146th Annual General Meeting

2014

30/04/2014 1

30/04/2014 2

Stuart Young

Chairman

• Welcome

• Apologies for Absence

• Minutes of the 145th Annual General Meeting

• Matters Arising

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Tony Wilmot

Finance Director

• Annual Accounts and Annual Business Statement for the

Year Ended 31st December 2013

Progress in 2013 – Income & Expenditure

The underlying financial performance of the Society has been strong.

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2013 2012

£000s £000s

Income

Net Interest Receivable 1,849 1,514

Other Income 93 93

Total Income £1,942 £1,607

Costs

Management Expenses (including

depreciation) 1,377 1,250

Mortgage Provision 99 (5)

FSCS levies 140 101

Total Costs £1,616 £1,346

Net Profit before tax 326 261

Tax (72) (55)

Net Profit £254 £206

Progress in 2013 – Balance Sheet

Strong balance sheet with growth in the year of 1.03%. Record year for Prime Residential lending resulting in growth in total mortgage balances of 7.39%. Adequate capital to underpin growth going forward.

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2013 2012

£000s £000s £000s £000s

Assets

Liquid assets 40,023 47,813

Mortgage balances 140,978 131,280

Less: Provisions (1,115) 139,863 (1,043) 130,237

Fixed assets 1,165 1,121

Other assets 280 307

Total Assets £181,331 £179,478

Liabilities

Shares and Deposits 168,720 164,641

Owed to credit institutions 0 168,720 2,508 167,149

Other liabilities 425 432

FSCS provision 188 155

Subordinated debt 2,750 2,750

Revaluation reserve 488 487

General reserve 8,760 8,502

Total Liabilities £181,331 £179,478

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Stuart Young

Chairman

• Chairman’s Statement

• Receive the Annual Report and Accounts and Auditors

Report

• To consider, and if thought fit, pass an Ordinary

Resolution to appoint KPMG LLP as auditors until the

conclusion of the next Annual General Meeting

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Stuart Young

Chairman• To consider and if thought fit pass the following Ordinary

Resolutions for the election of a director:

• 4 (a) To elect Sue Symington

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Stuart Young

Chairman

• To approve the Directors Remuneration Report

• To approve the amendments to the rules of the Society

• To transact any other business permitted by the rules of

the Society

• Close the formal part of the meeting

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Peter Myers

Chief Executive• Vision

• Strategy

• How the Society works

• Market Influences

• Questions

Vision

To be a strong independent mutual, that is

trusted and respected by members and non-

members, because we offer straightforward,

value for money products, that are easy to

understand, and supported by an unrivalled

level of personal service.

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Strategy

• As an independent Building Society we will provide a safe and trusted place for members to save.

• These savings will be used to provide residential mortgages, so that members can buy a house, or improve their existing home.

• Our strategy will be underpinned by an unrivalled level of personal service.

• Bonuses will be not be paid to any staff

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How the Society WorksThe Society has 3 main components to its business:-

2. Saver Members (Lend money to the Society – £168.7m)

3. Mortgage Members (Borrow money from the Society - £141m)

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1. Capital (Money held in reserve

– £8.8m)

How the Market Works

• The market is driven by supply and demand.

• When supply exceeds demand interest rates go down.

• When demand exceeds supply interest rates go up.

• Demand and supply are influenced by economic conditions in the UK, Europe and Globally.

• They are also influenced by government interventions in the UK, Europe and Globally.

• Currently the supply of savers funds exceeds demand.

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Market InfluencesFunding For Lending Scheme

• This is a Bank of England initiative designed to increase lending in the UK economy, encouraging investment and stimulating growth.

• FLS provides cheap money to banks and building societies that choose to subscribe.

• The result is an increased supply of funds at lower interest rates than those paid to retail savers.

• This reduces the overall savings rates within the market.

• The Beverley Building Society chose not to subscribe to the scheme believing our loyalty was to our saver members.

• However, it has been necessary to reduce savers rates for two reasons……..

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Market InfluencesFunding For Lending Scheme (contd)

…………..

1. An increased supply of funds available for mortgages has increased competition and reduced interest rates.

• The Society’s lowest mortgage rate is now 1.89%.

2. Other Banks and Building Societies have reduced savers rates, as they use Bank of England monies, and this has led to the Beverley having significant inflows of savers funds, which can only be managed by reducing rates.

• The Society deposits any money it does not lend with very safe counter parties - typically the Bank of England at 0.5% or Treasury Bills at 0.23%.

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Market InfluencesOther initiatives follow similar supply and demand principles……

Quantitative Easing

• This is where governments buy fixed income securities in the market.

• Government purchases increase demand and therefore the price of fixed income securities.

• There is an inverse relationship between the price and interest rate (yield).

• Therefore every month QE both increases the amount of funds available for lending and also reduces interest rates.

• This further reduces mortgage rates and in turn savers rates.

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Market InfluencesIn 2014 these market dynamics are likely to be reinforced by….

Changes to Cash and Stock and Share ISA’s

• Increased limits

• The ability to transfer stock and share ISA’s to Cash ISA’s

• Both could increase the supply of retail savings reducing mortgage and savers rates.

Pension Changes

• No need to buy an annuity.

• Complete flexibility on how monies are spent or saved.

• This could result in further inflows of retail savings and/or the repayment of mortgages.

• These could increase the supply of retail savings and also reduce mortgage demand.

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Market InfluencesGood News for those over 65………

Pensioner Bonds

• For those over 65 these could be good news with

competitive fixed rate deposits available.

• However, the amount proposed is £10bn – less than is

spent on QE in one month.

• Therefore the overall impact on market supply and

demand may be limited, meaning little benefit for savers

under 65.

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Market InfluencesGood News for all Members………

• Your money is safe with the Beverley Building Society.

• We are completely independent which means that £85,000 of every member’s savings (so £170,000 for joint accounts) are guaranteed by the Government.

• We promise that we will always offer consistently competitive rates.

• We will offer straight forward products with no confusing ‘special offers’.

• We take a conservative approach.

• We don’t pay bonuses to staff or dividends to shareholders.

• Therefore, all profits are reinvested in the Society.

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Questions?

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… a strong independent mutual