2016 Annual Report
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DUCA is governed by a Board of Directors (the “Board”) elected by our owners – the DUCA Members who bank with us. DUCA’s Board, comprised of nine Directors, elected to three-year terms, is your voice for how DUCA is governed.
The Board is responsible for ensuring the Credit Union is operated in a safe and prudent manner and adheres to standards of sound business and financial practices. In fulfilling its responsibilities, the Board ensures the Credit Union is operating in accordance with co-operative principles.
The Board carries out its duties by establishing, communicating, and monitoring the Credit Union’s adherence to its:
- Corporate Values
- Business philosophy and strategic direction
- Financial soundness and performance
- Quality of management
- Risk appetite with respect to the management of key inherent financial and operating risks, and strategic risks
To fulfil this responsibility, the Board:
- Exercises sound, unbiased judgment and decision making
- Has appropriate qualifications and competencies individually and collectively that meet the competency requirements established in the Ontario Credit Unions and Caisses Populaires Act, 1994, S.O. 1994, c. 11 (“the Act”)
- Diligently oversees risk management and control functions that are robust and independent of operating functions
- Follows good governance practices
- Seeks third party advice on matters for which Directors do not have direct knowledge and/or expertise
Directors
Committees
In accordance with the Credit Union’s by-laws, the Board of Directors established the following Committees in 2016:
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Audit
Audit Committee The Audit Committee’s mandate and duties are set out in the Regulations to the Act. The Audit Committee is responsible for reviewing the appropriateness and acceptability of the accounting principles and practices used in the financial reporting, changes in accounting principles or practices, and significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including the effects of alternative methods on the financial statements. In addition, the Audit Committee reviews the adequacy and effectiveness of the internal accounting and financial controls, and the recommendations of management, the external auditors and the internal auditors, for the improvement of accounting practices and internal controls. The Audit Committee is responsible for recommending the approval of the annual financial statements to the Board.
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Credit
Credit Committee The Credit Committee’s role is to provide oversight and advice to the Management Credit Committee and evaluate those loan applications that require concurrence and approval in accordance with the Credit Risk Policy.
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Elections
Elections Committee The Elections Committee is responsible for, actively seeking Director candidates for election by soliciting nominations from the Credit Union’s Members and incumbent Directors, ensuring the total number of individuals, whose names have been placed in nomination as candidates, is at least equal to the number of vacancies to be filled in the election. The committee also assesses potential candidates, taking into consideration the overall composition and diversity of the Board, the competencies of the candidate as compared to the gap analysis, the Board’s leadership requirements, and the overall functioning of the Board.
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Finance
Finance Committee The Finance Committee is responsible for the review, oversight and approval of the Annual Operating Plan and its process. This committee is also accountable for the strategic planning process and the bi-annual forecast and works collaboratively with business units to identify strategic opportunities and risks and ensure plans are in place to address them.
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Governance
Governance Committee The Governance Committee is responsible for overseeing the adequacy and effectiveness of the Credit Union’s corporate governance policies and recommending any improvements to the Board, the annual assessment of the performance of the Board, its Chair, and Committee Chairs, and recommending action plans to address any assessed weaknesses. At least triennially, this committee reviews the amount, determination, and payment of remuneration to be paid to Directors in light of time commitment, responsibilities, and fees paid by comparable companies, and recommends changes to the Board.
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Compensation
Compensation Committee The Compensation Committee is responsible for annually reviewing, approving and monitoring the Credit Union’s compensation and benefits programs, including the development and administration of short-term incentive plans. The committee develops and recommends to the Board the criteria, measures, and targets for the CEO’s performance evaluation and coordinates the evaluation process, as well as reviews and evaluates the process by which the CEO evaluates the performance of the Executive Leadership Team.
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Risk
Risk Committee The Risk Committee is responsible for overseeing the Credit Union’s risk management activities to ensure they are adequately resourced, have the appropriate status and visibility throughout the Credit Union, and the Credit Union has the systems, processes, and capabilities in place to evaluate its overall risk profile. In addition, the Risk Committee reviews, approves, oversees, and evaluates the processes, controls, principles, reporting, and systems developed by Management to identify, evaluate, and oversee appropriate management of applicable risks, including the status of any remediation plans to rectify any deficiencies identified.
Opening the door to more opportunities
Do More, Be More, Achieve More
DUCA’s story began in 1954 when a group of newcomers to Canada saw the need for a financial co-operative that would work to the benefit of its Members and communities.
From a single branch credit union in Toronto, to 15 branches across Southern Ontario, we now serve over 59,000 Retail, Small Business, and Commercial Members.
As a Member owned co-operative banking institution, our shareholders are the people and businesses who bank with us and we are driven to make decisions that are in their best interest. We help our Members ‘Do More, Be More, and Achieve More, with their money and their lives’ by having a keen interest in hearing your stories and a genuine desire to help you write the next chapters. We’re not about selling you products. We’re here to provide you with personalized and customized advice and solutions, and to support you in making sound financial decisions that will help you meet your goals.
For our Retail Members, our advisors work with you to ensure your financial plan and decision-making result in bringing life to your story whether that’s purchasing a home, financing your children’s education, growing your business, becoming debt free, taking that dream vacation, or putting a new car in the driveway.
For our Commercial Members, our focus is to partner with you to understand the nature of your project so we can structure an innovative and customized solution that meets your business needs.
We take our 'Profits with a Purpose' promise seriously and are committed to:
- Sharing profits with our Members, rewarding you for banking with us
- Investing back into the communities we serve because we all prosper when our communities prosper
- Investing in DUCA so we can continue to enhance the experience we deliver to our Members
- Meeting the Regulatory Capital Requirements necessary to ensure the safety of our Members’ assets
In this year’s Annual Report we will tell DUCA’s story from our Members' perspective. Your story is our story and our passion. We are proud of what you have achieved and about the role we want to play in helping even more Members 'Do More, Be More, and Achieve More.'
Member Experience and Engagement
Over the first quarter of 2016, DUCA completed a comprehensive study of what people want from their financial institution.
We interviewed DUCA Members and asked them about their experience with us.
We weren’t surprised to learn that, when compared to 12 other financial service providers, including the banks and several other large Ontario credit unions, DUCA had the largest share of Members who indicated they were extremely likely to recommend us to their family and friends.
Our Members told us they value No-Fee banking, appreciate the competitive rates on products, and love the approachability and personal attention provided by our employees. We will continue to offer No-Fee banking services and competitive products and rates. We will also expand our advice-based approach.
As we look to grow our business in 2017, we will do it in a way that doesn’t compromise the personal touch you’ve come to value and appreciate at DUCA. You can count on our employees never “selling” you a product you don’t need or that isn’t in your best interest. The solutions we put in front of you will always be in the context of helping you achieve your goals. Also be assured that, if we can’t offer you a solution that’s right for you, we’ll refer you elsewhere.
“A Member came in asking about a car loan. I knew DUCA couldn’t match the rates currently being offered by the dealerships and I told the Member to check that out first. I took the opportunity to let the Member know that while we’d been talking about the car loan, I’d qualified them for a mortgage because I knew they were currently renting. The Member said, ‘You mean we can afford a house? We didn’t know that!’ DUCA turned down the opportunity to give a Member a car loan but three months later the happy couple was back, excited about signing their mortgage papers!”
- DUCA Branch Manager
In 2017 we will be looking for ways to engage more of our Members in sharing their stories, and how DUCA has helped you. We believe your stories will help more people in our communities know there’s a different experience waiting for them at DUCA.
Commercial Banking
Over the last few years, DUCA has increased its capability and reputation for being able to provide innovative, customized solutions to our Commercial Members that include subordinated debt and mezzanine financing in addition to more traditional senior debt.
We are nimble in our ability to assess, adjudicate, and approve deals, and to bring other strategic partners to the table when necessary.
If a Member’s financing needs require more funding than we are able to provide, we lead and participate in syndications with major Canadian Schedule A banks, other prominent financial intermediaries, and sister credit unions in Ontario - working together to provide funds for a single borrower and sharing the risk inherent in larger projects.
This year we broadened our reach from both a geographic and industry perspective serving Members in the Ottawa, Kitchener-Waterloo, Cambridge, and London areas, and in sectors such as student housing, storage facilities, residential and commercial constructions, as well as hospitality.
Large commercial deals, by virtue of their size and complexity, represent risks to a financial institution that must be carefully assessed and managed. As a result, in 2016 we strengthened our credit management and adjudication capability and substantially reduced our delinquent loan accounts from $21.9 million in 2015 to $8.9 million primarily due to the settlement of two large commercial loans in 2016.
In 2017, we will expand our capacity to grow and service Commercial Members with borrowing needs between $1 - $10 million. We will also introduce cash management and payment solutions.
Growth and Diversification
In 2016 DUCA experienced another year of strong Membership growth with a total of 3,048 new Members joining the Credit Union.
While both our deposit and loan growth was up 4% year-over-year, DUCA’s vision is for more significant growth in 2017 and beyond, and is based on our desire to:
- Deepen relationships with our existing Members. Many DUCA Members bank with more than one financial services provider. By choosing DUCA as their primary financial services provider, and giving us the opportunity to see their total financial situation, we know we can offer comprehensive solutions that will help our Members reach their goals sooner.
- Attract new Members. We are passionate about helping as many people in our communities as possible to ‘Do More, Be More and Achieve More with their money and their lives.’
- Diversify our business. Diversifying our sources of revenue is necessary to ensure sustainable growth and risk-balanced profitability so we can keep our “Profits with a Purpose” promise.
Growing and diversifying our business, and meeting the needs of our Members, is dependent on having a suite of competitive and innovative products. In 2016 we introduced the following:
Business Visa – In partnership with our credit card partner Collabria, DUCA now offers a suite of three Business Visa cards specifically for small businesses.
Interac™ Flash Payments – DUCA Members can now use their debit card to ‘tap and go’ when making a debit payment.
Community Hero Mortgage – In partnership with Habitat for Humanity GTA, we launched our co-branded Community Hero Mortgage. When Members choose the Community Hero Mortgage they receive a mortgage at our regular posted rates and DUCA donates 0.02% of each interest payment made directly to Habitat for Humanity. This creates an ongoing revenue stream for Habitat Housing throughout the term of the mortgage, at no additional cost to our Members.
Payroll Services – In partnership with Desjardins, we are now pleased to refer our Small Business and Commercial clients to another member-owned, cooperative financial services provider, for payroll services.
Growing and diversifying our business is also dependent on our brand awareness in the communities we serve. Through our research study, we heard from approximately 1,025 individuals who are not yet DUCA Members. We learned it’s time to start talking about the “DUCA difference” more boldly, and increasing our physical presence in the market place. Prospective Members want what DUCA offers but we’re not well-known in all the communities we serve.
Our priorities in 2017 will include:
- Continuing to enhance our suite of competitive and innovative products.
- Building brand awareness in our communities to attract new Members to DUCA.
- Expanding our reach through the introduction of mobile teams so meeting with a DUCA advisor will be more convenient, for both our existing Members and new Members, than ever before.
- Enhancing our Small Business, Mid-Market Commercial, and Wealth offerings to diversify our business and enable us to help a broader base of Members.
Strengthening our Infrastructure
Not surprisingly, our research study told us it’s important to our Members that our operational processes make it easy and efficient to do business with us.
In 2016 we began implementing a Customer Relationship Management (CRM) system. This system will enable us to capture and remember the stories and goals of our Members so you don’t need to refresh our memories every time you meet with us. CRM will also enable us to better anticipate and build the solutions our Members need.
We also implemented dual authentication enhanced identification requirements on DUCA’s online banking system providing even more security for our Members.
Our focus going forward is on leveraging technology to streamline our processes, making it quicker and easier for our employees to deliver more personalized advice, guidance, and solutions to our Members. We are also investing in technology to add more functionality to our online banking experience – functionality that will provide more online account opening options and a more personal and engaging experience that embeds advice and guidance into the process for those Members who prefer a more self-directed, yet still personalized, banking experience.
Engaging our Employees
In 2016 we continued our journey to enhance our employee experience so we can attract the best individuals to DUCA, retain our talent, and model the experience we expect our employees to deliver to our Members. One of the ways we have focused on enhancing the employee experience has been to involve employees in helping us make decisions that are in their best interests.
In 2016 we conducted a review of the market competitiveness of our Total Rewards package and expect to implement new salary ranges in 2017. After receiving feedback from our employees, we transitioned our group health and dental benefits program to Sun Life to provide a better claims experience. We engaged employees in the process of determining what enhancements to our group health and dental plan they would most value and enhancements became effective January 1, 2017.
We offered well-attended and highly-rated information sessions to help employees better understand and utilize our group benefits and pension plans. Through our partnership with LifeSpeak, an online library of over 600 videos, covering a wide variety of topics including health & well-being, and personal & professional development, was made available to our employees and their families. In 2017 we will further enhance our employee experience through the implementation of a reward & recognition program.
At our DUCA Day Employee Event in November we engaged our people in a fun and meaningful experiential learning exercise that helped us better understand how we need to think and work differently across functions to ensure we meet the needs of our Members. Our partnership with Habitat for Humanity is also providing us with an exciting opportunity to work together as we build houses and contribute to the well-being of our communities.
We leveraged our online Performance Management application to more effectively engage employees in the process of setting individual performance goals, tracking performance throughout the year, and completing a self-review as input to the year-end performance review process.
In 2017, as we re-configure our physical office space in our head office location to accommodate growth in our employee base, we will engage as many employees as possible in providing input to how our space should be designed in order to help us strengthen the elements of our culture that will enable us to improve both our Member and employee experiences.
Helping our Members achieve more
Financial Snapshot
2012 | 2013 | 2014 | 2015 | 2016 | ||
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1.0 | Key Financial Results and Metrics ($ in thousands) | |||||
1.1 | DUCA Net Income Consolidated | $10,240 | $7,021 | $2,509 | $2,018 | $13,727 |
1.2 | DUCA Net Income excluding ZBC | $10,240 | $7,021 | $4,833 | $9,642 | $11,541 |
1.3 | ROE excluding ZBC | 13.2% | 8.8% | 6.5% | 9.5% | 7.8% |
1.4 | CER excluding ZBC | 61.87% | 65.18% | 69.11% | 62.82% | 63.32% |
1.5 | Capital Ratio | 8.03% | 7.88% | 5.92% | 6.64% | 6.65% |
1.6 | Risk Weighted Ratio | 16.88% | 14.00% | 12.00% | 12.63% | 12.28% |
1.7 | Liquidity Ratio | 16.92% | 9.97% | 7.60% | 12.58% | 16.41% |
2.0 | Balance Sheet Performance ($ in millions) | |||||
2.1 | Assets | $ 1,277 | $ 1,392 | $ 1,878 | $ 2,283 | $ 2,476 |
2.2 | Loans | $ 1,032 | $ 1,241 | $ 1,715 | $ 1,984 | $ 2,064 |
2.3 | Deposits | $ 1,166 | $ 1,270 | $ 1,641 | $ 1,791 | $ 1,869 |
2.4 | Securitization Debt | $ - | $ - | $ 91 | $ 329 | $ 435 |
2.5 | Regulatory Capital | $ 103 | $ 110 | $ 111 | $ 152 | $ 165 |
3.0 | Earnings Performance ($ in thousands) | |||||
3.1 | Net Interest Income | $ 30,365 | $ 29,640 | $ 32,288 | $ 36,581 | $ 44,378 |
3.2 | Fee and other income excluding ZBC | $ 2,951 | $ 3,120 | $ 5,739 | $ 10,393 | $ 7,229 |
3.3 | Loan impairment charges | $ (2,719) | $ 1,333 | $ 3,831 | $ 2,899 | $ 2,363 |
3.4 | Operating Expenses excluding ZBC | $ 20,613 | $ 21,352 | $ 26,281 | $ 29,508 | $ 32,679 |
3.5 | Pre-tax income before patronage excluding ZBC | $ 15,422 | $ 10,075 | $ 7,915 | $ 14,567 | $ 16,565 |
Download Summarized Financial Statements PDF
more community spirit
Community Highlights
- Community Investment Summary
- Community Impact Loans
- Community Hero Mortgage
- Eva’s Initiatives
- Christian Children’s Fund of Canada
- Members and Employees
Each year DUCA contributes a minimum of 3.5% of the previous year’s pre-tax profit to support community initiatives through donations and sponsorships. This is well beyond the Imagine Canada Caring Company standard of 1% aspired to by most community minded companies. This year our total investment in communities increased from $561,990 in 2015 to $583,180.
Cash Donations | $520,100 |
During Working Hours Volunteer Time | $2,222 |
In-Kind | $4,175 |
Program Management Costs | $56,683 |
Total | $583,180 |
One reason for this increase is DUCA’s partnership with Habitat for Humanity GTA. The partnership included the introduction of DUCA ‘Adopt a Days’ held at Habitat for Humanity build sites. This initiative helped to nearly double our ‘during working hours’ volunteer time, accounting for nearly 150 hours. These days enabled the DUCA team to go out into the community and help build housing for low income, working families…helping them change the next chapters of their stories. After returning from their ‘Adopt a day’ experience, DUCA employees said:
“I had a great experience with the Habitat Build, working together with staff and other volunteers. The best part was working alongside an individual who was going to be living in one of the units!”
Irene Haines, DUCA Branch Manager
“Incredible day, lots of fun and great team building event. Achieved so much in such a short space of time. I am so grateful to DUCA for giving me the opportunity to make a difference in the community.”
Shabar Jivraj, Financial Services Officer
To learn more about DUCA’s partnership with Habitat for Humanity GTA, please see our first of kind Mortgage partnership in the ‘Community Hero Mortgage’ section.
DUCA recognizes that, as a financial institution, we have a unique role in helping those organizations who are seeking to improve our community. This goes beyond philanthropy and extends to lending agreements with numerous faith based organizations, community serving non-profits, and healthcare organizations. These loans account for nearly 11% of all business lending at DUCA.
Our lending to the healthcare industry saw a significant increase in 2016 when DUCA entered into a $27.7 million loan transaction to support the development of a unique and significant healthcare campus in Thornhill.
2015 | 2016 | |
Faith based | $51,691,966 | $44,399,346 |
Non-Profit | $3,318,074 | $1,189,440 |
Co-op | $451,013 | $478,877 |
Healthcare/Other | $11,675,630 | $44,505,021 |
Total | $67,136,775 | $90,572,683 |
The housing affordability issues faced by many in our core markets of Toronto and the GTA has made the dream of home ownership unattainable for many low income families.
Specifically:
- The average price of a detached home on Toronto has increased 402% since 2000
- There was a net loss of 28,305 young people from Toronto from 2000-2014
- 1 in 5 families in the GTA live in sub-standard housing
DUCA entered into a five year agreement with Habitat for Humanity GTA in which we agreed to build at least one Habitat for Humanity house per year at the rate of $100,000 annually. DUCA employees would participate on up to ten build days per year at Habitat build sites, contributing their volunteer time towards building houses.
Habitat for Humanity GTA also agreed to launch a co-branded DUCA mortgage product. This product pays 0.02% of the interest paid on your mortgage to Habitat for Humanity, creating an ongoing revenue stream for Habitat Housing that runs throughout the term of the mortgage. In other words, each time a mortgage payment is paid by the borrower, over the entire term of the mortgage, DUCA pays Habitat a portion of the interest component of the payment. There is no cap on the donation that can be generated by the Community Hero Mortgage portfolio.
2016 Highlights
It is estimated that there are at least 10,000 youth who become homeless during the year and as many as 2,000 in Toronto on a given night.
- Many young people are still learning skills to navigate the world, including living on their own (e.g. cooking, budgeting, landlord-tenant negotiation)
- Disruption and trauma of homelessness means that homeless youth have even less access to these skills as they fall in/out of housing and experience interrupted relationships with parents/caring adults
- Research shows that youth need strong family-like supports to help them get and keep housing
Understanding the basics of money management is essential for youth to be able to save, manage personal debt, and ultimately, to stay off the street permanently. Beginning in 2014, DUCA committed to helping homeless youth rewrite the next chapters of their stories by investing $100,000 over four years to support the delivery of Eva’s Independent Living Program (ILP) and the development of its financial literacy toolkit, which can be found using the following link:www.evasfinancialkit.ca
At DUCA, we view financial literacy as an essential skill and are proud to support Eva’s in their efforts to raise financial literacy levels with homeless youth. We are proud to hear of the impact this program is having directly from the youth:
“Two weeks before arriving at Eva’s Place I gave birth to a daughter, Kaylynne. The Children’s Aid Society and staff at my group home felt that I did not have the appropriate skills to parent my baby. With the support of the staff I gained a self-confidence which has allowed me to believe that anything is possible. I successfully completed the Independent Living Skills Program which taught me how to cook, clean, and stay on a budget. I also took anger management training and when I was ready to move out on my own with my daughter the staff helped me with my housing search. I feel that being a mother is a very important job and seeing the smile on Kaylynne’s face and knowing that she is a part of me makes me feel that life is worthwhile.“
– Leanne, former resident
About Eva's Initiatives
Eva's Initiatives for Homeless Youth is an innovative and award-winning organization that helps homeless and at-risk youth reach their potential to lead productive, self-sufficient, and healthy lives. The three facilities, Eva’s Place, Eva’s Satellite, and Eva’s Phoenix engage and support 123 homeless youth (aged 16-24) each night to help youth with transition out of homelessness. Eva’s is one of the largest providers of shelter beds dedicated for youth, and programs uniquely tailored to address the challenges homeless youth experience in the GTA.
The Innovation Fund was established in 2013 by DUCA and Christian Children’s Fund of Canada (CCFC) as a new project funding model for international development projects. At that time, DUCA made a $100,000, five year commitment to CCFC to support the fund. Each year the Innovation Fund focuses on one of the four priority sectors: Health and Nutrition, Education, Water, and Sustainable Livelihood Development.
The partnership has had a significant impact with highlights from DUCA funded projects to date including:
In 2016 DUCA and CCFC stakeholders chose to support ‘Family Reading Time’. This initiative will improve literacy habits among Paraguayan children, 1-3 years old, by helping families incorporate reading and conversation into their parenting routines.
In rural Paraguay, many parents are illiterate and often only speak indigenous Guarani, an oral language only. As such, 60% of parents have no interaction with their child’s literacy development. With little access to early educational development, 36% of children are not reading at their grade level and 1 in 5 will not reach secondary school.
The project will increase access to books, literacy materials, and encourage parents to read to their children.
Find out what impact this project will have
For more information on the past winning projects, please see below:
In 2014 the project winning project, “Building a Solar-Powered Village” in Ghana
In 2015 the project chosen was Tailoring for Success (India)
Our Join-In promotion provided new Members with the opportunity to have $50 deposited into their account as well as a donation of $50 to the registered charity of their choice. In 2016 this program resulted in $35,800 in charitable donations representing an 8.3% increase over the previous year. The top charities supported by the Join-in program are as follows:
Charity Name | Amount |
SickKids Foundation | $7,450 |
Canadian Cancer Society Ontario | $3,100 |
Heart & Stroke Foundation of Ontario | $1,500 |
Salvation Army | $1,250 |
Canadian Diabetes Association | $1,050 |
Canadian Red Cross | $1,050 |
DUCA is proud to support to support our employees in their community work.
In the second year of DUCA’s volunteer and donor matching program, 34% of employees participated. In addition to supporting fundraising events, church charity drives, coaching youth sports, and a range of other community initiatives, employees also made personal donations to various not-for-profit organizations and DUCA matched their contributions up to a maximum of $500 annually per employee.
The team at our Orangeville branch participated in a walk to support the Alzheimer’s Society of Dufferin County and raised over $1,000 to support those with Alzheimer’s in their community.
Long time DUCA Members Raymond and Deborah Frank, who are pictured here with DUCA teammate Rose Tucci (at left), are great examples of the Members who have made DUCA so successful over the years. We know there are many, many others and we would like to convey our thanks to all.