Report from the CEO and Board Chair
Glorious Thirty Years
Year 2018 was especially a memorable year for us amongst the many momentous years we’ve had. Not only did we celebrate a notable milestone for our 30th year of operation, but there was continued growth with the highest substantial expansion we had witnessed in the recent few years.
Rapid growth can be a double-edged sword. The fact that definite positive aspects can be inevitably accompanied with possible risk cannot be disregarded. However, we are very pleased to report that our growth was well-balanced and the three most important factors: capital, liquidity and delinquency were adequately maintained.
Year 2018 will also be remembered as the year in which we carried out a large celebration to commemorate our 30th anniversary. More than a thousand participants, members and non-members, took part in the event and celebrated with us. It was a wonderful opportunity for members to confirm and be proud of their accomplishments and for non-members to realize and be impressed by the credit union’s role and prevalence within the community. We’re excited to report that since the celebration, the public attention on our credit union has significantly been elevated, where inquiries on products, services and opening new memberships have surged noticeably.
As to the external environment, we witnessed the Bank of Canada raising its key interest rate three times after two hikes in 2017. Although the rate has been halted for now due to local and global uncertainties, the Bank suggested the rate increase would be continued well into the next two to three years. Whether the rate fluctuates or maintains stationary, we will be prepared to face the circumstances competently in safeguarding the assets of the credit union.
We enjoyed healthy and strong growth in the midst of fierce competition in the financial market and the adverse conditions such as rising interest rates and tougher regulations on mortgage lending. On this remarkable achievement, I’d like to bring light to the success of our Port Coquitlam branch. Opened to the public in October 2016 and being in business just over two years, the branch quickly passed the break-even point late 2018. This accomplishment is highly attributed to our loyal staff who have been diligently pouring their effort in branch prosperity. I’d like to take this opportunity to thank all Port Coquitlam branch for their devotion and enthusiastic operations.
As briefly mentioned above, the magnitude of growth in 2018 was the largest within the recent decade. By the end of 2018, our total assets grew well over $400 million to $454 million, a 22% or $82 million increase from $372 million in 2017. Despite the distinctive sign of slowdown in the real estate market in BC, both residential and commercial mortgage lending activity was continually robust adding $63 million or 20% more onto the portfolio totaling $377 million. The deposit side showed equally strong growth adding $66 million in aggregate deposit total, a 19% growth to reach the total member deposits at $416 million.
Net operating income for the year was $2.38 million, a 69% or $980K increase compared to 2017. We were able to obtain this outstanding result with a much improved asset structure and effective cost control coupling with the aid of the higher interest rate. The Board again decided to share this profit with the members in the form of divided and patronage refunds in the total amount of $813K, a 17% increase from 2017 payouts. This amount was distributed as 3.0% dividend on share deposits and 7.5% refund on the interest paid on residential and commercial mortgages.
Growing with the Community
We hold a firm belief that we are able to maximize the meaning of our existence when we work together with the community we are based on and as such, we continued to diligently provide our support in 2018. We strongly believe that a strong community makes a strong credit union.
As our policy prioritizes the development of the second generations and the welfare of the senior citizens, we actively sought to support these groups. However, we also reached out to groups beyond our priorities and made sure to be involved in almost all local Korean-Canadian community events in 2018 either through sponsorships or subsidizations. Alongside supporting community events, with much excitement, we also planned and executed the credit union’s independent Scholarship Program, the SCU ‘Pursue Your Dreams’ Scholarship. The 2018 inauguration of this program began with granting $2,500 valued scholarships to 12 recipients, totaling $30,000. We are happy to report approximately $120,000 was distributed to the community in expression of our support.
Seven of our directors elected by you, our members, fulfilled their duties as the members of the Board as a whole and also as members of five statutory and two ad hoc committees. Ad hoc committees met as needed while statutory committees met at least once every quarter to receive operational reports and to discuss the various focus matters. The Board met seven times to receive reports from each committee and resolve critical items essential to the overall operations of the credit union. The Board also spent a significant amount of time contemplating and laying out the future direction for the credit union to pursue.
Accurate oversight of management and prudent governing the credit union direction are only possible with overall proficiency. Truly understanding this, the Board performed earnest assessment of its own functionality and that of the chair and committee chairs. The outcome was discussed in detail and whatever was deemed necessary for betterment was implemented. As a key element of seeking governance expertise, all the directors enthusiastically participated in upgrading their skills by taking courses and attending seminars.
Due to the widely expected slowdown of the real estate market in the Lower Mainland, the pace of growth in 2019 is anticipated less robust. Accordingly, we have budgeted our growth for the future year a little less ambitiously. Instead, we plan to concentrate on strengthening our capital. We will patiently lay up a strong foundation in pursuit of growing into a billion dollar-asset credit union that provides quality services.
The Board and staff alike, have the same mindset of going back to the basics, that is, “To be an innovative credit union devoted to the members and the community.” Another year is given to us and we will devote ourselves to make this credit union for the members, of the members and by the members. We dare to promise you to keep the credit union continuously strong and healthy and to provide genuine support to our members and to our communities.
Closing the report, I thank you all for your unwavering support and trust. We are what we are today because of your unchanging love for the credit union. As long as you put your trust in us, we will continue to exist only for you and only for our community.