2021 ANNUAL REPORT
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As an organization, we remain grounded in our mission to Make a Difference - for our credit union, our people, and our members, and our focus in 2021 positioned Northern to deliver on that promise. Thank you to our members, for your continued loyalty throughout the year. As your trusted partner, our goal is to always make a positive impact on your financial journey.
At Northern, we are particularly encouraged by the progress to our 2023 goal, which is focused on delivering streamlined and efficient end-to-end processes that will allow us to collectively deliver more efficient and effective services to our members. In 2021, the first step was to implement a new organizational structure, which would bring the right people into the right roles, all focused on delivering the best service to our members. During this time of significant change, our staff remained positive and engaged. This was demonstrated through the results of our employee satisfaction survey, which improved by six points over 2020. The extraordinary actions of our staff were recognized through monthly core value stories that were shared with all staff through our monthly newsletter.
These stories ranged from staff volunteering their time and resources within their communities to providing superior one-on-one support to our members as they managed through difficult situations.
For the first time in Northern’s history, we consolidated six branches across our footprint and permanently reduced hours in other locations. These difficult decisions were necessary to ensure that Northern could continue to modernize our services, keep up with changing member behaviours and industry trends, and ensure our long-term sustainability.
In 2021, we also launched our Community Cooperative Branch Model, in the community of Richards Landing. This is a first of its kind for Northern. Partnering with a local like-minded organization, truly highlights the value and importance of our cooperative principles. Through this partnership, we were able to continue to provide financial services to an underserved market while supporting the local community.
Rooted in our desire to strengthen and build member value and continue to drive engagement for both existing and new members, our goal in 2021, was to continue to remain relevant, improve the banking experience, and enhance core processes. We committed to building a viable organization that would allow us to invest in our members and our communities. In 2021, we rolled out new account packages to provide better options to our members and an opportunity to reduce overall service charges. We also continued to reduce our annual membership dues with the goal to eliminate this service charge in 2023.
In 2021, our members continued to embrace new ways of doing business through technology, as well as through our contact center, which provided them with more options and convenience when they needed it, with increased usage in these digital channels by our members. Recognizing that our members have varying degrees of comfort with technology, in June of 2021, Northern launched the Senior’s Priority Line. This dedicated phone line, complimented by our digital learning series, helped members of all abilities navigate technology and our digital banking channels. Our members also embraced new ways of doing business. “Fred”, our chatbot that launched in late 2020 has now been asked close to 7000 questions, which has resulted in 210 hours of saved time for our staff in the call center – staff who can now use these hours to focus on providing our members with a higher level of personalized advice.
Representing our members, our Board of Directors showed continued resilience, despite another unpredictable year and challenges posed by COVID-19, in setting the direction for the organization and providing strategic oversight. Through the Board’s five Committees: Governance, Audit, Finance & Risk, Human Resources, and Nominating, they carried out their fiduciary obligations. In the fall of 2020, our Board of Directors, and Executive met for its annual strategic planning session, setting the strategic direction that would guide us throughout the year.
In 2021, the Board continued its comprehensive review of its Governance policies and practices that was started in 2020. Specifically, a new Mentorship program was developed with the intent of expediting new Directors’ ability to carry out their fiduciary role with guidance from committed, knowledgeable mentors.
Director compensation was also reviewed to ensure that Directors were properly compensated for their time and commitment and commensurate with the size and complexity of the organization. Board members also continued their personal development journeys with several Board members successfully completing Credit Union Director’s Association (CUDA) courses, which resulted in two Directors becoming accredited and three who will achieve accreditation within 2022.
To ensure that Northern’s Board continually improves and gains insight into their competencies, a new approach to the Director Assessment and Evaluation process was implemented to enhance the process and reflect the needs of our organization and in line with the Financial Services Regulatory Authority of Ontario guidelines and expectations. As well, competency gaps and a new endorsement process were embedded into the nomination process to ensure a continuous improvement in the Board profile and keeping succession planning and diversity a priority.
In 2021, we embraced the challenges that came, and we remained focused on creating a culture of continuous improvement. Building on our strengths and learning along the way, we are confident that we will continue to transform our business to deliver on member expectations and build a sustainable future.
As the result of the successful completion of several projects, throughout 2021, we are now confident that we have the right staff, in the right role, doing the right work. Our branches have been realigned and many of our systems, procedures, processes and policies, particularly related to retail and commercial lending, have been revised and improved such that members are now beginning to experience the benefits of our efforts.
Much work was also undertaken in 2021 to assess our IT capabilities and requirements. This was a critical component of our plan. Although there are significant costs associated with anticipated changes, we are confident that we will achieve efficiencies and cost savings as the result of these changes. In 2022, we will see an increased effort around the improvement and development of our IT infrastructure, analytics, origination systems and payment strategies.
From a financial perspective, the financial implications of COVID in 2020 were expected to continue into 2021. Interest rates remained low, as well as loan demand through much of the year. Higher than usual liquid assets combined with significant competition for loans impacted margin and resulted in a high level of mortgage payouts driving an unusual level of income from mortgage payout fees. COVID restrictions continued to result in cost savings in travel and other related costs. As the year progressed, the economic outlook improved, which had a significant positive impact on our loan provisions. This was driven not only by macro-economic factors but also improved delinquency management and fewer write-offs. Loan demand started to increase in the last quarter resulting in Northern exceeding our loan growth targets by the end of the year. In combination, these events culminated into an unprecedented level of net profit.
We have a renewed commitment to supporting our communities. Recently, we established the Northern Advisory Committee. This group will consist of a small team of individuals from across the Northern footprint, who are community-driven and want to make a bigger impact in Ontario. Advisors will have a say in the initiatives we participate in, the organizations we support, and how donations and funds are allocated. As well, they will attend events as Northern representatives. Through this program, we will strive to make significant impacts by focusing on a select number of charities and organizations based on the causes that mean the most to us. We will also be seeking opportunities to participate in online initiatives like Ontario-wide fundraisers, and expanding our online presence on social media.
Our employees, who are the “flag bearers” of our cause, championing local initiatives, continue to work diligently to make a difference in the lives of their communities and the people that reside within them. Through our newly developed employee volunteer program, our employees gave back countless volunteer hours to worthy causes in our local communities. In addition, through our staff Win/Win program, we were able to contribute over $12,000 to local charities. As the world moves quickly into a digital environment and fewer members are visiting their branches, the focus on community and building key community partnerships becomes more vital, further extending our philanthropy, community economic development, financial literacy, and environmental sustainability efforts.
As we head into 2022, we are encouraged by what the future holds. Although 2022 will certainly be another busy year with much to accomplish, we are confident that with the support of our Board, employees, and members we will successfully navigate through the changing environment and continue to build a strong Credit Union. We will stay focused on improving our processes and creating a better member and staff experience, while at the same time start to realize the benefits of the changes we have already made. We will build resiliency into everything we do to ensure that we continue to move forward committed to Making a Difference in People’s Lives.
Jeannie Kilgour
Board Chair
Richard Adam
President & CEO
