)

Balance, October 31, 2014 311,150 4,434,069 8,658,184 13,403,403

Net income - - 1,033,985 1,033,985 Dividends paid through issuance of

member shares (311,150) 314,041 (2,891) - Dividends accrued 286,500 - (286,500) - Income tax recovery, dividends declared - - 69,281 69,281 Issuance of member shares - 1,249,017 - 1,249,017 Redemption of member shares - (162,985) - (162,985)

Balance, October 31, 2015 $ 286,500 $ 5,834,142 $ 9,472,059 $ 15,592,701

33

VERMILION CREDIT UNION LIMITED

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED OCTOBER 31, 2015

2015 2014 OPERATING ACTIVITIES

Interest received from member loans $ 5,130,043 $ 5,126,282 Interest received from investments 325,210 391,253 Dividends received 43,200 32,000 Other income received 933,490 918,429 Patronage income received 60,308 82,787 Interest paid to members (1,391,791) (1,802,762) Income taxes paid (272,029) (176,068) Net operating expenses paid (3,470,058) (3,255,331) Patronage allocation paid (72,575) (73,835) Net change in member loans (6,729,707) (10,195,633) Net change in investments (1,563,220) 12,858,511 Net change in member deposits 2,053,829 7,337,363

(4,953,300) 11,242,996 INVESTING ACTIVITIES

Purchase of property and equipment (30,000) (118,864) Purchase of intangible assets - (11,510)

(30,000) (130,374) FINANCING ACTIVITIES

Issue of member shares 1,563,058 226,575 Redemption of member shares (162,985) (321,130) Dividends on common shares (314,041) (155,656) Interest paid on financing (1) (514)

1,086,031 (250,725) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,897,269) 10,861,897 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 35,912,636 25,050,739 CASH AND CASH EQUIVALENTS, END OF YEAR $ 32,015,367 $ 35,912,636

34

VERMILION CREDIT UNION LIMITED SCHEDULE I

SCHEDULE OF OPERATING EXPENSES

FOR THE YEAR ENDED OCTOBER 31, 2015 2015 2014 Personnel

Salaries $ 1,726,870 $ 1,708,989 Benefits 234,891 224,739 Training and other 88,579 77,232 2,050,340 2,010,960

Occupancy

Repairs and maintenance 40,593 39,831 Depreciation 35,400 35,400 Utilities 32,972 31,461 Property taxes 25,264 24,248

134,229 130,940 Security

Deposit guarantee assessment 249,850 205,540 Bonding 21,412 24,449 Insurance 3,577 1,522

274,839 231,511 Organization

Central dues 46,137 43,808 Directors' fees 15,500 15,350 Directors' expenses 14,021 18,384 Other 10,315 14,714

85,973 92,256 General

Computer, cash and service charges 456,388 453,415 Office 125,105 111,189 Depreciation 77,085 67,153 Courier and postage 74,629 94,886 Office equipment, rental and maintenance 61,035 52,891 Advertising and community support 59,091 67,545 Professional fees 53,800 48,283 Amortization of intangible assets 50,594 50,399 Telephone 35,245 33,229 Travel 21,991 17,407 Loan associated expenses 19,166 14,697 Insurance 17,168 16,919 Loss on disposal of property and equipment 4,852 3,107

1,056,149 1,031,120 $ 3,601,530 $ 3,496,787

35

Notes

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36