annual information meeting - dicoconsolidation du secteur 1980 - 2015. 0 50 100 150 200 250 300 350...

1

Annual Information Meeting

Réunion d’information annuelle

April 28, 2016

Le 28 avril 2016

2

Steve BlakelyChair of the Board

Président du Conseil

3

DICO’s Board of DirectorsConseil d’administration de la SOAD

From L to R Top Row: John Ferreira, Gail Di Cintio, Steve Blakely, Jim Houston, Don Dalicandro

Bottom Row: Helen Young, Carmen Rossiter, Monique Tremblay

4

2015 Highlights2015 – Faits saillants

All depositor funds were protected

Maintained confidence in the sector

Sector experienced solid growth and profitability

Consolidation continued – down by 7 credit unions

Continued to enhance prudential oversight processes Insurance fund at $205.6 M (78 bps of insured

deposits)

5

DICO Strategic ObjectivesObjectifs stratégiques de la SOAD

Proactive and balanced regulation and risk managementRéglementation proactive et équilibrée et la gestion des risques

Sound Corporate GovernanceBonne gouvernance corporative

Effective Public and Stakeholder Awareness Sensibilisation efficace du public et des intervenants

Strong PartnershipsPartenariats solides

6

DICO InitiativesInitiatives de la SOAD

Focus on Governance: ICAAP and Stress Testing Corporate Governance Director Training, Qualification and Competency

Expectations and Assessment

Deposit Insurance Reserve Fund (DIRF) Recoveries on past claims Revised Differential Premium System 2015 DIRF target – 100 bps of insured deposits in 2020

7

DICO Initiatives (con’t) Initiatives de la SOAD (suite)

Proactive risk based prudential regulation Establishing guidance and expectations Examining regularly and providing feedback Avoiding potential losses by intervening early Assisting boards in long term strategic planning

Working with stakeholders

Continued focus on credit union sustainability & sector stability

8

Beryl RobertoDICO OmbudsmanOmbudsman de la SOAD

Ombudsman’s ReportRapport de l’ombudsman

9

Regulation and Risk ManagementRéglementation et Gestion des Risques

Guy HubertVice President, Regulation and Risk ManagementVice-président, Réglementation et Gestion des risques

10

Sector Consolidation 1980 - 2015Consolidation du secteur 1980 - 2015

0

50

100

150

200

250

300

350

400

450

0

150

300

450

600

750

900

1050

1200

1980 1985 1990 1995 2000 2005 2010 2015

$ mill

ions

Numb

er of

credit

unio

ns/ca

isses

popu

laires

Number of credit unions/caisses populairesAverage Assets

Chart1

19801980

19811981

19821982

19831983

19841984

19851985

19861986

19871987

19881988

19891989

19901990

19911991

19921992

19931993

19941994

19951995

19961996

19971997

19981998

19991999

20002000

20012001

20022002

20032003

20042004

20052005

20062006

20072007

20082008

20092009

20102010

20112011

20122012

20132013

20142014

20152015

110424

Number of credit unions/caisses populaires

Average Assets

Number of credit unions/caisses populaires

$ millions

1092

3

1049

4

999

5

952

6

925

7

906

8

862

9

833

10

795

11

734

12

696

13

656

16

598

18

563

20

529

23

501

25

474

27

445

29.3

407

32.8

378

36.4

343

37.3

321

47.6

302

54.9

276

65.2

258

82.9

240

92.5

235

102.2

220

112.8

210

126.6

198

142.3

186

158.3

167

185.6

152

222.1

143

255.9

127

307

117

362.8

Sheet1

Column119771979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015

Number of credit unions/caisses populaires120010921049999952925906862833795734696656598563529501474445407378343321302276258240235220210198186167152143127117110

Average Assets134567891011121316182023252729.332.836.437.347.654.965.282.992.5102.2112.8126.6142.3158.3185.6222.1255.9307362.8424

11

Sector PerformanceRendement du secteur

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Retu

rn on

Ass

ets

Tota

l Ass

ets

Total Assets Return on Assets

Chart1

19971997

19981998

19991999

20002000

20012001

20022002

20032003

20042004

20052005

20062006

20072007

20082008

20092009

20102010

20112011

20122012

20132013

20142014

20152015

Total Assets

Return on Assets

Total Assets

Return on Assets

13.3

0.0042

13.8

0.0058

14

0.0038

15.4

0.0047

16.7

0.004

17.9

0.0039

21.3

0.0031

22.3

0.003

23.4

0.0029

24.7

0.004

26.2

0.0033

27.9

0.0015

29.6

0.0025

31

0.0048

33.8

0.0051

36.6

0.0037

38.991

0.0043

42.45

0.0035

46.626

0.0028

Sheet1

yearTotal AssetsReturn on Assets

1997$13.300.42%

1998$13.800.58%

1999$14.000.38%

2000$15.400.47%

2001$16.700.40%

2002$17.900.39%

2003$21.300.31%

2004$22.300.30%

2005$23.400.29%

2006$24.700.40%

2007$26.200.33%

2008$27.900.15%

2009$29.600.25%

2010$31.000.48%

2011$33.800.51%

2012$36.600.37%

2013$38.990.43%

2014$42.450.35%

2015$46.630.28%

12

Number of Credit Unions/Caisses Populaires

Assets($ Billions)

ROA(bps)

British Columbia 42 66.7 36

Alberta 28 23.8 51

Saskatchewan 49 20.8 61

Manitoba 36 27.7 46

Québec 335 148.0 87

Ontario 110 46.6 28

Other ProvincesAutres provinces

13

Ontario Sector Profile 4Q15Profil du secteur de l’Ontario au 4T15

Credit Unions

Caisses Populaires Total Ontario

Number of Institutions 84 26 110

Assets ($Billions) $ 40.1 $6.5 $46.6

Capital (% assets) 7.10% 8.72% 7.32%

ROA (bp % assets) 20 75 28

ROA before dividends 30 79 36

Efficiency Ratio 86.4% 69.5% 83.7%

14

Capital Composition 2002 - 2015 Composition du capital entre 2002 – 2015

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Membership Shares Investment Shares Retained Earnings Other Capital

Chart1

2002200220022002

2003200320032003

2004200420042004

2005200520052005

2006200620062006

2007200720072007

2008200820082008

2009200920092009

2010201020102010

2011201120112011

2012201220122012

2013201320132013

2014201420142014

2015201520152015

Membership Shares

Investment Shares

Retained Earnings

Other Capital

0.067348838

0.2123222149

0.6530690083

0.0672599388

0.0569856822

0.20258473

0.5857039615

0.1547256262

0.0531862802

0.2122648507

0.573869466

0.1606794031

0.0471516305

0.2197247198

0.5457571507

0.187366499

0.0446819263

0.2206979991

0.5568782863

0.1777417883

0.0418762432

0.2194507327

0.5646703894

0.1740026347

0.040084807

0.2259252868

0.5566833283

0.1773065778

0.0367745605

0.2627735895

0.5464033944

0.1540484556

0.0324294452

0.2452601357

0.5629778798

0.1593325393

0.0318379069

0.2270740693

0.6146125953

0.1264754285

0.0291358214

0.2524512224

0.60160398

0.1168089763

0.0269

0.24159

0.6213

0.1102

0.0246

0.24

0.621

0.11

0.021

0.25

0.611

0.11

Sheet1

YearMembership SharesInvestment SharesRetained EarningsOther Capital

20027%21%65%7%

20036%20%59%15%

20045%21%57%16%

20055%22%55%19%

20064%22%56%18%

20074%22%56%17%

20084%23%56%18%

20094%26%55%15%

20103%25%56%16%

20113%23%61%13%

20123%25%60%12%

20133%24%62%11%

20142%24%62%11%

20152%25%61%11%

To resize chart data range, drag lower right corner of range.

15

Sector Profile by Risk Level (% of assets)Profil du secteur selon le niveau de risque (% de l’actif)

0.5%

3.6%

36.9%

39.1%

19.9%

2015

High Moderate-High Moderate Low-Moderate Low

Chart1

High

Moderate-High

Moderate

Low-Moderate

Low

2015

2015

0.005

0.036

0.369

0.391

0.199

Sheet1

2015

High0.5%

Moderate-High3.6%

Moderate36.9%

Low-Moderate39.1%

Low19.9%

16

Examination Findings: By-law #5 Résultats des examens : Règl. No 5

Governance: Board

Directors Training & Qualification Overall Adequate

Governance: Audit Committee

Enterprise Risk Management Overall Adequate

Internal Audit Some Improvement Needed

Governance: Management

Commercial Lending Some Improvement Needed

Capital & Liquidity management Some Improvement Needed

17

Intervention Levels by Program Niveaux d’intervention selon le programme

0

5

10

15

20

25

30

35

2007 2008 2009 2010 2011 2012 2013 2014 2015Watchlist Supervision Administration Liquidation

Chart1

2007200720072007

2008200820082008

2009200920092009

2010201020102010

2011201120112011

2012201220122012

2013201320132013

2014201420142014

2015201520152015

Watchlist

Supervision

Administration

Liquidation

29

6

3

8

26

7

3

10

21

4

2

16

18

4

1

20

23

2

1

25

23

1

1

26

14

1

0

13

11

0

0

12

13

0

0

10

Sheet1

YearWatchlistSupervisionAdministrationLiquidation

200729638

2008267310

2009214216

2010184120

2011232125

2012231126

2013141013

2014110012

2015130010


18

Number of Failed Credit Unions/Caisses PopulairesNombre de faillites Caisses Populaires/Credit Union

0

5

10

15

20

25

Chart1

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

# of Failures

10

8

20

15

11

10

4

11

3

2

2

0

1

1

0

0

1

0

3

2

2

2

1

0

0

0

0

Sheet1

Column11988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015

# of Failures19108201511104113220110010322210000

19

Losses to the Fund(Severity - By Year $M)Pertes au Fonds(Gravité - par année en millions $)

-70

-60

-50

-40

-30

-20

-10

0

10

20

■ Loss to the Fund ■ Recovery to the Fund

Chart1

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

■ Loss to the Fund■ Recovery to the Fund

Net Provision for Losses

-69

-22.7

3.2

2

-4.6

-18

-28

-2.4

-1.4

-10.8

1.3

5.5

2.2

3.8

5.1

6.6

1.3

-2.7

-0.5

-10.8

-25.3

-29.3

-1.5

0.1

16

-2

-0.14

0.246

Sheet1

Column119871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015

Net Provision for Losses-29-69-22.73.22-4.6-18-28-2.4-1.4-10.81.35.52.23.85.16.61.3-2.7-0.5-10.8-25.3-29.3-1.50.116-2-0.140.246

RED = Loss to the Fund

GREEN = Gain to the Fund

20

Current Deposit Profile: 2008 - 2015 Profil des dépôts : 2008 - 2015

0

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012 2013 2014 2015Insured Deposits Uninsured Deposits

$ bi

llion

s

Chart1

20082008

20092009

20102010

20112011

20122012

20132013

20142014

20152015

Insured Deposits

Uninsured Deposits

19.4

5.3

20.6

5.8

21.6

6.3

22.3

7.1

23.1

8.2

24.155

8.82

25.25

9.833

26.575

11.008

Sheet1

Year20082009201020112012201320142015

Insured Deposits19.420.621.622.323.124.15525.2526.575

Uninsured Deposits5.35.86.37.18.28.829.83311.008

21

Reserve Fund Comparison with Other Provincial Jurisdictions (Dec. 31, 2015) Fonds de réserve : comparaison avec celui des autres provinces (31 déc. 2015)

0

20

40

60

80

100

120

140

160

180

BC AB SK MB QC ON

Basi

s Po

ints

of I

nsur

ed D

epos

its

Actual Target

Chart1

BCBC

ABAB

SKSK

MBMB

QCQC

ONON

Actual

Target

Basis Points of Insured Deposits

82

90

123

150

157

160

107

115

90

90

77

100

Sheet1

ActualTargetTarget2

BC829088

AB123150150

SK157160160

MB107115115

QC909090

ON77100100

22

Deposit Insurance Premium Comparison Comparaison des primes d'assurance-dépôts

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

BC AB SK MB QC * ON

* Estimated rate for AMF (bottom portion) deposit insurance fund and Fonds de sécurité Desjardins (upper portion) stabilization fund

Chart1

BCBC

ABAB

SKSK

MBMB

QC *QC *

ONON

DI Rate

Stab Fund Rate

0.74

0

1.42

0

0.9

0

0.88

0

0.22

0.57

1.1

0

Sheet1

DI RateStab Fund Rate

BC0.740

AB1.420

SK0.900

MB0.880

QC *0.220.57AMF/FSD

ON1.100


BC***ABSKMB*ON*QC AMF**

0.074%0.14%0.09%0.09%0.110%0.022%

23

Key Strategies for 2016 Principales stratégies pour 2016

Support the Ministry with the Legislative and Mandate reviews

Develop guidance on IT Governance/Cybersecurity and Securitization

Enhance Liquidity Guidance Enhance examination practices Provide regulatory guidance and interpretation

24

The FutureL’Avenir

Andy PoprawaPresident & CEO

Président et chef de la direction

25

-0.80%

-0.60%

-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

-200

-150

-100

-50

0

50

100

150

200

250

300

350

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

DIRF ($) DIRF as a % of Current Coverage Insured Deposits

$m

illion

s

Perc

enta

ge

Trend in Reserve Fund Évolution du Fonds de réserve

DIRF Projections ($) DIRF Projections as a % of Current Insured Deposits

DIRF Target of 100 bps projected to be reached in 2020

26

Long Term Sector Strategy Stratégie à long terme pour le secteur

What strategies will make the sector stronger, more vibrant and sustainable? Focusing on member satisfaction and delivering a

differential experience Building a credit union/caisse populaire brand Constructing a sustainable business model and executing

on it Creating an ownership culture within the credit union Collaborating within the sector

27

Legislative and Mandate ReviewsExamens du mandat et des mesures législatives

Legislative Review Initiated November 2014 Consultations Recommendations February 2016

Key Proposals Increase deposit insurance coverage to $250,000 Adopt capital rules based on BASEL III principles Permit inter-provincial credit union loan syndications Permit wholly owned insurance brokerages Remove differentiated rules for smaller credit unions Enhance corporate governance and consumer

protection

28

Legislative and Mandate ReviewsExamens du mandat et des mesures législatives

Mandate Review Initiated February 2015 with consultations Preliminary Report November 2015 Final Report Due Spring 2016

Key Preliminary Proposals Integrated single regulatory agency – Financial

Services Regulatory Authority (FSRA) Distinct functions – market conduct, pensions and

prudential regulation Regulate all aspects of financial services in Ontario DICO’s prudential regulatory functions to be

transferred to FSRA

29

Questions and Discussions Questions et dialogue



30

Closing RemarksRemarques de clôture



31

Thank you.

Merci.

Slide Number 1Slide Number 2Slide Number 32015 Highlights�2015 – Faits saillantsDICO Strategic Objectives�Objectifs stratégiques de la SOADDICO Initiatives�Initiatives de la SOAD DICO Initiatives (con’t) �Initiatives de la SOAD (suite)Slide Number 8Slide Number 9Sector Consolidation 1980 - 2015 �Consolidation du secteur 1980 - 2015Sector Performance �Rendement du secteurOther Provinces�Autres provinces Ontario Sector Profile 4Q15 �Profil du secteur de l’Ontario au 4T15Capital Composition 2002 - 2015 �Composition du capital entre 2002 – 2015 Sector Profile by Risk Level (% of assets)�Profil du secteur selon le niveau de risque (% de l’actif) Examination Findings: By-law #5 �Résultats des examens : Règl. No 5 Intervention Levels by Program �Niveaux d’intervention selon le programmeNumber of Failed Credit Unions/Caisses Populaires�Nombre de faillites Caisses Populaires/Credit UnionLosses to the Fund (Severity - By Year $M)�Pertes au Fonds (Gravité - par année en millions $)Current Deposit Profile: 2008 - 2015 �Profil des dépôts : 2008 - 2015Reserve Fund Comparison with Other Provincial Jurisdictions (Dec. 31, 2015) �Fonds de réserve : comparaison avec celui des autres provinces (31 déc. 2015)Deposit Insurance Premium Comparison ��Comparaison des primes d'assurance-dépôts �Key Strategies for 2016 �Principales stratégies pour 2016Slide Number 24Trend in Reserve Fund �Évolution du Fonds de réserveLong Term Sector Strategy �Stratégie à long terme pour le secteurLegislative and Mandate Reviews�Examens du mandat et des mesures législativesLegislative and Mandate Reviews�Examens du mandat et des mesures législativesQuestions and Discussions �Questions et dialogueClosing Remarks�Remarques de clôtureThank you. ��Merci.

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