taking care of our own...“taking care of our own”! that is why we exist. we will continue to...

1 / The Police Credit Union Annual Report 2017

Taking Care of Our OwnANNUAL REPORT 2017


contentsBoard of Directors Report 3Message from the CEO 6Comparative Highlights 17Mentions & Milestones 18Community Involvement 20Audit Committee Report 22Independent Auditor’s Report 23Financial Statements 24Staff 27

The Police Credit Union Annual Report 2017 / 3

Messagefrom the Chair of the Board of DirectorsThe Police Credit Union celebrated 72 years of service to its members in 2017. There have been many changes to our Credit Union since its inception in 1946, but the one thing that has not changed, is the loyalty and commitment of our membership to the principles of the credit union system. As Chair of your Board of Directors I want to personally thank you for your support, involvement, passion and business that you have given to our Police Credit Union. We have and will always be “Taking Care of Our Own”.

Thanks to you, your Board of Directors has a role of stewardship of the Credit Union.Stewardship is recognized as the acceptance, or assignment, of responsibility to shepherd and safeguard the valuables of others. It is an ethic that embodies the responsible planning and management of resources. Stewardship requires vision and forward thinking, particularly in areas such as strategic planning, and identifying areas of risk. As stewards of your Credit Union your Board is working on leaving the Credit Union in better shape for our successors to oversee. I would like to thank all of you for electing us to your Board, and for putting your trust and faith in our abilities to provide stewardship to your Credit Union.

I am pleased to advise you that your Directors continued to contribute to the fulfillment of the By-Laws, goals, mission, vision and values of The Police Credit Union. My fellow Board members have conducted themselves in a manner befitting the Credit Union and promote the Credit Union, its purpose and values among members, stakeholders, and the community. We are honored and proud to represent you and we are committed to serving you. Your loyalty, trust and confidence in our Credit Union will ensure that we remain a strong, vibrant and a family centric Credit Union.

Your Board is also extremely pleased with the performance and leadership of our ChiefExecutive Officer, Andy Doak. Along with his excellent management team, and very dedicated staff, the team brings the vision of our Credit Union to life every day. They all embrace our vision of “Taking Care of Our Own”. Their knowledge, service and commitment to provide us with superior service, is truly appreciated. They are by far, an exemplary group of people.

In the past a remuneration review of all staff positions was undertaken. The purpose of this review was to ensure that our Credit Union was competitive in the employment market, and that our staff is being compensated at a rate that recognizes their skills, knowledge and dedication to the Credit Union. At the same time the annual honorarium for your Board of Directors was reviewed to ensure that the same principles being applied to our staff were being applied to the Board.

As you know our staff have received an annual cost of living increase as approved by your Board. The Board does not receive this increase. The Board’s honorarium was last reviewed and amended in 2009. As a result of the aforementioned review the Board’s annual honorarium has been amended, beginning in 2017, to reflect the cost of living changes that have occurred since 2009, and going forward will be subject to the same cost of living increase that may be approved for all employees of the Credit Union.


In 2017 your Board established the following strategic goals:

• Financial – Invest in opportunities to grow our business.

• Service Delivery – Have loyal members who utilize the many services offered by the Credit Union.

• Human Resources – Ensure that our staff had the resources to achieve our goals.

• Community – To be known as an active and effective partner in the communities we serve.

Success for each goal was measured through a series of key performance indicators. I am very pleased to advise the membership that in 2017 your Credit Union successfully met the targets established for each key performance indicator.

By achieving our targets, the Credit Union had a successful year in 2017. Success was measured by producing a positive financial report. Our loans growth was positive, as was our net income. The Credit Union was profitable in 2017. Earnings, as in the past, will be used to continue to build our Credit Union, better our services and improve our overall banking environment. Other financial institutions continue to charge many fees for their services, but The Police Credit Union provides free everyday banking for its Rewards Members.

Despite the challenges facing many Police Services to hire additional or replacement staff, your Credit Union through the diligent work of the entire team, recorded a gross increase in memberships.

Our final overall efficiency rating for 2017 came in lower than our projected percentage rate. This is one of the cases where recording a lower percentile rating is actually a “win” for the Credit Union. Your Credit Union is operating at an efficient rate while providing superior customer service.

The Police Credit Union was once again very active in the police community. We continued to build on our strong relationships with our core Police Associations and Police Services, by participating in their various sporting and charitable events. We focused on developing newer relationships with both the Halton Police Service and Halton Police Association. Our commitment to support the Ontario Police Memorial Foundation grew in 2017 as more funds were collected through our Mastercard Credit Card product program.

Our Branch Advisory Committee members once again provided us with excellent suggestions and ideas on how to improve our services to our members. In 2017 we had more members participating on the various Branch Advisory Committees than we ever had in the recent past. Thank you to all our Committee volunteers who take their own personal time to attend and participate in these important meetings.

One of the most important functions that your Board is involved in is the development of the strategic plan. Strategic planning is concerned with the long-term direction of the Credit Union through the configuration and utilization of its resources, to meet the challenges presented within a changing environment. Strategic planning includes the Board members and management, planning for needs of its members. This involves identifying key issues that impact on the Credit Union including infrastructure, people, finances, governance, regulation and competition.

Over the next decade, the goal of The Police Credit Union is to grow organically, to create an even stronger presence to meet the current and emerging needs of members across

Back row L to R: Gary Leitch; Rod Fraser; Mike Sharp; Stan Colley

Front row L to R: Bob Spafford; Geri James;

George Tucker


Ontario. Our financial projections illustrate enhanced efficiency, productivity and earnings capacity for the Credit Union. These goals and projections are guided by the core values of the Credit Union.

Our values of ethics, relationships, professionalism, accountability, quality service, financial knowledge and education, and teamwork, guide us in carrying out our mandate as Board members of The Police Credit Union.

The Credit Union maintains a comprehensive enterprise wide risk management policy covering all operating areas that expose the Credit Union to material, legal, regulatory or reputational risks. I am pleased to advise the membership that your Credit Union has ensured that there are sound and prudent practices that are supported by effective organizational and procedural administrative systems in place. That it has established effective internal controls to enhance the reliability of financial and other reports, and we are confident that we are compliant with applicable laws, regulations, standards and established policies.

In conclusion, I want to express my deep appreciation to my fellow Board members. Thank you for your participation, dedication, guidance and friendship. Your commitment and support to the Credit Union has enriched my role as the Chair of the Board.

Finally, I would like to thank all staff members for your dedication, hard- work and commitment to the Credit Union. Your smiles when you great us are truly appreciated. Your friendships are valued. You are The Police Credit Union.

“Taking Care of Our Own”! That is why we exist. We will continue to help and assist each other through ordinary moments as well as exciting milestones. We are a team that will help you realize your dreams today to planning for your future. The Police Credit Union is here to help you navigate your choices and support you all the way.

The Police Credit Union is a great credit union and we are ready for the future!

Stan Colley Chair – Board of Directors

Back row L to R: Gary Leitch; Rod Fraser; Mike Sharp; Stan Colley

Front row L to R: Bob Spafford; Geri James;

George Tucker

board of directors


Message from the CEOProfitability results were very strong this year and 2017 finished with assets exceeding $292.6 million, an increase of 7.3% over the previous year end. The Police Credit Union continued to “take care of our own members” with low interest rates on loans and mortgages and with very competitive rates on deposits.

FINANCIAL FOCUSThe strength of the mortgage market in 2017 was the catalyst for the Credit Union having a strong fiscal year, with income exceeding budget and prior year levels. After many years of low interest rates, there were two prime rate increases in 2017. In addition, the Credit Union launched two new products under its Residential lending portfolio known as Creditmaster® and Primeline and introduced a commercial product line as well. As a result, total mortgages held by members increased by $23.million (10.7%). Personal loan balances to members decreased slightly by $0.8 million (4.8%) recruit hiring practices was slower during the first part of the year but improved in the last quarter of 2017 resulting in fewer personal loan applications from members. Commercial loans and mortgages closed out the year with a balance of 3.8 million. Overall growth in the total loans to members increased $26.6 million (11.2%) compared to 2016.

As a result of a very competitive interest rate position adopted for members’ deposits, deposit balances increased by $12.2 million (4.7%) during the year. Tax-Free Savings Accounts have continued to capture the attention of members as balances in TFSAs closed the year at $21.4 million, up $1.5 million or 7.5% compared to 2016. Term deposit balances increased $9.1 million to $93.5 million which represents an increase of 10.8%, while holdings in registered products decreased by $0.4 million. The remaining deposit growth is associated with an increase in members’ chequing and savings account balances, up $1.9 million or 2.2% compared to 2016.

Growth in off-balance sheet wealth management assets improved with an increase in assets under administration of $1.9 million or 7.9%, from $24.0 million in 2016 to $25.9 million at the end of 2017.

Total asset growth for TPCU for the year was $21.7 million. This includes the off-balance sheet wealth administered assets as well as the assets managed by TPCU. Total asset balances improved from $296.8 million in 2016 to $318.5 million in 2017 an increase of 7.3%.

Operating revenues, which is interest earned on loans and investments, increased from $8.0 million in 2016 to $8.8 million in 2017. Excluding the one-time investment income of $440 thousand, ongoing operating revenues improved by $376 thousand during the year. The growth of the loan portfolio from new volumes and the higher yield earned from prime rate increases contributed to the higher interest income.


Interest expense on member deposits, member rebates and Credit Union borrowings was $47,277 higher than 2016 ending up at $2.7 million. Higher interest expenses on member deposits tied to prime rate increases during the year combined with additional borrowing costs to fund the strong lending activity were the main reasons for the year over year increase.

Financial margin results, which represent operating revenues less interest expense, improved $768 thousand. Overall financial margin results reported were $6.1 million in 2017 compared to $5.4 million in 2016, excluding the one-time investment income of $440 thousand, financial margin improved $328 thousand compared to 2016. Higher interest rates on loans during the year contributed to improved financial margins.

During the year, the recovery of loan losses was $30 thousand compared to a recovery of $16 thousand in 2016. Revenues associated with other income sources was flat year over year at $1.2 million. The strength of the Canadian dollar against the US dollar improved foreign exchange gains to $68 thousand during 2017 compared with a foreign exchange loss of $21 thousand in 2016.

Operating expenses decreased $66 thousand from 2016 to 6.1 million in 2017. The prior year included $153 thousand in provisions for the savings insurance adjustment, there was no provision recorded in 2017. Branch expansion to Halton contributed to a slight increase in salary expenses compared to 2016.

Income before taxes from on-going operations improved to $1,302,527 in 2017 from $387,342 in 2016. Excluding the one-time investment income of $439,816, income from on-going operations increased $475,369.

YEAR IN REVIEWThe Police Credit Union is guided by several strategic principles:

• “Rewards membership” is key to our success, this means offering members the best prices upfront on both loans and deposits with the lowest service charges possible.

• Nurture and enhance relationships with our existing members, our core Police Services and their Associations.

• Provide financial assistance to Ontario Police recruits to attend Ontario Police College.

• Provide membership convenience with strategic branch locations within our core police services and through our call centre operations.

• Provide convenient banking services through computer and mobile banking channels, automated payment processes and ATM networks like Interac® and THE EXCHANGE®.

• Provide newer innovative financial products, services and mobile platforms for members.

• Invest in technology to increase efficiencies of staff resources.

Total asset growth for TPCU for the year was $21.7 million an increase of 7.3%.


Our dedicated staff worked tirelessly enhancing relationships with all members, our core police services and the police associations. Results were positive as more members continued to choose our Rewards platform and brought more of their borrowing and deposit business to the Credit Union.

The Credit Union’s strategic direction aims at improving leverage capital levels to exceed 5% (2017 – 4.90%) in the near term and to increase to 6% over the next five years. While Risk Weighted Capital levels will exceed 12% (2016 13.36%). To achieve our leverage capital targets an investment share offering strategy will be implemented in 2018.

The Credit Union’s strategic direction aims at improving operating efficiency levels to 85% within 3 years.

Loan ReportLoan demand from members increased 6.6% compared to the previous year. Total loans advanced and lines approved to members increased $34.2 million from $88.3 million in 2016 to $122.5 million in 2017. This was largely due to an increase in mortgage and secured line of credit applications.

Total loans to members were $263.5 million, an increase of 11.2% over the previous year when loans to members totalled $236.9 million.

During the year, the loan allowance decreased to $69,406 with recoveries on loans previously written off equal to $17,049. Loan write-offs during the year amounted to $7,014. No members filed for bankruptcy or consumer proposal in 2017.

2017 2016

Total Lending Activity Number Amount Number Amount

Personal Loans 289 $ 5,159,802 264 $ 4,669,309

Lines of Credit 340 27,726,505 277 17,910,000

Mortgages 237 86,014,757 199 65,751,953

Total 872 122,533,664 740 88,331,262

Total Loans not approved 74 6,107,159 147 8,545,359

Total above 946 128,640,823 887 94,145,697

Loan Allowance

Specific 5 2,328 8 6,463

Non-Specific and General 67,078 82,781

Total above 5 69,406 8 89,244

RecruitsSince 1996, The Police Credit Union has been committed to assisting recruits hired by police services in Toronto, Durham, York, Peel, and others in Ontario with financial assistance for the cost to attend the Ontario Police College (OPC) in Aylmer, Ontario. Tuition fees to attend OPC are $11,065 for each recruit. The Police Credit Union is committed to providing all new recruits attending OPC with an automatically preapproved, low rate,


recruit training loan along with the costs to purchase a computer (if required) which is now a prerequisite for the program. The recruit package is designed to help recruits transition to their policing career and includes overdraft protection, a line of credit, and Mastercard.

This year, 150 new recruits joined The Police Credit Union and 101 (67.3%) recruits became REWARDS members. This is an important first step in building long-term relationships with our newest members. Through the REWARDS program, recruits automatically receive special products and services at preferred rates, which enable them to take full advantage of all their Credit Union has to offer and it gives Credit Union staff a chance to learn more about each member to determine which financial services are the right fit. Financial reviews are conducted to help recruits navigate their financial needs right away and prepare for their financial future. We are proud to report that throughout the history of the program, we have assisted 4,781 recruits with their dream of becoming a police officer.

Product, Services and Technology EnhancementsThe Police Credit Union offers a full suite of financial products and services to its members.

A broad range of personal deposit accounts and services are available for members. Retail products for individuals include Canadian dollar chequing and savings accounts, US dollar chequing and savings accounts, Term deposits, Registered Retirement Savings Plan, Registered Retirement Income Funds, Tax Free Savings Accounts and Registered Education Savings Plans. Concentra Trust provides trustee services for all the Credit Union’s registered products.

Lending products include installment loans, demand loans, lines of credit and overdraft protection on member chequing accounts. The Credit Union also provides conventional and high ratio insured mortgages, bridge financing, and equity lines of credit. Our Continuing Education line of credit was designed to provide financial assistance to members who are beginning the promotional process within their designated police service as many of our police services are placing a greater emphasis on their officers gaining higher levels of education to qualify for higher rank promotions.

During 2017, a commercial lending program was implemented, and we are now able to assist members with the purchase or refinance of an Investment Property. We will also be able to accommodate the Police Associations we deal with to finance or assist with financing to purchase or construct Association premises.

The Police Credit Union uses MemberCard card services to provide members access to Automated Teller Machine and Point of Sale services through Interac, The Exchange and Cirrus networks. Mastercard Credit Card and Global Payment Cards are provided to members through an arrangement with CUET’s Financial.

Mobile banking services for members include a native Mobile Banking App for iPhone and Android devices. The App has all the convenient features that members expect including

This year 150 new recruits joined TPCU, and of the recruit members, 67% became REWARDS members.


checking their account balances, paying bills, funds transfers, and finding the nearest branch or ATM. It’s a fast and secure way for members to handle everyday banking wherever and whenever it suits them. The Mobile Banking App’s now include Deposit Anywhere services, members can quickly and securely deposit their cheques with their smartphone or tablet, from anywhere, day or night. Deposit Anywhere is a free service and is just as secure as depositing a cheque at a branch. Members can complete their deposit in less than a minute and can do it from anywhere and at any time.

Wealth Management Services are available to members. Financial planning and investment advice is available through Credential Asset Management Inc. with over 3,000 funds to choose from including Ethical Funds while Credential Direct provides members with on-line Brokerage Services.

Creditor insurance products for life, disability and critical illness are available through our partner Credit Union Insurance Services (CUIS). Travel and Term Life insurance products may also be acquired.

Members of The Police Credit Union continue to use the services of Car Choice Canada, an Automotive Advisory Service which assists car shoppers with the purchase

of new or used vehicles and leasing. Car Choice Canada saves you time and money without the hassle of negotiating. Members can obtain an unbiased opinion on vehicle comparisons and the service can locate any type of vehicle, new or used, at the best price from over 35 new car dealers in the GTA who offer vehicles of every make or model, new or used.

Management and the Board of Directors continued to work with our Advisory Committees this year, a group of volunteers who provide the Credit Union with valuable insight from a member’s perspective on how the Credit Union can continue to expand to meet the needs of its membership. We have been able to solicit input and direction on the future of the Credit Union, its products and services, and technology enhancements.

Technological upgrades and enhancements continue to play a critical role in the Credit Union’s strategic direction. Work continued to proceed on a new release of MemberDirect Integrated services with new functionality that includes ‘personal financial management” (PFM) tools. Members gained access to these upgrades in mid 2017.

We will continue our search for innovative technology solutions that will benefit the members of our Credit Union and expand efficiencies and member service.

Youth Support and EducationCredit Unions are unique in the ways that they conduct business and serve their members. What we celebrate as the credit union difference extends far beyond our financial services. As member-owned co-operatives, credit unions have a long, distinguished history of reflecting the strength of their cooperative values in forging stronger communities.

Credit Union members have access to over 3,000 funds including Ethical Funds.


The Police Credit Union Union is committed to supporting our young members as they strive to reach their personal and academic goals. It’s one of the many ways that “we take care of our own”. By investing in accomplished students, we are helping to develop caring and engaged young leaders who will make meaningful contributions to the future of our communities.

In 2017, one of the ways in which we supported our community of young members was to offer a scholarship program for children and grandchildren of our members. Five $1,000 scholarships were awarded to young members of our Credit Union.

Another initiative to engage youth with our Credit Union was to give three children of members an opportunity to attend a summer program in 2017. Co-operative Young Leaders (CYL) is a summer experience unlike any other. The week-long program brings young people together from across Ontario to learn about, and practice, communication and leadership through co-operative activities. Every summer, Ontario Credit Unions and Co ops give 200 young people a chance to attend Co-operative Young Leaders. CYL is a program of the Ontario Co-operative Association. The Police Credit Union is pleased tobe an ongoing participant in this important youth initiative.

Human Resources and TrainingThe Police Credit Union continues to experience an increasingly competitive and changing business environment, the structures and business-focus of competitors continues to evolve. Member expectations are becoming more challenging and there is an increasing urgency in attracting, motivating and retaining high-level talent to provide the Credit Union with a competitive advantage. To ensure The Police Credit Union remains competitive in the market place, we commit to reviewing our compensation packages annually for our employees.

All our member facing employees completed a program entitled Building Financial Relationship. This program focused on the importance of developing and maintaining an advisory relationship with our members to ensure their financial needs are met. In addition, our managers completed a Coaching Program to enable them to further support employee development and performance management.

Staff development resources were strengthened by partnering with a second credit union learning facility. CU Training and existing CUSource provide programs and courses to all Credit Union employees including members of the Board of Directors.

Development continued for our frontline tellers and call centre staff as we transition them into roles which can handle more complex transactions, such as registered products and credit requests, enabling staff to provide enhanced members services.

All employees have met required legislative requirements by completing training sessions in Money Laundering and Terrorist Financing (FINTRAC); new employees completed Integrated Accessibility Standards (AODA); Canadian Anti-Spam Legislation (CASL), Occupational Health and Safety Awareness and Workplace Violence and Harassment to comply with legislative guidelines. Selected staff have completed their annual requalification in CPR and First Aid to continue to ensure that each of the Credit Unions’ locations have trained staff on-hand to assist in the event of an emergency.


An annual Employee Engagement Survey is completed to measure and assess annually both our employees’ satisfaction and commitment to our organization. An “engaged employee” is one who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization’s reputation and interests. We believe that an “engaged employee” will provide for a better member experience which will result in a win win situation for all. The Police Credit Union’s 2017 engagement results scored very well.

Marketing and Business DevelopmentThe prime purposes of our marketing communications each year are to ensure that The Police Credit Union remains top of mind for our members’ financial requirements, and that knowledge of products and services remains current. We use regular mail and email programs to supplement personal staff communications with our many loyal members. Monthly statement notifications and promotional emails are used to inform and introduce our products and promotions in a cost-effective manner.

The Police Credit Union awareness campaigns have been in operation for some time now, in addition to the mail and email approach, the Credit Union ensures promotional details are available on our website and on in-branch digital screens. In addition, where permitted the Credit Union has access to some Police Service Intranets and to screen savers on their computers this way police personnel are provided with our latest campaigns and promotions.

The Police Credit Union has committed to donating, annually, a percentage of the revenue sharing profits generated by our Mastercard Credit Card product to the Ontario Police Memorial Foundation. “We believe the foundation is near and dear to our members and this program will resonate with our membership group and will be successful within our policing community. The more our members use our Mastercard for their credit card purchases, the greater the annual donation will be. After three years, the Credit Union will have donated more than $23,000 to the foundation.

RETAIL AND CORPORATE BRANCHES TorontoThe largest number of members belong to the Toronto branch, who help 4,285 members with their financial needs. The branch operates with a staff of four who are dedicated to assisting members with their financial goals, as well as deepening relationships with the Toronto policing community including the Toronto Police Service, the Toronto Police Association Toronto Police Amateur Athletic Association, Toronto Police Widows and Orphans, and the Toronto Police Pensioners Association.

Assets finished the year at $128.4 million, which includes a loan portfolio of $41.9 million and a deposit portfolio of $113.9 million representing the largest deposit portfolio of all the branches.

CollegeLocated inside Toronto Police Headquarters, our 40 College Branch provides full service and convenient banking to members working at Toronto Police Headquarters and as well as Court Services at College Park. The branch opens its doors an hour earlier than other branches to accommodate shift change. The location works well for new hires as many attend Toronto Police headquarters for the hiring process including orientation.


The branch is staffed by two employees dedicated to the financial well being of 742 members and holds $9.7 million in assets, $6.0 million in deposits and $9.4 million in loans.

DurhamThe Durham branch is $62.7 million in assets and currently helps 2,948 members with realizing their financial goals. Members are served at the new Whitby location with a staff compliment of four employees. The branch continues to serve many retired members living in the east end, as well as members from Toronto and Durham Regional Police Services.

The branch maintains $61.4 million in deposits for members and with loans of $52.2 million. The branch continues to grow and foster relationships with the Durham Regional Police Service and Durham Regional Police Association, as well as the Cobourg Police Association. The Branch continues to explore new police relationships further east.

The Durham Branch moved from the Pickering location to Whitby in January 2017, to a bright new space. The size of the branch was decreased to reflect the needs of the branch and trends in the current financial strategy. The current size is 2,000 SF and has a full-service ATM in the lobby. The Branch’s new location is more centralized to our existing membership and located near the Durham Police Community.

YorkThe branch maintains assets of $51.1 million and helps 2,067 members with their financial needs and goals. The branch has grown deposits for members to $41.2 million and loans are now at $50.8 million. A staff complement of four employees are dedicated to building relationships with their members, the York Regional Police, York Regional Police Association, South Simcoe Police, Orangeville Police Services, and continues to explore opportunities with other police services further north.

PeelThe Peel branch has grown to be the second largest branch growing to $109.5 million in assets. The branch provides financial help and guidance to 2,099 members with a full-time staff complement of five. Deposits have grown to $45.0 million, while loans to members has reached the highest of all branches at $109.2 million.

The branch continues to change and evolve with its membership, most of which are in the borrowing stages of life. This has resulted in significant loan and mortgage growth over the past few years. The dedicated branch staff continue to deepen and grow relationships with their members, as well as police relationships with the Peel Regional Police Service, the Peel Regional Police Association, Halton Regional Police Association, and the Police Association of Ontario.

After three years, TPCU has given $23,000 to the Police Memorial Foundation through donating a percentage of profits from the use of our Mastercard.

HaltonThroughout 2017, plans were finalized with the Halton Regional Police Association(HRPA) to develop a branch location within their new Association facility. Construction finished towards the end of the year and the Halton Branch opened its doors in January 2018. The branch is well positioned to serve over 955 existing Credit Union members that live in the area and further west. Management and branch staff are actively engaged to deepen our relationships with Halton Regional Police Association and Halton Regional Police Service.

Call CentreThe Call Centre has a staff compliment of three call centre representatives who provide members assistance and offer solutions for a variety of financial needs. The dedicated representatives provide personalized service over the phone, email, and secure contact

via on-line and mobile platforms.

As a response to member input, the Call Centre hours of operation were increased to provide members with more opportunities to connect with a live representative to assist with requests, solve problems, and process financial transactions. Members can now reach the Call Centre as early as 8 in the morning, later in the evening on Thursdays and Fridays until 7 p.m., and open on Saturdays from 10 a.m. to 3 p.m. The Call Centre is a great alternative to visiting the branch. Many of our members appreciate the great services and help they need right from the convenience of their home.

Corporate Administrative BranchThe Corporate Administrative Branch Operations include; Administration, Accounting, Human Resources, Information Technology (IT), Call Centre, Marketing, Wealth Management, Centralized Lending and the CEO’s office.

This centralized structure of having all corporate operations within the same facility provides the appropriate framework for efficient operations while supporting the ongoing business growth of our retail branch operations and to maintain and build stronger member relations while improving the service delivery experience.

COMMUNITY INVOLVEMENT ACTIVITIESThe Police Credit Union actively supports and partners with our policing communities throughout the year. Police Association summer picnics as well as children’s holiday parties are supported with gifts. Our branch staff attend parties for the Toronto Police Association, Peel Regional Police Association, and Halton Regional Police Association. In addition to these functions, support is also provided to several Association Golf tournaments for their charitable endeavours including attending the tournaments, sponsoring holes, and providing give-aways.

Charitable events sponsored by our police services, organizations and Associations are supported with Blue Jay tickets to help with fundraising. Blue Jay tickets have been well received and helped to generate good donations for the charity involved. Some of these


Call Centre hours of operation were increased this year to provide members with more opportunities to connect with live help for their financial needs.

events are golf tournaments, others are special functions. Board and staff also attend gala events organized by our police services, including the Toronto Police’s Chief’s Gala in support of Victim Services, and the York Regional Police Appreciation night.

In 2017 branches donated to charities important to their core police communities, such as the Law Enforcement Torch Run for the Special Olympics. In December, all our branches partnered with their core police services as a drop-off point for the Christmas toy drive in their respective regions.

INTO THE FUTUREAs we enter our 73rd year of supplying financial services to our policing communities, our plans include for safe organic growth with our members, establishing “Rewards” membership status and by increasing our membership base through active pursuit of new recruits and civilian hires of Police Services, and their family members. In addition, we will continue to nurture existing relationships with the Police Services and Police Associations to which our members belong and explore new relationships with other Police Services and their employees within proximity to the GTA.

We will continue to offer our best possible prices on all our products and services, ensure that we have the latest in product offerings, and provide our members with the newest technological advancements made available by financial institutions.

Beginning January 2018, a new partnership will begin with Collabria for our Mastercard product. We believe this new supplier is more in alignment with The Police Credit Union’s values, provides for an innovative roadmap for future product development, provides our members with more credit card options matching their lifecycle needs and provides more rewards opportunities for both members and The Police Credit Union. We would encourage all current Mastercard credit card holders to switch to our new supplier to ensure we can continue to manage the credit card relationship and maximize our annual donation to the OPMF.

In April of 2018, our existing Peel Branch will relocate to 7725 Kennedy Road (Just north of the Powerade Centre) in Brampton. Members will be welcomed to a brand-new facility with a lobby style ATM on the premises and the branch will be finished in our corporate branding matching our other locations.

The Credit Union will continue its path to improve its capital position, aiming to exceed 5% in the near term and increase to 6% over the next five years. To reach these levels we expect to undertake an investment share offering and these will be made available for purchase throughout 2018. Member are encouraged to watch for the opportunity to invest in the future of their Credit Union, this is a rare investment opportunity and is expected to sell out.

The Credit Union’s strategic direction is to gradually improve operating efficiency levels to 85%. Management has developed options to improve either operating income or operating expenses and will continue to implement these throughout 2018. It is expected that Operating Efficiencies will be negatively impacted in 2018 before settling down and trending in a more efficient direction due to the full year effects of branch expansion into the Halton market place.


ACKNOWLEDGEMENTS First, I would like to thank the Board of Directors for their continued support and the faith they have placed in me to lead The Police Credit Union. Secondly, to my Senior Management team, thank you for all your hard work, dedication and support throughout this past year, you are truly the best team that I have ever assembled. Third, I would like to express my sincere appreciation to all of the staff of The Police Credit Union, you all are wonderful, you do a great job in making The Police Credit Union the successful organization it is. Lastly, to the membership, thank you for putting your faith in The Police Credit Union, we hope that our collective efforts show that we “take care of our own”.

Andy Doak Chief Executive Officer

From L to R:Denzil D’Mello, Sheila Carvalho, Bess Kominos-Estrela, Andy Doak (CEO), Karen Zwarych


Andy Doak Chief Executive Officer

Denzil D’Mello Controller

Karen Zwarych Human Resources & Training Manager

Bess Kominos-Estrela Manager of Retail Services

Sheila Carvalho Member Credit Manager

senior management team


Years Ended December 31

2017 2016 2015 2014 2013

Operating Revenue $

8,843,997

8,028,637

8,092,751

8,217,816 8,165,510

Interest on Members’ Deposits

- amount $ 2,661,507 2,621,137 2,794,504 2,741,095 2,769,477 - percent 30.1% 32.6% 34.5% 33.4% 33.9%

Financial Margin- amount $ 6,107,991 5,339,908 5,211,094 5,356,233 5,333,203 - percent 69.1% 66.5% 64.4% 65.2% 65.3%

Comprehensive Income

- amount $ 670,249 1,373,064 359,062 293,319 215,751 - percent 7.6% 17.1% 4.4% 3.6% 2.6%

Loans to Members $ 263,652,868 237,022,226 230,408,948 221,355,935 214,219,033

Membership Shares

$ 1,213,080 1 ,216,709 1,220,509 1,214,681 1,207,243

Members’ Deposits $ 269,626,619 257,424,759 240,228,040 230,126,991 222,578,054

Total Assets $ 292,596,571 272,781,195 258,876,916 248,136,296 242,625,151

Asset Growth 7.26% 5.41% 4.33% 2.30% 5.90%. .

Leverage Ratio 4.90% 5.01% 4.75% 4.81% 4.79%

BIS Ratio 11.89% 13.63% 13.11% 13.73% 14.10%

Liquidity 8.46% 11.17% 8.52% 8.83% 9.53%

Comparative Highlights


• Total Assets increased $19.8 million from

$272.8 million to 292.6 million as at December

31, 2017.

• Total Loans to members increased $26.6

million or 11.2%. During the year, TPCU

recorded a recovery charged to operations

of $29,764 for personal loans compared to a

recovery of $16,064 in 2016.

• Loan request applications from members was

up 17.3% compared to 2016.

• Increase of $23.6 million or 10.7% in residential

mortgage growth. In addition, loans and

mortgages from the Commercial product line

launched in 2017 closed at $3.8 million.

• Members’ Deposits increased $12.2 million

from $257.4 million in 2016 to $269.6 million

in 2017.

• Net Income after taxes decreased from

$1,361,957 in 2016 to $1,056,878. The current

year included a one-time investment income

of $439,816. While the overall financial

performance was much stronger than 2016,

the prior year included the gain from the sale

of the Durham Branch of $1,242,464.

• Members’ Equity grew from $12,371,392 in

2016 to $13,041,641 in 2017; an increase

of 5.4% % and exceeding regulatory capital

requirements.

• Financial Margin (the funds available after

interest expense is deducted from revenue)

saw an increase of $768,083. Excluding the

one-time investment income of $439,816,

financial margin improved $328,267 due to

strong lending activity during the year.

• In 2017 we welcomed 150 new recruits

as members, 101 of them became reward

members. In comparison, last year 100 new

recruits joined TPCU and 68 became rewards

members.

• Wealth Management Services - Assets under

Administration increased 1.9 million or 7.9%

from 24.0 million in 2016 to 25.9 million in 2017

Retirees

Civilian

Uniform

Market Penetration

South Simcoe

HaltonPeelYorkDurhamToronto

20%

$0

40%

60%

80%

70%

50%

30%

10%

Assets by Branch

Toronto

College

DurhamYork

Peel

Mentions & Milestones

Assets by Branch

Membership by Branch

Toronto

College

DurhamYork

Peel

Membership by Branch

Market Penetration


Branches

Toronto Members 4,285 Assets $128.4 million Deposits $113.9 million Loans $ 41.9 million

College Members 742 Assets $9.7 million Deposits $6.0 million Loans $9.4 million

Asset Growth

2016201520142013 2017

$180 M

$0

$200 M

$220 M

$240 M

$280 M

$300 M

$260 M

Recruit Hires

2016 2017201520142013

100

$0

200

300

400

600

Toronto

20177

Durham 24York 44Peel 75

500

Retirees

Civilian

Uniform

Total PCU Membership

South Simcoe


2000

0

4000

6000

8000

7000

5000

3000

1000

South Simcoe


4000

0

8000

12,000

14,000

10,000

6000

2000

Total Police Services Personnel

Retirees

Civilian

Uniform

Durham Members 2,948 Assets $62.7 million Deposits $61.4 million Loans $52.2 million

York Members 2,067 Assets $51.1 million Deposits $41.2 million Loans $50.8 million

Peel Members 2,099 Assets $109.5 million Deposits $ 45.0 million Loans $109.2 million

Consolidated Members 12,141 Assets $361.4 million Deposits $267.5 million Loans $263.5 million

Asset Growth

Recruit Loans

Total Police Services PersonnelPolice Services Personnel who are members


Community Involvement Activities


The Police Credit Union Scholarship Program


Audit Committee ReportThe Audit Committee is composed of four Directors (three Audit Committee members and one special advisor to the Audit Committee) and our function is to assist the Board of Directors (the Board) in fulfilling its oversight responsibilities. The Audit Committee (the Committee) accomplishes this by reviewing the integrity of The Police Credit Union’s financial statements, financial information, and reporting processes including the risk and controls related to those processes, which have been established by the Board and Management.

Our committee’s mandate includes all the tasks specified for Audit Committees which are outlined in the Credit Unions and Caisses Popularises Act 1994 (the Act) and the Associated Regulations.

In the fulfillment of these responsibilities, the Committee met bi-monthly during the 2017 fiscal year and completed its duties. Some key activities included:

• Review the financial statements and the results of the year-end audit with the external Auditor;

• Review the performance of the Auditors and their proposed engagement letter;

• Ensure that regulatory filings were submitted on time;

• Review the Credit Union policies, procedures and controls for legislative compliance;

• Review the Disaster Recovery Plan;

• Review any outstanding legal issues;

• Review any accounting issues;

• Review any risk management issues;

• Monitor the adherence of Directors, Officers, and staff with the Credit Union policies and code of conduct; and

• Complete a self-assessment of the effectiveness of the committee and take the necessary steps to ensure compliance if required.

This overview as outlined was supplemented by our dedicated Internal Auditor Mr. Rick Belsby, who provided the Committee with an updated and detailed Internal Audit Plan. Our Management team works closely with both the Committee and the Internal Auditor to implement ongoing recommendations. The Committee believes there are no matters, other than those contained in the notes to the Financial Statements, that should be reported to the members or that are required to be disclosed pursuant to the Act or the Regulations.

This report has been adopted and approved by the members of the Audit Committee and I submit this report on behalf of the four Directors; Ms. Geri James, Mr. Gary Leitch, special adviser Mr. Bob Spafford and Mr. Rod Fraser, Chair.

Rodney Fraser Chair, Audit Committee


Independent Auditor’s ReportTo the Members of The Police Credit Union Limited:The accompanying summarized financial statements, which include the balance sheet and the statements of changes in members’ equity, operations and comprehensive income are derived from the audited financial statements of The Police Credit Union Limited for the year ended December 31, 2017. We expressed an unmodified opinion on those financial statements in our report dated February 26, 2018.

These summarized financial statements do not contain all the disclosures required by International Financial Reporting Standards. Reading the summarized financial statements is not a substitute for reading the audited financial statements of The Police Credit Union Limited.

Management’s Responsibility for the Summarized Financial Statements Management is responsible for the preparation of the summarized financial statements in accordance with criteria that management has determined will represent a fair summary of the audited financial statements.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the summarized financial statements based on procedures, which were conducted in accordance with Canadian Auditing Standards (CAS) 810, “Engagement to Report on Summary Financial Statements”.

OpinionIn our opinion, the summarized financial statements derived from the audited financial statements of The Police Credit Union Limited for the year ended December 31, 2017 are a fair summary of those financial statements on the basis of criteria that management has determined will represent a fair summary of the audited financial statements.

Readers are cautioned that these summarized financial statements may not be appropriate for their purposes. For more information on the entity’s financial position, financial performance and cash flows, reference should be made to the related audited financial statements that are available from management upon request.

Jones & O’Connell LLP Chartered Professional Accountants Licensed Public AccountantsFebruary 26, 2018 St. Catharines, Ontario


Financial Statements

Balance SheetDecember 31 2017 2016

Assets

Cash $ 5,094,918 12,316,175

Investments 21,194,443 20,406,736

Loans to members 263,652,868 237,022,226

Other assets 630,346 1,520,798

Property and equipment 2,023,996 1,515,260

$ 292,596,571 $ 272,781,195

Liabilities and Members’ Equity

Members’ deposits $ 269,626,619 $ 257,424,759

Borrowings 7,000,000 -

Other current liabilities 1,343,831 1,376,935

Provisions 371,400 391,400

Membership shares qualifying as liabilities 1,213,080 1,216,709

$ 279,554,930 $ 260,409,803

Members’ Equity

Undivided earnings 13,042,369 11,985,491

Accumulated other comprehensive income (728) 385,901

13,041,641 12,371,392

$ 292,596,571 $ 272,781,195

On behalf of the board

R. Spafford Director

S. ColleyChair


Statement of OperationsFor the year ended December 31 2017 2016

Operating Revenue

Interest on loans $ 8,023,987 $ 7,677,421

Investment income - recurring 380,194 351,216

Investment income - one time 439,816 -

8,843,997 8,028,637

Interest Expense

Interest on members’ deposits 2,661,507 2,621,137

Member rebates 32,004 34,255

Other interest expense 42,495 33,337

2,736,006 2,688,729

Financial Margin 6,107,991 5,339,908

Other Operating Items

(Provision for) recovery of losses on loans $ 29,764 $ 16,064

Foreign exchange 19,488 (45,817)

Other income 1,208,607 1,205,981

Operating Margin $ 7,365,850 $ 6,516,136

Operating Expenses

Administrative 2,462,350 2,505,949

Amortization of property and equipment 332,198 303,780

DICO Insurance 182,974 176,933

Salaries and benefits 3,085,801 2,988,832

Savings insurance adjustment - 153,300

6,063,323 6,128,794

Operating Income Before Other Item and Income Tax Expense 1,302,527 387,342

Other Item

Gain on disposal of property and equipment (18,701) 1,242,464

Income Before Income Tax Expense 1,283,826 1,629,806

Income Tax Recovery (Expense)

Current (288,767) (143,073)

Deferred 61,819 (124,776)

Net Income for the Year $ 1,056,878 $ 1,361,957


Statement of Comprehensive IncomeFor the year ended December 31 2017 2016

Net Income for the Year $ 1,056,878 $ 1,361,957

Other Comprehensive Income

Reversal of previously recorded unrealized gain on investment classified as available for sale (440,321) -

Related current income tax recovery 54,420 -

Unrealized gain (loss) on investment classified as available for sale (728) 11,107

(386,629) 11,107

Comprehensive Income for the Year $ 670,249 $ 1,373,064

Statement of Changes in Members’ Equity

Undivided earnings

Accumulated Other

Comprehensive Income

Members’ Equity

Balance, December 31, 2015 $ 10,623,534 $ 374,794 $ 10,998,328

Comprehensive Income 1,361,957 11,107 1,373,064

Balance, December 31, 2016 11,985,491 385,901 12,371,392

Comprehensive income 1,056,878 (386,629) 670,249

Balance, December 31, 2017 $ 13,042,369 $ (728) $ 13,041,641

1. Basis of Presentation

These financial statements are a summarized version of the audited financial statements for the year ended December 31, 2017, which have been approved for issue by the Board of Directors on February 26, 2018. A copy of the audited financial statements is available upon request from management of the credit union.

Management and the board of the credit union have determined that presentation of the credit union’s balance sheet and statements of changes in members’ equity, operations and comprehensive income in these summarized financial statements provides sufficient information to allow members to assess the financial position and financial performance of the credit union for the year ended December 31, 2017.

Corporate Office Chief Executive Officer Andy Doak Executive Secretary Linda Fernandes Investment Specialist Horst Scheibelt Human Resources & Training Manager Karen Zwarych Member Credit Manager Sheila Carvalho Loans Officer Lila Jacob Loans Adminstration Clerk Sandie Loder Controller Denzil D’Mello Network & Systems Administrator Arvin Evangelista Administration Supervisor Brenda Wilson (retired) Accounting/ Administration Supervisor Sirin Patel Payroll Clerk Arlie Cruz (retired) Payroll Clerk Roya Ghahremani Clearing Clerk Carmencita Canivel-Sibug ATM Clerk Neetu Standford Financial Accountant Elizabeth Kunter Accounting Clerk Sandra Costanza Manager of Retail Services Bess Kominos-Estrela Call Centre Representative Jennifer Seerattan Call Centre Representative Judy Riley Call Centre Representative Tamara Pitter

Toronto Branch Toronto Branch - Manager Peter Giftakopoulos Financial Services Officer Cyndi Grenke Financial Services Officer Lianne Balasingham Senior Member Service Representative Bernice Muradali

40 College St. Branch Financial Services Officer Tommas Tammark Member Service Representative Anjou Philip

Durham Branch Durham Branch - Manager Anna Gomes Financial Services Officer Jackie McCulloch Financial Services Officer Cari Brothers Senior Member Service Representative Denise Lombardo

York Branch York Branch - Manager Diane Gelinas Financial Services Officer Susan Van Winckle Financial Services Officer Konstantine Karalis Member Service Representative Jeanette Wood

Peel Branch Peel Branch - Manager Donna Aleksovski Financial Services Officer Katarina Rakic Financial Services Officer Vince Sacino Financial Services Officer Thuvaraka Sornalingam Member Service Representative Mariel Garcia Member Service Representative Nelia Abdullah (Part-Time)

Halton Branch (opened January 03, 2018) Member Service Representative Katie Stienstra

Call Centre 1.800.561.2557 [email protected]

Telephone Banking 1.888.434.3511

Corporate Office 222 – 105 Gordon Baker Road Toronto, Ontario T 416.226.3353 F 416.226.1565 tpcu.on.ca

Toronto Branches (ATM on site) 103 – 105 Gordon Baker Road Toronto, Ontario T 416.226.3353 / 1.800.561.2557

40 College Street, Room 101 Toronto, Ontario T 416.961.2107

Durham Branch (ATM on site) Unit 101B – 3000 Garden Street Whitby, Ontario T 905.839.2693 / 1.888.354.8728

York Branch (drive-thru ATM) Unit 7 – 18025 Yonge Street, Newmarket, Ontario T 905.836.4998 / 1.877.242.8728

Peel Branch (ATM on site) Unit 1 – 7725 Kennedy Road South Brampton, Ontario T 905.795.2286 / 1.866.899.8728

Halton Branch (ATM on site) Unit 22 – 4671 Palladium WayBurlington, Ontario T 289.670.1005 / 1.800.561.2557

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