A goal properly set is halfway reached.
To improve the quality of life of our members and their families, through the provision of personalized financial solutions and advice.
EduCom Co-operative Credit Union is a member-centric, financially-sound and technologically enhanced employer of choice and is the top Credit Union in Jamaica in member value, compliance and satisfaction.
Lord, make me an instrument of thy peace;
Where there is hatred, let me sow love;
Where there is injury, pardon;
Where there is doubt, faith; Where there is despair, hope; Where there is darkness, light; And where there is sadness, joy.
Oh Divine Master, grant that I may not So much seek to be consoled as to console; To be understood as to understand; To be loved as to love; For it is in giving that we receive; It is pardoning that we are pardoned; And it is in dying that we are born to eternal life.
Be present in all things and thankful for all things. - Maya Angelou
Creating opportunities means looking where others are not.
- Mark Cuban
NOTICE IS HEREBY GIVEN that the 7th Annual General Meeting of EduCom Co-operative Credit Union Limited will be held virtually on Thursday, the 5th day of May 2022, commencing at 1:00 p.m.
The purpose of the meeting is to examine the operations of the Credit Union for the Year 2021 and to pass appropriate Resolutions.
Members will be able to register online by visiting the link below: www.educomco-op.com/agm
In convening this virtual AGM, members will be able to join the meeting live via the Zoom Conference platform. The link and meeting credentials will be made available prior to the meeting. Members will be able to participate in the relevant voting process through the online polling feature on the Zoom platform.
The Annual Report is available for viewing by visiting the link below: http://www.educomco-op.com/annualreport2021
BY ORDER OF THE BOARD Sonia Bennett SecretaryDated this 1st day of April 2022
The past two years have been extremely challenging for everyone. I know that you would have been impacted by COVID-19, whether in the form of losing relatives and / or friends, struggling with the health impacts of this deadly disease or struggling financially owing to the economic disruption caused. As we move forward it is my desire to wish you full recovery and prosperity.
I am pleased to report that despite the challenges, the credit union had a successful year. The initiatives we began implementing in 2020: improved sales focus, relationship building, diversified lending products, and improved timeliness in the delivery of our service, proved their efficacy throughout 2021, thus generating the positive results attained. At the governance level, we have implemented the necessary policies to support the team at the operational level. These initiatives have been important in shaping the efforts and efficiencies at the operational level where performance has been positively impacted. While the disruption caused by the pandemic has brought many challenges, it has also taught us some very important lessons, especially regarding our relationship with our respective stakeholders.
At the beginning of 2021, we considered members’ feedback and relaxed the share requirements in qualifying for loans and have been focusing on members’ risk rating and ability to repay. As a result, members now have a
greater opportunity to qualify for their loans. With the constant changes in market conditions, we also delegated the authority to the management team to adjust interest rates within limits, without Board of Directors for approval each time, thus removing the bureaucracy that hindered efficiency in this process.
The Credit Union’s financial performance for the year under review was outstanding. Overall, we saw growth in our revenues, resulting in a substantial increase in surplus. While there was an increase of 15.6% in operating cost, revenues grew by 17.2%, resulting in a surplus of $219.0M for the year. Our growth in Institutional Capital of 26% was mainly attributable to the Deferred Shares Offer, which was well supported by the membership. This undoubtedly would have further strengthened the Credit Union’s capital, putting us in a position where we were able to provide much more to our members in the form of loans, as evidenced by the 22.8% growth in this Key Performance Indicator. It must be emphasized that this was all achieved through organic growth.
While we relish our achievements for 2021, we are mindful that the competitive landscape does not allow us to be complacent. The team is fully aware of the challenges ahead, and at the governance level we are committed to continuing our focus on the policies and strategies that are supportive of management’s goals. Our growth strategy remains pivotal to our success and the targeted strategies to grow the credit union will include several enhancements. We will focus on, penetrating our bond to increase membership, increasing member engagement to improve relationships and build trust, marketing our existing products so that members and potential members are aware of the options that we provide, and improving our processing times to meet the best practice service level requirements.
I wish to extend a grateful “Thank You” to the management and staff for once again proving their unwavering commitment and support for the strategic direction of the Board. Through their dedication and hard work, the Credit Union achieved and surpassed its targets for the year and we will continue to provide the members and the entire EduCom team with the necessary support needed to drive this organization forward. Thanks to my colleagues on the Board, members of the supervisory and credit committees, and you, our members, for your loyalty and support to EduCom Credit Union.
There is no better way to begin this message but to comment on the outstanding efforts of the team in such a difficult operating environment in 2021. When Jamaica experienced the first COVID case in March 2020, who would have predicted that two years later we would still be wrestling with its impacts, in every sector of the economy, and by extension, globally. Operating under COVID restrictions has been challenging, but the team was relentless in its pursuit of excellence, and we are delighted at the efforts and the results that have been achieved, through this strong desire to succeed. The team has demonstrated true determination, resilience, and commitment in continuing to serve our members and I applaud their efforts.
While there were challenges throughout the year, our performance was tremendously rewarding, and reflected our dexterity and flexibility in delivering for our members, despite the unfamiliar circumstances. Our Net Surplus (after honorarium) of $219.0M, was phenomenal. Not only did it reflect a 227.7% increase over the previous year, but it also represents our best performance in our 7-year history. Our lending volumes showed substantial increase over the previous year, with total loan disbursements at a record amount of $5.47 billion for the year, an increase of 55% over the previous year. Our loan portfolio grew by 22.8%, to close the year at $9.36B, up from the $7.62B, where we closed 2020. The significance of our loan growth cannot be overstated, as this is one of the areas of extreme focus, as we strive to add value to the lives of our members. Our total assets at the end of the year were $12.54 billion, an increase of 15.1% over the previous year. Our savings growth was also commendable, increasing by 12.9% to end the year at $10.203B, up from the previous year’s $9.042B.
The strong set of financial results reflects that we had been able to quickly adapt and respond to the changing environment in which we had to operate. To remain sustainable, growing the business by increasing the number of members and expanding our product offerings to improve the possibility that our current membership looks to us first for their financial needs, remains one of the key strategic goals. We are indeed comfortably placed to achieve this strategic priority with membership growth of 5.6% for the year, even with the challenges of not being able to meet face to face, because of the pandemic.
In addition to those strategic priorities mentioned above, we continue to build relationships with our members and strive to exceed their expectations in the service that we deliver. This combination has undoubtedly been successful, as shown in the financial results. Our focus on serving our members so that they trumpet the quality of our service delivery has resonated with potential members who are attracted by our proposition of striving to add value to each of our members’ lives.
We are cognizant of the fact that there will be some level of uncertainty ahead as we move into a post-COVID world. In addition, the magnitude of our loan growth for the year, while commendable, must also be interpreted to mean that ensuring that members live up to their expectations of honoring their commitments, becomes critical to our short to medium term success.
The need for us to transform our business to become more digitally oriented, has now become a requirement for our continued success. The competitive nature of our business, the need for us to use data to drive decision making, and
maybe most importantly, our desire to provide convenience to you our members, are all factors which are driving this decision. We have been reporting that we were in the market for a new banking platform and I am happy to share with you that we have now decided on the provider, which means that the next stage, is implementation. We ask that you continue to be patient with us as we go through this process, even as we reassure you that this is not about becoming less personal or less member-focused, but instead, using the technology to serve you even better than we have been able to do in the past.
Finally, let me again thank the team at the operational level, for their exemplary work throughout 2021, the management and senior executives for their support, and the members of the Board and other committees, for their guidance and stewardship. And of course, thanks to you our members, who continue to have the trust and show the confidence in what we have been doing. We are very aware of your expectations, given the competitiveness of the industry, but we continue to be resolute in our effort to exceed your expectations.
Elvis King CHIEF EXECUTIVE OFFICERMinutes of the 6th Annual General Meeting of the EduCom Co-operative Credit Union Limited held virtually on Wednesday, April 28, 2021.
Members of the Board present were:
Mr. Ian McNaughton
Ms. Stacy-Ann Farquharson
Mr. Ian Sutherland
Ms. Sonia Bennett
Mr. Hilton Blenman
Mr. Charles O’Connor
Mr. Hector Stephenson
Mr. Ruel Nelson
Dr. Mark Nicely
Mrs. Janice Green
Ms. Coleen Lewis
Also present were:
Mr. Kurt Vaz
Miss Deloris Mollison
Miss Shashu Payne
Mr. Hopeton Newell
Miss Tasha Manley
Miss Erica Haughton
Mr. Andrew Smith
Mrs. Loraine Gordon-Pinnock
President
1st Vice President
2nd Vice President Secretary Treasurer Director Director Director Director Director Director
Chairman, Credit Committee Secretary, Credit Committee Member, Credit Committee Member, Credit Committee Chairman, Supervisory Committee - Secretary, Supervisory Committee Member, Supervisory Committee Member, Supervisory Committee
The Secretary, Ms. Sonia Bennett, announced that as at 1:10 p.m. there were 212 persons online and physically present at the location. She proceeded to invite Ms. Antoinette Spencer, a representative from the Department of Co-operatives and Friendly Societies, to join her at the podium.
Ms. Sonia Bennett, Secretary, informed the Meeting that given the pandemic and EduCom’s quest to keep its members safe and conforming to the Disaster Risk Management Act (DRMA), EduCom’s objective was to continue to keep its members safe and informed. Since EduCom did not know when the challenge of the pandemic would come to an end, EduCom had to make some changes to its Rules so that it could hold the Annual General Meeting virtually. She pointed out that the three (3) proposed Rule changes were interrelated and that there would be one (1) vote at the end of the presentation of those Resolutions.
Ms. Bennett explained that:
• The first Resolution, to amend Article XII Rule 56, was a proposal for EduCom to hold a virtual meeting.
• The second Resolution, to amend Article XII Rule 61, would propose that members be permitted to vote electronically since it was a virtual Annual General Meeting.
• The third Resolution – to amend Article XXIII Rule 85 –would propose that 75% of the members present either in-person, virtually or at a hybrid meeting and eligible to vote, must vote in favour of the Resolutions for them to pass.
Ms. Bennett presented the amendments to the Rules as follows:
WHEREAS Section 11 and Regulations 41 of the Cooperative Societies Act and Regulations provide for the amendment of Rules;
WHEREAS Article XXIII, Rule 85 allows for amendments to the Rules of the EduCom Co-operative Limited; and
WHEREAS Article XII, Rule 56 is being proposed for amendments in the Rules of the EduCom Co-operative Credit Union Limited; and
WHEREAS it is being proposed that meetings of members may be conducted by attendance at a physical location, or by virtual-only or by hybrid meeting; and
WHEREAS electronic attendance shall be construed as if the members were present at the physical location where the meeting is being convened; and
WHEREAS members attending meetings through electronic media shall constitute the quorum for a legally convened meeting of members of the Society; and
WHEREAS The Co-operative Societies (Amendment) Regulations 2021 dealing with the holding of general meetings in co-operative societies were promulgated on the 15th of January, 2021;
WHEREAS EduCom Co-operative Credit Union has agreed to adopt and accept all the interpretations so ascribed under the said regulations:
BE IT RESOLVED THAT ARTICLE XII, RULE 56, which now reads:
i. The supreme authority in the Credit Union is vested in the General Meeting of members at which every member has a right to attend and vote on all questions; and
ii. The first General Meeting of members after registration of the Credit Union shall be called the First Annual General Meeting and shall have the same powers as are herein given to the Annual General Meeting
BE AMENDED TO READ, by adding the following additional sentences after the current sentences:
iii. References to a “meeting” shall mean a meeting convened and held in a physical location only or via virtual-only and/or in a hybrid manner through a combination of both a physical and electronic communication system. Members shall be deemed to be present at that meeting for all purposes of the Rules, applicable laws, and the Co-operative Societies (Amendments) Regulations 2021 and said attendance
shall be construed to allow the member present in any one of these fora to attend and fully participate in any such meetings.
iv. A member’s participation in the business of a general meeting shall include, without limitation, the right to communicate, to vote, and to have access in hardcopy or electronic form all documents which are required to participate in the business of a general meeting; and participation in such a meeting shall constitute presence in person at such meeting and shall count towards the quorum and for all other voting processes.
v. References to “electronic communication system” shall include, without limitation, webcast, video, or any form of conference call systems (telephone, video, web or otherwise) and other communication of any sound, document, and or other data.
vi. If a separate meeting place is linked to the main place of a general meeting by an electronic communication system, such member present at the separate meeting place shall be taken to be present at the general meeting and entitled to exercise all rights as if the member was present at the main physical location.
vii. All general meetings (including a Special or Annual General Meeting, any adjourned meeting or postponed meeting) may be held as a physical, virtual-only or hybrid meeting.
viii. A virtual-only or hybrid meeting may be held in Jamaica and any part of the world and at one or more locations as may be determined by the Board of Directors in its absolute discretion; however, the principal place and time of such meeting shall be construed to be held in the jurisdiction of Jamaica.
ix. Votes (whether by a show of hands or ballot or by way of a poll) may be cast through or by electronic means or otherwise, in keeping with the Co-operative Societies (Amendment) Regulations 2021
x. If voting is to take place at the meeting, there must be reasonable measures in place to verify that every person voting at the meeting by means of electronic communication system is sufficiently identified, and the Secretary shall keep a record of any vote or action taken.
xi. The provision of these Rules shall apply, with any necessary modification, to hybrid meetings and virtualonly meetings.
At least seven (7) days before the date of any Annual or Special General Meeting, the Secretary shall post a notice of the Meeting in a conspicuous place in the Head Office and at each branch of the Credit Union and shall cause written notice to be placed in the national print, electronic media, in person or mailed to each member at his address or e-mail address that appears in the records of the Credit Union.
i. Where an Annual or Special General Meeting is either virtual-only or a hybrid meeting, the Secretary shall cause the notice of the meeting to provide instructions for attendance and participation, including voting by members electronically, and an electronic link for attendees.
ii. Where the meeting is held as a hybrid meeting or virtual-only meeting, and during the meeting a number of members participating, virtually, cease to be able to participate in the meeting, at any time and for any period during the meeting, in such numbers that the quorum requirement for that meeting is not met, all business transacted at that meeting, including matters put to the vote and any resolution passed, shall be void.
These Rules may be amended by a resolution of the members at any Annual General Meeting or Special General Meeting called for the purpose by threefourths vote of those present and entitled to vote; provided a copy of the proposed amendment together with a written notice of the meeting shall have been sent to each member or handed to him in person at least seven (7) days before the said meeting. No amendment shall become operative until it has been approved by the Registrar in accordance with the Act.
These Rules may be amended by a resolution of the members at the Annual General Meeting or Special General Meeting, called in accordance with Article XII, Rule 56 for the purpose, by at least three-fourth votes of those present either an in-person, virtual-only or at a hybrid meeting and entitled to vote, provided a copy of the proposed amendments together with a written notice of the meeting shall have been sent to each member by electronic means and printed in one daily newspaper, at least seven (7) days before the said meeting. No amendment shall become operative until it has been approved by the Registrar in accordance with the Act.
All amendments are to be operational immediately and are binding upon members, consequent upon approval at this General Meeting of members and subject to certification by the Registrar of Co-operative Societies.
Ms. Bennett then asked for a motion for the acceptance of the proposed changes to the Rules by way of raising of the hand on the electronic platform. The motion was moved by Mr. Tarick Gayle and seconded by Mr. Andrew Smith. Ms. Bennett reminded the meeting that at least 75% of the members present would have to vote for the proposed Rule changes to be passed and that guests were not eligible to vote. She subsequently invited the general membership to use the online polling feature to cast their votes instead of the raise hand feature. She informed the meeting that members would be allowed five (5) minutes to cast their votes. At the end of the five (5) minutes, the poll was declared closed.
Ms. Bennett invited Ms. Antoinette Spencer from the Department of Co-operatives and Friendly Societies to assist with the counting of the votes and to declare the results of the poll.
Ms. Spencer reminded the meeting that based on the Rule at least 75% of the votes of the members present at the meeting would need to be in favour of the Resolutions for the proposed Rule changes to be passed. The Presiding Officer declared the results of the poll as follows:
Ms. Spencer declared that the Resolutions were duly passed.
The meeting was called to order at 1:51 p.m. by the President, Mr. Ian McNaughton, presiding as Chairman of the meeting.
The Chairman invited Dr. Mark Nicely, Director, to lead the meeting in the invocation.
Following the invocation, the Chairman invited the Secretary, Ms. Sonia Bennett, to lead the meeting through the obituaries.
The Secretary called the meeting’s attention to the listing of deceased members of the Credit Union which was to be found on Page 164 of the Annual Report. The Secretary asked the members to peruse the list of the deceased members. She asked that if any member had passed between the last Annual General Meeting and present that the name be provided so it could be added to the present list.
There being no amendment to the list, the meeting was invited to pause for a moment of silence in remembrance of the deceased members.
The Secretary read the authority to convene the meeting which was received from the Registrar of Co-operatives and Friendly Societies. This was to be found on Page 73 of the Annual Report. Ms. Bennett read the authority to convene the meeting.
She then proceeded to read the Notice convening the meeting. She asked that the date of the Notice be amended to read 26th day of March 2021 instead of 28th day of March 2021.
An apology for absence was tendered on behalf of Ms. Nadeen Quest who was having connectivity issues and as such was unable to join the meeting.
Number voted for Number voted against Number abstentions
Number of members present at the time of voting
The Chairman extended a warm welcome to all those present.
He acknowledged the presence of the Board Members, Mr. Elvis King (Chief Executive Officer), members of the management team and staff, members of the Supervisory and Credit Committees.
A special welcome was extended to Mr. Robin Levy, Ms. Vera Lindo, Ms. Katrina Grant-D’Aguilar and Ms. Melonie Gentles (JCCUL), Ms. Joydene Jarrett (JPS Credit Union), Mr. Ricardo Laird and Ms. Jennifer Hibbert (External Auditors, BDO), Ms. Antoinette Spencer and Mr. Alvin Williams (Department of Co-operatives and Friendly Societies).
The Chairman remarked that since early 2020, what was considered normal life had changed drastically. He stated that the outbreak of the COVID-19 virus had created significant upheaval worldwide, which has had a significant impact on all economies, and Jamaica had not been spared. The Credit Union faced and continued to face significant challenges, as EduCom was not immune to the challenges of Jamaica’s economic downturn with the results being increases in unemployment and underemployment. Additionally, the direct impact of the pandemic itself with increased operating costs had negatively impacted the Credit Union’s operations.
Mr. McNaughton reported that EduCom was particularly pleased with the choices made in relation to members who fell on hard times during the peak of the pandemic. Members were made aware of the opportunity to write to the Credit Union and share their experiences on how the pandemic had negatively impacted their income. As a result, the Board was able to make the necessary adjustments to members’ loan repayment arrangements and schedules. Notwithstanding that the decision came at a cost to the Credit Union, the Board remained convinced that the strategic choice was one that was consistent with the mission “to improve the quality of life of our members and their families, through the provision of personalized financial solutions and advice”.
Continuing, the Chairman stated that EduCom remained focused on its mission and vision. The Credit Union would continue to strive to provide its members with competitive returns on their invested funds and simultaneously offer a suite of loan products which were not only tailored to their needs but were also offered to members at prevailing marketdriven rates. Importantly, EduCom would continue to strive to improve member experience with the implementation of technological solutions.
The Minutes of the 5th Annual General Meeting held on November 2, 2020, having been previously circulated, was taken as read on a motion by Mr. Ray Howell, duly seconded by Ms. Ann Marie Rose and carried.
Page 11, under the heading, Queries from the Board Report under Item a) Business Process Review and Optimization, last line “… with a share offer at very competitive rate” amended to read “… with a deferred shares offer at a very competitive rate”.
The Minutes was confirmed on a motion by Ms. Simone Lloyd, duly seconded by Mr. Ray Howell.
Mega Credit Union of the Year Award
Ms. Simone Lloyd asked that the membership be appraised of what would have been contributed to the Credit Union achieving the Mega Credit Union of the Year Award in 2020.
Mr. King responded that the Jamaica Co-operative Credit Union League (JCCUL) in its assessment considered several factors: how the credit unions performed in several categories, and how quickly Credit Unions were able to hold their Annual General Meeting and submit their financials to JCCUL, Bank of Jamaica (BOJ) and the Department of Cooperatives and Friendly Societies.
Mr. Dominic Jarrett noted that a Member Satisfaction Survey was conducted in 2020. He queried whether a survey would be done for 2021. Mr. King, CEO, informed the meeting that the survey was conducted annually. Given the current pandemic, which was expected to continue for some time, EduCom was adhering to the established health protocols of social distancing and gathering limits and would do the next annual survey virtually, if necessary.
Mr. Dominic Jarrett sought an explanation about the purpose
of the funds which were in the Statutory Reserve. Mr. King responded that financial institutions were mandated to set funds aside to meet the Statutory Reserve requirement. He explained that EduCom had to ensure that its capital was increasing so that if there were any challenges, whether in the internal or external environment, (such as the current pandemic) EduCom should be able to respond to those shocks. Credit Unions were required to set aside a minimum of 25% of Surplus each year for the Statutory Reserve Fund.
Ms. Donna Edwards stated that since the inception of EduCom she had not received any dividend.
Ms. Bennett, Secretary, requested that Mr. King, CEO, provide the meeting with general information in relation to dividends. Mr. King told the meeting that in the past, members would receive a dividend on their Voluntary Shares. He stated that the Credit Union had changed from paying a dividend on Voluntary Shares and had instead begun paying interest. He further stated that EduCom currently paid interest on regular Savings and Shares, but dividends were paid on Permanent Shares. He reported that since the inception of EduCom, dividend payments had been made to members.
The Secretary suggested that members who wished to seek further clarification on the matter should call the CEO’s office.
Mr. Lennox Deane asked if there was any development with regards to the Business Process Review and Optimization (BPRO), and the suggestion to offer Deferred Shares to members.
Mr. King reported that the Deferred Shares Offer was at a stage where EduCom had submitted its proposal to the Department of Co-operatives and Friendly Societies. As at the meeting date, management was awaiting a response. Once the relevant approval had been received, the Deferred Shares Offer would be opened to the membership. He stated that the interest rate would be extremely competitive.
Continuing, Mr. King reported that the main aspect of the BPRO was the Information and Communication Technology (ICT). He mentioned that just two (2) years prior to the meeting date, an ICT assessment was done, and it was found that EduCom’s ICT was very limited. As such, the Credit Union was currently assessing some banking platforms,
and demonstrations were done. The Credit Union was in the process of reviewing/selecting a new core banking platform.
Mr. Michael Brydson said that while he was satisfied with the response from the CEO, he noted that the process was taking a long time. Ms. Bennett, Secretary expressed the hope that the members would receive some satisfactory progress soon.
Mr. Dominic Jarrett sought an explanation as to the significance for the Rules amendment to Article VII, Rule 26. The CEO advised that the Rule change was specifically for volunteers and regular members. He mentioned in the past, EduCom would have the full composition of the Credit and Supervisory Committees, and the Board approving loans. Hence, the Rule was amended to allow the use of a representative from the Credit Committee and the Supervisory Committee, with a quorum of the Board, rather than having the full composition of the Credit and Supervisory Committees, and the Board approving such loans. The CEO pointed out that the Rule change would allow for transparency in the loan approval process for the officers of the Credit Union.
The Chairman in his opening remarks stated that since early 2020 Jamaica’s business environment was being significantly impacted by the Coronavirus pandemic.
The economy suffered a steep contraction in 2020, but was projected to rebound for 2021, as both domestic and foreign demand strengthened.
The 2020 calendar year ended with the Statistical Institute of Jamaica (STATIN) reporting that inflation closed at 5.1% compared with 6.2% recorded in 2019. Gross Domestic Product declined by 10.2% compared with the previous year’s 0.9% growth, and unemployment closed the year at 10.7% compared with 7.2% experienced in 2019, reversing the positive trend of the last two (2) years. The Jamaican Dollar depreciated by 7.6% against its US counterpart, to close the year at J$142.65 to US$1.00.
During the year under review, the average Treasury Bill
Rate, which was a key driver of interest rates, declined from 1.25% at the beginning of the year to close the year at a low of 0.77%. The Chairman stated that these environmental indicators were far from surprising in a pandemic year. It showed the strides made over the last 10 to 15 years by successive administrations to improve the resilience of the Jamaican economy.
EduCom continued its preparation mode ahead of the Bank of Jamaica (BOJ) becoming a regulator of credit unions. Management and the Board was working assiduously to ensure the Credit Union’s preparedness to register for licencing once the regulations were passed. The Chairman reported that EduCom was in good stead and expected to be successful in whatever licencing regime the BOJ introduced.
The Chairman reported that the financial year saw an upward trend in all the Credit Union’s financial performance indicators except for net loans, which took a pandemic-triggered dip in 2020. He proceeded to report on the performance for the period under review.
Members had continued to show their confidence in the management of the Credit Union by increasing savings by 10.9%, ending the year at $8.986B compared with $8.103B in 2019. Unfortunately, the ravages of the pandemic and the resultant impact on members’ employment and income streams created a scenario where net loans showed a reduction of 1.7%, an unwanted statistic – the first in the history of EduCom – to end the year at $7.600B (2019: $7.728B), and total assets increased by 11.5% over 2019’s performance, moving from $9.763B to $10.888B.
The Chairman reported that EduCom continued to perform well in its delinquency management efforts, albeit delinquency increased to 3.8%, moving from 3.5% in 2019. He implored members to communicate with the Credit Union whenever there were challenges with meeting monthly obligations to the Credit Union. He reported that at the peak of the pandemic, 9% of the borrowing members applied and received approval for moratoria. During the period of the moratoria, the Board opted to freeze the interest on the loans so that members were not faced with a massive interest cost when payments resumed. The result of that initiative was that the Credit Union’s interest income was negatively affected by $23M.
Operating income for the period under review closed at $1.121B, a growth of 2.7% over the 2019 performance of $1.092B. The marginal increase in operating income reflected the challenges faced in convincing members to borrow in 2020, as the pandemic took a toll on the Credit Union’s operations.
Despite the challenging times, the overarching strategic focus of EduCom remained unchanged, that is, adding value to members’ lives. This mantra took on a greater significance during the year 2020, as EduCom implemented approaches designed to cushion the impact of the pandemic on members. The Credit Union continued to examine the strategy statement and was committed to concurrently working on all the strategies to ensure an improved member experience and continued to improve its level of highperformance indicators and targets. Those were:
• Member Value – The Board continued its focus and efforts on improving member value by understanding individual needs and providing personalized financial solutions from an expanded suite of products. The Board also decided that the pertinent factors were interest paid to the members, interest rate charged on loans, dividend paid, and fees charged. EduCom compared its fees, rates, and dividends to that of the market and was pleased to report that the Credit Union had surpassed its first two years’ target on the strategic metric.
• Member Satisfaction – EduCom’s objective was to improve member satisfaction to 92.5% by the end of 2023. At the end of 2020, the weighted satisfaction score was 74%. The target for 2021 was 81%.
• Compliance to Regulatory Requirements – The aim was to have 100% compliance by the end of 2023. The Credit Union achieved a compliance rate of 91.3% at the end of 2020, with the goal of increasing the rate to 95% by the end of 2021.
• Membership Growth – The 3-year target was to increase the membership to a minimum of 100,000 by 2023. The Credit Union closed 2020 with a membership of 78,000 and was focused on achieving a 9.2% growth in 2021.
• Reactivation of Dormant Accounts - At the end of 2020, 57% of the members had not done a transaction with the Credit Union over the last twelve (12) months, resulting in their accounts becoming dormant. The objective was
to reduce this target to below 50% in Year 1, and to a maximum of 35% over the 3-year horizon.
The success of those high-performance indicators would result in the success of the financial, membership and governance indicators that were critical for the Credit Union’s success in 2021 and beyond. Those financial, member and governance indicators include:
• Strengthening capital – A strong capital base was the lifeblood of the Credit Union. EduCom was in good stead with its capital base, and it was anticipated to improve in the foreseeable future.
• Building relationships – Membership continued to be the primary relationship that we sought to improve and build on.
• Enterprise Risk Management (ERM) – In this difficult environment of regulatory structures, rules and regulations, ERM was the primary way that the Credit Union would protect members’ investments and protect the reputation of all those who were involved in the Credit Union’s operations.
• Service Excellence
• Product improvement was paramount. EduCom continued to listen to its stakeholders and tried to ensure that its members were provided with products which were competitive in the current marketplace.
• Providing competitive savings rates.
The Chairman informed the meeting that the Credit Union was in the process of procuring a new core banking platform to improve the Credit Union’s information technology capabilities. He reported that this banking platform would not only improve operational efficiencies but would also improve member experience.
The Chairman referred to the fact that EduCom was in the final stages of getting approval to open a Deferred Shares Offering to its members. The proceeds from the Shares Offer would be used to facilitate the procurement of the new banking platform. Efforts would be made to ensure that members were provided with the best possible interface, which would allow them to access products and services as seamlessly as possible.
The Credit Union continued to engage its members by providing significant contributions to social enterprises and through its annual scholarship awards. Of particular importance was the continued support given to the Albert Street Basic School. EduCom expected to continue this thrust, given its mantra.
a. Information and Communication Technology (ICT)
Ms. Mevonnie Ferguson asked whether the new banking platform would allow members to access their accounts online from anywhere, and whether it would have enhanced access features with greater functionality.
She was informed that the new banking platform would provide members with information on their accounts, and significantly improve the security of their accounts. In addition, the internal efficiencies that would be realized from the new banking platform would facilitate a significant improvement in the automated client interface. The CEO, Mr. Elvis King informed the meeting that the new banking platform would not allow members to use their debit cards online. He however advised that the Credit Union League was currently negotiating for credit unions to be able to issue MasterCard debit cards to members, so that they could use it to do online transactions such as to making bill purchasing payments. Management anticipated that EduCom would be able to begin issuing the new debit card by the second half of 2021.
There being no further questions on the Board of Directors’ Report, it was adopted on a motion by Mr. Dominic Jarrett, duly seconded by Mrs. Patricia Reid-Waugh.
The Chairman then proceeded to invite the Treasurer, Mr. Hilton Blenman, to lead the meeting through the following reports:
• Registrar’s Report
• Auditor’s Report
• Treasurer’s Report
The Registrar’s Report was tabled and duly noted.
The Treasurer invited the Engagement Partner from BDO, Mrs. Jennifer Hibbert, to present the Auditor’s Report.
Mrs. Jennifer Hibbert read the Independent Auditor’s Report on the Credit Union’s financial affairs for the year ended December 31, 2020.
A motion for the Treasurer’s Report to be taken as read was moved by Mr. Ray Howell and seconded by Mr. Kurt Vaz. The motion was carried.
Mr. Hilton Blenman, Treasurer, reported that the 1st Quarter 2020 financial results, when compared to the similar period in previous financial year, engendered a bright prospect for the remainder of the year, based on surplus realized and loan disbursement. The unexpected emergence of the COVID-19 pandemic had significant adverse effects on economies worldwide. As such, the business operations of the Credit Union were affected. Drastic changes had to be made for how operational activities were carried out, as follows:
• Some team members’ functions had to be done remotely from their homes, which became the norm.
• Board of Directors’ meetings were convened online via the Zoom platform.
• Opening hours for the branch network had to be changed in an effort to reduce the negative effects on operational efficiencies.
• EduCom granted moratoria to members, which resulted in the deferral of principal and interest payments (which totalled $23M) on their loans. This exemplified the principle of member centricity, as the Credit Union sought to assist members who had been severely impacted by the effects of the pandemic.
• The elevation of credit risk in loan receivables resulted in additional impairment provisions of $39.70M.
The challenges which arose as a result of the pandemic negatively impacted the Credit Union’s financial performance
in terms of its core business – disbursement of loans to members. This resulted in a decrease of 1.7% in the net loan portfolio over the previous year.
Despite the challenges encountered, EduCom’s performance met and, in most cases, exceeded the key financial indicators as measured against the PEARLS standards used by the Jamaica Co-operative Credit Union League (JCCUL) as a means of assessment.
Despite another challenging year, EduCom achieved relatively good performance with a surplus of $66.85M after honorarium compared to $94.78M recorded in the 2019 comparative period. The performance fell short of the budgeted surplus of $135.06M by $68.21M representing a decrease of 29.5% when compared to 2019’s surplus. The shortfall was attributed mainly to the following factors:
• The negative impact of the COVID-19 pandemic on loans disbursement. This resulted in the total loan repayment exceeding the total loans disbursement during the year.
• Members’ reluctance to borrow, given the high level of uncertainty about the future and concerns in terms of income security.
• Loan impairment losses due to write-off of unrecoverable loans.
• An increase in loan loss provision for possible uncollectible loans, and an increase in operating expenses.
Loans – Net loans decreased by approximately $140.8M, closing the year at $7.62B – a 1.8% decrease in the loan portfolio. This was mainly attributed to a significant decrease in loan disbursements. Additionally, EduCom realized a net loan to total assets ratio of 70% for 2020 compared to 79% achieved in 2019.
Operating Expenses increased to $788.6M from $727.5M in the previous year. This reflected an increase of 8.4% (or $61.1M). The main contributing factors to this increase were the additional costs from inflationary factors.
Total Assets – Total assets increased to $10.90B in 2020, an overall increase of $1.046B (or 11.0%) compared to $9.850B in 2019.
Delinquency – Management continued to be successful in its objective to keep the delinquency rate low, despite the negative impact that the COVID-19 pandemic had on 595 members who were adversely affected. Through the concerted efforts of management, volunteers, and staff, EduCom managed to control this very important indicator by remaining vigilant in monitoring and managing the timely receipt of members’ payments on the loan portfolio. The Credit Union achieved a delinquency rate of 3.8%, which was below the established benchmark of 5%, even though it compared unfavourably to 2019’s rate of 3.5%.
Members’ Savings increased to $9.042B (a growth of 12.0%) compared to $8.055B in 2019. EduCom, however, did not achieve its objective to satisfy its loan demand from members’ savings. The Credit Union would continue to offer attractive rates on savings products to maintain the gap between the total loan portfolio and the total members’ savings.
Mr. Blenman reported that The Credit Union continued to operate in a changing and highly uncertain environment, where the integrity and behaviour of some of members were becoming questionable. He cited instances of members who borrowed from the Credit Union with no intention of honouring their obligations. This resulted in loans becoming delinquent and being charged-off the accounting records. This was at a significant cost to the Credit Union – approximately $50.4M, compared to $52.8M for the previous year. He stated that management was carrying out recovery efforts through the following channels:
• The engagement of the services of bailiffs.
• The engagement of attorneys-at-law to pursue recourse through the court system to collect sums owing.
• The foreclosure of real estate properties which had been pledged as collateral.
• The names of delinquent members were being sent to the Credit Bureaus to prevent them from accessing further credits from any other institution without settling their outstanding debt to the Credit Union.
• The names of delinquent members would be published on notice boards in branches and on the Credit Union’s website.
• The names of delinquent members who could not be located would be published in printed media.
Ms. Arleen Richards noted the low surplus that was earned in 2020 compared with prior years and asked about the basis for distributing a high honorarium to the Volunteers.
Mr. Blenman explained that the purpose of the honorarium was to reward the Volunteers for the work and services they had provided to the organization. He stated that the honorarium was a small modicum of compensation, because the value of the contribution of the Volunteers to the Credit Union far exceeded the honorarium. He further stated that the honorarium was significantly below what the Credit Union would have had to pay the Volunteers for their services were they professionally engaged. He explained that each year, the Board of Directors recommended the payment of the honorarium out of the surplus and the general membership usually approved it as part of the appropriation of surplus. However, in the current dispensation, the Registrar of Co-operatives had advised that the honorarium should be treated as an expense in the financial statements. As such, the honorarium was reflected in the financial statements as an expense. Hence, the net surplus after honorarium was $68M.
Mr. Blenman reported that the honorarium distributed for 2020 was $9.7M.
Mrs. Patricia Reid-Waugh referred to the PEARLS Ratio Schedule on Page 46 and pointed out that there needed to be some amendments as follows:
External Credit/Total Assets under the “Standard” column should be amended to read ‘Maximum 5%’.
Short-Term Payable/Total Deposit, under the “Standard” – delete the words “of the credit” and insert the figures for the standard.
Short-Term Payable/Total Deposit – insert the following notation “(Measures the ability of the Credit Union to meet withdrawals)”.
Non-Earning Liquid Assets/Total Assets under the “Standard” – delete the words “union to” and insert the figures for the standard.
Mrs. Reid-Waugh asked the Treasurer to review the “Standards” column and make the adjustments accordingly. The Treasurer agreed.
Mrs. Reid-Waugh referred to Note 14 on Page 141 of the Annual Report and pointed out that Foreclosed Properties had stood at $32M since 2017. She cited the Bank of Jamaica (BOJ) Regulations which stipulated that such properties should be disposed of within three (3) years of being foreclosed. She enquired whether those properties would have to be written down to dispose of them and whether the valuation was impaired.
The Treasurer responded that the foreclosed properties were carried over as part of the 2017 merger with St. Catherine Co-operative Credit Union. He reported that one (1) of the properties had been disposed of and that as at the meeting date four (4) properties remained. Efforts were being made to dispose of another property, but the transaction had fallen through because of the pandemic. The Credit Union would continue its efforts to try to sell the properties.
Mr. Lennox Deane moved a motion for the acceptance of the Treasurer’s Report, and it was duly seconded by Mr. Dalton Haughton. The motion was carried.
The Chairman stated that the Appropriation of Surplus was presented as part of the Treasurer’s Report. He invited Mr. Hilton Blenman, Treasurer, to present the proposed Appropriation of Surplus. The recommended breakdown was as follows:
Vaccine Initiative
Total
$33.87M
Mr. Ray Howell highlighted that Community Outreach which was $4.9M in 2019 had been reduced by approximately 500% to $1.0M in 2020. Mr. Blenman explained that EduCom had reallocated $3.0M from the Community Outreach fund to the St. Vincent Contribution to assist with disaster recovery efforts as part of a wider Caribbean initiative by the Credit Union Movement. He informed that there was a balance of $5.9M in the Community Outreach fund coming from prior years. He stated that because of the pandemic the Credit Union had not been able to disburse the funds. Mr. Howell thanked the Treasurer for providing the explanation.
Mr. Dominic Jarrett moved a motion for the Appropriation of Surplus to be accepted and it was seconded by Mrs. Natasha McLaren-Mills. The motion was carried.
The Chairman, at this stage asked for a vote for those who were in favour of the Appropriation of Surplus report to raise their virtual hands. He informed the meeting that a minimum of 130 persons would be required to support the Appropriation of Surplus for it to be passed. The following results were:
Number voted for
Number voted against
Number abstentions
The Chairman invited Ms. Tasha Manley, Chairman of the Supervisory Committee, to present the Committee’s Report. Mr. Dominic Jarrett moved a motion for the Report to be taken as read. The motion was seconded by Mr. Ray Howell. The motion was carried.
There being no questions on the Supervisory Committee’s Report, it was accepted on a motion by Ms. Donna Edwards, duly seconded by Ms. Simone Lloyd.
The Chairman invited Mr. Kurt Vaz, the Committee’s Chair, to present the Report.
Mr. Vaz reported that as at December 31, 2020, the net loans portfolio decreased by approximately $140.8M, closing the year at $7.62B. This represented a decline of 1.8% over the corresponding financial period when $7.76B was recorded. Total new loans disbursed during the period under review was $3.53B.
With the advent of the pandemic, the Credit Union took time to demonstrate its core values of C.A.R.E. to the membership by approving moratoria representing approximately 7.00% of the loan portfolio. Moratoria were extended for up to nine (9) months and impacted over 1,300 accounts, with principal and interest payments being deferred.
The loans portfolio mix was as follows:
• Motor vehicle - 29.98%
• Unsecured - 26.32%
• Secured - 23.02%
• Mortgage - 17.33%.
• Staff Concessionary Loans - 1.98%
• Restructured Loans - 1.36%.
The Committee expressed appreciation and thanks to Miss Deloris Mollison for her commitment to the Credit Union and to the late Mr. Clayton McEwan, who had served the Credit Committee commendably before being promoted to the Board of Directors in February 2020.
There being no questions on the report, it was adopted on a motion moved by Mrs. Janice Green, duly seconded by Mr. Ray Howell.
The Report was taken as read on a motion moved by Mr. Lennox Deane, duly seconded by Mrs. Natasha McLarenMills. The motion was carried. Mr. Ruel Nelson, Chairman of the Nomination Committee, presented the Report.
The other members of the Committee were:
• Mr. Michael Brydson
• Mr. Tanjay Holmes
• Mr. Frederick Mills
• Mr. Ian Sutherland
The following Directors retired at the Annual General Meeting, but were eligible for re-election:
• Ms. Sonia Bennett
• Mrs. Janice Green
The Committee expressed its sincere thanks and appreciation to Mrs. Green for her unselfish and dedicated service to the Credit Union over the years.
Mr. Nelson reported that the Nomination Committee had identified a candidate to replace Director Green. The Committee’s recommendation was Mrs. Keriene CollinsSalmon, with a proposal for her to serve for a term of three (3) years. The Committee also recommended that Ms. Sonia Bennett be nominated to serve on the Board for another three (3) years. The other proposed members of the Board and their respective remaining tenures were as follows:
• Miss Stacey-Ann Farquharson - two (2) years
• Miss Coleen Lewis - two (2) years
• Dr. Mark Nicely - two (2) years
• Mr. Ian Sutherland - two (2) years
• Mr. Charles O’Connor - two (2) years
• Mr. Hilton Blenman - one (1) year
• Mr. Ian McNaughton - one (1) year
• Mr. Ruel Nelson - one (1) year
• Mr. Hector Stephenson - one (1) year
The following Committee Member retired, but was not eligible for re-election as she had served for three (3) consecutive terms of two (2) years each:
• Miss Deloris Mollison
The Committee acknowledged the sterling contribution of Miss. Mollison over the years, noting that her commitment and dedication to her responsibilities were unparalleled.
The Committee identified Mr. Courtney Garrick as the candidate to replace Miss Deloris Mollison. The recommendation was that Mr. Garrick be appointed to serve on the Credit Committee for two (2) years. The Committee also recommended that Mr. Kurt Vaz be appointed to serve for another two (2) years.
The other proposed members of the Credit Committee and their respective remaining tenures were as follows:
• Miss Rachelle McKenzie - one (1) year
• Miss. Shashu Payne - one (1) year
• Mr. Hopeton Newell - one (1) year
The members of the Supervisory Committee were elected to serve for one (1) year, and as such, all members were due for retirement.
The Committee acknowledged the commitment and dedication of Miss Tasha Manley, Mr. Clive McLean, and Mrs. Loraine Gordon-Pinnock whose contributions were exemplary. The Committee also thanked them for having served.
The Committee recommended that the following persons be elected to serve for a period of (one) 1 year:
• Miss Erica Haughton
• Mrs. Petal Thompson Williams
• Mr. Glenville Henry
• Mr. David Weir
• Mr. Andrew Smith
Mr. Nelson sought a motion for the Nominations Committee Report to be accepted. The motion was moved by Mr. Kerson Batchu, duly seconded by Ms. Donna Edwards. The motion was carried.
Mr. Ruel Nelson invited Ms. Antoinette Spencer from the Department of Co-operatives and Friendly Societies to formally ratify the nominations.
Ms. Spencer invited the meeting to note the poll that was projected on the screen and asked persons to cast their vote to indicate their acceptance of the persons nominated to serve until the 2022 AGM. Five (5) minutes were allotted for voting.
Upon tallying the votes, Ms. Spencer announced that the affirmative votes were in the majority. Therefore, the nominations were duly accepted.
The elected Directors and Committee Members for the 2021/2022 administrative year were:
Mrs. Keriene Collins-Salmon
Ms. Sonia Bennett Miss Stacey-Ann Farquharson Miss Coleen Lewis
Dr. Mark Nicely
Mr. Charles O’Connor
Mr. Ian Sutherland
Mr. Hilton Blenman
Mr. Ian McNaughton
Mr. Ruel Nelson Mr. Hector Stephenson
3 years 3 years 2 years 2 years 2 years 2 years 2 years 1 year 1 year 1 year 1 year
Mr. Courtney Garrick
Mr. Kurt Vaz
Miss Rachelle McKenzie Miss Shashu Payne
Mr. Hopeton Newell
2 years 2 years 1 year 1 year 1 year
The Chairman invited the Treasurer, Mr. Hilton Blenman, to present the Fixing of the Maximum Liability.
Mr. Blenman sought the meeting’s approval for the fixing of maximum liability. He referenced Rule #77 which stated that the Credit Union could borrow up to sixteen (16) times its capital in the event of a significant emergency. The capital stood at $1.136B. Mr. Blenman recommended that the maximum liability be set at $12B. He pointed out that the recommendation of $12B had remained since 2019.
Ms. Heather Prendergast moved a motion for the approval of the maximum liability to be set at $12B, and the motion was duly seconded by Mrs. Patricia Reid-Waugh. By a show of hands, the motion was carried.
Mr. Godfrey Taylor queried whether a fee was still being charged for members to withdraw their own funds. The CEO responded in the affirmative and explained that a minimal fee was being charged for persons below the age of 60 years. Mr. King stated that the introduction of the fee was a matter which had been given careful consideration,however, arising from a review of the overall business, steps had to be taken to ensure that the Credit Union remained viable. The economic cost of doing business was also taken into account in arriving at the decision for a minimum fee to be charged.
Mr. Taylor remarked that the basis of his question was more of a moral one. He asked that the Board give serious consideration to the matter of the withdrawal fee from a principled perspective, rather than from an income-
generating perspective. The CEO commented that members’ suggestions/concerns were usually reviewed.
Mrs. Patricia Reid Waugh stated that she agreed with Mr. Taylor’s views and opined that implementation of the fee was immoral. She commented that she had raised the matter at a previous AGM, and a decision was subsequently taken that the fee would not be applicable to members over the age of 60.
Ms. Danielle Black stated that for the last two (2) months, she had noted a recurring fee being debited from her account. When she had enquired, she was advised that the debit represented a monthly maintenance fee. She stated that she did not recall receiving a notice regarding any maintenance fee being charged against her account.
The CEO responded that the concerns regarding fees were noted and that the Board of Directors would review the matter and a decision taken on the way forward.
As there were no further queries/concerns, the Chairman thanked everyone for their attendance and participation in the meeting. In preparation for termination of the meeting, a closing prayer was offered.
There being no other business, the meeting ended at 5:15 p.m. on a motion moved by Mr. Lennox Deane and seconded by Ms. Mevonnie Ferguson.
Minutes of the Special General Meeting of the EduCom Co-operative
Credit Union Limited held virtually on Thursday, August 19, 2021.
Present were:
Mr. Ian Sutherland (President)
Mr. Hector Stephenson (1st Vice President) Miss Coleen Lewis (2nd Vice President)
Ms. Sonia Bennett (Secretary)
Mrs. Charles O’Connor (Treasurer)
Mr. Hilton Blenman (Director)
Mr. Ruel Nelson (Director)
Mr. Andrew Smith (Director)
Dr. Mark Nicely (Director) Mrs. Keriene Collins-Salmon (Director) Miss Stacy Farquharson (Director)
The Secretary, Ms Sonia Bennett, confirmed that a quorum was present. The quorum was 100 members and as at 4:04 p.m. there were 131 members present.
The meeting was called to order at 4:09 p.m. by the Chairman and President, Mr Ian Sutherland.
The Chairman invited the 1st Vice President, Mr. Hector Stephenson, to lead the meeting in the invocation.
The Secretary, Ms. Sonia Bennett, read the Notice convening the Special General Meeting.
There were no apologies for absence.
The Chairman welcomed members to the first virtual Special General Meeting.
He acknowledged the presence of the Board Members, Mr. Elvis King (Chief Executive Officer), members of the Supervisory and Credit Committees, the management team and staff.
A special welcome was extended to Ms Sheryll Brown of the Department of Co-operatives and Friendly Societies.
The Chairman stated that the meeting had been called to consider, and if thought fit, pass an appropriate Resolution relating to a Deferred Shares Offer. He informed the meeting that the Credit Union, needed to identify funding to realise some of its strategic initiatives. In particular, funding was required to facilitate improvements in the Credit Union’s technology base which would result in improved products and services.
A brief overview of the Deferred Shares Offer was provided by the Chairman. He stated that the Deferred Shares product was a long-term investment that would provide shareholders with good returns. The planned listing of the Shares on the Jamaica Stock Exchange (JSE) would allow for trading if a shareholder needed to retrieve the funds at any point in time. He cited the downward trend of interest rates over the
last five (5) years and stated that the Offer would provide investors with a level of certainty given that it was a fixedrate instrument. The Chairman encouraged all members to participate in the decision-making process of whether to proceed with the Shares Offer.
The Chairman asked the CEO, Mr. Elvis King, to make the presentation on the Deferred Shares Offer.
In his opening remarks, Mr. King stated that the presentation would focus on the purpose of the Deferred Shares Offer, followed by a question-and-answer session. Thereafter the matter of whether to proceed with the Deferred Shares Offer would be put to a vote.
Mr. King informed the meeting that the purpose of the Shares Offer was to improve the working capital, which included effecting improvements to the Credit Union’s technological infrastructure. The Deferred Shares Offer was one way of sourcing funds to enhance EduCom’s capital and to execute imperatives in order to achieve strategic objectives.
It was anticipated that the Deferred Shares Offer would be opened for subscription either late September 2021 or early October 2021. The investment was for five (5) years and as such the Shares were not redeemable until 2026. Mr. King explained that provisions had, however, been made to facilitate encashment before 2026, but that the Rules of the Credit Union would need to be amended to allow the shares to be traded.
The CEO outlined the characteristics of the Deferred Shares, which were as follows:
• The Shares Offer provided a source of funding the Credit Union’s capital.
• The Shares would form part of the Credit Union’s capital.
• In the event of winding-up of the Credit Union the claims of the holders of the Deferred Shares would be subordinated to the claims of depositors, lenders and trade creditors, but rank in priority to the claim of members in respect of their Permanent Shares.
• The Shares would have to be held for not less than five (5) years if they were to be redeemed by the Credit Union.
• The Shares could not be used as collateral for a loan.
• Members could not increase their investment once the Offer had closed.
Mr. King informed the meeting that through the Shares Offer, the Credit Union would be seeking funding from its members, other co-operatives and member organizations. The proceeds of the Shares Offer would primarily be used for the acquisition of a new core banking platform. The new banking platform would facilitate members doing most of their banking at their convenience – whether from the comfort of their homes or while on the go.
The benefits of implementation of the new core banking system included:
• Improved user experience and engagement.
• Improved risk management and internal controls.
• Enhanced brand reputation.
• Improved decision-making.
• More flexibility and agility.
• Streamlining of operational processes.
• Provision of data that would facilitate creating a more personalized experience for members.
• Improved online services to include funds transfer, loan application, and onboarding of new members.
The Lead Broker for the Shares Offer was Money Master Limited. As at the meeting date, the Prospectus was being finalized and was expected to be available to potential investors in September 2021.
The Credit Union was seeking to raise $250M. The cost per share was $1.00. The minimum investment was $25K, with the maximum investment from any one investor capped at $50M. The tenure of the investment was five (5) years, maturity date being in 2026. Interest at a rate of 6.5% per annum would be paid quarterly.
No additional voting rights were attached to the Deferred Shares – each member of the Credit Union had one (1) vote.
Holders of Deferred Shares who are not members of the Credit Union and who acquired said shares through trading would not have any voting rights.
The primary reason for the modification of the Rules was to have the Deferred Shares listed on the JSE. If a holder of Deferred Shares needed to dispose of the Shares before the maturity date, the trade would need to be done on the JSE.
The CEO outlined the benefits of listing the Shares on the JSE.
At the end of the presentation, Mr. King invited questions from the floor with members using the raise hand feature on the Zoom platform.
Ms. Terry-Ann McPherson asked whether the minimum investment amount of $25,000.00 was a one-time payment or members could make continuous payments.
Mr King responded that there was no requirement to add to the investment during its tenure. He reiterated that no further investment in the instrument could be done once the Offer had been closed.
Mr. Ray Howell inquired about the expected performance of the Shares Offer. The CEO responded that the target was to raise $250M. A fixed rate of return of 6.5% per annum was considered to be extremely good. He pointed out that in the past five (5) to seven (7) years, interest rates were trending downwards. EduCom, however, did not opt for a variable rate instrument as it wanted to offer investors a guaranteed rate of return.
Mr. King further informed the meeting that interest on the instrument was taxable. The Credit Union was working with Money Masters Limited to allow members to pay their own taxes.
Miss Shasu Payne queried whether the Offer would be made primarily to the membership, or whether it would be made available to the open market. The CEO responded that EduCom’s Rules only allowed for the Deferred Shares to be offered to its members, other co-operatives and member organizations. Non-members would, however, be able to purchase the shares once they began trading on the JSE.
Miss Payne further questioned how often interest would be paid on the instrument and whether it would be paid
into members’ accounts. The CEO responded that interest payments would be made quarterly with the amounts being deposited to members’ accounts.
Mr. Ray Howell commented that the Deferred Shares would provide members with a good opportunity to invest in their children’s tertiary education.
A member enquired whether investment in the Offer carried any risks. Mr. King reiterated that the instrument had a guaranteed rate of return, and that the principal would be repaid on maturity. He stated that the price of the shares traded on the JSE would fluctuate based on volatility in the market. The rate of return on the investment was, however, guaranteed.
Another member inquired whether the 6.5% interest payment would be applied every quarter to a Deferred shareholder’s account. Mr. King clarified that the 6.5% was an annual rate, and that payments would be made quarterly.
In response to a question of whether there was a service fee/ commission that would need to be paid in order to invest in the Offer, Mr. King stated that members were not required to pay as the Credit Union had absorbed the fee that would have been due to the Lead Broker, Money Masters Limited.
The member further queried whether he could pre-order the Shares. Mr. King responded in the affirmative. The application for the Shares would, however, not be processed until the Offer was opened.
Mr. Patrick Tulloch asked whether members would be able to order the Shares directly from EduCom or through a broker. Mr. King advised that the Credit Union would channel members who wished to participate in the Share Offer to the broker, Money Masters Limited.
Mrs. Patricia Reid-Waugh referred to a document that had been previously emailed to members. She observed that a number of the questions being asked were answered in relation to the Rules of the Offer. She said that the document was extensive and spoke to the matter of beneficiaries.
A member indicated that he resided overseas and was interested in the Offer. He inquired how he could participate in the Offer. The CEO promised to share with the member information on how he could remit the funds to the Broker for purchasing the Shares.
Thereafter the question-and-answer segment of the meeting was closed. The Chairman thanked the CEO for the presentation and the members for their questions. He then invited Ms. Sonia Bennett, Secretary, to read the Resolution.
Ms. Bennett read the proposed Special By-Laws for the Deferred Shares, which were stated as follows:
The purpose of these Special By-laws is to ensure that the rights and privileges relating to the Deferred Shares due 2026 meet certain requirements set out in the Rules of the Jamaica Stock Exchange (JSE) in order that the Deferred Shares due 2026 may be admitted to trade on the JSE as was contemplated at the time that the Deferred Shares due 2026 were placed with investors.
Pursuant to Rule 86 of the Rules of the Board of Directors of EduCom Co-operative Credit Union Limited, hereby enact these Special By-laws (hereinafter referred to as By-Law #1) setting out certain rights and privileges relating to the Deferred Shares due 2026.
1.1 In these By-laws, unless the context otherwise requires:
“Act” means the Co-operative Societies Act and any regulations made thereunder;
“Business Day” means any day (other than a Saturday, Sunday or public general holiday) on which banks are open for business in the Corporate Area of Kingston and Saint Andrew in Jamaica;
“Deferred Shares due (year)” means EduCom Co-operative Credit Union 6.5% Fixed Rate Deferred Shares due 2026;
“Distribution Date” means the 15th day of the first month in each quarter, following the first three (3) months of the initial issue. If that day is not a Business Day, then the next following Business Day;
“JCSD” means the Jamaica Central Securities Depository Limited;
“Maturity Date” means August 2026;
“Rules” means the approved Rules of EduCom Co-operative Credit Union Limited;
“Society” means EduCom Co-operative Credit Union Limited.
2.1 The Deferred Shares due 2026 shall be paid for in full at the time of the application and shall carry the rights and privileges set out in these Special By-laws.
2.2 The Deferred Shares due 2026 shall be a distinct and separate class of share capital carrying a contractual right to quarterly dividend payments and subject to mandatory redemption on the redemption date.
2.3 Each Deferred Share due 2026 shall rank pari passu with each other in all respects.
2.4 On a winding-up of the Society the claims of the holders of the Deferred Shares due 2026 in respect of their Deferred Shares due 2026 shall be subordinated to the claims of depositors, lenders and trade creditors, but rank in priority to the claim of Members in respect of their Permanent Shares.
2.5 The Deferred Shares due 2026 have the following characteristics namely:
(a) a fixed redemption date; (b) contractual right to quarterly dividend payments; (c) no voting rights save and except as provided herein; and a debt instrument under the International Financial Reporting Standards,
Accordingly, the Deferred Shares due 2026 are not to be treated as within the definition of a “Share” as defined and contemplated by the Act or the Rules and may be issued to, held by, or freely transferable to Members or non-Members (including but not limited to persons (whether natural or legal) that are not eligible for membership to the Society).
3.1 The Society shall not charge any fee for the transfer of any Deferred Share due 2026 or upon the registration of any probate, letters of administration, certificate of death or marriage, power of attorney, notice in lieu of listing as or other instrument. If the Deferred Shares due 2026 are deposited with the Jamaica Central Securities Depository Limited (JCSD), they may be transferred in book entry form in accordance with the rules and procedures of the JCSD.
3.2 The Deferred Shares due 2026 shall be freely transferable to Members and non-Members (including but not limited to persons (whether natural or legal) that are not within eligibility for membership to the Society). The instrument of transfer of any share Deferred shall be executed by or on behalf of the transferor, and the transferor shall be deemed to remain a holder of the Deferred Share due 2026 until the name of the transferee is entered in the Register of Deferred Shareholders in respect thereof.
3.3 Every person whose name is entered in the Register of Deferred Shareholders shall be entitled without payment to receive within ten (10) days after allotment or lodgement of transfer one certificate for all his Deferred Shares due 2026 or several certificates each for one or more of his Deferred Shares due 2026. Every certificate shall be under the Seal of the Society and shall specify the Deferred Shares due 2026 to which it relates, and the amount paid up thereon. Provided that in respect of a Deferred Share or Deferred Shares held jointly by several persons, the Society shall not be bound to issue more than one certificate, and delivery of a certificate for a Deferred Share to one of several joint holders shall be sufficient delivery to all such holders. In the case of Deferred Shares due 2026 deposited in the JCSD, the statement of accounts for capital shall be completed and ready for delivery within ten (10)
days of lodgement of the transfer. The Registration of Transfer may be suspended at such times and for such period as the directors of the Society may from time to time determine, provided always that such registration shall not be suspended for more than thirty (30) days in any year.
3.4 If a share certificate be defaced, lost or destroyed, it may be renewed on payment of a fee to be determined by the Society, with due regard to evidence and indemnity and the payment of out-of-pocket expenses of the Society incurred in investigating the loss, as the directors think fit, PROVIDED that the Society may elect to waive the fee.
4.1 Where two (2) or more persons are registered as the holders of any Deferred Share, they shall be deemed to hold the same as joint tenants with benefit of survivorship, subject to the provisions following:
(a) on the death of any one (1) such joint holder, the survivor or survivors shall be the only person or persons recognized by the Society as having any title to such Deferred Share due 2026); but nothing herein contained shall release the estate of the deceased joint holder from any liability in respect of any Deferred Share due 2026, which had been jointly held by him;
(b) any one (1) such joint holder may give effectual receipts for any dividend, bonus or return of capital payable to such joint holders; (c) only the person whose name stands first in the Register of Deferred Shareholders as one (1) of the joint holders of any Deferred Share due 2026, shall be entitled to delivery of the certificate relating to such Deferred Share, or to receive notices from the Society, and any notice given to such person shall be deemed notice to all the joint holders. Where such person does not register with the Society, an address within the Island, notice may be given by the Society to any other joint holder and similar such notice shall be deemed to be notice to all the joint holders; and
(d) the Society shall not be obliged to register more than two (2) persons as joint holders of a Deferred Share.
5.1
The holder of a Deferred Share due 2026 shall have a contract right to an annual dividend payment equivalent to 6.5% for the duration of the Deferred Share Offer.
5.2 The annual dividend shall be due and payable in Jamaican dollars monthly on the Distribution Date, subject to any withholding taxes required to be held at source under Jamaican law (as applicable).
5.3 All dividends unclaimed after having been declared may be invested or otherwise made use of by the directors for the benefit of the Society until claimed and if unclaimed for twelve (12) years may be forfeited and retained by the Society.
6.1 On the Maturity Date, the Society shall redeem each Deferred Share due 2026 at a price per Deferred Share due 2026 of J$1.00 per share.
6.2 The holders of any Deferred Shares due 2026, that are to be redeemed shall have a right to the aggregate amount of any dividends accrued up to the date of redemption.
6.3 All redemption payments shall be made gross of any applicable fees and taxes (save for withholding taxes required to be held at source under Jamaican law), and brokerage fees and Jamaica Stock Exchange fees (as applicable).
7.1 The Deferred Shares due 2026 carry no conversion rights.
8.1 The Deferred Shares due 2026 shall carry no voting rights save and except:
(a) in circumstances where a dividend is due to be paid on the Deferred Shares due 2026 and remains unpaid for a period greater than six (6) months; and/or
(b) in the event that a resolution to wind-up the Society has been tabled for consideration in accordance with the Act; and/or (c) there is a proposal to vary the rights attaching to the Deferred Shares due 2026
In any of the abovementioned events, the Society shall call a meeting of the Deferred Shareholders by giving at least twenty-one (21) days’ notice (inclusive of the day of service but exclusive of the day of the meeting) of the place, date and time of any meeting (an “Extraordinary Meeting”).
8.2 At any Extraordinary Meeting (other than an adjourned meeting) the quorum shall consist of at least two (2) Deferred Shareholders holding or representing by proxy at least fifty percent (50%) in nominal value of the Deferred Shares due 2026, for the time being outstanding. The necessary majority for passing a resolution at the Extraordinary Meeting (except in the case of a variation of rights) shall be not less than three-fourths (3/4) of the persons voting thereat on a show of hands and if a poll is demanded then not less than three-fourths (3/4) of the votes given on such a poll. Every holder present in person or by proxy shall have one (1) vote, and on a poll every holder shall have one (1) vote for each Deferred Share of which he is the holder.
8.3 A meeting of the Deferred Shares due 2026 must be called on a requisition in writing signed by holders of at least one-tenth (1/10) of the nominal amount of the Deferred Shares due 2026 for that time being outstanding.
8.4 An instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorized in writing, or, if the appointer is a corporation, either under seal, or under the hand of an officer or attorney duly authorized. A proxy need not be a Member of the Society nor a holder of Deferred Shares due 2026.
9.1 The rights attached to the Deferred Shares due 2026 may only be amended with the consent in writing of the holders of three-fourths (3/4) of the issued Deferred Shares, or with the sanction of a resolution passed at a separate meeting of the holders of the Deferred Shares due 2026. Permanent Share Holders must always have the right to ratify any proposed variation of rights attached to deferred shares.
10.1 A copy of the Society’s Annual Report, containing a segment on Management Discussion and Analysis, accompanied by a Balance Sheet (including every document required by the law to be annexed thereto) and Profit and Loss Account or Income and Expenditure Account, shall be made available on the Society’s website.
Ms. Sheryl Brown, the representative from the Department of Co-operatives and Friendly Societies, was invited to conduct the poll.
Ms. Brown informed the meeting that for the Resolution to be passed, a majority of 75% of the members present at the meeting would need to vote in favour of the Special By-Laws relating to Deferred Shares. She declared that there were 166 members present. She informed the meeting that three (3) minutes would be allowed for voting, at the end of which the poll would be closed.
The motion for the acceptance of the Special By-Laws relating to the Deferred Shares was moved by Ms Janice Cunningham and seconded by Mr Ray Howell. Voting was opened and the poll feature on the Zoom platform was used for voting. The votes were tallied, and the results were as follows:
Number voted for
voted against
abstained
Number of members present at
Ms. Brown then sought a motion for the acceptance of the resolution to have Deferred Shares listed on the JSE to be accepted. The motion which was moved by Ms. Janice Cunningham, and duly seconded by Mr. Ray Howell was carried.
The Chairman thanked Ms. Sheryl Brown and the members for their participation in the meeting. He wished for all a good evening and those who were travelling, a safe journey home.
There being no further business, the meeting ended at 5:41 p.m.
Confirmed on motion by:
by:
Mr. Ian Sutherland is a Senior Manager at the University of the West Indies (Mona) with responsibility for Enterprise Applications at Mona Information Technology Services. His experience in the field of Computer Science and Information Technology spans over thirty (30) years, and includes, but not limited to the areas of Data Management, Application Development, Reporting Solutions, Process Engineering and Systems Integration.
With a wide appreciation of Management and Information and Communication Technology (ICT), he is capable of representing a range of matters and has provided consulting services to several industries including financial, insurance, education and medical institutions.
He holds a BSc. (Computer Science, Chemistry and Math), a Post-graduate Diploma in Management Studies, a MSc. Computer Based Management Information Systems from the University of the West Indies and a professional certificate in Project Management (PMP) from the Project Management Institute.
My Sutherland is currently the president and chairman of the board. During his tenure as a director of EduCom, he has contributed to various committees and special projects, including the ICT(chairman), Policy, Risk and Compliance, Marketing, Business Process Review and Optimization and Delinquency Committees. Mr. Sutherland is also a director of Quality Network Limited (QNET) where he serves on the governance committee and represents QNET on the JCCUL Enterprise Risk Management committee.
Mr. Stephenson began his professional career as a teacher of Integrated Science at St. Georges College in 1983 after completing his studies in Double Option Science at The Mico College (now Mico University College). During his sojourn at St Georges, he served as Grade Supervisor and Dean of Discipline before being awarded The Peter Hans Kolvenbach Scholarship to pursue a Master’s Degree in Secondary School Supervision and Administration at Boston College University in Massachusetts, USA. While at Boston College, he worked as a Graduate Assistant in the School of Education where he supervised undergraduate student-teachers who were seeking to gain professional teaching certification in the state of Massachusetts.
After returning to Jamaica in 1989, Mr. Stephenson was named Dean of Students at St. Georges College, before being promoted to the position of Vice-Principal in 1991 and Principal the following year becoming the first Non-Catholic permanently appointed Headmaster of St. Georges College. During his tenure as Headmaster, Mr. Stephenson also completed diplomas in Human Resources Development and Management Studies at the Institute of Management and Production (IMP) and Jamaica Institute Management respectively. Subsequent to joining the staff of the Overseas Examinations Office as Deputy Director, he served as Acting Executive Director before he was appointed Executive Director and Caribbean Examinations Council (CXC) Local Registrar in 2003.
Mr. Stephenson has served on several Boards and Committees including the Boards of the Excellence Coalition on Scholastic Aptitude Test; Edwin Allen High School, St. Hugh’s High School and Clan Carthy Primary School. He has been an active member of the Edwin Allen Past Students Association and a Past President of that body.
He is currently a Board member of EduCom Cooperative Credit Union and Chairman of the Rules & Policy Committee. Mr. Stephenson was elected to serve as a Director on the Board of the Jamaica Co-operative Credit Union League (JCCUL) in 2020 and is a member of the Stabilization Fund Committee.
He is also a member of the Caribbean Examinations Council (CXC) National Committee, the CXC Final Awards Committee and a member of the National Qualifications Framework Committee of Jamaica.
Ian Sutherland PRESIDENT
Hector Stephenson 1st Vice President
Dr. Coleen Lewis, Attorney-at-law is a fulltime lecturer at the Faculty of Law, the University of the West Indies with over 20 years of legal experience. As a lawyer, she has worked in the areas of Offshore law, Corporate and Commercial Law, Media Law, Intellectual Property Law, Conveyancing and Company Administration in law firms across the Commonwealth Caribbean as well as in the Legal Department of Jamaica’s biggest and oldest media house. She presently serves as the Deputy Dean, Undergraduate studies and student success.
Charles O’Connor is the Chief Executive Officer of Charles O’Connor Consulting Network Limited (COCN), a professional services company with emphasis on Business Process Outsourcing, Web Based/Cloud Accounting Solution, Tax Planning and Business Advisory Services. Mr. O’Connor is a fellow of the Institute of Chartered Accountants of Jamaica (ICAJ) and the Association of Chartered Certified Accountants (ACCA) in the UK. He has been a Registered Public Accountant since 2000. He received training in Fixed Income Securities at the New York Institute of Finance, Treasury Control within Banks at The Bank of Jamaica in association with Crown Agents-UK, and Project Management with the University of New Orleans.
Over the last 25 years, Mr. O’Connor has held senior executive positions in both the Public and Private Sectors. He distinguished himself as General Manager of Finance and Planning at the Transport Authority of Jamaica (20062010) and Director - Securities Management in the Debt Management Division of the Ministry of Finance and Planning (19982001). In 2018, he successfully completed the Insolvency Practitioner Course at the Council of Legal Education, Norman Manley Law School and is now licensed to practice in Jamaica as an Insolvency Trustee. Mr. O’Connor is also an Associate Tutor in Accounting at the Norman Manley Law School.
Mr. O’Connor has served on various boards and is currently a member of the Dispute Resolution Tribunal of the Jamaica Consumer Affairs Commission. He is also a member of the Tax Committee of the Institute of Chartered Accountants of Jamaica.
Sonia Bennett Board Secretary
Ms Sonia Bennett is the Publishing Manager/ Educational Technologist at Carlong Publishers (Caribbean) Limited. Sonia has considerable experience in education, from a classroom teacher of English and Literature to Principal at the tertiary level, serving as Director/Principal of the Vocational Training Development Institute (VTDI), a tertiary institution funded by the HEART Trust National Training Agency.
She is a graduate of Pepperdine University in California with a MA in Educational Technology. She holds a BA in Arts and General Studies –Social Sciences with Language and Literature from the University of the West Indies; a Certificate in Teacher Education majoring in English Language, Literature, Social Studies from Mico Teachers’ College (now Mico University College) and a certificate in Theatre Arts from the Jamaica School of Drama. Sonia has also begun work at the doctoral level in Curriculum and Instruction.
Sonia has specialized training in Moderating Online Learning, Human Capacity Development in the Information Age, Information & Communication Technology for Capacity Development, Strategic Business Re-engineering and Information Technology and Public Relations.
She is co-author of five (5) textbooks being used in the Jamaican education system.
Stacey-Ann Farquharson Director
Keriene Collins-Salmon Director
Ms. Farquharson is an Attorney-at-Law and a senior human resource practitioner who is presently employed as Senior Director in the Human Resource Division of the Bank of Jamaica where she heads the Bank’s organization development and human resource planning and strategy function. She currently serves as Director of EduCom and chair of the EduCom HR Committee.
Ms. Farquharson is an ardent believer in the spirit of volunteerism and has served various organizations including the Jamaica Cancer Society, Dress for Success Jamaica, the National Youth Service and Youth Opportunities Unlimited.
Ms. Farquharson holds several qualifications and certifications including a Bachelor of Laws Degree, a Master of Science Degree in Governance, a Diploma in Human Resource Management and is a Certified Senior Professional in Human Resource Management from the Society for Human Resource Management.
Mrs. Keriene R Collins-Salmon is the Acting Senior Audit Manager of the Management Audit Department at the UWI Regional Headquarters. She has over 18 years of combined internal and external audit experience. She started her career in external auditing working at the prestigious audit and assurance firm PricewaterhouseCoopers where she gained a wealth of knowledge and experience working on audits in various sectors. She joined the University of the West Indies in 2008 and has gained invaluable internal auditing experience which has allowed her to add value to the University and assist in improving their operations. Areas of expertise include financial reporting, governance, risk management and fraud.
Mrs. Salmon is a fellow of the Association of Certified Chartered Accountants (ACCA) and the Institute of Chartered Accountants of Jamaica (ICAJ), a Certified Internal Auditor (CIA), a Certified Fraud Examiner (CFE) and is certified in Risk Management Assurance (CRMA). She also holds a BSc. Accounting (major), Economics & Management Studies (minors) from the University of the West Indies, Mona.
Mrs. Salmon maintains high ethical standards and is committed to excellence in her pursuits. She previously served as a member and Chair of the Supervisory Committee of the former UWI Mona & Community Co-operative Credit Union. She also serves as Treasurer of her community’s home owners association.
Andrew Smith Director
Hilton Blenman Director
Andrew Smith has been a member of the credit union movement for the past thirty-six (36) years. He has served as a member of the Credit Committee of the Jamaica Defence Force and the St. Catherine Co-operative Credit Unions, and as a member of the Supervisory Committee of EduCom Co-operative Credit Union. He also served as a Director of St. Catherine Co-operative Credit Union.
He is employed by the Electoral Office of Jamaica as the Regional Manager for Kingston and part of St. Andrew. He is an adjunct lecturer at the Vocational Training Development Institute where he lectures Entrepreneurship and Business Development. This ex-military man has over twenty (21) years’ experience working at both the operational and strategic management levels in both private and public sectors.
Mr. Smith is the holder of a Post Graduate Diploma in Education and Training, a Master of Business Administration Degree, a Bachelor of Science Degree in Operations Management, among other educational achievements. His education and training spans several countries such as The United Kingdom, Canada, United States of America, Dominica and Costa Rica.
Being a dedicated Christian, Mr. Smith worships at the Ensom City Gospel Chapel where he serves in several capacities to include Lay Preacher, Chairman for the Board of Deacons & Deaconesses, and Chairman for the Finance Committee.
He is a Justice of the Peace and a member of the Justice of the Peace Association of Jamaica and the Lay Magistrates’ Association of Jamaica, (St. Catherine Chapter) Management Committee. He is also the Chairman for Zone East for both associations. Mr. Smith is the 1st Vice President of the Green Village Country Club Home Owners Association Board of Management.
Mr. Blenman is a Fellow of the Institute of Chartered Accountants of Jamaica who holds a Master of Science (M.Sc.) Degree in Accounting and a Bachelor of Science (B.Sc.) Degree in Management of Business from the University of the West Indies, Mona Campus. Mr. Blenman has spent over 40 years in the field of accounting where he started as an external auditor with Touche Ross and later, served as Assistant Vice President, Finance and Accounting and Chief Internal Auditor at the Jamaica Mutual Life Assurance Society.
He served as Managing Director at Edward Gayle and Company and as the Director of Internal Audit at the Jamaica Public Service Limited for one year. He also served the banking sector as Manager, Accounting at CIBC First Caribbean Bank. In recent years he has been a consultant to various firms.
Mr. Blenman has served as past Treasurer and is a current member of the Board of Directors of Jamaica Child Evangelism Fellowship Limited.
Mr. Nelson is a management professional with over 20 years of financial management and accounting experience. He is currently employed as a Financial Manager at the University of the West Indies, Mona Campus. He holds an MBA from the University of the West Indies, Mona School of Business and is a Fellow of the Association of Chartered Certified Accountants (FCCA). He is also a Fellow of the Institute of Chartered Accountants of Jamaica. He recently completed his Bachelor’s of Law Degree from the University of the West Indies and is completing the Legal Education Certificate at the Norman Manley Law School.
Mr. Nelson has served in the capacity of Treasurer and 2nd Vice President on the Board of Directors. In addition, he served as a member of the Supervisory Committee of EduCom Co-operative Credit Union and the Jamaica Co-operative Credit Union League
Dr. Mark Nicely is a seasoned educator with over twenty (20) years of service in the Jamaican Education Sector. He has served as principal at the Hayes Primary and Junior High School in Clarendon, the Jamaica Baptist Union and William Knibb Memorial High School in Trelawny from 2004- 2011 and 2011 - 2015 respectively.
As a crowning achievement of his professional career, Dr. Nicely became the 49th President of the Jamaica Teachers’ Association and served in other notable roles such as Board Chairman at the One Way Group of Schools, External Examiner for the Joint Board of Teacher Education, Lecturer at The Mico University College, Northern Caribbean University, Heart Trust/NTA and the International University of the Caribbean. He also worked with the Ministry of Education to empanel several schools across the country and assisted with the training of new principals in school management and record keeping.
In his current role, he occupies the post of Secretary General at the Jamaica Teachers’ Association which makes him the Chief Administrator of the association, while extending his time to civic duties as Justice of the Peace for the parish of Kingston. He also volunteers as a Director on the EduCom Co-operative Credit Union Board; is a member of the Teachers’ Services Commission and a Director on the E-Learning Jamaica Company Limited Board.
Dr. Nicely is adept at resolving problems and making timely decisions as a result of his intuitive ability to assimilate challenging situations. His operational knowledge and practice of psychology enables him to demonstrate people skills and execute emotional intelligence, in galvanizing harmony among stakeholders. This commendable leader continues to maximize his skills to maintain efficiency and proficiency. He possesses high standards of performance and uses analytical approaches and strategic networking which transitions into an in-depth understanding of life experiences.
Dr. Nicely is a proud single parent of two girls, Abbigel and Amiya, who he considers to be part of life’s greatest blessings. They are a source of inspiration and treasured ingredients in living an amazing life. His mother, Jennie Webb-Connor, remains his mentor, spiritual mother, example setter, motivator and holds him accountable to acceptable moral values and ethical standards. He remains a patriotic Jamaican who is keen on giving back to the land of his birth.
Notwithstanding the global pandemic that continued throughout 2021, it was expected that the economy would rebound from its massive decline in 2020. The Jamaican economy grew in 2021, recording growth of 4.4%, a substantial rebound from the 10.2 percent decline experienced in 2020. The positive growth experienced in the calendar year largely reflected the continued relaxation of COVID-19 containment measures globally, which facilitated increased domestic and external demand, resulting in a general uptick in economic activities.
The 2021 calendar year ended with the Statistical Institute of Jamaica (STATIN) reporting that inflation closed at 9.1%. The inflation rate recorded for the year represented an increase from the previous year’s 5.1%. The Jamaican dollar continues to depreciate against its major trading partner, USA. At the beginning of the year, the dollar was trading at J$142.65 to US$1.00 but closed the year at J$155.08 to represent an 8.7% depreciation over the period.
The economic projection for 2022 is that activities should continue to expand at a similar rate to that which occurred in 2021, because of heightened domestic demand and robust export growth. There is however concern that tighter monetary policy amid relatively elevated inflation will likely dampen momentum, while the new Covid-19 variants pose a large risk to activity, given the country’s low vaccination rate. The graph below depicts some of the key economic variables over the past three years.
The figure above
Day
The key indicators used to measure
below
Union’s
starting
past year.
the 12-month
the
total assets, surplus and gross income.
years,
2021 GROWTH
- 2021.
GROWTH %
7.622B
10.896B
1.121B 1.393B
The 2021 performance was again centered around organic growth, as there were no mergers during the year under review. Despite the challenges of the pandemic and the competitive nature of the financial landscape, the Credit Union performed exceptionally well, compared to the Movement, as shown in the table above. These results reflect the success of our continued emphasis on performance, our dedication to serving you in the most challenging times, and the commitment of the leadership to anticipate and respond to the changing needs of our members.
We closed the year with savings of $9.769B, reflecting growth of 13.7% over the previous year’s $8.587B. Loans closed at $9.363B, a substantial increase of 22.8% over 2020’s $7.622B, while the Movement experienced a comparative increase of 6.0%. The huge increase in the loan portfolio was because of the aggressive approach taken by our sales team to reach out to the members, sought their needs and find a solution for them. Despite the ongoing pandemic, total assets also grew, reflecting a growth of 15.1% over 2020’s performance to close the year at $12.537B. The Movement’s assets grew by 9.9% for the comparative period.
The figure below shows graphically our performance in another key indicator, namely, delinquency.
The Delinquency Ratio, Y-O-Y, has increased substantially from last year’s 3.8%, to close at 5.9% in 2021.
We continue to implore our members to communicate with us whenever there are challenges. During the year, we continued to facilitate members who lost their income as a result of Covd-19, by facilitating moratoria for these members. During the period of the moratoria, we froze interest on the loans, so that members were not faced with a substantial interest cost when payments resumed. This would have continued to negatively affect our interest income, but we are indeed mindful that the decisions we make must align with our mission, that of improving the lives of our members and their families.
Operating Income for the period closed at $1.393B, a growth of 24.3% over the performance of 2020. The increase in our Operating Income reflects the effort of the hard-working team, along with our members who continue to have the confidence in us, as we strive to meet their financial needs.
The specific driver or overarching objective of the 20222024 strategic plan is to maximize revenues and reduce our operating costs, so that our members can benefit from improved surplus.
Our strategy statement is revised each year to reflect our strategic focus and guide our actions over the next threeyear planning cycle. Our emphasis continues to be to improve the quality of lives for our members and their families by:
1. Expanding membership through target marketing, sales initiatives and direct recruitment of untapped businesses within the existing bond
2. Increasing member engagement and utilizing existing products and services through improved service delivery and relationship building.
3. Promoting transparency and feedback, recognizing top performers, upholding core values, and holding team members accountable.
4. Improving credit administration processes and
improving pricing strategies.
5. Aligning governance, leadership, and organizational culture to fixation of purpose.
6. Establishing a reactivation program and an individual campaign focusing on early engagement and strong win-back to re-engage members.
7. Improving brand image to include, aesthetical improvement to our branches and a slogan that resonates well with the members.
The strategic imperative of this planning horizon is to replace our current banking platform. We have made progress in this regard, having selected the banking platform and are now in the process of planning the implementation stage. With the implementation of the new system, we will be able to release new products and services frequently, scale our infrastructure needs and be readily able to execute more efficiently on mergers and acquisitions where possible.
The current legacy core banking system (Clareti), although very reliable, consists of a closed architecture (no integration with other software) which limits the progress that can be made in a constantly changing market environment. We intend to install a new core banking system which should allow us to:
product offerings and move with the
• Minimize paper-related processes
• Automate processes
• Improve integration and remove duplications
• Deliver better support and integrated reporting
• Provide improved online member service
• Have faster set up of ecosystems
The growth strategies that will be pursued over the next three years include:
• Penetration of the bond
• Increased member engagement
• Loans and savings growth
• Marketing of existing products
• Improving our processes to enhance the member experience
Our marketing strategy is geared to provide opportunities to grow the loan portfolio, increase revenue and savings, boost fee income from value-added products and expand the membership base. We will seek to expand and deepen our roots in traditional markets as well as attract new members from the wider market, including the unbanked. The main objectives of the marketing strategy are as follows:
• Significantly exploit the membership base through greater member engagement
• Expand personal banking and relationship selling opportunities
• Ensure robust member solutions selling by frontline staff and Business Development Officers; increase wallet share through Business Development Leaders
• Host community-based sales promotion events targeting the unbanked and under-banked
• Increase sales productivity through intensive sales training of management and staff
• Train internal trainers to train frontline staff
• Increase online meetings targeting professionals, selfemployed and millennials
• Deepen and widen social media footprints to get more qualified sales leads
The Key Performance Indicators (KPIs) devised at the corporate level that underscores the level of value creation
to be facilitated by the organization over the strategic period are highlighted below.
We continue to focus our efforts on improving member value by understanding individual needs and providing personalized financial solutions from an expanded suite of products. In determining member value, we decided that the factors pertinent are interest paid to the members, interest rate charged on loans, dividend paid, and fees charged. We compared our fees, rates and dividend to that of the market and are pleased to report that we have exceeded the first two years’ target on this strategic metric.
Member satisfaction is extremely high on our list of priorities, and based on the weighted satisfaction assessment for 2021, our overall satisfaction score was 76%. This was two percentage points above that which we attained in 2020 and therefore showed that we had made some progress in our service delivery in 2021. The goal to improve to a 92.5% satisfaction level by the end of 2023 continues to be the focus of the team.
Regulatory compliance refers to the goals that we aspire to achieve to ensure that we comply with relevant laws, policies, and regulations. The focus on compliance is not restricted to completing reports and submitting them on time to regulatory agencies, but more importantly, that the established standards are met on a consistent basis. The emphasis on standards requires that management reports each month to the Board of Directors on the percentage adherence to compliance and regulatory requirements. In addition, management must provide information on what would have caused them to fall below expectations by identifying the contributing factors and then showing the corrective measures put in place to remedy the situation. The aim is to have 100% compliance by the end of 2023. We are pleased to report a 95% compliance at the end of 2021, with the objective of increasing this to 100% compliance by the end of 2023.
Another component of our strategic focus for us is to grow the membership of the credit union. Though we exceeded the Movement’s target of 5%, having grown by 5.6%, we would like to have done better. At the end of 2021, we closed
the year at 82,672 and have set our sights on achieving a minimum of 5% growth in 2022. We will continue to target family members and relatives of our current membership but will deepen our involvement in the communities and widen our reach, as we purposefully focus on this deliverable acknowledging that we must grow membership to remain viable.
Another strategic initiative that we will pursue over the next three years will be to reduce the number of dormant accounts, substantially, through reactivation. At the end of 2021, we continued to observe that a substantial number of our members have not been using their account and as a result, their accounts have become dormant, The target to reduce dormant accounts below 50% in 2021 was not achieved, but we have decided to add more resources to this strategic focus in order to achieve our 3 year goal of reducing dormancy below 35%.
Throughout 2021, EduCom continued to enact its Disaster Preparedness and Business Continuity Plan in response to the ongoing pandemic. COVID-19 has altered how companies operate, and in its response, EduCom reprioritized its existing risks and assessed its exposure to new ones. The Credit Union remained steadfast in enhancing its Enterprise Risk Management (ERM) framework focusing on minimizing loss exposures and protecting the interest of its members. EduCom continued to strengthen its policies and control environment, found ways to increase collaboration as well as engender a greater sense of community, and communicated consistently with employees, members, regulators, and other stakeholders.
From this experience, EduCom boosted its agility, flexibility and understanding which allowed it to pivot to become more creative in its approach to strategic initiatives, response to members needs and adept at being proactive in identifying and filling voids. The Credit Union utilized a holistic approach in identifying, analysing, evaluating and treating risks. While the ERM framework is not at an advanced stage of implementation, there has been progress in this regard.
Remote work and other necessary changes due to the pandemic slowed core compliance processes. These processes were formerly hands-on, such as investigations, reporting concerns, monitoring, and in-person training. As a result, the Credit Union was forced to rely heavily on
technology and as such, invested in an Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) system, Alessa. The system met expectations and led to the ability to detect unusual transaction patterns and improved on efficiency of the Know Your Customer (KYC) process. The Compliance Unit continues to work diligently to ensure that EduCom remains complaint with regulatory requirements and internal policies and procedures.
We continue to follow the principle of recognizing that helping others is not only a good thing to do but might be considered the right thing to do. In recognition of our commitment to being a good corporate citizen and in line with our policy, we continue our focus on assisting those in greater need. Despite the pandemic, the assistance to our members, charitable organizations, other institutions, and individuals during 2021 was no less. In line with our emphasis on education over the years, our Annual Scholarship programme and the support given to the Albert Street Basic School, were the major benefactors from our budget allocation for outreach initiatives.
The Wealth Creator, Diamond Reserve and Executive Note continue to be the saving products that are of the highest demand among our members. The competitiveness of the rates offered on these products, along with their features (which are more geared toward the building of resources for specific purposes in the medium to long term), make these products prevalent among our membership. The competitive rates offered on these products continue to be unmatched in the industry. As it relates to loans, our Loan Consolidation and the Line of Credit are in high demand. We continue to respond to the members’ feedback from our surveys and have used the information to meet your needs. We also continue to welcome your feedback on how we can further improve our product offerings.
We also want to use this opportunity to remind our members of the very competitive saving instruments that your credit union has on offer. Good financial management requires that you maximize the returns that you get on your savings. We encourage you always to be mindful of the rates offered at your credit union before considering investing elsewhere. Here are some tips on how you can plan, save and minimize your expenses as you build your wealth over the next few years:
Make a monthly budget and stick to it by providing a snapshot of where your money is going.
Find ways to cut back on expenses by prioritizing what must be done rather than conforming to social pressures.
View and understand your credit score. Do not do this often, however, as this can impact your score negatively.
Keep an eye on your investment accounts and the trends in interest rates.
Monitor the market to find the best offerings on similar accounts and credit cards to ensure that you get the most competitive interest rate or earn more benefits.
Below is a list of our product offerings. Kindly visit our website, call and speak with one of our Member Care Representatives, or visit our offices to learn more and benefit from these superior products.
Permanent Share Account
Regular Deposits
interest
Executive Note - Competitive interest
Diamond Reserve - Interest credited
Special/Fixed Deposits - Competitive interest
Wealth Creator - Long-term savings
Christmas Savings Club - Monthly savings
T.E.A.C.H. - Share account for Trainee
Y.S.C.
Savers Club)
Personal
Debt Consolidation
EduCom Special
Line of Credit
Productive/ Business
Educational
Savings
interest
Standing Order
Family Indemnity Plan (F.I.P)
Health Insurance
Internet Banking
Access Plus Debit Card
Financial Counseling
Home Acquisition & Improvement
Motor Vehicle
The Board of Directors is comprised of 11 members. The following table shows the attendance at meetings. The Board held 12 regular meetings, with a number of other meetings as dictated by the circumstances that prevailed during 2021. Four (4) of the meetings that were held were Joint Meetings that included members of the Supervisory and Credit Committees. The Committees reported monthly on their activities and continued to provide useful suggestions for improvement in the quality of the service provided by the credit union.
Sonia Bennett
Hilton Blenman
Keriene Collins-Salmon (Appointed April 28, 2021)
Stacey-Ann Farquharson
Janice Green (Retired April 28, 2021)
Ian McNaughton (resigned June 1, 2021)
Ruel Nelson
Mark Nicely
Charles O’Connor
Smith
Coleen Lewis Ian Sutherland
June 17, 2021)
Stephenson
Committee comprised of: Ms. Erica Haughton (Chairperson), Mrs. Petal Thompson-Williams, Mr. Glenville Henry, Mr. David Weir and Mrs. Maria Morrison. The Committee met at least once per month. At the beginning of each year an audit plan is prepared by the Internal Audit Manager and approved by the Committee. During the year the Committee monitored the audit plan, reviewed the governance of the organization, made
followed up outstanding matters that management cited in these
The Committee comprising Mr. Kurt Vaz, (Chairman), Mr. Hopeton Newell, Mr. Courtney Garrick, Ms. Shashu Payne and Ms. Rachelle McKenzie, met at least once per week, over the year, and has done an outstanding job to approve member’s loans and moratorium requests. This was another year that the Committee would have been drawn on to show compassion, given the number of requests made on the credit union to suspend payments, sometimes for as much as six (6) months. We are pleased to report that our members were extremely satisfied with the level of support given to them during the period of uncertainty brought about by the pandemic.
Board of Directors graciously uses this opportunity to place on record our appreciation to the members of the Supervisory and Credit committees, the management and staff, the team of EduCom Ambassadors and all other volunteers for their hard
work and commitment throughout the year. Even during a year with the continued challenges associated with the coronavirus, they were able to satisfy their obligations to the credit union, enabling its success. We look forward to your continued support, dedication and involvement in 2022, as together we seek to fulfill our mission and vision of EduCom.
To those volunteers that have retired, we say a special thanks to you for your contribution while we welcome those who joined our ranks.
Several other persons and organizations supported us throughout the year. We would like to say special thanks to the following:
• The University of the West Indies and all its affiliates
• Development Bank of Jamaica
• The Principals, Bursars and Head Teachers in all our schools
• The Credit Union League and its subsidiaries
• Cuna Mutual Insurance Society
• Jamaica Co-operative Insurance Agency
• The Office of the Post Master General
• NCB - Oxford Road
• BDO & Associates
• The Registrar of Co-operative and Friendly Societies
• Samuda & Johnson, Attorneys at Law
• Usim, Williams & Co.
• Highgate Systems Ltd, our software provider
• The National Housing Trust
• The National Land Agency
for the year ended December 31, 2021
I am pleased and honoured to present the Treasurer’s Report to the seventh Annual General Meeting of EduCom Co-operative Credit Union Limited (EduCom).
As you are aware, the financial year under review commenced as a year of great uncertainty as the economic environment was significantly impacted by the advent of the Covid-19 pandemic. Despite the challenges of the pandemic, with which you are very familiar, your Board and Management was very deliberate in responding to those challenges. Armed with insights from the previous year, the Board and Management, through careful planning and increased vigilance in the area of risk mitigation; a path of recovery from the previous year’s fallout was developed and implemented with tremendous success.
Some of the key responses to the difficult socio-economic environment were as follows:
• We adjusted our risk tolerance to bring more members into the pool of borrowing members or increased the available amount of credit to each member.
• We decided to implement strategies to unearth new or improve revenue streams.
• Direct tactics were developed and implemented to strengthen our sales culture, whereby we are now far more proactive in growing the business of the Credit Union.
• Remote work was implemented at all levels from Board, Committees, Management levels, Customer
service and other line staff which necessitated the astute management and governance required during the turbulence of the ravages of the Covid-19 pandemic.
These initiatives, together with the resoluteness of the EduCom Staff have resulted in an increase of 22.8% in the net loan portfolio over the previous year. From $7.622M at the end of December 2020 to $9.363M at the end of December 2021.
The resilience of the credit union to rebound from the disappointing performance of the previous period has been clearly demonstrated in EduCom’ s audited financial performance for the year in review, reflecting a surplus after honorarium of $219M when compared to a very ambitious budgeted surplus of $200 Million and prior year actual surplus of $66.85M.
In addition, we are pleased to report that despite what appeared to be insurmountable challenges, EduCom’s performance in all cases either met or exceeded key financial indicators/ratios (PEARLS) used by the Jamaica Co-operative Credit Union League (JCCUL) as a means of assessing the financial health and soundness of credit unions.
It is against the difficult challenge of combating the Covid-19 pandemic, continued development of a new culture and trade practices such as direct sales and employing the use of Business Development Officers (BDOs), that EduCom realized a surplus after honorarium for the year of $219.04 million when compared to $66.85 million the previous year as previously stated. This reflected a 228% increase in the surplus for the current year when compared to the previous year, and can be attributed mainly to the following factors:
1. New and improved revenue streams from the sale of the Family Indemnity Product (FIP), management fees on scheme loans and the implementation of an annual maintenance charge to assist in defraying increased operating expenses. These initiatives resulted in a 68% increase in non-interest income when compared to the previous period as non-interest income grew from $157M in year ended December 31, 2020, to $263M in the year ended December 31, 2021.
2. Risk-based pricing of unsecured loans once members
satisfied the credit and adjudication requirements by demonstrating their ability to repay the loan obligations. This significantly increased the revenue earnings from the credit union’s core business, which is the provision of loans to its members.
3. The increased growth in the credit union’s total asset base through inflows from savings components included in loan repayment obligations provided incremental funds for investment opportunities such as equity holdings in companies listed on the Jamaica Stock Exchange.
The total gross interest income from members’ loans and investments amounted to $1,129.79 billion when compared to $964.64 million in 2020. This reflected growth in total gross interest income of approximately 17% over the previous year. The main factors that contributed to this outturn were as follows:
1. The gross interest income from members’ loans increased by 15%, which was positively impacted by the increase in loan disbursement that reflected a growth of 20% when compared to the previous period that saw a decline of 25%.
2. The increase in available investible funds provided the base for more investment activities that resulted in investment income increasing by 51% over the previous period.
3. A deliberate action to increase the proportion of unsecured loans within the credit union’s loan portfolio based on the adjustment in the credit union’s risk tolerance to a maximum of 35% for unsecured loans as a percent of the total loan portfolio value. This resulted in an increase in the number and value of unsecured loans which are priced at a higher interest rate as compensation for the higher risk.
4. Foregoing income from investments in financial markets increased by $27.65 million or 34%, because of an increase in investible funds.
Operating expenses totaled $922.54 million when compared to $798.19 million for the previous year. This reflected a 15.6% increase in total operating expenses or $124.35 million. This clearly exemplifies the view that we must invest and incur expenditures in various productive activities to create the required capacity and environment to generate
a significant increase in revenue. The main contributing factors to this increase were the additional costs to combat the Covid-19 pandemic environment, marketing, and sales efforts to attract more business and from inflationary factors:
1. Administrative expenses reflected an increase of 51% due mainly to the deployment of contracted employees to perform the role of cleaning and sanitization, plus the cost of cleaning materials and the installation and maintenance of sanitization stations.
2. Marketing and promotion activities reflected an increase of 19% to provide the pull factor for our members to utilize our financial services and products.
3. Staff costs reflected an increase of 16% due to an increase in head count to maintain excellent member service level and to drive direct sales of our products and services.
4. Utilities and telecommunication expenses reflected an increase of 10% due to rate increases.
Interest Expenses:
EduCom paid to our members, $154.5 million in interest expense for voluntary shares, deferred shares and deposits held with your credit union for the current year, when
compared to $139.7 million, the previous year. This relative increase of $14.8 million was attributed to less than expected inflows from members’ shares and deposits despite measures implemented to increase members’ participation in the products on offer and downward adjustments in interest rates to maintain parity based on the significant decline in interest rates on investible funds. It should also be noted that during the period under review, EduCom offered extremely competitive interest rates on members’ savings and deposits. These rates ranged between 0.75% to 4.25% per annum, and were determined by the type of saving products, market condition, amount of funds and tenure.
Additionally, EduCom has continued the revolving loan agreement with the Credit Union Fund Management Company (CUFMC) and NHT mortgage down-payment facility to meet the needs of members with existing mortgage loans. This resulted in external interest expense of $5.2 million when compared to $5.9 million in 2020.
The following chart shows the comparative financial performances over the last five years of EduCom Cooperative Credit Union’s audited financials.
Based on EduCom’ s financial performance for the year under review, total assets increased by $1,641.5 million or 15% and stood at $12.54 billion as at December 31, 2021. Conversely, net total loans portfolio increased by approximately $1,740 million, closing at $9.36 billion to represent a 22.8% increase in the loan portfolio (mainly due to a significant increase in loan disbursements attributable to unsecured loans). Additionally, EduCom realized a Net Loan to Total Assets ratio of 75% for the current year, when compared to 70% that was achieved in 2020.
It should be noted that management has not been successful in its objective to keep the delinquency rate low, exacerbated by the negative impact that the Covid-19 pandemic had on 595 members who were adversely affected. Through the concerted efforts of management, volunteers, and staff, we have managed to implement measures to mitigate the outturn of this particularly important indicator, by remaining vigilant in monitoring and managing the timely receipt of members’ payments on our loan portfolio. For the year under review, we recorded a delinquency rate of 5.88%, which was above the standard of 5%, and the previous year’s outturn of
3.78%. The slight deterioration is a direct result of the harsh economic environment created by the pandemic, but we wish to assure you, our fellow cooperators that the matter of stringent delinquency management remains our top priority for the ensuing year.
Members’ savings at year-end increased to $9.77 billion when compared to the previous year of $8.59 billion. This represents a 14.0% growth over the period. However, it should be noted that the anticipated increase in our secured loan demand from members will require an elevated level of savings from our members with a long-term horizon. Therefore, we continue to offer attractive rates on EduCom’s saving products, as we seek to maintain the gap between the total loan portfolio and the total members’ savings. We will continue to offer these attractive returns on long-term saving products, creating the opportunities to encourage savings and build individual wealth for our members. It is important to remind you that it is primarily through savings and investments that wealth is created.
The performance of the key indicators is captured graphically below and illustrates the different rates of increase in loans when compared to the increase in savings.
Members’ Loans, after provision for impairment
Total Assets
2017 6,669 6,124 8,308
2018 7,388 6,700 9,064
2019 8,055 7,763 9,850
2020 8,587 7,622 10,896
2021 9,769 9,363 12,537
Your credit union is operating in a changing and highly uncertain environment, where the integrity and behaviour of some of our members are becoming questionable; we have seen sufficient evidence to conclude that these members (though in the minority) borrowed from the credit union with no intention to honour their obligations. This has resulted in delinquent loans costing your credit union approximately $74.3 million for the year in review, when compared to the previous year of $50.4 million; an increase in bad debts of $23.9 million.
Management has taken steps to pursue these members through the following channels:
1. The employment of bailiff services
2. The employment of attorneys-at-law to pursue recourse through the court system to collect sums owing.
3. The foreclosure of real estate properties that have been offered as securities.
4. The names of these delinquent members will be sent
to the credit bureau to prevent them from accessing further credits from any other institution.
5. The names of these delinquent members will be published on notice boards in the branches and on the credit union’s website.
6. The names of delinquent members who cannot be located will be published in the printed media.
As you may be aware, the Bank of Jamaica will soon regulate your credit union. This will result in a higher cost of operating through enhanced and regular financial reporting.
Further, to improve operational efficiencies and to benefit from the current wave of digital transformation, your Credit Union has contracted with Sharetec out of North America to implement a fully digitized banking platform. The full implementation of this application is slated for August 2023. As indicated in our previous report, we launched the deferred share offer to our members to raise the amount of $250 million to secure the funding for this particularly important project. The actual intake from the offer was $243 million, just marginally below our target. We believe that this
effort was a tremendous success and take this opportunity to express our gratitude to all of you who participated and to say to those who never had a chance to participate that we have not forgotten you. Please stay tuned to our various communication channels for updates on other opportunities.
I thank God, the members, and fellow board members for affording me the opportunity to serve EduCom in the role of Treasurer. It has been an honour and a privilege to perform the functions. I thank our members for the continued business support that you have given to EduCom and entrusting your confidence in the Board of Directors and Management in serving you. We hope to continue to justify the confidence that you have placed in us.
I thank and commend all the team members including volunteers, managers and staff who consistently applied themselves to EduCom’s continued successful growth and development.
On behalf of the Board of Directors, I must express sincere appreciation to the following entities:
• The Registrar of Co-operative and Friendly Societies for the guidance and good advice provided, especially during the year and
• The Jamaica Co-operative Credit Union League (JCCUL) for guidance and expert services provided in relation to operational and regulatory matters.
Also, I thank our Auditor, BDO for the continued professionalism displayed in the execution of the audit.
We need the continued support of all our members to utilize the services of EduCom as we seek to live our vision. Where EduCom’s operation is member-centric, service-oriented, financially sound and technologically driven employer of choice; and is the top Credit Union in Jamaica in member value, member satisfaction and compliance.
Charles O’Connor TREASURERProv. for loan loss/Delinq.>12mnths.
Prov. for loan loss/Delinq.>6-12mnths.
Prov. for loan loss/Delinq.>3-12mnths.
Net loan/ Total Assets
Liquid Assets/ Total Assets
Financial Investment/ Total Assets Savings/ Total Assets
External Credit/ Total Assets
Institutional Capital/ Total Assets
Deliq.>60 days/Loan Portfolio Non-Earning Assets/ Total Assets Zero-Cost Funds/ Non-Earning Assets
Net Loan Income/ Avg. Net Loan Portfolio
Financial Investment Income/ Avg. fin. Invest. Financial Cost:Deposit/ Avg. Deposit
Operating Expenses/Avg. Assets Gross Margin/Avg. Assets
Total Liquidity/Total Savings
Short-Term Payable/Total Deposit
Non-Earning Liquid Assets/Total Assets Membership
30 30 30 30 30% 74.68% 69.96% 78.82% 73.92% 73.72% 60-80%
14.98% 18.54% 11.86% 14.04% 11.61% Max 5%
5.14% 5.64% 2.74% 5.05% 5.83% Max 10% 77.92% 78.81% 81.78% 81.51% 80.27% 70% - 80%
0.84% 0.97% 1.11% 1.54% 1.96% 10% 11.68% 10.67% 11.31% 11.91% 12.21% Min 10%
5.88 3.78 3.46 2.45% 3.55% < 5%
5.20% 5.86% 6.59% 6.98% 8.25%
334.83% 265.49% 251.27% 242.81% 215.36% > 100%
12.33% 11.83% 12.11% 13.17% 15.72% Market rates 4.04% 3.45% 2.41% 4.01% 7.63% Market rates 1.65% 1.67% 1.77% 2.38% 2.86% Market rates 7.87% 7.70% 8.34% 8.38% 9.47%
3% - 10% 8.18% 7.79% 8.03% 8.19% 9.95%
> 10%
23.95% 29.59% 16.52% 22.48% 21.93% 20% - 30%
10%2.44% 1.99% 2.15% 1.67% 1.60% 0.44% 0.71% 0.67% 0.59% 1.44%
< 10%
15.07% 10.62% 8.67% 9.11% 42.40% > Inflation 5.30 5.63 5.63 5.55 3.2 > 5%
7.31 5.19 4 4.6 2.00
This report highlights the outcomes of internal audit activities in financial year (FY) 2021 and demonstrates our efforts to assist management in identifying and addressing significant risks and driving efficiencies, while providing ongoing assurance to the Board of Directors and other stakeholders. While we continued to provide service to the Credit Union over the year, attention was also paid to the strengthening of the internal audit and Supervisory Committee functions.
PETAL THOMPSON-WILLIAMS
DAVID WEIR
GLENVILLE HENRY
MARIA MORRISON
Secretary
1. Completed approximately ninety percent (90%) of budgeted audit activities.
2. Implemented recommendations made by the Jamaica Co-operative Credit Union League (JCCUL) towards the strengthening of the internal audit and supervisory functions.
3. Produced recommendations for improvements to governance, risk management, and internal control processes, with corresponding agreed management corrective actions.
The primary role of the Supervisory Committee is to provide oversight of the Credit Union’s Internal Audit function, to assess the level of adherence to the Credit Union’s policies, procedures and to regulatory requirements. The Committee is assisted in this role by the Internal Audit Department, which conducts scheduled and ad-hoc reviews of the internal control system and reports its findings to the Committee. The Committee also assists this process by presiding over follow-up reviews of the implementation status of audit recommendations (ISOAR).
The audit activities undertaken by the Internal Audit Department during the year ended December 31, 2021, were outlined in the Internal Audit Plan which was duly approved by the Supervisory Committee and ratified by the Board of Directors. The Plan was developed using a risk-based approach whereby each auditable business process was assigned a risk rating. The audits pursued were prioritized according to the risk rating assigned to the respective business processes, the significance of each business process to the Credit Union’s strategic business plan, and the readiness requirements for the pending licencing of credit unions by the Bank of Jamaica (BOJ).
For the year under review, in addition to the investigation of members’ complaints and other ad hoc investigations, internal audits were done of several areas of the Credit Union’s operations. The findings from these audits formed part of the Supervisory Committee’s monthly report to the Board of Directors. Our reports provided details of the scope of the audits done and in addition, the exceptions that were raised, and their associated risks to the Credit Union,
recommendations to prevent or minimize the occurrence of the risks, along with Management’s responses to the findings and recommendations.
The performance of the audits was guided by the International Standards for the Professional Practice of Internal Auditing, recommended risk management techniques, The Proceeds of Crime Act, and the Bank of Jamaica Guidance Notes. Where appropriate, audits were performed consistent with the requirements of the proposed Bank of Jamaica (Credit Unions) Regulations, though not yet enacted.
The areas of operation and business processes that were audited during the year ended December 31, 2021, were as follows:
• Treasury Management
• Teller Operations
• Debt Card Management
• Opening of New Accounts and KYC Requirements
• Branch Physical Security
• Mail Processing
• Loans Processing
• Related Party Loans
• Branch Business Development Activities
• Management of Deceased Members’ Accounts
POCA Compliance
• Member Resignation and Termination Process
• Branch Cash Counts
Based on the findings of the audits that were done, it is our opinion that the Credit Union’s system of internal control operated satisfactorily. For the most part there was general adherence to the Credit Union’s policies, procedures and to the regulations applicable to the functions or processes that were audited. The exceptions identified and reported were mostly in relation to inconsistencies in the adherence to some areas of internal controls or in some instances, failure to detect certain transactions that have the potential to expose the Credit Union to some degree of financial loss risk. These findings were brought to the attention of Management and the Board of Directors in a timely manner. Generally, audit recommendations have been accepted by Management, and where possible some have already been implemented. Those that have not yet been implemented are mainly those
that require significant adjustments to systems, significant capital outlay, or changes to governing policies.
The operations of the Internal Audit Department were negatively impacted by the Covid-19 pandemic, as social distancing and gathering limit protocols hampered the Department’s ability to conclude investigations and complete the budgeted audit areas for the year.
The members of the Supervisory Committee attended and participated in training activities hosted by the JCCUL and EduCom’s Risk and Compliance Department. Members were also afforded the opportunity to receive training in detecting and preventing money laundering and terrorist financing offered by JCCUL and Jamaica Institute of Financial Services (JIFS). The Committee added value to the Credit Union through the representation made by the Chairman and the Secretary, along with the Internal Audit Manager at the Annual Strategic Planning Retreat.
On a monthly basis the Committee’s work was largely focused on careful review and analysis of audit reports and investigations carried out by the Internal Audit Department. Similarly, responses to reports were prepared and submitted to the Board. The dedicated work of the Committee Members contributed to the high level of efficiency and effectiveness with which the Committee carried out its mandate.
The profile of Committee Members’ attendance at meetings for the period January to December 2021 is shown in the table below.
As we continually seek to improve the Credit Union’s operations, we are mindful of the impending BOJ regulations and the possible impacts on the scope and functioning of the Internal Audit Department and the Supervisory Committee. The Supervisory Committee will follow these developments carefully and will closely monitor initiatives undertaken to enhance EduCom’s internal control and risk management environment. These will include actions to further develop oversight, the establishment of a complete map of risks and ensuring the three lines of defence model are effectively deployed across the organization, including addressing the findings coming from Internal Audit’s review on the credit risk management.
The Supervisory Committee wishes to place on record its immense appreciation and thanks to the Board of Directors, Management and Staff of the Credit Union, who despite the extremely difficult and challenging circumstances presented by the Covid-19 pandemic, continues to work tirelessly and at great risk to serve the members of this institution.
Special thanks to the Internal Audit team who worked very hard and provided us with quality support and assistance during the year.
The Supervisory Committee wishes to express its gratitude to Mr. Andrew Smith who served the Committee with distinction before being promoted to the Board of Directors in June 2021. The Committee also welcomed its newest member, Ms. Maria Morrison, who was appointed to fill the casual vacancy left by Mr. Smith’s promotion.
Thanks are also expressed to my fellow Committee members for their invaluable contribution during the year.
Lastly, on behalf of the members of the Committee, I would like to express our sincere gratitude for having been allowed the privilege of serving the Credit Union and its membership in this capacity.
EduCom Co-operative Credit Union is determined to offer products and services to meet our members’ needs. For the year ending December 31, 2021, our loan portfolio stood at $9.42B, representing a net increase of 22.51% over the previous financial year. This year’s performance solidified the rebound of our loan portfolio over the previously challenging year, thus reemphasizing our resilience and commitment to growth. Based on the ever-competitive lending market, the Credit Union relaxed a number of our conditions to meet the demand of our members. A reduction in our Home Equity Loan rates and Motor Vehicle Loan rates to 6.5% and 6.95% respectively, positioned our offerings to compete with significant players while also adding value to our membership.
SHASHU PAYNE Secretary
COURTNEY GARRICK
RACHELLE MCKENZIE
HOPETON NEWELL
For the period under review,
total of
disbursed in new loans
and acquisition, motor vehicle
personal
home
to name a few. Below is a reflection of
quarterly loan disbursement:
Activities during 2021 lead to a
depicted
GRAND
Deloris Mollison*
Shashu Payne
Committee Chair
Garrick**
cases
of
The Nominating Committee which held its 1st meeting on February 12, 2022 was chaired by Director Mark Nicely. Other members of the Committee were Messrs. Michael Brydson and Tanjay Holmes, Mrs. Janice Green, and Director Stacey-Ann Farquharson. The Committee was mandated to nominate members who it considers appropriate for nomination or appointment to the Board, and the Credit and Supervisory Committees – such persons must be “fit and proper” as defined in the preamble of the Credit Union’s Rules and be willing and available to serve the Credit Union as volunteers.
Preceding the selection of officers who would be proposed for nomination at the Annual General Meeting (AGM), the Committee held six (6) meetings. The full Committee attended all meetings. In its deliberations, the Committee ensured that its activities were in accordance with the Credit Union’s Rules and its Terms of Reference and that its considerations and decisions came out of a high degree of assessment, integrity and fairness. The Committee is pleased to report that its objectives were successfully achieved.
The Department of Co-operatives, having conducted a review of the nomination and election process for the period 2017 to 2021, had identified breaches in the number of Directors who retired at each Annual General Meeting for the period under review. An issue arose following the merger with the former St. Catherine Co-operative Credit Union (SCCU). Based on the Memorandum of Understanding (MOU) for that merger two (2) SCCU directors should have retired at each AGM to reduce the Board’s complement to eleven (11) by
2019. However, in 2018, the Board was reduced to eleven, with four (4) directors retiring.
The second issue had to do with the tenure recommended and approved for a Director who had been appointed to replace Mr. Clide Nesbeth subsequent to his resignation on February 10, 2020. Mr. Nesbeth had been reappointed in 2019 to serve for a period of three (3) years. The late Director Clayton McEwan was appointed on February 15, 2020 to complete the remaining portion of Mr. Nesbeth’s tenure. Following Mr. McEwan’s death on June 29, 2020, Miss Coleen Lewis was appointed on August 22, 2020. Miss Lewis, however, retired at the AGM held on November 2, 2020 and was given her own mandate to serve for three (3) years. The error which caused the breach was that Miss Lewis, when she was appointed in 2020 should have served until 2022, given that she was completing the tenure which had been started by Mr. Nesbeth in 2019.
To prevent any further perpetuation of the breaches, the Registrar provided guidance on the recommendation of tenures for the Directors who would be proposed for appointment in 2022.
The following directors will retire at this AGM:
• Hilton Blenman
• Andrew Smith*
• Ruel Nelson
• Hector Stephenson
* Appointed to the Board effective June 17, 2021 to fill a casual vacancy which arose from the resignation of Ian McNaughton.
The Committee acknowledges the sterling contribution of the Directors Hilton Blenman and Ruel Nelson and their commitment and dedication to their assigned responsibilities.
Having completed its selection of candidates for nomination to the Board of Directors, the Committee has identified two (2) candidates to replace Directors Blenman and Nelson. The recommended candidates are:
• Leonard Francis • David Weir
Based on the guidance received from the Registrar of Cooperatives, the proposed members of the Board and their respective tenures are as follows:
• Leonard Francis
• Keriene Collins-Salmon
• Coleen Lewis
• Charles O’Connor
• Andrew Smith
• Ian Sutherland
• Hector Stephenson
• Stacey-Ann Farquharson
• David Weir
• Mark Nicely
• Sonia Bennett
3 years
2 years
3 years
2 years
3 years
2 years
3 years
1 year
3 years
1 year
2 years
Having completed its selection of candidates for nomination to the Credit Committee, the Committee has identified Mr. Frederick Mills to replace Mr. Newell.
The Committee is recommending that Misses McKenzie and Payne be nominated to serve for another two (2) years. The other proposed members and their respective tenures are:
• Kurt Vaz
• Courtney Garrick
1 year
1 year
Members of this Committee are elected to serve for one (1) year and as such, all members retire at each AGM. The Committee comprises five (5) members. The volunteers of this Committee have spent significant portions of their time ensuring that proper management control systems are in place for the sustainability of a viable credit union.
The recommended members of this Committee for 2022/2023 are:
• Stascia Gordon
• Maria Morrison
• Erica Haughton
• Petal Thompson Williams
• Glenville Henry
Persons are normally elected to serve on this Committee for two (2) years. The Nominating Committee recognizes and appreciates the quality service provided by the members of this Committee, who meet each week to review and make decisions on loans submitted for approval as the Credit Union seeks to satisfy the needs of its members.
The following Committee members will retire at this AGM:
• Rachelle McKenzie • Shashu Payne
• Hopeton Newell
The Committee acknowledges the sterling contribution of Mr. Newell over the years; his commitment and dedication to his responsibilities were unparalleled.
The Nominating Committee thanks you for the opportunity to serve. Despite the challenges brought about by the COVID-19 pandemic, our team remains committed to serving the membership with zeal and enthusiasm. We look forward to a productive year of service, as all the volunteers, staff and members work towards building brand EduCom.
Mark Nicely Chairman, Nominating Committee
ELVIS KING Chief Executive Officer
CAMILLE CAMPBELL DRUMMOND Operations Manager
ERIC HESLOP Chief Financial Officer
DELROY SCARLETT Member Experience & Marketing Manager
ODENE JAMES Chief Risk & Compliance Officer
MARCIA
SCOTT GOLDING Human Resource & Admin Manager
LEWIN BAXTER Internal Audit Manager
NATASHA MILLS Regional Member Experience Manager
ST. THERESA VERNON Credit Manager
King Dixon Samuels Williams Barnaby Boswell Dunchie Edwards Francis Fray Fyffe Gray Anderson
McLean Gayle
Morgan Heslop
Mowatt-Hall Jonas-Stone
Richard Lyons Jones
Smith Morrison
Thoms Sinclair
Vernon Wallcom
Wedderburn White Daley Gordon Lothian Reynolds Scott Golding Sinclair Willams Bailey Benjamin Edwards Phipps Smellie
Elvis Michell Karette Michael Rhiana Kadion Natalie Ki-Ki Ann Barbara Shahna-Kae Daniel Millicent
Cassandra Yakeisha
Pierre-Charles Eric
Cheryl Shaunakaye
Judith Ruth-Ann
Leigh-Ann Kedeen
Nicole Navlette
St. Theresa Tamara
Antoinette Deangelo Radcliff Chevell Andrea Petula Marcia Nova Tevin James Nigel Brendan Samantha
Executive Assistant
Administrative Assistant
Junior Recovery Officer
HEART Trainee
HEART Trainee Loans Adjudicator Junior Recovery Officer Junior Recovery Officer Junior Recovery Officer
Clerical Assistant
Executive Office
Executive Office
Executive Office
Credit Credit Credit Credit Credit Credit Credit Credit
Head Office
Head Office Head Office
Spanish Town
UWI
UWI Head Office
UWI UWI
UWI UWI
UWI
Senior Recovery Officer Accounting Officer 11
Loans Adjudicator Chief Financial Officer
Junior Recovery Officer Senior Accountant
Recovery Officer
Recovery Officer Clerical Officer
Senior Recovery Officer Accountant
Credit Manager Accounting Officer 1
Accounting Manager
Senior Accountant
Clerical Assistant Clerical Assistant
Bearer
Human Resource Assistant Human Resource Officer Office Attendant
Human Resource & Adm. Manager Human Resource Officer User Support Officer
User Support Officer ICT Manager Network Administrator Clerical Assistant
Credit Finance & Investment
Credit Finance & Investment
Credit Finance & Investment
Credit Finance & Investment
Credit Finance & Investment
Credit Finance & Investment
Credit Finance & Investment
Credit Finance & Investment Human Resource & Administration Human Resource & Administration Human Resource & Administration Human Resource & Administration Human Resource & Administration Human Resource & Administration Information & Communication Technology Information & Communication Technology Information & Communication Technology Information & Communication Technology Information & Communication Technology
Finance & Investment
UWI
UWI
Head Office Head Office
UWI
Head Office
UWI Head Office
Head Office
Head Office
Spanish Town Head Office
Head Office Head Office
Head Office
Head Office
Head Office Head Office Head Office Head Office Head Office Head Office Head Office
Spanish Town Head Office Head Office Head Office
Batchu Baxter Bennett Blair-Samuels
Ashbourne Barrett Barrett Belnavis Bent Bernard Blair Clarke
Brinsley Cole
Brown Crooks
Brown Davidson
Bryan Davis
Campbell Davis
Campbell Davis Hansel
Channer Deans
Christie Dennis Ellis Fagan Fagan Francis Grant Guest Guthrie Harvey Henry Henry Henry Holgate Howe Insular Hyatt
Kerson
Lewin Omar Kerry-Ann Shaquana Nickeria Roychelle Cavelle Lisa Christopher Kay-Ann
Internal Audit Officer
Internal Audit Manager
Internal Audit Officer
Senior Internal Audit Officer
HEART Trainee
Member Care Representative
Business Development Leader
Member Care Representative - Recept. Business Development Leader
Business Development Officer Member Care Representative - Telephone
Internal Audit
Internal Audit
Internal Audit
Internal Audit
Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
UWI
UWI
UWI
UWI Head Office Head Office Mandeville
UWI Montego Bay
Spanish Town
UWI
Justine Natalie
Mellicia Chadeki
Verona Monique
Kerri-Ann Monique M.
Alesha Monique O.
Peta-Gaye Patrine
Samantha Grichen
Chayanne Tricia
Rajon
Hakeem Anthoy Janice Ebony Kerise Patrice Danielle Kimberly Tyeish Rochelle Suzel Jodian Tarana Totyana Nastasia
Member Care Representative
Head Office
Business Development Officer Office Attendant
Senior Member Care Representative Teller
Sales Representative
Teller
Teller Business Development Officer
HEART Trainee Credit Officer
Teller
Public Relations & Communications Officer
Member Care Representative
Member Care Representative Member Care Representative
HEART Trainee
Credit Officer Business Development Officer
Credit Officer
Member Care Representative - Telephone Teller
Member Care Representative
Senior Member Care Representative
Member Care Representative
HEART Trainee Member Care Representative Teller
Member Care Representative Member Care Representative Member Care Representative HEART Trainee
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing
UWI
Linstead Head Office
Head Office
Linstead Old Harbour
Mandeville Head Office
Linstead
UWI
UWI Linstead
UWI
Spanish Town
Portmore Linstead Head Office
UWI Head Office Portmore
Spanish Town
UWI
UWI Spanish Town Portmore Old Harbour Head Office UTECH UTECH Mandeville Old Harbour
Johnson Jones Kelly-Bailey Kelly-Murphy Kirlew Lee Lewis Linton Loney Masters McDaniel-Tyrell Nelson
McLean Owens
Mills Payne
Montaque Peters
Morgan Porter
Morgan Porter Davis
Morris Ramus
Mowatt Redwood
Myers Ritchie Robb-Brown Robinson Roper Rose Russell Russell Scarlett Sinclair Sinclair Smith Stewart Tennant Topper Walker Turner
Topaz
Jodi
Tarika Rosa-Lee Brandon Renardo Janine Latoya Shannon Trishanna Tashna
Sales Representative
Business Development Leader
Member Care Representative Business Development Leader
Member Care Representative
Teller
Member Care Representative - Telephone Member Care Representative Clerical Assistant
Senior Member Care Representative Member Care Representative
Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing
Montego Bay
Head Office
Spanish Town Linstead Montego Bay
UTECH
Venessa Gabrielle
Natasha Lalibella
Therese Jachael
Georgiana Lisa Stacey-Ann
Tremaine Patrick Rakeesha
Roxanne Kadene
Salim Tassia Kimberly Shenaireo Ceraphia Monique
Shannell
Niesha Shanique Delroy Earl Horace Rachael Shane Sabrina Ricardo Raxon David
Member Care Representative Business Development Officer
Regional Member Experience Manager Marketing Assistant
Credit Officer Heart Trainee
Marketing & Promotions Officer Teller
Branch Liaison Business Development Officer Business Development Leader
HEART Trainee Member Care Representative - Recept.
Senior Member Care Representative
Senior Member Care Representative
Business Development Leader Member Care Representative Business Development Officer Teller
Regional Member Experience Manager Business Development Leader
Member Care Representative - Recept. Member Care Representative
Member Experience & Marketing Manager Business Development Officer
Bearer
HEART Trainee Teller
Teller Business Development Officer Member Care Representative Clerical Assistant
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing Member Experience and Marketing
Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing
UWI Portmore Head Office UTECH Spanish Town Portmore
Old Harbour Portmore
UWI
UWI Old Harbour
Head Office Head Office
UWI UWI Head Office
Montego Bay Head Office
UWI
UWI
Old Harbour Old Harbour
UTECH Old Harbour
Spanish Town Portmore Linstead Portmore UWI Portmore Spanish Town Portmore UWI Mandeville Spanish Town Linstead UWI
Walker Wallace Ward Watson Watson Eaton
Whyte
Tyreek Jessica Mauvallette Roshain
HEART Trainee
Member Care Representative - Telephone
Senior Member Care Representative
Member Experience and Marketing
Member Experience and Marketing
Member Experience and Marketing
Spanish Town
UWI
Business Development Leader Teller
Member Experience and Marketing
Member Experience and Marketing
Whyte Williams Williams Willis Willock Wisdom Wright Wright Bennett Brown Campbell Davy Fender Foster Johnson Kenton Lamothe Lawrence Liking Logan Kelly McKenzie McNeil Morrison Morgan Robinson Salmon Terthoffer Valentine-Brown Walker White Whitley-Seymour
Campbell Drummond
Whyte
Yee
Hemmings James Lattibeaudiere-Fyffe O’Gere
Peddie
Shamone Taneca Telesia Camise Kemeisha Tewanna Samantha Christopher Charnelle Venese Alisa Colletta Triscia Richard Trishana Tameka Azeim Anna Latoya Tashauna Monique Velma Ivanna Suzette Moya Shanoya Cashema Marrifa Simone Vivolyn Michelle Saneka Glovanna Princess Patricia Odene Cadene Shellique Phillipa
Senior Member Care Representative Teller
Senior Member Care Representative
Senior Member Care Representative
HEART Trainee
Member Care Representative - Recept.
Member Experience and Marketing
Member Experience and Marketing
Member Experience and Marketing
Member Experience and Marketing
Member Experience and Marketing
Member Experience and Marketing
Camille
Operations Manager
Business Development Officer Member Care Representative Business Development Officer Operations Assistant Operations Assistant Operations Assistant Operations Assistant Operations Assistant Operations Officer
Registry Clerk Clerical Assistant Clerical Assistant Clerical Officer Operations Assistant Registry Clerk Operations Officer
Clerical Assistant Clerical Assistant
Clerical Assistant Clerical Assistant Operations Assistant Registry Clerk
Operations Assistant
Senior Operations Officer Operations Officer Clerical Assistant Clerical Assistant Clerical Assistant Chief Risk and Compliance Officer Compliance Officer Risk Analyst Compliance Officer
Member Experience and Marketing
Member Experience and Marketing Member Experience and Marketing Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Risk & Compliance Risk & Compliance
Montego Bay Spanish Town Old Harbour Mandeville Spanish Town Spanish Town Old Harbour Portmore Portmore Linstead Spanish Town Linstead Head Office
UWI
Operations
Risk & Compliance Risk & Compliance Risk & Compliance
Head Office
Head Office Head Office Head Office Head Office Head Office Spanish Town Spanish Town Head Office
Spanish Town Head Office
UWI
UWI Head Office Head Office Spanish Town Head Office Head Office Head Office Head Office Head Office Spanish Town Head Office UWI UWI UWI UWI UWI
UWI
We rise by lifting others. - Robert Ingersoll
EduCom Co-op Credit Union gifted a total of twenty (20) laptop computers to five (5) select schools in Kingston as part of an initiative to provide students with the necessary technology to facilitate online education.
The devices, valued at approximately J$1.2 million, were presented during a ceremony at EduCom’s office in Kingston on May 19, 2021.The respective principals of the following schools: Excelsior High, Penwood High, St. Andrew Technical High, Seaview Gardens High and Tivoli Gardens High, were happy to receive the gifts.
In her remarks, Acting Regional Director for Region 1 in the Ministry of Education, Dasmine Kennedy, commended EduCom and expressed her gratitude on behalf of the Ministry.
Chief Financial Officer at EduCom, Mr. Eric Heslop, stated that the initiative was born out of a request from a teacher seeking assistance with the purchasing of laptops for two of her students who were unable to acquire same based on their economic situation.
“As a Credit Union, in keeping with our philosophy, we want to contribute to our community and add value to our members’ lives, starting with our children. When we invest in the lives of our children, we are investing in the future of our communities and further development of our country. As a result, the request for two laptops mushroomed into twenty laptops,” said Mr. Heslop. He added that “EduCom feels extremely proud to be able to provide the means to bless twenty students with computers that will aid in their educational development.”
Keisha Heslop-Pessoa (right), principal of Seaview Gardens Primary School in Kingston and EduCom Credit Union’s Chief Financial Officer, Eric Heslop, assist Grade 2 student of Seaview Gardens Primary, Alanjay Ebanks, with navigating the device following the presentation ceremony held on May 19, 2021. A snapshot of the laptops donated to the five select schools. Education Officer in the Ministry of Education, Mrs. Lisa JamesRichardson presents a laptop to the Principal of Excelsior High School, Mr. Deanroy Bromfield during a presentation ceremony at the EduCom office in Kingston on May 19, 2021.Board Secretary, Sonia Bennett (podium) officially commences
EduCom’s virtual AGM while a representative from the Department of Co-operatives and Friendly Societies looked on.
Chief Executive Officer, Elvis King, addresses the virtual audience comprising of members and special guests during the 6th staging of the Annual General Meeting.
The Executive Arm of the Board of Directors and the CEO, Elvis King (2nd left) prepare for the start of the 6th Annual General Meeting held on April 28, 2021.
Chief Financial Officer of EduCom Co-operative Credit Union, Mr. Eric Heslop (third right) and Education Officer for Region 1 in the Ministry of Education, Mrs. Lisa James-Richardson(centre) share lens time with the principals of the receiving schools. The computers were presented to the principals of the five select schools (From left): Deanroy Bromfield – Excelsior High, Donna McLaren – Penwood High, Worrell Hibbert – St. Andrew Technical High, Keisha Heslop-Pessoa- Seaview Gardens Primary and Marvin Johnson- Tivoli Gardens High.
EduCom
Business Development Leader for the Oxford Terrace Branch, Jodi Jones (c) assists a prospect in completing his membership application form at the Branch’s Spin the Wheel Savings promotion on June 22, 2021 on location. Members and prospects were provided with information and encouraged to spin the wheel for a chance to win a number of prizes, they were provided with information on the various products and services available at the Credit Union.
Business Development Leader for the Oxford Terrace Branch, Jodi Jones (c) watches as a prospect spins the wheel for a chance to win one of the many prizes available.
Member Care Assistant, Shaquana Ashbourne (l) presents a prize to a prospect who stopped by the booth on June 25, 2021.
Business Development Leader for the UTECH Branch, Jodi Jones (r) assists a member with completing the membership application form during the Branch’s commencement of the Jammin’ June promotions on the campus on June 14, 2021. To boost awareness of the various product offerings available to members, the team had a table set up at the entrance to the branch allowing members and prospects alike to stop by for more information on the Credit Union.
Member Care Representative, Trishanna Masters (c) explains the benefits of membership to two ladies who stopped by the information desk on June 14, 2021.
EduCom Co-op Credit Union awarded eightyfive (85) scholarships valued at $3.42 Million to students at the Primary and Tertiary levels across the island.
The scholarships granted for the 2021/2022 academic year will allow students to pursue studies at the University of the West Indies, The University of Technology, various Community and Teachers’ Colleges as well as at a number of high schools.
Speaking after the presentation, Shieka Walsh, a third year student at the University of the West Indies, Mona Campus and recipient of the TEACH Scholarship, said that she was elated to have received the scholarship which will allow her to cover her tuition. “Without this assistance, it would have been very difficult to continue due to a lack of funding, I’m now able to stay on top of my grades”
The EduCom Scholarship Awards Programme selects individuals from its membership who have maintained a minimum ‘A’ average in their recent examinations along with demonstrating verifiable financial need. Of the 85 scholarships granted for the academic year, fifty-five (55) of the recipients were PEP awardees. At the Tertiary level, the EduCom Scholarships will allow thirty (30) students to pursue degree programmes.
Chief Executive Officer of EduCom Co-operative Credit Union, Elvis King (r) presents EduCom’s Top Girl in the 2021 sitting of the PEP examinations, Kriss-Annette Peterkin, with an award during the presentation ceremony held on September 3, 2021 at the EduCom office in Kingston. PEP awardees share lens time at a presentation ceremony held in September at the EduCom office in Montego Bay. Business Development Leader for the Portmore Branch, Monique Rose (l), presents an award to TEACH recipient, Aviel Wright during a brief presentation held at the branch. Business Development Leader for the Mandeville Branch, Roychelle Barrett, presents PEP awardee, Neah-Loi Dean with an award during a brief presentation at the branch.
EduCom Co-operative Credit Union Limited launched its Deferred Share Offer which was priced at an attractive fixed interest rate of 6.5% p.a. on September 22, 2021. The Offer, brokered by Money Masters Limited, opened on September 22 and closed on December 1, 2021. It was made available to current and prospective members of EduCom as well as other entities within the Cooperative Movement.
The Credit Union sought to raise $250 Million from subscriptions for 250 million Deferred
Shares. The Offer was intended to raise capital to finance the technological enhancement of the banking system of the Credit Union. The strategic objective is to implement a new platform which will be able to positively transform our members’ digital experience in the near future.
The banking platform will provide the opportunity to streamline our operations, provide management information and essential data that will allow us to create a more personalized experience for our members.
CEO, Elvis King (2nd right) looks through the prospectus with President of Money Masters Limited, Claudette Crooks (c). Also present in the frame are President of EduCom Credit Union, Ian Sutherland (far right), Registrar of the Department of Co-operatives and Friendly Societies, Errol Gallimore (2nd left) and EduCom’s Chief Financial Officer, Eric Heslop (far left) Chief Executive Officer of EduCom Co-operative Credit Union, Elvis King, being interviewed at the launch of EduCom’s Deferred Share Offer while President of Money Masters Limited, Claudette Crooks looks on. Registrar for the Department of Co-operatives and Friendly Societies, Errol Gallimore, making a presentation to the audience at the launch of EduCom’s Deferred Share Offer held on September 22, 2021.The Jamaica Co-operative Credit Union League (JCCUL) celebrated its Family Fun Day on August 20, 2021 under the theme: “Fi mi Credit Union, Fi mi FAMILY (My Credit Union, My Family)”
EduCom participated at the Branch level with our members visiting our locations throughout the day. Our members were treated to lots of excitement, giveaways, and activities. Members were able to participate in an online trivia game to win prizes.
CEO, Elvis King, presents a member with a token during the Credit Union League’s Family Fun Day on August 20, 2021.
Member Care Representative attached to the Portmore Branch, Ebony Francis, presents a member with a token during the day’s activities.
HEART trainee assigned to the Mandeville Branch, Alesha Campbell (l), engages with a member in one of the many activities the branch hosted during the day.
Business Development Leader for the Montego Bay Branch, Lisa Bent (seated) explains the benefit of membership to the prospects who visited the booth at the Jamaica Teacher’s Association Conference in Trelawny on August 16, 2021. The session provided information on the products and services available at the Credit Union.
Business Development Leader for the Montego Bay Branch, Lisa Bent (c) makes a presentation to the participants during the conference on August 16, 2021.
Business Development Leader for the Montego Bay Branch Lisa Bent (l) presents a token to a participant at the Conference.
EduCom CO OPERATIVE CREDIT UNION LIMITED
EduCom Co-operative Credit Union Limited STATEMENT OF SURPLUS OR DEFICIT AND OTHER COMPREHENSIVE INCOME
Year ended 31 December 2021
YEAR ENDED 31 DECEMBER 2021
Note 2021 2020 $’000 $’000
INTEREST INCOME:
Loans to members 1,047,532 910,034
Liquid assets 10,312 15,566
Financial investments 26,973 11,842
Reverse repurchase agreements 44,973 27,200 1,129,790 964,642
INTEREST EXPENSE AND OTHER FINANCIAL COSTS:
Deposits 115,981 106,621
Loan scheme deposits 6,882 6,232
Voluntary shares 28,696 26,390
Deferred shares 2,917 419
External credits 5,218 5,916
Other financial costs 11,392 11,054 171,086 156,632
NET INTEREST INCOME 958,704 808,010 Decrease/(increase) in impairment loss on investments 276 ( 160) Loan impairment losses 12 ( 70,197) ( 90,089)
NET INTEREST INCOME AFTER IMPAIRMENT
LOSSES ON LOANS AND INVESTMENTS 888,783 717,761 Non interest income 6 263,020 157,049
1,151,803 874,810 Operating expenses 7 ( 922,543) (798,191)
NET SURPLUS BEFORE HONORARIUM 229,260 76,619 Honorarium ( 10,223) ( 9,767)
NET SURPLUS AFTER HONORARIUM FOR THE YEAR 219,037 66,852
OTHER COMPREHENSIVE INCOME:
Items that will not be reclassified to surplus Revaluation of land and buildings 6,193 Re measurement of defined benefit pension plan ( 4,376) ( 3,227) ( 4,376) 2,966
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 214,661 69,818
EduCom Co-operative Credit Union Limited STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
LIMITED
YEAR ENDED 31 DECEMBER 2021
Non Institutional Institutional Capital Capital Total Note $’000 $’000 $’000
Balance at 1 January 2020 1,074,582 342,414 1,416,996
Total comprehensive income
Net surplus for the year 66,852 66,852 Other comprehensive income 2,966 2,966
Transactions with owners
Entrance fees 1,812 1,812
Dividend ( 30,000) ( 30,000)
Issue of permanent shares 40,290 40,290
Increase in permanent shares reserve 338 338
Transfer to statutory reserve 24(a) 19,155 ( 19,155) Decrease in other reserve 26(a) ( 126) ( 126)
Balance at 31 December 2020 1,135,839 363,289 1,499,128
Additional transfer to statutory reserve for year ended 31 December 2020 14,728 ( 14,728)
Total comprehensive income
Net surplus for the year 219,037 219,037 Other comprehensive income ( 4,376) ( 4,376)
Transactions with owners
Entrance fees 162 162
Dividend ( 14,911) ( 14,911)
Increase in permanent shares 12,966 12,966
Decrease in permanent shares reserve ( 1,206) ( 1,206) Transfer to statutory reserve 24(a) 57,316 ( 57,316) Decrease in other reserve 26(a) ( 10,426) ( 10,426)
Balance at 31 December 2021 1,221,011 479,363 1,700,374
LIMITED
EduCom Co-operative Credit Union Limited STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
YEAR ENDED 31 DECEMBER 2021
INSTITUTIONAL CAPITAL Business Statutory Special Permanent Combination Reserve Reserve Share Reserve Total $’000 $’000 $’000 $’000 $’000
Balance at 1 January 2020 318,169 253,143 215,193 288,077 1,074,582
Transactions with owners Entrance fees 1,812 1,812
Issue of permanent shares 40,290 40,290 Transfer from undistributed surplus 19,155 19,155
Balance at 31 December 2020 339,136 253,143 255,483 288,077 1,135,839
Additional transfer to statutory reserve for year ended 31 December 2020 14,728 14,728
Transactions with owners Entrance fees 162 162
Issue of permanent shares 12,966 12,966 Transfer from undistributed surplus 57,316 57,316.
Balance at 31 December 2021 411,342 253,143 268,449 288,077 1,221,011
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
ENDED 31 DECEMBER 2021 2021 2020 $’000 $’000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net surplus 219,037 66,852
Adjustments for:
Interest received 1,116,119 957,000
Interest income (1,129,790) ( 964,642)
Interest expense 154,476 139,662
Interest paid ( 144,476) ( 139,066)
Depreciation 23,848 24,493
Amortisation of right-of-use assets 6,850 6,850
Finance expense 11,392 10,186
Property, plant & equipment written off 4,850
Unrealised foreign exchange ga in 444 ( 615)
Pension expense 1,957 2,309
Impairment losses on investments ( 276) 160
Loan impairment losses 70,197 90,089 329,778 198,128
Changes in operating assets and liabilities
Saving deposits 774,005 668,440
Loan scheme deposits ( 21,476) 2,882
Voluntary shares 399,043 315,295
Retirement benefit assets ( 329) 340
Inventories 1,242 ( 1,892)
Other assets ( 43,135) 5,340
Loans (1,805,361) 49,813
Payables 68,043 ( 2,636)
Decrease in reserves ( 10,426) ( 126)
Cash (used in)/ provided by operating activities ( 308,616) 1,235,584
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment ( 25,276) ( 13,017)
Reverse repurchase agreements ( 330,604) ( 742,041)
Financial investments, net ( 33,123) ( 343,820)
Cash used in investing activities ( 389,003) (1,098,878)
CASH FLOWS FROM FINANCING ACTIVITIES:
External credits ( 976) ( 3,616)
Increase in permanent shares 12,966 40,290
Deferred shares, net 216,448 ( 12,967)
Dividend paid ( 14,911) ( 30,000)
Entrance fees 162 1,812
Principal paid on lease liabilities ( 4,606) ( 3,839)
Interest paid on lease liabilities ( 3,936) ( 4,270)
Interest paid on external credit ( 5,218) ( 5,916)
Cash provided by/ (used in) financing activities 199,929 ( 18,506) ( 497,690) 118,200.
Exchange gain on foreign cash balances 46. Increase in cash and cash equivalents ( 497,690) 118,246 Cash and cash equivalents at beginning of year 802,744 684,498
CASH AND CASH EQUIVALENT S AT END OF YEAR (Note 13) 305,054 802,744
EduCom
DECEMBER 2021
EduCom Co operative Credit Union Limited (the Credit Union) is incorporat ed under the laws of Jamaica and is registered under the Co operative Societies Act. The registered office of the Credit Union is located at 10 Oxfo rd Terrace, Kingston 5, Jamaica The Credit Union was formed following the merger of A.A.M.M Co operative Credit Union Limited and UWI (Mona) & Community Co operative Credit Union Limited on 1 April 2015. On 1 January 2017, the Credit Union merged its operation with St. Catherine Co operative Credit Union Limited .
The main activities of the Credit Union are to promote thrift among its members by affording them an opportunity to accumulate their savings and to create for them a sourc e of credit for provident or productive purposes at reasonable rates of interest.
Membership to the Credit Union is obtained by members’ subscribing to a minimum of $2,000 permanent shares and a minimum of $600 voluntary shares. Voluntary shares are deposits available for withdrawals on demand, while permanent shares are paid in cash and invested in risk capital and are redeemable only upon transfer to another member. Individual membership may not exceed 20% of the total of the members’ shares of the Credit Union.
The Co operative Societies Act requires, among other provisions, that at least 20% of the net surplus of the Credit Union be transferred annually to a reserve fund. Section 59 (1) & (11) of the Act provides for the exemption from income tax a nd stamp duty for the Credit Union
The Credit Union’s operations are located in the parishes of Kingston, St. Andrew, St. Catherine, Manchester and St. James
These financial statements are presented in Jamaican dollars which is the Credit Union’s functional currency. Except where indicated to be otherwise, financial information presented are shown in thousands of Jamaican dollars.
The principal accounting policies applied in the preparati on of the financial st atements are set out below. These policies have been consistently app lied to all the years presented. Where necessary, prior year balances have been reclassified to conform to current year presentation.
These financial statements have been prepared in accordance with International Financial Reporting Standards , International Accou nting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively IFRS). The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain properties and financial assets that are measured at fair value or revalued amounts.
Year ended 31 December 2021
DECEMBER 2021
(a) Basis of preparation (cont’d)
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Credit Union’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4.
New standards, interpretations and amendments adopted from 1 January 2021
Certain new standards, interpretations and amendments to existing standards have been published that became effective during the current financial year. The Credit Union has assessed the relevance of all such new standards, interpretations and amendments and has concluded that there are no new standards, interpretations and amendments, which are relevant to its operations.
New standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted
At the date of authorization, there are a number of standards, amendments to standards and interpretations which have been issued by the IASB that are effective in future accounting periods that the Credit Union has decided not to adopt early. The most significant of thes e are:
Amendments to IAS 1, ‘Presentation of Financial Statements’ on Classification of Liabilities (effective for accounting periods beginning on or after 1 January 2023). These narrow scope amendments to IAS 1, ‘Presentation of financial statements’, clarify that liabilities are classified as either current or non current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectation of the entity or events after the reporting date (for example, th e receipt of a waiver or a breach of covenant). The amendment also clarities what IAS 1 means when it refers to the ‘settlement’ of a liability. The Credit Union will assess the impact of future adoption of this amendment on its financial statements.
Annual Improvements to IFRS Standards 2018 2021 cycle (effective for annual periods beginning on or after January 1, 2022). These amendments include minor changes to the following applicable standards:
(i) IFRS 9 Financial Instruments amendment clarifies that for the purpose of performing the ’10 per cent test’ for derecognition of financial liabilities in determining those fees paid net of fees received, a borrower includes only fees paid or received between the borrower and the lender, including fees paid o r received by either the borrower or lender on the other’s behalf.
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
31 DECEMBER 2021
(a) Basis of preparation (cont’d)
New standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopte d (cont’d)
Annual Improvements to IFRS Standards 2018 2021 cycle (effective for annual periods beginning on or after January 1, 2022). These amendments include minor changes to the following applicable standards (cont’d):
(ii) IFRS 16 Leases amendment removes the illustration of payments from the lessor relating to leasehold improvements.
The Credit Union is assessing the impact this amendment will have on its 2022 financial statements.
Amendment to IAS 1, ‘Practice statement 2 and IAS 8’ (effective for annual periods beginning on or after 1 January 2023). The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies. The Credit Union will assess the impact of future adoption of this amendment on its financial statements.
The Credit Union does not expect any other standards or interpretations issued by the IASB, but not yet effective, to have a material effect on its financi al position.
Transactions entered into by the Credit Union in a currency other than the currency of the primary economic environment in which they operate (their “functional currency”) are recorded at the rates ruling when the transactions occur.
Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognized immediatel y in surplus or deficit.
A financial asset is any contract that gives rise to both a financial asset in o ne entity and a financial liability or equity of another entity.
The Credit Union classifies its financial assets based on the business model used for managing the financial assets and the asset’s contractual terms. These are measured at either:
DECEMBER 2021
(c) Financial assets (cont’d)
Classification and subsequent measureme nt (cont’d)
Amortised cost, and;
Fair value through profit or loss (FVPL).
The classification requirements for debt and equi ty instruments are described below:
Debt instruments
Measurement of debt instruments depends on the Credit Union’s business model for managing the asset and the cash flow characteristics of the asset. The Credit Union classifies its debt instruments into one of the following two measurement categories.
Assets that are held for collection of contractual cash flows , where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets are included in the income statement using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in the surplus or deficit. Impairment losses are presented as a line item in the income statement as credit impairment losses. Bad debt recoveries are included in other income.
Fair value through profit or loss (FVPL)
Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income ( FVOCI) are measured at fair value through profit or loss (FVPL)
A gain or loss on a debt instrument that is measured at fair value through pro fit is recognised in profit or loss in the period in which it arises . Interest income from these financial assets is included in ‘Interest income’ using the effective interest method.
The Credit Union measures all equity investments at fair value. Upon initial recognition, the Credit Union elects to classify irrevocably some of its equity investments as equity instruments at FVOCI when they are not held for trading. Such classification is determined on an instrument by instrument basis. Gains and losses on such equity instruments are never reclassified to surplus or deficit and no impairment is recognised in surplus or deficit. Dividends are recognised in surplus or deficit unless they clearly represent a recovery of part of the cost of the investment, in which case they are recognised in other comprehensive income. Cumulative gains and losses recognised in other comprehensive income are transferred to accumulated surplus on disposal of an investment. Equity instruments at FVOCI are no t subject to an impairment assessment.
EduCom CO
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2021
(c) Financial assets (cont’d)
Classification and subsequent measurement (cont’d)
Equity instruments (cont’d)
Equity instruments held for trading are measured at FVPL and changes in the fair value are recognized in surplus for the period.
The Credit Union derecognises a financial asset when the contract ual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in wh ich the Credit Union neither transfers nor retains substantially all of the risks and rewards of ownership and it does not ret ain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received ( including any new asse t obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in surplus or deficit
Financial assets at amo rtised cost are initially measured at fair value plus incremental direct transaction costs, and subsequently at their amortised co st using the effective interest method. The amortised cost is reduced by impairment losses.
The financial investments caption in the statement of financial position includes:
debt investment securities measured at amortised cost which are initiall y measured at fair value plus incremental direct transaction costs, and subsequently at their amortised cost using the effecti ve interest method less any impairment losses.
equity investment securities mandatorily measured at FVTPL or designated as at FVTPL which are at fair value with changes recognised immediately in surplus or deficit;
equity investment securities designated as at FVOCI.
Year ended 31 December 2021
31 DECEMBER 2021
(c) Financial assets (cont’d) Impairment
The Credit Union assesses on a forward looking basis the expected credit losses (ECL) associated with its financial assets classified at amortised cost.
The ECL will be recognised in surplus before a loss event has occurred. The measurement of ECL reflects an unbiased an d probability weighted amount that is determined by evaluating a range of possible outcomes. The probability weighted outcome considers multiple scenarios based on reasonable and supportable forecasts. Under current guidance, impairment amount represents the single best outco me; the time value of money; and reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
ECL is calculated by multiplying the Probability of default (PD), Loss Given Default (LGD) and Exposure at Default (EAD).
The impairment model uses a three stage approach based on the extent of credit deterioration since origination:
Stage 1 12 month ECL applies to all financial as sets that have not experienced a significant increase in credit risk since origination and are not non performing. The ECL will be computed using a 12 -month PD that represents the probability of default occurring over the next 12 months.
Stage 2 When a financial asset experiences a significant increase in credit risk subsequent to origination but is not non performing, it is considered to be in Stage 2. This requires the computation of ECL based on lifetime PD that represents the probability of default occurring over the remaining estimated life of the financial asset. Provisions are higher in this stage because of an increase in risk and the impact of a longer time horizon being considered compared to 12 months in Stage 1.
Stage 3 Financial assets that have an objective evidence of impairment will be included in this stage. Similar to Stage 2, th e allowance for credit losses will continue to capture the lifetime ECL.
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
31 DECEMBER 2021
(c) Financial assets (cont’d)
The Credit Union uses judgement when considering the following factors that affect the determination of impairment:
The assessment of a significant increase in credit risk is done on a relative basis. To assess whether the credit risk on a financial asset has increased significantly s ince origination, the Credit Union compares the risk of default occurring over the expected life of the financial asset at the rep orting date to the corresponding risk of default at origination, using key risk indicators that are used in the Credit Union’s existing risk management processes. At each reporting date, the assessment of a change in credit risk will be assessed on a collective basis, this would require the segmentation of credit exposure on the basis of shared credit risk characteristics. This assessment is symmetrical in nature, allowing credit risk of financial assets to move back to Stage 1 if the increase in credit risk since origination has reduced and is no longer deemed to be significant.
Macroeconomic factors, forward looking information and multiple scenarios
The Credit Union applies an unbiased and probability weighted estimate of credit losses by evaluating a range of possible outcomes that incorporates forecasts of future economic conditions.
Macroeconomic factors and forward looking information are incorporated into the measurement of ECL as well as the determination of whether there has been a significant increase in credit risk since origination . Measurement of ECLs at each reporting period reflect reasonable and supportable information at the reporting date about past events, current conditions and forecasts of future economic conditions.
The Credit Union uses three scenarios that are probability weighted to determine ECL: base, optimistic and pessimistic.
When measuring ECL, th e Credit Union considers the maximum contractual period over which the Credit Union is exposed to credit ris k. All contractual terms are considered when determining the expected life. For certain revolving credit facilities that do no t have a fixed maturity, the expected life is estimated based on the period over which the Credit Union is exposed to credit risk and where the credit loss would not be mitigated by management’s actions.
Year ended 31 December 2021
For other receivables, the Credit Union applies the simplified approach permitted by IFRS 9, which requires that the impairment provision is measured at initial recognition and throughout the life of the receivables using a lifetime ECL. As a practical expedient, a provision matrix is utilised in determining the lifetime EC Ls for other receivables.
The lifetime ECLs are determined by taking into consideration historical rates of default for each segment of aged receivables as well as the estimated impact of forward looking information.
The Credit U nion’s financial liabilities net of transaction costs, are initially measured at fair value, and are subsequently measured at amor tised cost using the effective interest method. At the reporting date, the items classified as fin ancial liabilities are members’ voluntary shares, saving deposits, loan schemes deposits, deferred shares, payables and external credits.
The purchase and sales of securities under resale and repurchase agreements are treated as collateral lending and borrowing transactions. The related interest income and expense are recorded on the accrual basis.
Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the cash flo w statement, cash and cash equivalents comprise cash in hand and in bank and deposits not held to satisfy sta tutory requirements and short term highly liquid investments with original maturities of three months or less .
Inventories are initially recognised at cost, and subsequently stated at the lower of cost and fair value less cost to sell, cost being determined on the first in first out basis.
Year ended 31 December 2021
Other receivables are carried at anticipated reali zable value. An estimate is made for doubtful receivables based on all outstanding amounts at year end. Bad debts are written off in the year in w hich they are identified.
Items of property, plant and equipment are recorded at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Freehold buildings are subsequently carried at fair value, based on periodic v aluations by a professionally qualified valuer. These revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. Ch anges in fair value are recognised in other comprehensive income and accumulated in the revaluation reserve except to the exte nt that any decrease in value in excess of the credit balance on the revaluation reserve, or reversal of such a transaction, is recognised in surplus or deficit.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Credit Union and the cost of the item can be measured reliably. The carrying amount of any replaced part is derecognised. All other repairs and maintenance are c harged to surplus or deficit during the financial period in which they are incurred.
Depreciation is calculated on the straight line method at annual rates estimated to write off the costs of the assets over the period of their est imated useful lives. Land is not depreciated. Annual rates are as follows:
Buildings 2½%
Leasehold Improvement 14 1/3%
Equipment 20%
Computer hardware and software 33 1/3%
Furniture and Fixtures 10%
Motor vehicles 20%
Property, plant and equipment are periodically reviewed for impairment. Where the carrying amount of the assets is greater tha n the estimated recoverable amount, it is written down immediately to its recovery amount.
Year ended 31 December 2021
31 DECEMBER 2021
(j) Property, plant and equipment (cont’d)
Gains and losses on disposals of property, plant and equipment are determined by reference to their carrying amounts and are taken into account in determining profit or loss.
The assets’ residual values and useful lives ar e reviewed and adjusted if appropriate, at each reporting date.
The Credit Union contributes to two separate pension funds on behalf of its employees a defined contribution plan and a defined benefit plan independently administe red as follows:
This is a money purchase plan whereby it pays contributions to a privately admin istered fund. Once the contributions have been paid, the Credit Union has no further obligations. The regular contributions consti tute net periodic costs for the year in which they are due and are included in staff costs.
This is a multi employer defined benefit pension scheme. The pension is funded from payments from employees and by the Credit Union, taken into account the recommendation of independent qualified actuaries.
The asset or liability in respect of defined benefit pla ns is the difference between the present value of the defined benefit obligations and fair value of plan assets at the reporting date.
Where a pension asset arises, the amount recognized is limited to the present value of any economic benefits available in the form of funds from the plan or reductions in the future contributions to the plan. The valuation is performed annually by independent actuaries using the projected unit credit method. Under this method, the cost of providing pensions is charged to net surplus so as to spread the regular cost of service over the service lives of the employees. The pension obligation is measur ed as the present value of the estimated future cash outflows using discount rates based on market yields on government securi ties which have terms to maturity approximating the terms of the related liability. The pension plan assets are allocated based on the Credit Union’s obligations as a proportion of the total obligations of the plan.
EduCom
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
LIMITED
31 DECEMBER 2021
(j) Employees’ benefits (cont’d)
Actuarial gains and losses arising from experience adjustments, changes in actuarial assumptions and amendments to pension plans are charged or credited to the undistributed surplus in other comprehensive income in the period in which they arise.
Past service costs are recognised immediately in the statement of comprehensive income.
All obligation in respect of outstanding leave are recognised in the statement of comprehensive income in the year to which it relates.
External credits are recognized initially as the proceeds received, net of transaction costs incurred. External credits are subsequently stated at amortised cost using the effective yield method. Any difference betwee n proceeds, net of transaction costs, and the redemption value is recognized in surplus or deficit over the period of the external credit.
Saving deposits are recognized initially at the normal amount when funds are received. Deposits are subsequently stated at amortised cost.
All leases are accounted for by recognising a right of use asset and a corresponding lease liability, except for:
• Leases of low value assets; and
• Leases with a duration of 12 months or less .
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Credit Union’s incremental borrowing rate on commencement of the lease is used. Variable leas e payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other var iable lease payments and non lease components are expensed in the period to which they relate.
Year ended 31 December 2021
DECEMBER 2021
On initial recognition, the carrying value of the lease liability also includes:
• amounts expected to be payable under any residual value guarantee;
• the exercise price of any purchase option granted in favour of the Credit Union if it is reasonable certain to exercise that option;
• any penalties payable for terminating the lease, if the term of the lea se has been estimated on the basis of termination option being exercised.
Right of use assets are initially measured at an amount equal to the initial value of the lease liabilities reduced for any lease incentives received, and increased for:
• lease payments made on or before commencement of the leases;
• initial direct costs incurred; and
• the amount of any provision recognise d where the Credit Union is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations).
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right of use assets are amortised on a straight line basis over the remaining term of the leases or over the remaining economic life of the asset s if, rarely, this is judged to be shorter than the lease terms.
Permanent shares represent a member’s ownership in the Cre dit Union and may be redeemable subject to the sale, transfer, or repurchase of such shares. Classified as equity, these shares form part of the ca pital of the Credit Union. Dividends may be paid on permanent shares subject to the profitability of the Cr edit Union.
Members’ voluntary shares represent deposit holdings of the Credit Union’s members, to satisfy membership requirements and to facilitate eligibility for loans and other benefits. These shares are classified as financial liabilities. Interest payable on these shares are determined at the discretion of the Credit Union and reported as interest in the statement of income in the period in which they are approved.
EduCom
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
LIMITED
31 DECEMBER 2021
(n) Shares (cont’d)
Deferred shares
Deferred shares form part of the capital of the Credit Union. These shares represent placement by members which are not withdrawable for a period of five (5) years. Any redemption before the expiration would result in a penalty being levied . Interest on deferred shares are paid quarterly at an interest rate of 6.50% per annum from the date of origination.
Institutional capital includes the statutory reserve fund, as well as any other reserve established from time to time which, in the opinion of the directors, are necessary to support the operations of the Credit Union and, thereby, protect the interest of the members. These reserves are not available for distribution.
A party is related to the Credit Union, if:
(i) Directly, or indirectly through one or more intermediaries, the party:
(a) is controlled by, or is under common control with, the Credit Union; (b) has an interest in the Credit Union that gives it significant influence over the entity; or (c) has joint control over the Credit Union
(ii) The party is a member of the key management personnel of the entity or its parent;
(iii) The party is a close member of the family of any individual referred to in (i) or (iv);
(iv) The party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant vo ting power in such entity resides with, directly or indirectly, any individual referred to in (ii) or (iii).
A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged . The Credit Union has a related party relationship with its directors and key management personnel representing certain senior officers of the Credit Union.
Year ended 31 December 2021
31 DECEMBER 2021
Revenue represents income that arises in the course of the ordinary activities of the Credit Union. The Credit Union offers financial services to its approved memb ers. These services are provided on a time and fixed price contact, with terms ranging from one year to thirty nine years. Revenue is generally recognised when the performance obligations are satisfied either at a point in time or over time as the service s are provided. Accordingly, revenue comprises interest income, fees and commissions, dividends, rental and other income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial as sets, except for:
Purchased or originated credit impaired (POCI) financial assets, for which the original credit adjusted effective interest rate is applied to the amortised cost of the financial asset.
Financial assets that are not ‘POCI’ but have sub sequently become credit impaired (or ‘stage 3’), for which interest revenue is calculated by applying the effective interest r ate to their amortised cost (i.e., net of the expected credit loss provision).
Fees and commission income ar e recognized on the accrual basis when the service has been provided. Fees and commission arising from negotiating or participating in the negotiation of a transaction are recognized on completion of the underlying transaction at a point in time or over t ime as the services are provided. It is the Credit Union’s policy not to defer loan origination fees over the life of the loan.
Dividend income from equity financial investments is recognized at the point when the shareholder’s right to receiv e payment has been established.
Rental income from operating leases is recognised on a straight line basis over the term, period of occupancy, of the relevant lease.
EduCom Co-operative Credit Union Limited
EduCom CO-OPERATIVE CREDIT UNION LIMITED
Year ended 31 December 2021
31 DECEMBER 2021
(q) Revenue recognition (cont’d)
Other income is recognised on an accrual basis.
(r) Provisions
The Credit Union has recognised provision for l iabilities of uncertain timing or amount. The provision is a measure of the best estimate of expenditure required to settle th e obligation at the re porting date.
The Credit Union makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
A number of assets included in the Credit Union’s financial statements require measurement at, and/or disclosure of, at fair value.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s l ength transaction. Ma rket price is used to determine fair value where an active market (such as a recognized stock exchange) exists as it is the best evidence of the fair value of a financial instrument.
The fair value measurement of the Credit Union’s financial and non financial assets and liabilities utilizes market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorized into different levels based on the degree to which the fair value is observable.
The standard requires disclosure of fair value measurements by level using the following fair value measurement hierarchy:
(i) Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
(ii) Level 2 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (th at is, as prices) or indirectly (that is, derived from prices).
Year ended 31 December 2021
31 DECEMBER 2021
(i) Fair value estimation (cont’d)
(iii) Level 3 Inputs for the asset or liability that are not based on observable market data (that is, derived from prices).
The classifications of an item into the above levels are based on the lowest level of the inputs used that has a significant effect on the fair value measurement of these items.
The Credit Union measures a number of i tems at fair value
Financial investments (Note 11)
Revalued building property, plant and equipment (N ote 15)
The cost of these benefits and the present value of the future obligations depend on a number of factors that are determined by actuaries using a number of assumptions. The assumptions used in determining the net periodic cost or i ncome for retirement benefits include the expected long term rate of return on the relevant plan assets and the discount rate. Any changes in these assumptions will impact the net periodic cost or income recorded for retirement benefits and may affect pla nned funding of the pension plan. The Credit Union determines the appropriate discount rate at the end of each year, which represents the interest rate that should be used to determine the present value of estimated future cash outflows expected to be req uired to settle the retirement benefit obligations. In determining the appropriate discount rate, the Credit Union considers interest rate of high quality corporate bonds that are denominated in local currency and have terms to maturity approximating the terms of the related obligations. Other key assumptions for the retirement benefits are based on current market conditions.
The measurement of the expected credit loss allowance for financial assets measured at amortised cost requires the use of complex models and significant assumptions about future economic conditions and credit behaviou r such as the likeliho od of members’ defaulting and the resulting losses.
EduCom
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
LIMITED
31 DECEMBER 2021
(iv) Impairment losses on f inancial assets (cont’d)
A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as:
• Determining criteria for significant increase in credit risk
• Choosing appropriate models and assumptions for the measurement of ECL.
• Establishing the number and relative weights of forward looking scenarios.
• Establishing groups of similar financial assets for the purpose of measuring ECL.
The Credit Union’s activities are principally related to the use of financial instruments, which involve analysis, evaluation and management of some d egree of risk or combination of risks. The Credit Union manages risk through a framework of risk principles, organizational s tructures and risk management and monitoring processes that are closely aligned with the activities of the Credit Union. The Credit Union’s risk management policies are designed to identify and analyze the risks faced by the Credit Union, to set appropriate risk limits and controls, and to monitor risks and adherence to limits by means of regularly generated reports . The Credit Union’s aim is therefore to achieve an appropriate balance between risks and return and minimize potential adverse effects on the Credit Union’s financial performance.
The Credit Union has exposure to the following risks from its use of financial instrument s:
• Credit risk
• Liquidity risk
• Market risk
In common with all other businesses, the Credit Union’s activities is exposed to a variety of risks that arise from its use of financial instruments. This note describes the Credit Union’s objectives, policies and processes for managing those risks to minimize potential adverse effects on the financial performance of the Credit Union and the methods used to measure them.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(i) Principal financial instruments
The principal financial instruments used by the Credit Union from which financial instrument risk arises, are as follows:
Financial investments
Loan receivables Liquid assets
Reverse repurchase agreements
Cash in hand and at bank Payables
Voluntary shares
Deferred shares
Saving deposits
Loan scheme deposits External credits
(ii) Financial instruments by category
Financial assets
Assets at Fair value through Assets at fair other Assets at Value through comprehensive Amortised cost Profit or loss income Total $’000 $’000 $’000 $’000
As at 31 December 2021:
Cash in hand and bank 55,394 55,394
Liquid assets 249,660 249,660
Reverse repurchase agreements 1,628,791 1,628,791
Loans receivables (net) 9,362,508 9,362,508
Financial investments 352,688 221,564 70,223 644,475 11,649,041 221,564 70,223 11,940,828
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
EduCom CO-OPERATIVE
Year ended 31 December 2021
UNION LIMITED
31 DECEMBER 2021
5 FINANCIAL RISK MANAGEMENT (CONT’D):
(ii) Financial instruments by category
Financial assets
Assets at Fair value through
Assets at fair other Assets at Value through comprehensive Amortised cost Profit or loss income Total $’000 $’000 $’000 $’000
As at 31 December 2020:
Cash in hand and bank 77,258 77,258
Liquid assets 725,486 725,486
Reverse repurchase agreements 1,294,634 1,294,634
Loans receivables 7,622,437 7,622,437
Financial investments 370,989 162,010 81,333 614,332 10,090,804 162,010 81,333 10,334,147
At amortised cost 2021 2020 $’000 $’000
Payables 196,487 144,862
Saving deposits 5,335,053 4,551,976
Voluntary shares 4,433,801 4,034,758
Loan scheme fund 434,112 455,588
Deferred shares 243,906 26,725
External credits 104,944 105,920
10,748,285 9,319,829
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iii) Financial instruments measured at fai r value
Fair value is the amount for which an asset could be exchanged, or liability settled, between knowledgeable willing parties in an arm’s length transaction.
The financial instruments are grouped into level 1 to 3 based on the degree to which the fair values are observable as follows:
• Level 1 includes those instruments which are measured based on quoted prices in active markets for identica l assets or liabilities.
• Level 2 includes those instruments which are measured using inputs other than quoted prices within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (t hat is, derived from prices).
• Level 3 includes those instruments which are measured using valuation techniques that include inputs for the instrument that are not based on observable market date (unobservable inputs).
There were no transfers between levels during the year.
The following table shows the fair values of financial assets including their levels in the fair value hierarchy. The tables do not include fair value information for financial assets and liabilities not measured at fair value if th e carrying amount is a reasonable approximation of their fair value.
2021 .
Level 1 level 2 Level 3 Total $’000 $’000 $’000 $’000
Financial assets measured at fair value:
Financial investments (Note 11) 72,703 148,861 70,223 291,787.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iii) Financial instruments measured at fair value (cont’d)
2020 .
Level 1 level 2 Level 3 Total $’000 $’000 $’000 $’000
Financial assets measured at fair value:
Financial investments (Note 11) 51,659 110,351 81,333 243,343
The valuation technique used in determining the fair value measurement of level 1 financial instrument is the Jamaica Stock Exchange trading rates. The val uation technique used for level 3 financial instruments is the net assets valuation method.
Financial investments, which have been categorized as level 2 valuation model is based on the price of units at reporting date as quoted by the broker.
The fair value of liquid a ssets, reverse repurchase agreements, cash and bank balances maturing within one (1) year is assumed to appr oximate their carrying amount. This assumption applies to all other financial assets and liabilities.
The fair value of time deposits and savings deposits with no specific maturity is assumed to be amount payable on demand at the reporting date.
The carrying value for deferred shares and external credits approximates their fair value as the liabilities are carried at amortis ed cost reflecting their contractual obligations and the interest rates are reflective of current market rates for similar transactions.
(iv) Financial risk
The Board of Directors is ultimately responsible for the establishment and oversight of the Credit Union’s risk management framework. The Board has established committees for managing and monitoring risks.
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
The five key committees for managing and monitoring risks are as follow s:
The Supervisory Committee oversees the Internal Audit function of the Credit Union and ensures that internal procedures and controls are adhered to. The Supervisory Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of management controls and procedures, the results of which are repo rted to the Supervisory Committee.
The Credit Committee oversees the approval of the credit facilities to members. It is also primarily responsible for monitoring the quality of the loan portfolio.
The Finance Committee is responsible for overseeing the management of the Credit Union’s assets and liabilities and the overall financial structure. It is also primarily responsible for managing the funding and liquidity risks of the Credit Union
The Risk and Compliance Committee monitors the Credit Union’s exposure to business risks, primarily credit risk by ensu ring that collaterals used to secure members’ loans are adequate prior to loan approval. It is also responsible for monitoring the Credit Union’s compliance to the rules and regulations governing the Credit Union as well as management’s policies and proced ures.
The Delinquency Committee is responsible for overseeing the management of the Credit Union’s delinquency ratios and the recoverability of overdue loan balances. The committee also oversees the disposal of repossessed c ollateral with the assistance of the Risk and Compliance Committee.
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
These committees comprise persons independent of management and Supervisory, Finance and Risk and Compliance Committees report to the Board monthly. The information from the other committees reports through the CEO to the Board of Directors.
The Credit Union’s overall risk management programme seeks to minimize potential adverse effects on the Credit Union’s financial performance. There have been no significant changes to the Credit Union’s exposure to fina ncial risks or the manner in which it manages and measures its risks.
The Credit Union takes on exposure to credit risk, which is the risk that a counterparty will cause a financial loss by being unable to pay amounts in full when due. Credit exposures arise principally in lending activities. For loans, strategic decisions are primarily made by the Board of Dire ctors, with some delegation of credit approval authority to the Credit Committee and certain members of executive management. The Credit Union’s credit policy forms the basis for all its lending operations. The policy aims at maintaining a high quality loan portfolio, as well a s enhancing the Credit Union’s mission and strategy. The policy sets the basi c criteria for acceptable risk and identifies risk areas that require special attention.
Additionally, the Credit Union is exposed to credit risk in its treasury activities, arising from financial assets that the Credit Union uses for managing its liquidity and interest rate risks, as well as other market risks.
There is also credit risk in relation to financial items not included in the statement of financial position at year end such as loan commitments.
The Credit Union has established a credit quality review process involving regular analysis of the ability of borrowers and other counterparties to meet interest and loan repayment obligations
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
(i) Credit risk (cont’d)
The Credit Union assesses the probability of default of individual borrowers using internal ratings. The Credit Union assesses each borrower on four critical factors. These factors are the member’s credit history, ability to pay linked to the industry benchmarked debt service ratio of 75%, character profile and the member’s economic stability, based on employment and place of abode.
Borrowers of the Credit Union are segmented into two rating classes: performing and non performing.
The credit quality review process allows the Credit Union to assess the potential loss as a result of the risk to which it is exposed and take c orrective action. Exposure to credit risk is managed, in part, by obtaining collateral and personal guarantees.
The Credit Unio n manag es concentrations of credit ri sk by placing limit s on the amount of risk accepted i n relation to a si ngle borrower or group of related borrowe rs, and to product segments.
Borrowing limits are established by the use of the sys tem described above. Limits on the level of credit risk by product categories and for investment categories, are reviewed and approved annually by the Board of Directors.
The amount and typ e of collateral required depends on an assessment of the credit risk of the borrower. With the exception of loans, debt securities are generally unsecured while reverse repurchase agre ements are secured by portfolios of financial instruments. Guidelines are implemented regarding the acceptability of differe nt types of collateral. The Credit Union’s policy regarding obtaining collateral has not significantly changed during the reporti ng period and there has been no significant change in the overall quality of the collateral held by the Credit Union since the prior period. The principal collateral types for loans and advances are:
EduCom
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
(j) Credit risk (cont’d)
Collateral (cont’d)
• Mortgages over residential and commercial properties
• Charges over business assets such as premises,
• Bill of sale over motor vehicles
• Charges and hypothecations over deposit balances
Management monitors the market value of collateral, request additional collateral in accordance with the underlying agreement, and monitors the market value of collateral obtained during its annual review of individual credit facilities as well as during its review of the adequacy of the provision fo r credit losses.
External rating agency grades are used to ass ess credit quality. These published grades are continuously monitored and updated. Default probabilities and recovery rates are assigned as published by the rating agency.
The Credit Union limits its exposure to credit risk by investing mainly in liquid securities, with counterparties that have high credit quality. As a consequence, management’s expectation of default is low.
All liquid assets and bank balances are held in financial institutions which management regards as strong and reputable and are therefore assessed as having low credit risk at reporting date . The strength of these financi al institutions is constantly reviewed by the Finance Committee.
The Credit Union has three (3) types of financial assets that are subject to the expected credit loss model:
• Loan receivables,
• Debt investments carried at amortised cost, and;
• Reverse repurchase agreement.
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
(i) Credit risk (cont’d)
Impairment of financial assets (cont’d)
While cash and cash equivalents are also subject to the requirements of IFRS 9, all bank balances are assessed to have low credit risk at each reporting date as they are held with reputable banking institution . No impairment loss was recognised.
The Credit Union applies the ‘three stage' model u nder IFRS 9 i n measuring the expected credit losses on loans, and makes estimations about the likelihood of defaults occurring, associated loss ratios, changes in market conditions and expected future cash flows. This is measured usin g the Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) for a portfolio of assets.
• Probability of Default This represents the likelihood of a borrower defaulting on its financial obligation either over the next 12 months (12 months PD) or over the remaining lifetime (Lifetime PD) of the obligation.
• Exposure at Default This represents the expected balance at default, taking into account the repayment of principal and interest from the statement of financial position date to the default event together wi th any expected drawdowns of committed facilities.
• Loss Given Default The LGD represents expected losses on the EAD given the event of default, taking into account the mitigating effect of collateral value at the time it is expected to be reali zed and also the time value of money.
DECEMBER 2021
(iv) Financial risk (cont’d)
(i) Credit risk (cont’d)
The ‘three stage' model is used to c ategorize financial assets according to credit quality as follows:
• Stage 1 If a financial asset is subject to low credit risk at the reporting date, an amount equal to 12 month expected credit losses would be recognized.
• Stage 2 If the credit risk increases significantly from initial recognition, an amount equal to lifetime expecte d credit losses would be recognized. Interest revenue would be on the gross basis.
• Stage 3 If the financial asset meets the credit impaired definition, an amount equal to lifetime expected credit losses would be recognized and interest revenue would be on the net basis, rather than on the gross amount.
Loans, at any point in time, a re either in stage 1, 2, or 3. At origination all loans are in stage 1 and a lifetime PD established based on the current risk score at that time. At future reporting dates, loans are again rated and another lifetime PD established based on the remaining term of the loan. This remaining lifetime PD is then compared with the expected remaining lifetime PD to determine if there is any significant increase in credit risk based on the difference, if any, of the two. If there are major differences , the loan moves to stage 2. Notwithstanding the above, loans on a watch list are placed in stage 2. Stage 2 loans are moved to stage 3, if the loan rating results in the borrower being rated as non performing or in default.
If there is no significant increase in credi t risk but the borrower is in for more than 30 days past due, then the loan is placed in stage 2. Also, for those in arrears for more than 90 days past due, the loan is placed in stage 3. This rebuttable presumption is an after the fact measure. Stage 3 l oans are said to be impaired and are subject to write offs, cures, or debt consolidation. Transition means the ability to move from one stage (state) to the next.
Year ended 31 December 2021
(iv) Financial risk (cont’d)
By forward transition we mean moving from stage 1 to 2, stage 2 to 3, or stage 1 to 3 between reporting and measurement pe riods.
Backward transition means moving from stage 3 to 2, 2 to 1 but not directly from stage 3 to 1. Al l rehabilitated stage 3 loans, called “cured”, will remain in stage 3 for 6 month in good standing before moving to stage 2 and wi ll have to remain in stage 2 for another 6 months before going to stage 1. Before a backward transition is made all arrears must be fully paid.
A “cured” loan is a loan that was in default and has recovered through the following routes or a combination thereof.
• All past due payments have been made and the borrower has made 6 monthly payments on time.
• The loan has been restructured wit h due regard to a new payment plan which reduces the monthly payments by extending the maturity date.
A “watch list” is a mechanism used to track and report on loans from when they first reach stage 2 and, after they fall in arrears of over 30 days. The list also includes loans for which a sign ificant increase in credit risk (SICR) has occurred using both quantitative and qualitative measures.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
(i) Credit risk (cont’d)
Impairment - loan receivables (cont’d)
Watch List
Significant increase in credit risk (SICR)
The Credit Union considers a f inancial asset to have experienced a significant increase in credit risk when one or more of the following qualitative criteria have been met:
• Deterioration in the Borrower's Risk Rating (BRR) below established threshold;
• Failure to comply with provisions of any statute under which the borrower conducts business;
• Actual or expected restructuring; or,
• Early signs of cash flow/liquidity problems.
Loan commitments are assessed along with the category of loan the Credit Union is committed to provide.
The assessment of SICR is performed for individual loans , taking into consideration the sector grouping of the individual exposures, and incorporates forward looking information. This assessment is performed on a n annual basis.
Irrespective of the above qualitative assess ment, the Credit Union presumes that the credit risk on a financial asset has increased significantly since initial recognition, when contractual payments are more than 30 days past due.
The Credit Union defines a financial instrument as non performing, when it meets one or more of the following criteria:
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
(i) Credit risk (cont’d)
Impairment loan receivables (cont’d)
The borrower is more than 90 days past due on its contractual payments.
The borrower meets unlikeliness to pay criteria as outlined below, which indicates the borrower is in significant financial difficulty:
• Delinquency in contractual payments of principal and interest;
• Cash flow difficulties experienced by the borrower;
• Breach of loan covenants or conditions, and;
• Initiation of bankruptcy proceedings.
The criteria above hav e been a pplied to all loans held by the Credit Union and are consistent with the definition of ‘non performing' used for inte rnal credit risk management purposes.
The ECL is determined by projecting the PD, LGD, and EAD which are multiplied together and discounted back to the reporting date. The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.
The 12 month PD is calculated by observing the rate of historical default within the first year of a portfolio of loans and adjusted for the exp ected impact of forward looking economic information.
The lifetime PD is calculated by observing the rate of historical defau lt over the life of a portfolio of loans and adjusted for the impact of forward looking economic information.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Impairment loan receivables (cont’d)
Forward looking information
The most significant period end assumptions used in determining the ECL as at the reporting date are set out below:
Economic factor
Gross Domestic Product (GDP)
Inflation rate
Unemployment rate
Rate .
Scenarios 2021 2020 % %
Base 2.00 4.50
Optimistic 2.50 4.75
Pessimistic 1.50 4.25
Base 3.50 4.00
Optimistic 3.00 3.50
Pessimistic .80 4.50
Base 8.00 8.50
Optimistic 8.00 8.00
Pessimistic 8.00 9.00
The underlying models and their calibration, how they react to forwa rd looking economic conditions were based on how they relate to the Credit Union’s existing portfolio, these variables and remain subject to review and refinement as the Credit Union builds data. Other forward looking considerations not otherwise incorporated within the above scena rios, such as the impact of any regulatory, legislative or po litical changes, have also been considered, but not deemed to have a material impact and therefore no adjustment has been made to the ECL for such factors. This is reviewed and monitored for appr opriateness on an annual basis.
Forward looking indicators having the most significant impact on the EC L are GDP growth, unemployment rate and inflation rate
EduCom
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Impairment loan receivables (cont’d)
Sensitivity Analysis (cont’d)
Set out below are the chang es to the ECL as at 31 December that would result from reasonably possible changes in these par ameters from the actual assumptions used in the Credit Union's economic variable assumptions.
2021 .
Forward Forward Forward looking Change in Effect on Change in Effect on Indicator basis points ECL basis points ECL . % $’000 % $’000
GDP growth +100bp 9,095 100bp (9,095) Unemployment rate +100bp 7,276 100bp (7,276) Inflation rate +100bp 1,817 100bp (1,817)
2020 .
Forward Forward Forward looking Change in Effect on Change in Effect on Indicator basis points ECL basis points ECL . % $’000 % $’000 .
GDP growth +100bp 9,554 100bp (9,554)
Unemployment rate +100bp 7,643 100bp (7,643) Inflation rate +100bp 1,909 100bp (1,909)
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Impairment loan receivables (cont’d)
Portfolio Segmentation
Expected credit loss provisions are modelled on a collective basis, by grouping exposures on the basis of shared risk characteristics, such that risk exposures within a group are homogeneous. In performing this grouping, there mu st be sufficient information for the group to be statistically credible.
Exposures are grouped according to loan type (unsecured, mortgage, home equity, motor vehicle, line of credit, restructured and other ). The appropriateness of groupings is monitore d and reviewed on a periodic basis by the Credit Committee.
Stage 3 loans are assessed on an individual basis for impairment.
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Impairment loan receivables (cont’d)
Loss allowance Loan receivables
The loss allowance recognized in the period is impacted by a variety of facto rs. The following table explains the changes in the loss allowance between the beginning and the end of the annual period due to these factors:
2021 .
Stage 1 Stage 2 Stage 3 12 Months Lifetime Lifetime ECL ECL ECL Total $’000 $’000 $’000 $’000
At 1 January 54,333 21,621 10,635 86,589 Movements with income statement impact: Transfer:
Transfer from Stage 1 to 2 ( 728) 728
Transfer from Stage 1 to 3 ( 2,370) - 2,370 -
Transfer from Stage 2 to 3 ( 348) 348
Transfer from Stage 3 to 2 205 ( 205) Transfer from Stage 2 to 1 1,120 ( 1,120)
New financial assets originated 23,831 12,930 77,913 114,674 Changes in PDs/LGDs/EADs ( 3,296) 97 3,948 749 Financial assets derecognized during the period (27,516) (11,735) ( 5,975) (45,226)
Total net income statement Change 45,374 22,378 89,034 156,786 Write offs (74,358) (74,358)
At 31 December 45,374 22,378 14,676 82,428
EduCom
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
LIMITED
31 DECEMBER 2021
5. FINANCIAL RISK MANAGEMENT (CONT’D):
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Impairment - loan receivables (cont’d)
Loss allowance Loan receivables (cont’d)
2020 . Stage 1 Stage 2 Stage 3 12 Months Lifetime Lifetime ECL ECL ECL Total $’000 $’000 $’000 $’000
At 1 January 29,716 11,254 5,921 46,891 Movements with income statement impact: Transfer:
Transfer from Stage 1 to 2 ( 1,365) 1,365
Transfer from Stage 1 to 3 ( 3,260) 3,260 Transfer from Stage 2 to 3 ( 122) 122 Transfer from Stage 2 to 1 2,539 ( 2,539)
New financial assets originated 23,118 11,706 51,664 86,488 Changes in PDs/LGDs/EADs 11,049 597 2,204 13,850
Financial assets derecognized during the period ( 7,464) ( 554) ( 1,201) ( 9,219) Other movements . ( 86) ( 944) ( 1,030) Total net income statement change 54,333 21,621 61,026 136,980 Write offs (50,391) ( 50,391)
At 31 December 54,333 21,621 10,635 86,589
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Maximum exposure to credit risk
Loan receivables
The Credit Union measures ECL considering the risk of default over the maximum contractual period (including extensio n options) over which it is exposed to credit risk and not a longer period , even if contract extension or renewal is common practice.
The gross carrying amount of financial assets below also represents the Credit Union’s maximum exposure to credit risk o n these assets.
The following tables contain an analysis of the credit risk exposure of financial instruments for which an EC L allowance is recog nised. The gross carrying amount of financial assets below also represents the Credit Union's maximum exposure to credit risk on these assets.
2021 . Stage 1 Stage 2 Stage 3 12 Months Lifetime Lifetime ECL ECL ECL Total $’000 $’000 $’000 $’000
Performing
8,297,320 714,494 9,011,814
Non performing . . 407,455 407,455
Gross carrying Amount 8,297,320 714,494 407,455 9,419,269 Loan impairment losses ( 45,374) ( 22,379) ( 14,675) ( 82,428)
Carrying amount 8,251,946 692,115 392,780 9,336,841
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Maximum exposure to credit risk (cont’d)
Loans receivables (cont’d)
2020 .
Stage 1 Stage 2 Stage 3 12 Months Lifetime Lifetime ECL ECL ECL Total $’000 $’000 $’000 $’000
Performi ng 6,803,313 563,710 7,367,023
Non performing . . 321,333 321,333
Gross carrying amount 6,803,313 563,710 321,333 7,688,356
Loan impairment losses ( 54,333) ( 21,621) ( 10,635) ( 86,589)
Carrying amount 6,748,980 542,089 310,698 7,601,767
Loans exposure by product type
The following table summarizes the Credit Union’s credit exposure for loans at their carrying amounts.
2021 2020 $’000 $’000
Educational 9,175 21,579
Real estate 1,609,878 1,332,851
Motor vehicle 2,724,300 2,469,776
Personal 3,790,999 2,724,138
Other 1,284,917 1,140,012
9,419,269 7,688,356
Less: loan impairment losses ( 82,428) ( 86,589)
9,337,537 7,601,767
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Maximum exposure to credit risk (cont’d)
Loans are written off, in whole or in part, when the Credit Union has exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. Indicators that there are no reasonable expectation of recovery include ceasing enforceable activity, and where the Credit Union’s recovery method is foreclosing on collateral, and the value of the collateral is such that there is no reasonable expectation of recovery in full.
As at 31 December 2021, the fair value of collateral held in respect of non performing financial assets is $ 222,026,000 (2020 $204,687,000).
The Credit Union used external credit ratings as published by established rating agencies in its assessment of the probability of default on debt investments. The PDs and LGDs for government bonds have been developed by the rating agencies based on statistics on the default loss and rating transition experience of government bond issuers.
The loss allowance on deb t investments carried at amortised cost is measured using lifetime PDs. The credit ratings and associated PD s are reviewed and updated on an annual basis.
Based on available credit ratings for debt, debt securities were classified i n stage 2 as they were below investment grade as defined by reputable rating agencies.
The following table summarizes the Credit Union’s credit exposure for debt securities at their carrying amounts, as categorized by issuer:
2021 2020 $’000 $’000
At amortised cost (Note 11) 352,688 370,989.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(i) Credit risk (cont’d)
Maximum exposure to credit risk (cont’d)
Debt Investments (cont’d)
The loss allowance for investments at amortised cost as at 31 December is as follows:
2021 2020 $’000 $’000
2,846 2,686 (Decrease)/increase in impairment losses ( 276) 160
At the 1 January
2,570. 2,846.
Similarly, to debt investments, the Credit Union use d published external credit rating in assessing the probability of default on reverse repurchase agreement. The credit ratings and associated PDs are reviewed and updated on an annual basis.
Based on avail able credit ratings, reverse repurchase agreement were classified in stage 2 as they were below investment grade as defined by reputable rating agencies.
Other than exposure on Government of Jamaica securities, there is no significant concentration of cr edit risk related to reverse repurchase agreements. As a consequence, management’s expectation of default is low. Therefore, no impairment provision was recognised.
The following table summarizes the Credit Union’s credit exposure for reverse repurchase agreement at their carrying amounts:
2021 2020 $’000 $’000
At amortised cost (Note 10) 1,628,791 1,294,634.
Year ended 31 December 2021
DECEMBER 2021
(iv) Financial risk factors (cont’d)
Liquidity risk is the risk that the Credit Union is unable to meet its payment obligations associated with its financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors and fulfil commitments to lend.
The Credit Union’s approach to managing liquidity is to ensure as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damages to the Credit Union’s reputation.
The Credit Union’s liquidity management process, as carried out within the Credit Union, includes:
(i) Monitoring future cash flows and liquidity on a daily basis. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure funding if required;
(ii) Maintaining a portfolio of highly marketable and diverse assets that can easily be liquidated as protection against a ny unforeseen interruption to cash flow;
(iii) Optimising cash returns on investments;
(iv) Managing the concentration and profile o f debt maturities.
Monitoring and reporting take the form of an analysis of the cash balances and expected investment maturity profiles for the nex t day, week and month, respectively, as these are key periods for liquidity management. The starting point for those projections is an analysis of the contractual maturity of the financial liabilities and the expected collection date of the financial assets.
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk factors (cont’d)
(ii) Liquidity risk (cont’d)
Liquidity risk management process (cont’d)
The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest bearing liabilities as they mature, are important factors in assessing the liquidity of the Credit Union and its ex posure to changes in interest rates and exchange rates.
The tables below present the undiscounted cash flows payable (both intere st and principal cash flows) of the Credit Union’s financial liabilities based on contractual repayment obligations. The Cred it Union expects that many customers will not request repayment on the earliest date the Credit Union could be required to pay. The expected maturity dates of financial liabilities are based on estimates made by management and determined by retention history.
Year ended 31 December 2021
(iv) Financial risk (cont’d)
Assets available to meet all the liabilities and to cover outstanding loan commitments include cash, deposits , short term investments, reverse repurchase agreements and advanc es to customers.
The members’ voluntary shares are contractually on call except in cases where these balances are held as security for loans.
At 31 December 2021, the Credit Union’s commitment to extend credit to members, in respect of loans approved but not yet disbursed, amounted to $137,406,594 (2020: $74,194,000).
The Credit Union takes on exposure to market risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk mainly arises from changes in foreign currency exchange rates and interest rates. Market risk is monitored by the Finance Committee which carries out extensive rese arch and monitors the price movement of financial assets on the local and international markets. Market risk exposures are measured using sensitivity analysis.
Currency or foreign exchange risk is the risk that the fair value of future cas h flows of a financial instrument will fluctuate because of changes in foreign exchange rates
The Credit Union manages this risk by ensuring that exposure in foreign assets is kept to an acceptable level by monitoring currency positions.
The Credit Union’s exposure to foreign currency risk at statement of financial position date was as follows:
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
(iii) Market risk (cont’d)
Currency risk (cont’d) 2021 2020 $’000 $’000
Reverse repurchase agreement 68,193 60,730
Financial investments 9,527 12,906
Cash in hand and at bank 1,433 3,075
Net financial assets 79,153 76,711
The following tables indicate the United States Dollar currency to which the Credit Union had significant exposure on its monetary assets and its forecast cash flows. The changes in currency rates below represent management’s assessment of the possible change in foreign exchange rates.
Change in Effect on % Change in Effect on Currency Rate Net Surplus Currency Rate Net Surplus 2021 2021 2020 2020 % $’000 % $’000
Currency: USD +8 6,332 +6 4,603 USD 2 ( 1,583) 2 ( 1,534)
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
31 DECEMBER 2021
(iv) Financial risk (cont’d)
(iii) Market risk (cont’d)
Price risk
Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether t hose changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market. The Credit Union is exposed to equity securities price risk arising from its holding of investment measured at fair value through surplus or deficit .
The following table indicates the possible impact on the Credit Union’s surplus as a result of possible increase/decrease in the equity prices. There was no impact on other comprehensive income.
Effects on Surplus 2021 2020 $’000 $’000
Changes in equity prices: +5% (2020:5%)
3,635 2,583 5% (2020:10%) (3,635) (5,166)
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates, and arises mainly from investments, loans, saving deposits, loan scheme deposits, deferred shares, reverse repurchase agreements and external credit.
Floating rate instruments expose the Credit Union to cash flow interest risk, whereas fixed interest rate instruments expose the Credit Union to fair value interest risk.
The Credit Union’s interest rate risk policy requires it to manage i nterest rate risk by maintaining an appropriate mix of fixed and variable rate instruments as determined by the Finance Committee. The policy also requires it to manage the maturities of interest bearing financial assets and interest bearing financial liabilities. The Board sets limits on the level of mismatch of interest rate re pricing that may be undertaken, which is monitor ed daily by the Finance department.
With the exception of deferred shares held in C&WJ Co operative Credit Union, there were no other financial assets or financial liabilities with variable interest rate at 31 December 2020 and 2021
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
31 DECEMBER 2021
5. FINANCIAL RISK MANAGEMENT (CONT’D):
(iv) Financial risk (cont’d)
(iv) Financial risk (cont’d)
(iii) Market risk (cont’d)
(iii) Market risk (cont’d)
Interest rate risk (cont’d)
Interest rate risk (cont’d)
The following tables summarize t he Credit Union’s exposure to interest rate risk. They include the Credit Union’s financial instruments at carrying amounts, cate gorized by the earlier of contractual re pricing or maturity dates.
The following tables summarize t he Credit Union’s exposure to interest rate risk. They include the Credit Union’s financial instruments at carrying amounts, cate gorized by the earlier of contractual re pricing or maturity dates.
2021 Between Between Non Up to 3 3 and 12 1 and 5 Over 5 Interest Months Months Years Years Bearing Total $’000 $’000 $’000 $’000 $’000 $’000
2021 Between Between Non Up to 3 3 and 12 1 and 5 Over 5 Interest Months Months Years Years Bearing Total $’000 $’000 $’000 $’000 $’000 $’000
Financial Assets:
Financial Assets:
Liquid assets 249,660 249,660
Cash and bank balances 55,394 55,394
Liquid assets 249,660 249,660 Cash and bank balances 55,394 55,394
Reverse repurchase agreements 1,610,172 18,619 1,628,791 Financial investments 95,340 75,000 120,971 50,001 303,163 644,475
Loan receivables 79,429 164,997 3,568,146 5,549,936 9,362,508 2,034,601 258,616 3,689,117 5,599,937 358,557 11,940,828
Reverse repurchase agreements 1,610,172 18,619 1,628,791 Financial investments 95,340 75,000 120,971 50,001 303,163 644,475 Loan receivables 79,429 164,997 3,568,146 5,549,936 9,362,508 2,034,601 258,616 3,689,117 5,599,937 358,557 11,940,828
Financial Liabilities:
Financial Liabilities:
Payables 196,487 196,487
Savings deposits 4,412,544 480,635 403,374 38,482 5,335,035
Loan scheme deposits 334,114 90,099 9,899 434,112
Payables 196,487 196,487 Savings deposits 4,412,544 480,635 403,374 38,482 5,335,035 Loan scheme deposits 334,114 90,099 9,899 434,112
Voluntary shares 2,411,584 163,249 880,469 978,499 4,433,801
Voluntary shares 2,411,584 163,249 880,469 978,499 4,433,801
Deferred shares 733 243,173 243,906
External credits . . 68,967 35,977 . 104,944 7,158,975 733,983 1,605,882 1,052,958 196,487. 10,748,285
Deferred shares 733 - 243,173 - - 243,906 External credits . . 68,967 35,977 . 104,944 7,158,975 733,983 1,605,882 1,052,958 196,487. 10,748,285
Total interest rate
Sensitivity gap (5,124,374) ( 475,367) 2,083,235 4,546,979 162,070 1,192,543
Total interest rate Sensitivity gap (5,124,374) ( 475,367) 2,083,235 4,546,979 162,070 1,192,543
Cumulative Gap (5,124,374) (5,599,741) (3,516,506) 1,030,473 1,192,543 .
Cumulative Gap (5,124,374) (5,599,741) (3,516,506) 1,030,473 1,192,543 .
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
EduCom CO-OPERATIVE CREDIT UNION LIMITED
Year ended 31 December 2021
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2021
(iv) Financial risk (cont’d)
(iii) Market risk (cont’d)
Interest rate risk (cont’d)
2020 Between Between Non
Up to 3 3 and 12 1 and 5 Over 5 Interest Months Months Years Years Bearing Total $’000 $’000 $’000 $’000 $’000 $’000
Financial Assets:
Liquid assets 725,486 725,486
Cash and bank balances 77,258 77,258
Reverse repurchase agreements 1,223,279 71,355 1,294,634
Financial investments 65,773 255,186 40,000 253,373 614,332
Loan receivables 81,422 174,375 3,508,803 3,857,837 7,622,437 2,095,960 500,916 3,548,803 3,857,837 330,631 10,334,147
Financial Liabilities:
Payables 144,862 144,862
Savings deposits 3,746,061 409,878 365,839 30,198 - 4,551,976
Loan scheme deposits 359,444 86,717 9,427 455,588
Voluntary shares 2,317,225 163,186 801,998 752,349 4,034,758
Deferred shares 4,196 22,529 26,725 External credits 69,943 35,977 105,920 6,426,926 682,310 1,247,207 818,524 144,862 9,319,829
Total interest rate Sensitivity gap (4,330,966) ( 181,394) 2,301,596 3,039,313 185,769 1,014,318
Cumulative Gap (4,330,966) (4,512,360) (2,210,764) 828,549 1,014,318.
EduCom Co-operative
Union
Year ended 31 December 2021
DECEMBER 2021
The Credit Union’s objectives when managing institutional capital, which is a broader concept than the ‘equity’ on the face of the statement of financial position are:
Year
(i) To comply with the capital requirements set by the Jamaica Co operative Credit Union League and the Bank of Jamaica for the financial sector in which the Credit Union operates;
(ii) To safeguard the Credit Union’s ability to continue as a going concern so that it can continue to provide returns and benefits for members;
(iii) To maintain a 10% ratio of institutional capital to total assets;
(iv) To maintain a strong capital base to support the development of its business through the allocation of 20% (minimum) of net surplus to institutional capital ; and
(v) To increase the permanent share capital as the main focus of building institutional capital.
Capital adequacy and the use of regulatory capital are monitored by the Credit Union’s management, based on the guidelines in its Capital Asset Management Policy.
The table below summaries the composition of regulatory capital and the ratios of the Credit Union as at 31 December 2021 and 2020. The total regulatory capital is comprised of institutional capital and deferred shares. During the year, the Credit Union complied with all externally imposed capital requirements to which they are subject.
Actual Required Actual Required 2021 2021 2020 2020 $’000 $’000 $’000 $’000
Total regulatory capital
Risk weighted assets: Total risk-weighted assets
Risk weighted capital adequacy ratio
1,162,564 804,308
8,043,082
14%
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(vi) Capital management (cont’d)
In determining the Credit Union’s capital base (institution capital), the institutional capital of the acquired credit unions at their dates of merger were included. UWI Mona & Community Co operative Credit Union Limited (UWI) and A.A.M.M Co operative Credit Union Limited (A.A.M .M.) merged to form EduCom Co operative Credit Union Limited on 1 April 2015. St. Catherine Credit U nion Limited (SCCU) merged with EduCom Co operative Credit Union Limited as at 1 January 2017. As at the date of each merger, the institutional capital of t he acquired entities included the following reserves:
UWI SCCU $ $
Statutory reserve 163,881,381 154,586,335
Retained earnings/(deficit) 22,312,866 (140,711,327)
General reserve 24,390,297 . 210,584,544 13,875,008
6. NON INTEREST INCOME:
2021 2020 $’000 $’000
Dividends from equity securities 4,753 930
Unrealised gain on quoted equities 4,073 2,164
Rental income 1,497 2,154 Fees: Maintenance 48,817
Processing fee 106,424 51,706
Other fees 49,265 43,419 Miscellaneous income 48,191 56,676 263,020 157,049
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
2021 2020 $’000 $’000
Utilities 19,270 17,301
Depreciation 23,848 24,493
Amortisation of right of use asset 6,850 6,850 Audit and supervision 6,000 5,500
Repairs and maintenance 7,540 5,893
Telecommunication 23,597 21,524
Deferred share expense 8,598
Printing, stationery and supplies 12,800 9,654 Insurance premium 8,752 8,504
Professional and consulting 22,870 26,047
Subscription 260 110
Administrative expenses 92,039 67,480
Security 21,389 19,434
Bad debt 2,874
Members’ security 28,639 26,735
Marketing and promotion 25,072 21,001
Representation and affiliation 8,868 10,618
League dues 21,296 19,215
Stabilization dues 6,440 8,055
Staff costs (Note 8) 575,541 494,927
Property, plant and equipment written off 4,850
922,543 798,191
2021 2020 $’000 $’000
Employee salaries and allowances 426,350 371,085
Other staff benefits 147,234 121,533
Pension (Note 17) 1,957 2,309
575,541 494,927
The number of persons employed at December 31:
Full time 127 124
153
EduCom Co-operative Credit Union Limited
EduCom CO OPERATIVE CREDIT UNION LIMITED
Year ended 31 December 2021
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2021
2021 2020 $’000 $’000
Cumax Money Market Fund 249,660 725,486
The Credit Union enters into reverse repurchase agreements collaterised by Government of Jamaica securities as follows:
2021 2020 $’000 $’000
Principal 1,620,755 1,290,151 Interest receivable 8,036 4,483 1,628,791 1,294,634
These agreements may result in a credit exposure in the event that the counter party to the transactions is unable to fulfill its collateral obligations.
The Credit Union did not recognise impairment losses o n the reserve repurchase agreements because the amount was immaterial.
The reverse repurchase agreements are expected to mature within an average of 91 days (2020: 180 days) after the end of the financial year.
Amortised costs:
2021 2020 $’000 $’000
Victoria Mutual Building Society 109,979 175,463
Special mortgage 20 20 C & WJ Co operative Credit Union 10,028 10,030
Jamaica Police Co operative Credit Union 15,046
C.O.K Sodality Co operative Credit Union Limited 12,058
First Heritage Co operative Credit Union 10,030 24,119 Corporate bonds 157,896
UWI Commercial paper 164,203 Certificate of deposit 40,201 . 355,258 373,835
Less impairment losses ( 2,570) ( 2,846)
Total carried forward (page 62) 352,688 370,989(page 138)
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
EduCom CO-OPERATIVE CREDIT UNION LIMITED
Year ended 31 December 2021
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2021
2021 2020 $’000 $’000
Total brought forward (page 61) 352,688 370,989
(page 137)
Fair value through profit or loss:
Quoted equities 72,703 51,659
Jamaica Co operative Credit Union League (JCCUL) 47,793 46,813 Jamaica Money Market Brokers 12,906 Scotia Investments Limited 28,067 27,583 Jamaica Money Market Brokers Preference Shares 73,001 23,049 221,564 162,010
Fair value through other comprehensive income:
Unquoted equities: Jamaica Co operative Credit Union League (JCCUL) 14,161 14,161 Quality Network (QNET) 11,275 11,383 C.O.K Sodality Co operative Credit Union Limited 11,002 Cumax Wealth Managem ent Limited 13,787 13,787 MoneyMasters Limited 10,000 10,000 Caribbean Mezzanine Fund 20,000 20,000 Jamaica Co operative Insurance Agency Limited 1,000 1,000 70,223 81,333
644,475 614,332
2021 2020 $’000 $’000
Maturity:
Due within one year 170,340 320,959
Due after one year 170,972 40,000
No set maturity 303,163 253,373
644,475 614,332
EduCom
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
(a)
The Victoria Mutual Building Society deposits include Certificate of Deposits which are held to secure joint mortgage facilities which are extended to members of the Credit Union.
(b) Investments with Cumax Wealth Management Limited represent deposits and mortgage fund instruments, used to secure joint mortgage facilities which are extended to members of the Credit Union.
(c) The rules of the League stipulate that a minimum of 1,000,000 shares, each with a par value of $1.00, must be held with the League for the Credit Union to retain membership status. The equivalent of amounts held in the statutory reserve (Note 24 (a) must either be used to purchase League shares or placed in League term deposits (Note 9).
(d) The QNET amount represents investment by the Credi t Union in the company which will provide information services to participating Credit Unions. In total, the particip ating Credit Unions will account for 80% of the cost of the project and the remaining 20% will be funded by the League.
(e) FHCCU Investment represents deferred shares held by the Credit Union in First Heritage Co operative Credit Union. The shares are held for five years o n which the Credit Union receives a fixed income.
(f) The Commercial Paper represents amount to be used as general working capital support by the University of West Indies, Jamaica. The commercial p aper agreement which accrued interest at 7.99% was encashed a nd funds reinvested.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
Movement in loans during the year is as follows
2021 2020 $’000 $’000
Balance at beginning of y ear 7,688,356 7,763,224
Add: disbursements 15,139,548 10,665,147
22,827,904 18,428,371
Less: repayments and transfers (13,408,635) (10,740,015)
9,419,269 7,688,356
Less: Provision for loan impairment ( 82,428) ( 86,589)
9,336,841 7,601,767
Accrued interest 25,667 20,670 9,362,508 7,622,437
Maturity:
Due within 1 year 244,426 255,797 Due after 1 year 9,118,082 7,366,640 9,362,508 7,622,437
The aggregate amount of non performing loans on which interest was not being accrued amounted to $279,565,401 (2020: $172,213,561). Uncollected interest not accrued in the financial statements on these loans was estimated at $18,821,706 (2020: $12,658,141).
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
31 DECEMBER 2021
Provision for loan impairment
The movement in the provision for loan impairment determined under the requirements of IFRS is as follows:
2021 2020 $’000 $’000
Balance at beginning of year 86,589 46,891
Increase charged to revenue during the year 70,197 90,089 156,786 136,980
Bad debt written off ( 74,358) ( 50,391)
Impairment losses at year end 82,428 86,589
The provision for impairment losses under the JCCUL regulatory requirement is as follows:
As at 31 December 2021:
Number of Total Months in accounts Loan Savings held Loan Loss Provision Arrears in arrears Balances against loans Exposure Provision Rate $’000 $’000 $’000 $’000 %
2 3 months 102 106,673 7,464 99,209 10,667 10
3 6 months 204 180,947 19,356 161,591 54,284 30
7 12 months 135 70,391 7,657 62,734 42,235 60
12 months and over 33 28,227 2,289 25,938 28,227 100
Totals 386,238 36,766 349,472 135,413
Year ended 31 December 2021
31 DECEMBER 2021
Provision for loan impairment (cont’d)
As at 31 December 2020:
Number of Total
Months in accounts Loan Savings held Loan Loss Provision Arrears in arrears Balance against loans Exposure Provision Rate $’000 $’000 $’000 $’000 %
2 3 months 51 43,407 4,330 39,077 4,341 10
3 6 months 92 63,132 5,959 57,173 18,940 30
7 12 months 141 80,685 7,489 73,196 48,411 60
12 months and over 40 28,397 2,377 26,020 28,396 100
Totals 324 215,621 20,155 195,466 100,088
The provision for loan impairment under the JCCUL regulatory requirement for 2021 is in excess of the provision required under IFRS provisioning rules. The excess of the League’s provision over the IFRS provision is dealt with through a tra nsfer from undistributed surplus to a loan loss reserve as follows
2021 2020 $’000 $’000
IFRS provision as per above 82,428 86,589 Loan loss reserve (Note 25 (f)) 52,985 13,499 135,413 100,088
Cash
2021 2020 $’000 $’000
Cash at bank and in hand 55,394 77,258
Cash and cash equivalent in the cash flow comprise:
2021 2020 $’000 $’000
Cash and bank balances 55,394 77,258 Liquid assets (Note 9) 249,660 725,486 305,054 802,744
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
14. OTHER ASSETS:
2021 2020 $’000 $’000
Other receivables 4,822 2,788
Payroll receivables 39,678 39,365
Foreclosed properties 31,808 31,808
Prepaid expenses 10,490 6,810 Deposit on assets 41,286 4,178 128,084 84,949
Foreclosed properties represent the fair value less costs to sell properties previously held as collateral on which the Credit Union has foreclosed. These assets are to be disposed of within three years. Management has accepted o ffers for sale and is currently in the process of finalizing the agreements.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
The Credit Union’s land and building were revalued on 6 April and 4 May 2020, by independent qualified valuers. The valuation surplus was credited to other comprehensive i ncome and is shown in non institutional capital.
The fair value measurement of the building has been categoriz ed as level 3 for fair value, based on inputs to the valuation technique relating to expected market rental growth, yields and rental rates. A reconciliation to the closing fair value balance is as follows
2021 2020 $’000 $’000
Historical cost 135,542 135,542
Gains included in ‘other comprehensive income’
Gain on property revaluation 210,446 210,446
Closing balance (level 3 fair values) 345,988 345,988
16 LEASES:
The Credit Union recognized the right of use asset for its leased premise as follows:
2021 2020 $’000 $’000
At 1 January 46,807 53,657 Amortisation ( 6,850) ( 6,850)
At 31 December 39,957 46,807.
The following table presents the lease obligations for the Credit Union:
2021 2020 $’000 $’000
At 1 January 51,239 55,078
Interest expense 3,936 4,270 Lease payments ( 8,542) ( 8,109)
At 31 December 46,633 51,239
Year ended 31 December 2021
31 DECEMBER 2021
The following table presents the lease liabilities obligation for the Credit Union (cont’d):
2021 2020 $’000 $’000
Current portion 5,467 3,586 Non current portion 41,166 47,653
At 31 December 46,633 51,239
Amount recognised in the statement of comprehensive income:
2021 2020 $’000 $’000
Amortisation 6,850 6,850 Interest expense 3,936 4,270
Short term lease expense 516 516 11,302 11,636
Amount recognised in the statement of cashflows:
2021 2020 $’000 $’000
Total cash outflows for leases excluding interest 4,606 3,839
The Credit Union leases various office spaces for fixed per iods of up to five (5) years with the option to renew and obtain lease term extensions. When measuring the lease obligation s, the Credit Union discounted the remaining lease payments using its incremental borrowing rate at the date of initial application, which is 8% per annum.
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
31 DECEMBER 2021
The Credit Union has both a defined contribution pension scheme and a define d benefit pension scheme.
The Credit Union is a participatory employer in a money purchase pension scheme administered by Sagicor Life Jamaica Limited. The scheme is open to all employees who satisfy eligibility requirements. Contributions are determined by reference to gross salary with minimum contributions of 5% for employees with an option for additional amounts up to 5% and a contribution of 10% by the Credit Union for each employee contributing to the scheme. Employer’s contributions to the pension scheme are expensed annually. Contributions for the year amounted to $25,849,347 (2020: $25,013,204).
The most recent actuarial valuation, which was conducted as at 30 June 2019 disclosed a surplus of $22,461,000.
The Credit Union participates in a joint contributory pension scheme, which is restricted to all former permanent employees of AAMM Co operative Credit Union and operated by the Jamaica Co operative Credit Union League Limited. The plan pr ovides benefits to members based on average earnings for their final three years of service, with each employee contributing 5 10% of pensionable salaries and the Credit Union contributing currently 8%
The plan is valued by independent actuaries annually for financial reporting purposes using the projected unit credit method. Additionally, the plan is valued by independent actuaries annually to determine the adequacy of funding. The latest such valuation was at 31 December 2021 revealed that the scheme was adequately funded.
(a) The defined benefit asset recognised in the statement of financial position was determined as follows:
2021 2020 $’000 $’000
Fair value of plan assets 189,165 172,696
Present value of obligations (153,617) (135,520)
Asset recognised in the statement of financial position 35,548 37,176
.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
.
(b) Movements in the net asset recognised in the statement of financial position:
2021 2020 $’000 $’000
Net assets at beginning of the year 37,176 37,754 Contributions 4,705 4,958
Expense recognised in surplus ( 1,957) ( 2,309)
Re measurement recognised in other comprehensive income ( 4,376) ( 3,227)
Net assets at the end of the year 35,548 37,176
(c) The movement in the fair value of pension plan assets during the year was as follows:
2021 2020 $’000 $’000
At beginning of year 172,696 157,118
Interest income on plan assets 15,917 12,030
Contributions: Employer 4,705 4,958 Employee 3,987 4,143
Administrative expenses ( 901) ( 1,097)
Benefits paid ( 363) ( 2,542)
Actuarial losses on plan assets ( 6,876) ( 1,914)
At the end of the year 189,165 172,696
(d) The movement in the present value of the define d benefit obligation during the year was as follows:
2021 2020 $’000 $’000
At the beginning of the year 135,520 119,364
Current service cost 4,793 4,230 Employees’ contributions 3,987 4,143
Interest cost on plan obligations 12,180 9,012
Benefits paid ( 363) ( 2,542)
Actuarial (losses)/ gains on obligations ( 2,500) 1,313
At end of the year 153,617 135,520
Expected contributions to the plan fo r the year ended 31 December 202 2 is $4.71 million.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
(e) The amounts recognised in surplus for the year are as follows:
2021 2020 $’000 $’000
Current service cost 4,793 4,230
Interest cost on obligations 12,180 9,012
Income on plan assets (15,917) (12,030)
Administrative expenses 901 1,097
Total included in staff costs (Note 8) 1,957 2,309
(f) The amounts recognized in other comprehensive for the year are as follows:
2021 2020 $’000 $’000
Actuarial loss on net plan assets (4,376) (3,227)
(g) The pension plan assets are allocated based on the Credit Union’s obligation as a proportion of the total obligation of the plan. T he distribution of plan assets was as follows:
2021 2020 % %
Quoted equities 23 20
Real estate investment trust and property 24 25 Government of Jamaica securities 26 31
Repurchase agreements 9 2 US$ Bonds and certificates of deposit 14 19 Other 4 3 100 100
Co-operative Credit Union
Year ended 31 December 2021
31 DECEMBER 2021
(h) The five year trend for the fair value of plan assets, the defined benefit obligation, the surplus in the plan, and experience adju stments for plan assets and liabilities are as follows:
2021 2020 2019 2018 2017 $’000 $’000 $’000 $’000 $’000
Fair value of plan assets 189,165 172,696 157,118 138,594 122,258
Defined benefits obligation (153,617) (135,520) (119,364) (119,206) ( 90,649)
Surplus 35,548 37,176 37,754 19,388 31,609
Experience adjustments:
Fair value of plan assets ( 6,876) ( 1,914) 4,149 ( 1,641) 2,133
Defined benefit obligation ( 7,560) 2,945 ( 5,902) 1,421 ( 717)
(i) The principal actuarial assumptions used were as follows:
2021 2020 % %
Discount rate 8.00 9.00
Future salary increases 5.50 6.50
Future pension increases 3.75 4.50
Long term inflation rate 5.00 6.00
Expected average remaining working lives of em ployees (years) 41.00 39.00
(j) Impact on Defined Benefit Obligation (DBO) of 1% change in key economic assumptions
The change in the Defined Benefit Obligation (DBO) that would arise from a one present (1%) change in each of the key economic assumptions is shown below. In determining the impact of each assumption, the others are held constant.
Measurement 2021 2020 Assumptions +1% -1% +1% -1% $’000 $’000 $’000 $’000
Discount rate (28,832) 38,713 (25,671) 34,499
Future salary increase 17,646 (14,985) 15,941 (13,501)
Future pension increases 17,188 (14,378) 15,217 (12,705)
EduCom Co-operative Credit Union
Year ended 31 December 2021
31 DECEMBER 2021
(k) Liability duration
Liability duration (years ) 2021 2020
Category of participant:
Active members 24.3 24.8
Deferred pensioners 13.2 14.0
Retirees 11.2 11.3
All participants 22.6 23.0
There was no movement in the liability duration of the active members during the year under review. However, reduction can result from changes in the actuarial assumptions, to include rates of withdrawal from service on groun ds other than retirement or death.
(l) Impact on defined benefit obligation of a one (1) year increase in life expectancy:
The effect on the defined benefit obligation of an increase of one year in the life expectancy is $5.26 million (2020: 4.66 millio n).
18. SAVING DEPOSITS:
Ordinary deposits
Balance at 1 January
2021 2020 $’000 $’000
4,499,527 3,882,940
Deposits and transfers 30,800,982 27,525,453
35,300,509 31,408,393
Less withdrawals and transfers (30,909,394) (27,775,117)
4,391,115 3,633,276
Fixed deposits 882,417 866,251.
5,273,532 4,499,527
Interest accrued 61,503 52,449
Maturity:
Due within 1 year
5,335,035 4,551,976
4,893,179 4,155,939
Due after 1 year 441,856 396,037
5,335,035 4,551,976
Year ended 31 December 2021
31 DECEMBER 2021
Regular deposits:
2021 2020 $’000 $’000
Balance at 1 January 4,034,758 3,719,463
Share deposited 3,305,719 3,199,034.
7,340,477 6,918,497
Share withdrawn (2,906,676) (2,883,739)
4,433,801 4,034,758
Maturity:
Due within 1 year 2,574,833 2,480,411
Due after 1 year 1,858,968 1,554,347
4,433,801 4,034,758
The inception of the scheme loan management fund was developed from various unionized groups on the University of the West Ind ies campus to provide access to more affordable financial services for their constituents. The groups selected UWI Mona & Community Credit Union to be the financial entity through which access to financial services would be disseminated to its members. This role was subsequentl y passed to EduCom Co operative Credit Union in April 2015 due to the merger between UWI Mona & C ommunity Credit Union and AAMM Co operative Credit Union.
Additionally, in 2006 the Government of Jamaica provided funds on behalf of t he University of the West Indies (UWI) and University of Technology, Jamaica (Utech ) to be used to provide access to affordable loans to students for the financing of their tertiary education.
EduCom manages the fund through the assessment, evaluation of loan applications from qualified members and students and the disbursement of the loans. The Credit Union is also responsible for the collection of loan payments and the investment of un loaned funds. All expenditure incurred in the provision of the financ ial services are charged to the fund and interest earned on un loaned funds are credited. EduCom earns a management fee for the provision of the various financial services provided in the management of the fund.
EduCom Co-operative Credit Union Limited
Year ended 31 December 2021
31 DECEMBER 2021
Utech Revolving Loan UWI Others Total $’000 $’000 $’000 $’000
Balance at 1 January 2020 102,498 321,295 31,795 455,588
Add: New funds 5,941 5,941
Interest on fixed deposit 3,980 856 4,836
Receipts interest from loans 1,393 6,384 7,777 Interest paid on unloaded fund 929 1,146 2,075 2,322 11,510 6,797 20,629
Less: Management fees ( 4,577) ( 5,382) ( 9,959) Insurance ( 218) ( 520) ( 738) Withdrawal ( 30,000) ( 4) ( 30,004) Honorarium ( 1,404) . ( 1,404) ( 34,795) ( 7,310) . ( 42,105)
Balance at 31 December 2021 70,025 325,495 38,592 434,112
Utech Revolving Loan UWI Others Total $’000 $’000 $’000 $’000
Balance at 1 January 2019 105,116 318,496 29,094 452,706
Add: Interest on fixed deposit 2,788 2,701 5,489
Receipts interest from loans 1,870 6,333 8,203 Interest paid on unloaded fund 596 1,109 . 1,705 2,466 10,230 2,701 15,397
Less: Management fees ( 4,790) ( 5,492) ( 10,282) Insurance ( 294) ( 496) ( 790) Honorarium . ( 1,443) . ( 1,443) ( 5,084) ( 7,431) . ( 12,515)
Balance at 31 December 2020 102,498 321,295 31,795 455,588
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
2021 2020 $’000 $’000
Balance at 1 January 26,725 39,692
Withdrawal ( 26,725) (12,967)
Interest accrued 733 Issue 243,173 243,906 26,725
Maturity:
Due within 1 year 733 26,725 Due after 1 year 243,173 243,906 26,725
During the period, the Credit Union allotted new shares in order to facilitate improvement in its technology platform and to support working capital requirements. These amounts were issued at a par value of $1.00 in September 2021 at a minimum subscription level of $25,000. They are not withdrawable for a period of five (5 ) years up to November 2026 and attracts interest at a fixed rate of 6.50% per annum, payable qu arterly. Existing deferred shares which matured in November 2021 were paid and interest settled in full. Based on the proposed Bank of Jamaica Credit Union Regulations, deferred shares are treated as institutional capital, and as such are included in the calculation of the capital to asset ratio. They are, however, classified in these financial statements as liabilities in accordance with the requirements of IFRS. Interest on deferred shares to date were paid during the period and interest accrued at year end.
2021 2020 $’000 $’000
Jamaica Co operative Credit Union League 7% 34,575 35,945
NHT Micro Financing Facility 4.5% 70,369 69,975 104,944 105,920
Maturity: Due after 1 year 104,944 105,920
The Jamaica Co operative Credit Union League loan is secured by First legal mortgage stamped to cover $ 76.5 million over commercial property located at 10 Oxford Road, Kingston 5, registered at volume 956 Folio 140 in the name of EduCom Cooperative Credit Unio n limited and charge over loan receivables.
The NHT Micro Financing Facility allows members of the Credit Union to apply through the Credit Union to access NH T Housing Financing. The facility is secured by the members’ loan receivable balances.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
31 DECEMBER 2021
23. PAYABLES:
2021 2020 $’000 $’000
Accounts payables 14,865 7,551
Stale dated cheques 7,232 6,173
Audit & accounting fees 6,000 5,091
Accrued expenses 10,007 8,565
Insurance payable 92,688 69,930
Deceased members’ account 29,631 25,156
Members’ payable 21,021 15,748
Other payables 15,043 6,648
Total financial liabilities measured at amortised cost 196,487 144,862
Withholding tax 9,727 8,645
Accrued benefits and deductions 27,085 12,798
Others 5,266 4,207 238,565 170,512
2021 2020 $’000 $’000
Statutory and legal reserves
Balance brought forward 339,136 318,169
Additional transfer for year ended 31 December 2020 14,728
Current year transfer 57,316 19,155 Entrance fee 162 1,812
411,342 339,136
Special reserve 253,143 253,143
664,485 592,279
Members’ permanent shares 268,449 255,483
932,934 847,762
Business combination reserve 288,077 288,077
1,221,011 1,135,839
As required by the Co operative Societies Act and the rules of the EduCom Co operative Credit Union Limited, a minimum of twenty five percent (25%) of the annual surplus and amounts collected for entrance fees are transferred to this reserve.
EduCom
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
24. INSTITUTIONAL CAPITAL (CONT’D):
(b) Special reserves
The special reserves represent amounts appropriated by members, to strengthen the capital based of the Credit Union and is not available for distribution.
(c) Members’ permanent shares
Permanent shares are shares issued at no par value, paid up in cash and form a permanent part of the capital of the Credit Union. Permanent shares may be redeemable subject to the sale, transfer, or repurchase of such shares per ‘Rule 16’ of the Credit Union’s Rule Book.
(d) Business combination reserve
This represents the excess of the net assets acquire d and the deemed value for shares issued to members in the business combinations.
25. NON INSTITUTIONAL CAPITAL:
2021 2020 $’000 $’000
Undistributed surplus 156,266 80,387
Retirement benefit reserve 35,548 37,176 General reserves 13,144 18,580 Revaluation reserve 210,446 210,446
Permanent Shares reserve 10,974 3,201 Loan loss reserve 52,985 13,499
479,363 363,289
(a) Undistributed surplus:
This represents surplus not distributed at the statement of financial position date.
(b) Retirement benefit reserve:
This represents actuarial gain on plan a ssets as per annual revaluation. The amount on this reserve is capped and was created to match the value of the retirement benefit asset of the Credit Union.
(c) General reserves:
These represent appropriations for scholarships, donations and for other miscellaneous purposes.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
EduCom CO-OPERATIVE
Year ended 31 December 2021
LIMITED
(d) Revaluation reserve:
This represents unrealised gain on the revaluation of the Credit Union’s freehold land and buildings.
(e) Permanent share reserve:
This represents amount set asi de from surplus to be ascribed as permanent shares for members. These permanent shares were issued to members during the year. The balance above represents shares bought back by the Credit Union from resigning and deceased members.
(f) Loan loss reserve:
This is the excess of the loan loss provision under the League’s regulatory requirements over the IFRS 9 requirements
(a) The following payments/ transfers were made from reserve during th e year:
2021 2020 $’000 $’000
Payments:
Community Outreach Program
2,283 126 St. Vincent and the Grenadines Fund 3,000 Scholarship fund 5,143 10,426 126
(b) The following amounts were transferred from accumulated surplus to other reserves as per approval at special general meeting:
2021 2020 $’000 $’000
1,000 4,900 Corona Virus Vaccine Initiative 990 St. Vincent and the Grenadines Fund 3,000 Share Transfer fund 8,979 Scholarship fund 8,000 13,969 12,900
Community Outreach Program
Additional transfer to statutory reserve for the year ended 31 December 2020 14,728 28,697 12,900
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
During the year, the Credit Union had fidelity insurance coverage with British Caribbean Insurance Company Limited. The total premium for the year was $2,694,000 (2020: $3,633,000).
During the year, the Credit Union had life savings and loan protection coverage with CMFG Life Insurance Company. Total premium for the year was $25,117,000 (2020: $23,788,000).
During the year, the Credit Union had insurance coverage with CMFG Life Insurance Company. The total premium for the year was $ 3,522,000 (2020: $2,948,000). These policies remained in force throughout the year with all premiums being paid promptly .
The Credit Union entered into the following transactions with related parties: 2021 2020 $’000 $’000
(a) Loan balances (including interest)
Board and committee members
211,298 171,629
Members of staff 309,699 256,427
(b) Deposits (including interest)
Board and committee members 90,887 81,717
Members of staff 121,703 98,899
As in the prior years, all loans owing by directors, committee members and staff were being repaid in accordance with their loan agreements.
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
EduCom CO OPERATIVE CREDIT UNION LIMITED
Year ended 31 December 2021
31 DECEMBER 2021
28. RELATED PARTY TRANSACTIONS (CONT’D):
(c) Compensation of key management personnel
The remuneration of key members of management during the year was as follows
2021 2020 $’000 $’000
Salaries and other short term benefits 85,348 79,839 Post employment benefits 6,258 6,269 91,606 86,108
Their remuneration is determined by the Board of Directors, having regard to their performance and prevailing macro economic factors. The remuneration of key members of management is subject to review annually.
Post employment benefits represent employee’s contribution to a money purchase pension scheme.
29. COMPARISON OF LEDGER BALANCES:
The detailed records of balances relating to loans to members, deposits, deferred shares, voluntary and permanent share from their respective control accounts as follows:
Loans to Saving Deferred Voluntary Permanent Members Deposits Shares Share Share $’000 $’000 $’000 $’000 $’000
Balance as per general ledger 9,444,936 5,335,035 243,901 4,433,801 268,449
Balance as per members’ Ledger 9,444,936 5,335,035 243,901 4,433,801 268,449.
Difference
EduCom Co-operative Credit Union Limited NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2021
a) The Credit Union has financial commitment with Sharetec for the implementation of a new banking software application system in the amount of USD$512,640.00. Th e Credit Union has a deposit of US$256,320. The roll out and installation of the software is scheduled for August 2023 at which the final payment will become due .
b) During the period, the Credit Union signed a secured line agreement with the National Commercial Bank of Jamaica Limited for a sum of $150 million at an interest rate of 6.25% per annum. To date, the Credit Union has not exercised the option to draw down on the facility.
As in the prior year, the Credit Union c ontinues to be exposed to elevated level of credit, liquidity, foreign currency and price risk with the most significant exposure relating to credit risk.
The nature and extent of the impact on the Credit Union’s financial position, results and cash flows continues to evolve given the rapid pace of change and the elevated level of uncertainty.
However, the Credit Union continues to monitor and manage the specific identified risks by employing several measures such as robust monitoring of loans receivabl e portfolio, managing investment portfolio position and assessing the adequacy of financial resources and access to line of credit for contingent needs. These responses are monitored through its Crisis Management Committee.
Adrienne Abbigail Villous
Akeem Alfredo Bennett
Alicia Allen
Allison Goulbourne
Amelia Sebrena Cooke-Edwards
Andrew Morais Pearson
Andrew Scott
Angella Campbell
Angella Green
Antionett Lois Pessoa
Arnold Henry Pinnock
Audrey Sharon Mcfarlane-Gowe
Aviann Jarrett
Bernice Webster
Berrisford Anthony Gordon
Beverley Wallace
Boysie Egerton Anderson
Brennetta Gordon Carlos Emanuel Gordon
Carlyle Stredwick Linton
Carmen Deborah Jackson
Casford Campbell
Casilda Elizabeth Bernard-Rowe
Cecil Parker
Cecil Ugent Henry
Cecil Uriah Stanley
Charles Edward Crawford
Chester Nelson
Christina Ansonette Gayle
Clive Reid
Constantine Scott Cynthia Agatha Facey
Dawn Thompson
Diandra Rose Thompson
Donovan C. Thompson
Doreen Cooper
Dorothy Willis
Dothlyn Joyce Scott
Ebony Virilyn Eddis Dixon-Brown Elaine Walcott Eloise Eunice Henry Erica Marshall Eunice Solomon Feron Green-Marks Florence Eliza Blake
Francis Alloiu Ximines
Franklyn Smith
George Dave Foster
Georgia Elizabeth White-Facey Glenroy Thompson Hazel R. Hutchinson
Helena Wint
Horace Neale
Howard Livingston Henry Hurbert Richards
Hurdley Hugh Arthur Johnson Ingrid Rose James Doran
Jasmin Marie Cousins
Jeanette B Kellimouth
Jeffery Paul Dixon
Joeseph Forrester
Joscelyn Burke Joycyln Adassa Raymond
Karlene Joy Chaplin
Kayan Thompson
Kenneth V Williams
Keturah Patricia Williams
Leonard Bird
Leonard Russell
Leroy Barton
Leslie Alphanso Knight
Linnette James
Linval Crossman
Lorna Bettyann Blackwood
Lorretta Bryan
Marcia Atkins-Mckenzie
Marciana Monic Ambersley
Marjorie Margr Cheese
Marjorie Shaw
Marlene Vassell
Meltonian Blake
Melva Odessa King
Melvin Johnson
Merilda Jackson
Merlene Wallace-Sinclair
Myrtle Adassa Stewart
Myrtle Ayre
Nichara Johnson-Simpson
Norval Edwards King
Olive Veronica Bennett
Oneil Anthony Mcfarlane
Orando Anthony Perry
Orlene Gooden-Wellington
Osbert Winston Brown
Otis Orlando Barrett
Owen Burnett
Owen St.Clair Morgan
Ozetta Christian
Pamella Lousie Smalling
Patricia Mcfarlane
Patricia Y Blackwood
Paul Bair
Pauline Mcfarlane
Peat Lester Brown
Peter Lloyd Williams
Ranford Kellerman
Reginald Nathan Newell
Remona Williams-Harrison
Richard Anthony Johnson
Richard Anthony Williams
Ronald Joseph Walker Roy Gabbidon
Rupert Rose
Sabrina Wedderburn
Selvin Augustu Morris
Selvin Constantine Hall
Sherie-Ann Sherifa Barrett
Shirley Adassa Small Simonique Sabrina Stone Solomon Scott
Steven Rae Smalling Tackeisha Terry-Ann Mcdonald
Tameka Hall-Campbell Terriyan Elaine Walker-Allen Traval Lee
Trecia Trudy Wright Trevor Alexander Ramikie
Troy Brown
Tulia Williams-Davis
Udor Dora Pearson
Verona Evans Vincent Adolph Cole
Vincent E. Keith
Vincent G. Kelly
Windell May Spence Yvonne Warburton
Zaudita A Walters