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Annual Information Meeting

Réunion d’information annuelle

May 2, 2018

Le 2 mai 2018

40th Anniversary40e anniversaire

2

Don DalicandroChair of the Board, P. Eng., MBA, C.Dir.

Président du Conseil, ingénieur, MBA, C.Dir.

3

Agenda Ordre du jour

I. Board Overview

II. Operational Overview

III. Question and Answer Period

4

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

From L to R

Top Row: Don Dalicandro, Gail Di Cintio, Steve Blakely, John Ferreira, Jim Houston Bottom Row: Helen Young, Carmen Rossiter, Monique Tremblay

5

Board and ManagementConseil et direction

Stewardshipand

Oversight

Operational

Board

Strategy

Management

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2017 Highlights - Stewardship2017 – Faits saillants – Intendance

Journey to Reengineer our Strategic Planning Process

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2017 Highlights - Oversight2017 – Faits saillants – Surveillance

• Enhanced Risk Focus – Internal

o Examination Process

o Information Technology

o Resources

o FSRA

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• Enhanced Risk Focus – External

o Sector Diversification of Revenue Strategies

o Sector Funding Models

o Information Technology and Fintech

o Changing Economic Factors

9


• Governance Improvements

o Streamlined Board Activities

o Expanded Stakeholder Engagement

o Continuous Learning and Assessment

10

Key Strategies for 2018 Principales stratégies pour 2018

• Strategic Process Reengineering Journey – Part Two

• Continuous Improvement of Governance Practices

• FSRA

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Thank YouMerci

• President and CEO, Guy Hubert

• Senior Leadership Team(Michelle Séguin, Randy Nanek, Brian Mullan)

• DICO Management and Staff

12

Operational Overview

13

2017 Operational Overview2017 – Vue d’ensemble des operations

Guy HubertPresident and CEO Président et chef de la direction

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Sector Performance Rendement du secteur

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

$60

Retu

rn o

n As

sets

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

20162016

20172017

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

51.85

0.0033

57.24

0.0039

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%

2016$51.850.33%

2017$57.240.39%

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Capital CompositionComposition du capital

2014 2017

3% 2%30% 37%

65% 59%

Capital Composition 2014 vs 2017

Membership Shares Investment Shares Retained Earnings Other Capital

2%2%

Chart1

2014201420142014

2017201720172017

Membership Shares

Investment Shares

Retained Earnings

Other Capital

Capital Composition 2014 vs 2017

0.025

0.297

0.654

0.025

0.015

0.373

0.593

0.019

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

20084%23%56%18%

20094%26%55%15%

20103%25%56%16%

20113%23%61%13%

20123%25%60%12%

20133%24%62%11%

20143%30%65%3%

20152%36%62%0%

20162%36%62%0%

20172%37%59%2%

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State of the SectorÉtat du secteur

• Nine CU on the watchlist, no Supervision or Administration

• No new liquidation (3 finalized in 2017)

• Risk rating stable, slight up tic in “Moderate-High” and “High” category

• At $100,000, insured deposits $32B or 72% of total deposits

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-0.80%

-0.60%

-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

-150

-100

-50

0

50

100

150

200

250

300

350

400

450

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

2021

2022

2023

DIRF ($) DIRF % Current Coverage of Insured Deposits

$milli

ons

Perc

enta

ge

State of the DIRFFonds de réserve

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

Chart4

19941994

19951995

19961996

19971997

19981998

19991999

20002000

20012001

20022002

20032003

20042004

20052005

20062006

20072007

20082008

20092009

20102010

20112011

20122012

20132013

20142014

20152015

20162016

20172017

20182018

20192019

20202020

20212021

20222022

20232023

$ millions

Percentage

DIRF ($)

DIRF % Current Coverage of Insured Deposits

-90.3

-0.0078

-75.3

-0.007

-58.3

-0.0053

-50.2

-0.0046

-31.2

-0.0028

-7.7

-0.0007

15.1

0.0012

28.9

0.0021

43.1

0.003

60.8

0.0038

74.3

0.0045

85.2

0.005

100.2

0.0056

106.2

0.0057

97

0.005

81.8

0.004

94.8

0.0044

113.2

0.0052

147.5

0.0064

164.7

0.0068

185.1

0.0073

205.6

0.0077

226

0.0079

246

0.0083

272

0.0078

299

0.0082

328

0.0086

356

0.0091

391

0.0095

426

0.01

Sheet1

199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023

DIRF ($)-90.3-75.3-58.3-50.2-31.2-7.715.128.943.160.874.385.2100.2106.29781.894.8113.2147.5164.7185.1205.6226246272299328356391426

DIRF % Current Coverage of Insured Deposits-0.78%-0.70%-0.53%-0.46%-0.28%-0.07%0.12%0.21%0.30%0.38%0.45%0.50%0.56%0.57%0.50%0.40%0.44%0.52%0.64%0.68%0.73%0.77%0.79%0.83%0.78%0.82%0.86%0.91%0.95%1.00%

Sheet1

DIRF ($)


Sheet2

DIRF Target set at 100 bps

DIRF ($)


DIRF Target of 100 bps projected to be reached in 2023

Sheet3

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2017 Organizational Changes 2017 Changements organisationnel

• Continued organizational transition

• Enhanced skillset

• Cultural shift

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2017 Highlights 2017 – Faits saillants

• Updated web-based reporting tool

• Benchmarked examination methodology

• Developed Liquidity & Securitization Guidance Notes

• Provided input to MOF on their consultation paper on Proposed Capital Adequacy Framework (Basel III)

• Operationalized changes to CUCPA

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2017 Highlights 2017 – Faits saillants

Legislative CUCPA Reviews • Implementation: Phase 1 – Completed• Phase 2 – TBD

Phase 1: Implemented January 1, 2018o Increase deposit insurance coverage to $250,000 (2018)o Permit inter-provincial credit union loan syndicationso Permit wholly owned insurance brokerageso Remove differentiated rules for smaller credit unions (Class 1 & 2)

Phase 2:o Consideration of capital rules based on BASEL III principleso Enhance corporate governance and consumer protection

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Sector DevelopmentsDéveloppements du secteur

• Impact of funding model changes

• Banking platforms and data security

• Diversification of revenues

• Sustainability

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32%

IT SurveySondage TI

70% 81%

CUs with IT Governance Policies CUs with IT Security Policies

CUs that have experienced cyber security attacks

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• Reframing our Resolution strategies

• Developing a Recovery Plan framework for credit unions

• Sector consultation – new Guidance Notes

o Retail Mortgage Lending Guidance Note

o IT Governance Guidance Note

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• Implementing improvements to examination methodology

• Enhanced data analytics

• Continue providing assistance with Phase 2 of CUCPA review.

• Support FSRA-related transition activities.

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Questions and Discussions Questions et dialogue

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Closing RemarksRemarques de clôture

Don DalicandroChair of the Board, P. Eng., MBA, C.Dir.

Président du Conseil, ingénieur, MBA, C.Dir.

27

Thank you.

Merci.

Slide Number 1Slide Number 2Agenda �Ordre du jourSlide Number 4Board and Management�Conseil et direction2017 Highlights - Stewardship�2017 – Faits saillants – Intendance2017 Highlights - Oversight�2017 – Faits saillants – Surveillance2017 Highlights - Oversight�2017 – Faits saillants – Surveillance2017 Highlights - Oversight�2017 – Faits saillants – SurveillanceKey Strategies for 2018 �Principales stratégies pour 2018Thank You�MerciSlide Number 12Slide Number 13Sector Performance �Rendement du secteurCapital Composition�Composition du capitalState of the Sector�État du secteurState of the DIRF�Fonds de réserve2017 Organizational Changes �2017 Changements organisationnel2017 Highlights �2017 – Faits saillants 2017 Highlights �2017 – Faits saillantsSector Developments�Développements du secteurIT Survey�Sondage TIKey Strategies for 2018 �Principales stratégies pour 2018Key Strategies for 2018 �Principales stratégies pour 2018Questions and Discussions �Questions et dialogueClosing Remarks�Remarques de clôtureThank you. ��Merci.

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