2014 Affinity Annual Report

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

A BETTER BANKING EXPERIENCE Annual Report and Summary Consolidated Financial Statements |

DECEMBER 31, 2014

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SUPPORTING GREEN BUSINESSES

James Wood, Owner Wood Bros. Apiaries Inc.

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

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It’s great to work in an industry that has a positive impact on the environment while creating jobs, local foods and generating a livelihood for our families – what could be more rewarding?

– James Wood For Affinity, a healthy environment is all about investing in businesses that are producing green products and services or actively improving their environmental performance.

Affinity members James and Anthony Wood own and operate Wood Bros. Apiaries Inc, a commercial bee and honey production business in Northeast Saskatchewan near Melfort. They develop breeding lines suited to the Saskatchewan environment and their bee colonies have grown annually. When they

needed funding to expand their business, they came to Affinity for help – and we said yes!

Now they have 1,500 hives that produce about 500,000 pounds of honey per year and related products – now that’s a thriving local business.

Affinity continues to partner with James and Anthony and other like-minded organizations to protect the environment, including the Saskatchewan Beekeepers Association and the Honey Producers Co-operative. We focus on building a better world for everyone, every day.

CONTENTS 2

Values You Can Bank On

23 Community Investment

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Banking Local

29 Management Discussion and Analysis

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Strengthening Our Local Economy

6

Local Governance by Member-Owners

34 Management’s Responsibility for Financial Reporting

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Board President’s Report

10 Board of Directors 11 A Tribute to Myrna Bentley 11 Elwood Harvey Co-operative Leadership Scholarship 12 District Council Delegates 14 Senior Leadership 15 Bringing Financial Services to Your Door 16 Chief Executive Officer Report 20 Values You Can Bank On

Cover Photo: Curry Cai, Affinity Accounting Analyst

35 Independent Auditor’s Report 36 Summary Consolidated Statement of Financial Position 37 Summary Consolidated Statement of Comprehensive Income 38 Summary Consolidated Statement of Changes in Equity 39 Summary Consolidated Statement of Cash Flows 40 Note to the Summary Consolidated Financial Statements

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Annual Report and Summary Consolidated Financial Statements

VALUES YOU CAN BANK ON Our purpose as an organization and our promise to members, employees and communities, is built on co-operative values and principles. These values and principles guide us in all we do and set us apart from any other financial institution. We had our members in mind when we built our vision, mission and values. Where we’re headed and how we’ll get there are closely aligned with what you’ve told us you want to see in your financial institution.

Our Vision Build a better world for everyone, every day.

Our Mission

DECEMBER 31, 2014

$5.3b

in assets under management

100%

of member deposits are fully guaranteed through the Credit Union Deposit Guarantee Corporation

Enabling members and communities to invest in one another.

Our Values Open, honest, inclusive and committed.

100%

of the credit union is owned and run by our members

916 employees

Affinity members now have access to over 1,800 surcharge-free ATMs all across Canada.

And it’s all ding free®.

– Affinity employees from Rochdale Branch

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Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

BANKING LOCAL Affinity at a Glance • Member Contact Centre • Largest Branch Network in Saskatchewan • Mobile Banking • Internet Banking • Telephone Banking • Mobile App with Deposit Anywhere™

• Commercial Services Centre • Dealer Finance Division • Mobile Mortgage Specialists • Affinity Insurance

Investments and Advice Looking to craft a comfortable retirement? Our investment experts are ready to show you how it’s done! With Affinity, you can choose from a full range of investment options and wealth management expertise, plus the personal attention that comes with being a member-owner.

Financial Planning and Estate Planning Financial planning, investments, estate planning – Affinity offers all of the services you’d find at a bank, with the benefit of personalized service. Whether you’re buying a home, saving for your little one’s education or counting down to your retirement, we’re here to help you achieve your dreams.

Business Loans Accounts We offer account and card options designed to fit your age, stage and lifestyle. And, you can access your funds from anywhere in the world using an automated teller machine, mobile devices, internet banking or any one of our branches across the province.

Loans and Mortgages Becoming a homeowner, advancing your education, building your retirement – no matter what your next goal is, Affinity Credit Union is here to lend you so much more than money.

2.1m

$

in donations, sponsorships and grants

We offer a wide range of commercial loans to finance just about any business, large or small. Micro-loans are also available to provide funds to those businesses that would not qualify for traditional financing.

Insurance Brokerage We have a team of professionals that offer a comprehensive range of general insurance solutions, including home, tenant, condo, farm, commercial, travel, bonding and surety through a variety of insurers. You can visit an insurance broker and get great personalized advice from 2 locations in Regina, 4 in Saskatoon and locations in Meadow Lake, Naicam and Prince Albert. We also offer motor vehicle licensing and web-based renewals at affinityis.ca.

100% of our profits stay in Saskatchewan

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

STRENGTHENING OUR LOCAL ECONOMY At Affinity, we reinvest member deposits in local businesses and work with business members to ensure they are successful.

In doing so, we strengthen our local economy.

Reg and Carly Lepage of Martensville were passionate about fitness and dreamed of owning their own business. After winning $25,000 in the Venture Forward Business Plan Competition, they approached Affinity for additional funds to open up their own gym. They did not qualify for traditional financing at first but their drive, determination and entrepreneurial spirit was acknowledged and they were soon approved for a micro-loan.

In 2008, while Reg attended school in Prince Albert, he commissioned extensive market research to determine the type of equipment and programs people wanted in a gym.

In September 2009, Wrench Fitness opened its doors.

“We opened at 6 am and our first customer arrived at 6:02 am. It was a great feeling!” said Reg. “Our goal was to create a different kind of gym. One with a family atmosphere and a community feel, where we know everyone by name. It worked!”

Within a few years, they were able to pay off the loan, double the size of the gym and are now enjoying a thriving business, employing 16 people locally. “We’re grateful to Affinity, who helped us get started,” added Reg. “I love helping local businesses reach their goals and potential,” said Tony Korol, Manager, Martensville Branch. “A successful business improves our local community and contributes to local economic development: it’s a win-win situation.”

For more information, go to wrenchfitness.com Affinity Members, Reg and Carly Lepage with their son Logan

Our goal was to create a different kind of gym.

One with a family atmosphere and a community feel, where we know everyone by name.

– Reg Lepage

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Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

LOCAL GOVERNANCE

BY MEMBEROWNERS

Member Engagement Members and employees are encouraged to engage with the Board and provide feedback in a variety of ways: • Through their locally-elected Delegates or directly to the Board • By participating on Board sub-committees • By submitting a resolution or participating in a vote at the Annual General Meeting • By Delegates participating in the All Delegates Meeting

Assessing the Board’s Performance Affinity Credit Union is a financial co-operative governed by a Board of Directors and accountable to the member-owners of the credit union. The Board operates on multiple levels, establishing vision and overseeing core business operations at Affinity while building relationships with members and communities and providing leadership within the values-based banking, co-operative and credit-union systems.

Affinity appoints an external consultant to evaluate the effectiveness of the Board of Directors. A report and recommendations are presented to the Board followed by documented plans for each Board Committee.

Avoiding Conflicts of Interest

It is comprised of 22 independent and elected Directors. The Board delegates the day-to-day leadership and management of Affinity to the Chief Executive Officer, who establishes the accountabilities for each member of the executive leadership team.

To ensure our elected officials contribute according to high ethical standards, each is required to sign a conflict of interest declaration annually. They are also required to declare conflicts on Board, District Council and Committee agendas.

Nomination Process

Continuing Education of Directors and Delegates

In accordance with the bylaws, members – including our employees – can nominate members to serve as a District Council Delegate. Voting is by electronic or paper ballot. District Council Delegates elect Board Directors from each of their Districts.

Directors and Delegates receive the training they need to run the credit union. This includes an orientation program for newlyelected Delegates and Directors and recommended courses.

Director and Delegates are reimbursed for expenses incurred in connection with these education programs and receive per diems.

2014 All Delegates Meeting

Annual Report and Summary Consolidated Financial Statements

Mandate and Responsibilities of Members of Board Committees Directors and Delegates are expected to prepare for, attend and contribute meaningfully to all Board and applicable committee meetings and keep deliberations confidential. Each committee has a mandate outlining its purpose and responsibilities.

Committees meet regularly throughout the year and provide regular reports to the Board. Affinity Credit Union has nine Standing Committees. Members of all Standing Committees are appointed by the Board.

Board Committees Scott Flavel, Board President, is an ex officio member on all Board committees.

• The Audit and Risk Committee (8 Directors) – responsible for overseeing risk management and financial reporting integrity.

• The Conduct Review Committee (8 Directors) – responsible for overseeing conduct and ethical business standards.

• The Board Policy Committee (6 Directors, 3 Delegates) – responsible for formulating and recommending policy positions that will ensure sound governance of the organization.

• The CEO Liaison Committee (7 Directors: President, 1st & 2nd Vice Presidents and 4 other Directors) – responsible for providing advice to the CEO on issues affecting the credit union and agendas for the Board meetings.

• The Governance Committee (6 Directors, 3 Delegates) – responsible for overseeing corporate governance.

• The Subsidiary Operations Committee (6 Directors, 3 Delegates) – responsible for reviewing a management report on the operations of all subsidiary companies.

• The Planning to Plan Committee (4 Directors, 4 Delegates) – supports a robust strategic planning process at the credit union by recommending specific agenda items for the All Delegates Annual Planning meeting.

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DECEMBER 31, 2014

The Co-op Principles and Traditions Committee (4 Directors, 4 Delegates, 2 retired Directors/Delegates, 4 employees) – responsible for ensuring our co-operative values and traditions remain healthy and robust.

The Corporate Social Responsibility Committee (1 Delegate from each District, 4 Directors) – responsible for researching and recommending corporate social responsibility policies to the Board of Directors.

Remuneration and Meeting Attendance The Governance Committee is responsible for reviewing elected officials compensation and reporting on meeting attendance.

2014 per diem amounts established by the Board were: Regular Board Meeting

$400.00

All Day Meeting

$300.00

Half Day Meeting

$240.00

Committee Meeting

$200.00

Committee Meeting Chair

$225.00

Sub-Committee Meeting

$200.00

Sub-Committee Chair

$225.00

Memberships in Associations Affinity Credit Union is a member of SaskCentral, Credit Union Central of Canada and the Saskatchewan Co-operative Association and participates in boards and/or committees of these organizations.

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Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

BOARD PRESIDENT’S REPORT

On behalf of the Board of Directors, I’m pleased to share significant milestones we achieved in 2014.

Throughout the year, the Board continued to focus on its oversight of the core areas of growth and financial strength, member experience, compliance with regulations, risk management, employee satisfaction, community development and governance. This resulted in strong growth, good levels of member satisfaction and employee engagement. We also maintained sufficient profitability to provide for future sustainability and exceeded our regulatory requirements.

Early in the year, we reviewed and updated our strategic plan with a focus on our long-term future. Key focus areas remain member growth, financial stability, aboriginal relations, mergers, grassroots governance, employee satisfaction and telling our Affinity story. To help deliver on these strategies, we worked with senior leadership to develop a four-year strategy aimed at redefining our service approach to meet the changing needs of our members, leveraging technology and to set the stage for better use of our specialists and branch network. Implementation of this strategy began late in 2014.

Scott Flavel, Board President

Affinity is member-led rather than shareholder led, so we make decisions that focus on meeting the needs of our members and their communities.

– Scott Flavel

The Board and its committees continued to practice good governance by meeting throughout the year to ensure that prudent policies were in place and that we complied with federal and provincial regulations. During these meetings, we reviewed a new supervisory framework and assessment criteria developed by our regulators, the Credit Union Deposit Guarantee Corporation, and implemented a new Enterprise Risk Management Framework.

The Board also ensured that a CEO contingency plan was in place and work continues on a succession plan. A 360° review of the CEO and the President was carried out early in the year and, toward the end of the year, we conducted a Committee Chair assessment for three of our key committees.

With the assistance of an external consultant, who was appointed to evaluate the effectiveness of the Board of Directors and District Council Delegates, we implemented changes to our governance framework. These changes will require further development throughout 2015 and will include a restructure of Board committees, a review of Delegate meetings and skills and competency levels, revisions to Board reporting, a review of our terms of reference and the implementation of three-year individual development plans.

As part of the Board’s commitment to continuous learning, the Directors completed training and development programs, including privacy and anti-money laundering programs and participated in provincial, national and international credit union and co-operative conferences.

Annual Report and Summary Consolidated Financial Statements

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Board Directors

114

District Council Delegates

Guided by co-operative principles, the Board continued to make a meaningful impact on local communities by encouraging partnerships with other co-operatives and non-profit organizations to advance programs committed to social and economic development across the province. These programs included entry-level housing, social enterprise, reducing poverty and social exclusion and enhancing and promoting environmental sustainability. Through our community development funding, we provided support to maintain community infrastructure and have aided many local groups and organizations in continuing to provide services to their respective communities.

The Board also continued to be a champion of corporate social responsibility and established a reporting system that will integrate environmental responsibility and leadership into all areas of the credit union. Our first step was to reduce the credit union’s environmental footprint by moving the annual report to an online version and setting targets to reduce overall paper usage throughout the organization. We continued to hold video and teleconference meetings where appropriate by making better use of technology in order to reduce gas emissions. The Board used international reporting standards to establish a disclosure system on governance matters. Many of the performance indicators are included in this annual report and will be expanded in the future.

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Following a successful provincial lobby against increased taxes for credit unions in 2013, the provincial government decided not to make changes to credit union taxes in 2014. To continue with our efforts to remain competitive with banks, Affinity took part in a national campaign to lobby the federal government to introduce a tax credit for credit unions so that we will not be paying more tax than banks in 2017 as a result of federal tax changes in 2013. Results of this campaign will be known in 2015.

2014 was a full year for our credit union as we continued to integrate systems and procedures from recent mergers. While there have been member impacts due to the banking system conversions, the members at legacy Spectra and Advantage are now able to access our latest developments such as mobile banking, Interac Flash™ on debit cards and Deposit Anywhere™.

A warm Affinity welcome to our newest members from Hudson Bay and Shaunavon Credit Unions, who joined the Affinity family on January 1, 2015.

As always, we welcome feedback from our members on the changes we’ve made to our products and services throughout the year and continue to look for opportunities to increase member engagement through our District Council Delegate elections and Annual General Meeting.

On a sad note, we said goodbye to our dear friend and colleague, Myrna Bentley, who passed away in August. She was a firm supporter of our credit union and co-operative movement and a valued member of our board for the past four years. She will be sadly missed by all. (See page 11 for our full tribute to her.)

On behalf of the Board, I’d like to recognize Chief Executive Officer, Mark Lane, our senior leadership team and our 916 employees for their continued commitment to the credit union and for the critical role they played in embracing another great year of change and success. On a personal level, thank you to my fellow directors and delegates for your engagement, insights, guidance and continued commitment to making sure Affinity Credit Union is a leader in meeting the needs of our communities and members. Finally, to our members, thank you for supporting your local credit union in each of our communities across the province and for the trust you’ve placed in us as your financial institution of choice.

Our Conduct and Co-operative Values Our Board ensures the credit union follows policies and procedures so that the interests of the credit union and employees are aligned with the interests of members. Our Market Code outlines this commitment and can be found on our website at affinitycu.ca

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Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

BOARD OF DIRECTORS The Board is responsible for the strategic oversight, business direction and supervision of the management of Affinity Credit Union. In acting in the best interests of the credit union and its members, the Board’s actions follow the standards set out in The Credit Union Act 1998, the Standards of Sound Business Practice and other applicable legislation.

The Board, led by a non-executive President, is comprised of 22 independent/elected Directors and is based on a District governance structure. Terms are three years in duration and renewable. Collectively, the Board is capable of fulfilling its role and represents a variety of experience, competence and knowledge: 45% are women and 55% are men.

Wayne Amos

Gailmarie Anderson

Mitchell Anderson

Gayl Basler

Myrna Bentley

Ed Cechanowicz

Duane Chipley

Scott Flavel

Ruth Glatt

Kearney Healy

Lois Herback

Cathy Holtslander

Audrey Horkoff

Evelyn Kasahoff

Milton Kerpan

Paul Ledeux

Cameron Nordin

Cy Standing

Brandi Tracksell-Sampson

Dannie Wreford

Vanda Wutzke

Pauline Ziehl Grimsrud

Spectra

Spectra

East 1st Vice President

First Nations

Advantage N.E.

Central

Langham

Saskatoon

Saskatoon

Saskatoon from October 2014

Advantage N.E.

Shellbrook 2nd Vice President

Saskatoon

Saskatoon

First Nations

North

Saskatoon to August 2014

Regina

Spectra

Spectra

Saskatoon

Saskatoon

Hugh Sampson Advantage N.

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

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A Tribute to Myrna Bentley It was with great sadness that Affinity Credit Union learned of the passing of Myrna Bentley, a dear friend, colleague and Board Director, in August 2014.

Myrna had a life-long commitment to the credit union and co-operative movement and throughout 1954 - 2014 her career she achieved the respect, admiration and friendship of people across the credit union world. Myrna began her working career with the most junior of positions, first with Royal Trust then with Co-operative Trust Company of Canada. Later she joined Concentra Financial and was there for 38 years, the last 12 years of which were as President and CEO. After her working career, she enjoyed continued involvement as a valued member of numerous boards including the Saskatoon Community Foundation, STARS, Credit Union Central of Saskatchewan and Affinity Credit Union from 2010 right up to her passing.

Helping those in need was important to Myrna.

She was an active volunteer with the Co-operative Development Foundation of Canada where she shared her knowledge, caring and work ethic in Malawi, Peru, Columbia, Thailand and Indonesia. She was recognized internationally for her years of service, receiving the 2014 Global Co-operator Award, presented by the Co-operative Development Foundation of Canada.

She will be dearly missed by everyone at Affinity Credit Union and most particularly by the senior leadership team and her fellow board members.

The Co-operative Development Foundation of Canada has set up a fund in her name to provide support and leadership development for women around the world.

Donations can be made online at cdfcanada.coop

Elwood Harvey Co-operative Leadership Scholarship The Elwood Harvey Co-operative Leadership Scholarship is perfect for young members who are interested in learning how the credit union operates. It also helps to build their knowledge of the co-operative movement and to develop valuable leadership skills that will be beneficial to their local communities.

In 2014, 24 students from across the province took part in Affinity’s District Council Delegate Strategic Planning Session and provided valuable input into our planning process. While there, they also received the $2,500 scholarship, which will support their post-secondary education.

The scholarship is named in memory of our past Board President, Elwood Harvey, who was a respected, long-time leader in the co-operative sector.

$93,000 in total scholarships provided to 101 students

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Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

DELEGATES Delegates play an influential role in the governance of the credit union. They use their local knowledge and established community relationships to ensure that the voice of the memberowner is heard. Delegates also provide leadership in allocating community development funds and attend many of the credit union’s community events. 46% are women and 54% are men.

Henry Dyck

Lise Gareau

Glen Grismer

Terry Hinz

Henry Penner

Katrina Regier

Leo Schulz

Vanda Wutzke

Mitchell Anderson

Gayl Basler

Karl Baumgardner

Myrna Bentley

Ed Cechanowicz

Charlie Clark

Deb Chobotuk

Max Fineday

Linsey Gatzke

Ruth Glatt

Kearney Healy

Doug Hofmann

Cathy Holtslander

Doug Knowles

Martin McInnis

Randy Pshebylo

Cecile Smith

Jan Sylvestre

Brandi TracksellSampson

Lovie Wesolowski Spicer

Bree Asbjornhus

Joanne Brochu

Don Ehmann

Scott Flavel

Grant Greenshields

Wendy Gullacher

Brett Halstead

Patricia Isherwood-Thomas

Allen Madland

Gerald Munholland

Kelvin Schapansky

Perry Thiessen

Sara Trenouth

Leni Udell

Florent Bilodeau

Jean Dufresne

Lois Herback

Richard Heroux

Ronda Palmer

Gordon Perkins

Karen Reed

Betty Ann Schiefner

Tracey Selinger

DISTRICT 5 SOUTH

DISTRICT 4 CENTRAL

DISTRICT 23 SASKATOON

DISTRICT 1 NORTH

Our local communities are represented by member-elected District Councils. In 2014, there were 11 District Councils representing the 67 communities we serve. Delegates elect Directors to the Affinity Board of Directors from their respective District Councils.

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DISTRICT 6 EAST

Annual Report and Summary Consolidated Financial Statements

Bryan Cottenie

Georgina Harambura

Audrey Horkoff

Sharon Nelson

Alvena Oryszczyn

James Yakimoski

Peter Block

Donna Epp

Evelyn Kasahoff

Deborah Ann McGuire

Mike McLeod

Eric Pearce

Karen Stobbe

Bev Turgeon

Lyle Banda

Gary Gerein

Philip Joanette

Andy Larsen

Heather Ranger

Tina Stene

Debbie Topping

Dannie Wreford

Michael Bob

Dennis Buckles

Alex Kennedy

Bonnie Lavallee

Paul Ledoux

Bryce Michael

Chief Richard Okemow

Margaret Boettcher

Janine Hoey

Karl Panas

Joseph Rybinski

Hugh Sampson

Nick Trofimuk

Gailmarie Anderson

Charlotte Berthold

Randy Boyko

Gladys Court

Milton Kerpan

Alice McFarlane

Dara McMunn

Gregory Shabaga

Larry Sparks

Paul Ulrich

Wayne Amos

Amanda Bendickson

Dennis Bode

DISTRICT 7 LANGHAM

Linda Bourque

Gerard Wild

Jacalyn Pilon

Cy Standing

Chief Delbert Wapass

Christal Nordick

Lynn Pederson

Joseph Schemenauer

DISTRICT 12 SPECTRA

DISTRICT 11 ADVANTAGE N.E.

DISTRICT 10 ADVANTAGE N.

DISTRICT 9 FIRST NATIONS

DISTRICT 8 SHELLBROOK

Geraldine Wainwright

Duane Chipley

Joyce Fraser

Garry Lafrentz

Cameron Nordin

Merrill Renaud

Pauline Ziehl Grimsrud

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Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

SENIOR LEADERSHIP Affinity Credit Union’s executive leadership team plays a vital role in determining organizational strategy and guiding the operations of the credit union.

Pat Brothers EVP HR

Ken Harding

EVP Governance & Risk

Myrna Hewitt EVP Marketing & Community

Mark Lane CEO

Lise de Moissac EVP & CFO

Tim Schroh EVP & COO

Atul Varde EVP & CIO

Affinity Credit Union’s senior leaders develop and implement operational strategies to meet the organizational goals of the credit union.

Hugh Balkwill

Glenn Brodt

Myles Lariviere

Dave Schneider

Serese Selanders

Corinna Stevenson Mark St. Onge

VP Credit Services

VP Compliance

VP Administration

VP Sales & Development

VP Wealth Strategies & Insurance

VP Risk

Tanya Llewellyn VP Accounting

VP Service Delivery

Josh Pion

Rick Matte

Tami Scott

Murray Yeadon

Chief Internal Auditor

VP Network Infrastructure

VP Talent Management VP Business Banking

Shawna Miller VP Governance & Strategy

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

FINANCIAL SERVICES AT YOUR DOOR Life doesn’t always follow banking hours. That’s why we’ve made our mortgage experts available to meet our members when and where it works best for them – whether that’s in their home, office, favourite coffee shop, or even their campsite!

Cari Skjerven, Mobile Mortgage Specialist for Regina and area, was camping at Craven when she got to know Paula Sanders in the tent next to hers. As they chatted, Paula asked if Cari would look at her financial situation as she wanted to purchase the condo she was currently renting. Cari got to work immediately and soon after finalized the deal. Paula is now the proud owner of her own home – a long-term dream.

“Cari made the process so easy, and it was really convenient holding the meeting in my own home and at a time to suit my schedule,” said Paula.

“Whether you’re buying a home, renewing your existing mortgage, or wanting access to your home equity, I’m always happy to help our members,” said Cari. “And, I’ll bring it to your door!”

The mortgage process was so easy and it was really convenient holding the meeting in my own home and at a time to suit my schedule.

– Paula Sanders

Affinity Member Paula Sanders and Cari Skjerven, Mobile Mortgage Specialist

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Annual Report and Summary Consolidated Financial Statements

CHIEF EXECUTIVE OFFICER REPORT

DECEMBER 31, 2014

2014 was a successful year in which Affinity continued to integrate social, environmental and economic factors into all aspects of our business and worked together with members and fellow co-operatives, government and non-profit organizations to drive the economic engine of our province and to build a better world for everyone, every day.

We moved ahead in many key areas relating to member service, financial strength, community building, employee growth and innovation.

Member Service As a member-focused and values-based organization, 2014 saw Affinity continue its pursuit of a better overall experience for our members while maintaining our commitment to delivering our products and services in an ethical manner. This included a complete review of how we provide services to our members and how they prefer to access them – all within the context of a highly competitive marketplace. The results led to the development of a four-year plan that focused on engaging with our members when, where and how it is convenient for them.

Implementing the plan, beginning in 2015, will have a significant impact on our business. It will involve moving away from some legacy branching infrastructure while reinvesting in other technology-driven service delivery channels that are growing in demand. We believe these changes will have a lasting impact on our credit union well into the future.

Mark Lane, Chief Executive Officer

We’re proud to be a values-based financial co-operative that’s owned by our members.

– Mark Lane

Realizing the need to relate and appeal to a new generation of members, improvements to our website, better interactive tools, a new online banking platform and enhanced mobile apps were all introduced in 2014. Going forward, these will be significant and growing service channels for our members.

Our investment in alternative service delivery channels included the development of a pilot for a new technology-based branch with remote network connections that will allow members to interface with Affinity’s specialists regardless of their branch location. Service will focus on building member relationships and providing education for members. This pilot will be rolled out in early 2015 and, if well received, will become the first of several service centres planned for strategic locations across the province.

To make banking easier for all members, we undertook a major initiative to simplify our product offering with the goal of enhancing member service overall. We also continued to refine our loan and mortgage processes in an effort to make applications quicker and easier for our members.

Annual Report and Summary Consolidated Financial Statements

Planning for the complex process of moving the 45,000 legacy Advantage and Spectra Credit Union members onto the Affinity banking system was successfully completed in November. Having one banking system for all of our members now means we can offer them a seamless service in-branch, over the phone, online and when using mobile banking. As well, all members now have access to the same products and services.

Following a due diligence process with Shaunavon Credit Union in the spring of 2014, members voted overwhelmingly in favour of an amalgamation with Affinity. Their members were welcomed into the Affinity family on January 1, 2015 along with members of Hudson Bay Credit Union, who approved their respective merger in November 2013.

Financial Strength 2014 was another year of strong growth and profitability – annual results have demonstrated the stability and long-term sustainability of our credit union. Our complete financial story accompanies this report in the form of our 2014 Summary Consolidated Financial Statements.

We’re pleased to remind members that all deposits held in Affinity Credit Union are fully guaranteed by Credit Union Deposit Guarantee Corporation. The Corporation was the first deposit guarantor in Canada and has successfully guaranteed deposits held in Saskatchewan credit unions since 1953. For more information about the Corporation and the guarantee, talk to any one of our employees or visit www.cudgc.sk.ca.

Community Building As a local values-based financial institution, we enable our members to invest in one another. We put their deposits to work by providing loans to other members, fueling economic growth and enhancing social and cultural vitality in communities across the province. Our community investment initiatives in 2014 aligned with that vision, including funding and special loan programs as well as leadership and volunteer activities.

We continued our focus on using our member deposits to address social, economic and environmental issues in our communities through our specialized community lending programs. In 2014, we approved $19.6 million in financing to small business start-ups, non-profit organizations and community enterprise initiatives. These included financing for the construction of a new childcare facility in Shellbrook, the development of 77 new units of affordable seniors’ housing in Warman and start-up financing for a micro-brewery in Nokomis, to name just a few.

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Affinity also continued to be an active partner with Westcap Mgt. Ltd. and other Saskatchewan credit unions in the delivery of the HeadStart on a Home® program, which leverages funding made available from the Government of Saskatchewan to build entrylevel homes in the province. Since August 2011, the HeadStart program has approved over $370 million in financing to builders and developers. In turn, 2,040 new entry-level homes have been built or are under construction to ease entry-level housing demands.

Through our corporate donations, sponsorship, scholarship and district council community development funding programs, we invested a total of $2.1 million – representing 8.1% of 2013 net profit – into community initiatives across the province in 2014.

We invested heavily in the development, repair and renovations of community assets and facilities that were critical to community well-being and vitality. In 2014, we provided $847,573 in funding to a range of facilities, including 40 recreation centres, sport complexes or rinks, 33 playgrounds, parks and trail facilities, 17 childcare centres, 37 community halls, libraries and museums and 7 housing facilities. We are proud to have been a supporter of Northeast Outreach and Support Services Women’s Shelter initiative, providing both capital donations as well as construction financing. When the almost completed building was destroyed by fire in late December 2014, we committed an additional $10,000 donation toward the rebuild.

As a financial institution, we embrace the important role we have to play in enhancing financial well-being and building financial literacy of our members, youth and others in the community.

In 2014, our employees and community partners delivered 62 financial literacy presentations or workshops through local schools and community based organizations, reaching 1,308 individuals in 17 communities across the province. We also expanded our partnership with READ Saskatoon to support financial education for vulnerable populations, such as single mothers, low-income families and Aboriginal youth. And, once again, we oversaw the delivery of the Saskatoon Individual Development Account (IDA) Program that supported 29 young people from vulnerable populations to stay in school, find employment and save toward a financial goal.

18

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

As a socially responsible organization, we decided to enhance our efforts in protecting the environment. Internally, we formed a set of targets for 2015 to reduce business-related mileage and CO2 emissions by 5%, paper use by 15% and have committed to buy 50% of our paper consumption as post consumer waste paper.

Externally, 8.65% of our total corporate and district council funding was invested in environmental initiatives as compared to 3.91% in 2013.

Employee Growth 2014 brought many partnership related challenges for our employees including the timing of banking system conversions, product and pricing alignments, departmental resource alignments and both attrition and consolidation opportunities.

Like many times prior, employees rose to the challenge and worked successfully through the required integrations and wholeheartedly recognized the investment they were making in the future of our credit union and in our members. We are rewarded every day for their significant efforts.

Throughout 2014, our organizational focus was on change management training for all employees – critical given the significant change initiatives already underway and anticipated in the future.

In addition, we invested a total of $519,499 in employee learning including educational support, tuition reimbursement, training and workshops to support individual employees’ personal and professional growth. To support a smoother transition of our partnerships with Advantage and Spectra, we carried out comprehensive training in areas such as the banking system, performance management and sales and service processes.

As always, Affinity is committed to being an employer of choice and continued to provide competitive pay and a comprehensive benefits plan to all employees, including those who are covered by our collective bargaining agreements.

We continued to support the involvement of our employees and elected officials in community activities through the Community Spirit Fund, which provides for the allocation of $200 by each individual to the cause of their choice. We are very proud that over 95% took part in the Community Spirit Fund program this past year. In addition, all employees had the opportunity to spend one paid day throughout the year where they were involved in community work. In all, 1,554 hours of paid employee volunteer days were donated to local communities, which had an estimated economic value of $47,020. We also continued our support of the United Way agencies by providing approximately $11,000 as an in-kind contribution through the loaned representative program.

Affinity employees from Melfort. From left: Joan Olson, Financial Services Representative; Darren Wilkinson, Accounting Supervisor and Shannon Enns, Support Services Analyst.

Annual Report and Summary Consolidated Financial Statements

Innovation In addition to organic and partnership growth, innovation and development was a highlight of the year.

DECEMBER 31, 2014

Values-Based Banking – Human Resources Statistics

We saw the launch of our new internet banking platform, which offers members a new look, enhanced features and effortless navigation.

To ensure members have a safer and more convenient banking experience, we also introduced “push notifications” – a real-time alert system using mobile banking platforms. Members using our mobile app can now receive various real-time alerts, including service downtime notifications and warnings about phishing and other scams. These alerts are delivered through Apple iOS and Google Android push notifications. This system is flexible enough to allow us to send alerts that are specific to a certain member, common to a defined segment of the membership, or common to all members.

We also completed a joint pilot with national technology and credit union partners using mobile Interac Flash™, which will eventually enable members to pay for purchases with their mobile phones. Refinements to this service will be carried out throughout 2015.

We continue to focus on innovation and look forward to reporting further developments over the coming year.

Future To guide us in the future, Affinity’s board and management developed a four-year plan, that will keep us focused on adapting to meet our members’ needs. It will help us to provide quality products and services at prices that members expect and deserve. We will do so through all delivery channels – mobile, branch, phone, video, ATM and online – and will reach out and engage with our current members and attract new members.

By choosing this path, we hope to have a lasting impact on our member experience, now and into the future. We have confidence that we can achieve our goals and are excited about the future. It is our opportunity to make a difference and to build a better world for everyone, every day.

We aim to build a strong foundation for our employees right across the credit union.

Demographics • • • • •

916 total employees 712 full time 204 part time 53% working in urban locations 47% working in rural locations

Hiring practices • • • • •

73.4% positions filled internally 9.15% voluntary turnover 20.1% unionized 7.83% new hires are of Aboriginal ancestry 24.35% new hires are from diversity groups

Employee development • $519,499 investment in training

Workplace diversity • Management: 45.3 average age 32.7% male 67.3% female • Non-management: 40.6 average age 9.9% male 90.1% female

Human rights • 0 complaints of discrimination

19

20

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

VALUES YOU CAN BANK ON

We continue to work to build our social finance programs and products that make financing accessible for initiatives that directly contribute to social or environmental goals and increase access to credit for individuals and organizations that may face barriers to gaining the financing they need.

Building on our co-operative roots and principles, we continue to deepen our commitment to values-based banking and corporate social responsibility – in how we operate, how we support and engage with member-owners and how we reinvest member deposits and profits in our communities. Our ultimate goal is to foster healthy communities and productive economies.

Where We Invest Members’ Money As a local institution, we work to enable our members to invest in one another close to home. Member deposits are channeled into loans for other members – families, businesses and community organizations – that fuel economic growth and support community vitality and stability. In 2014, our 130,000 members had $3.93 billion of deposits with Affinity. This capital was invested in $3.55 billion in loans to 51,077 members in our communities and this means that 100% of our existing loans are funded by our members.

For the most part, this reality is experienced in many of our Affinity communities like Kamsack, Rosthern or Shaunavon. This is our members’ money at work where they live – in the seniors’ housing development, the new local bakery or childcare centre.

Social Finance Loan Programs (total outstanding December 31, 2014) (in thousands of deposits) Type of Loan

Balance

Accessible Home-Ownership Loan Programs

$32,131

Community/Non-Profit Loans

$21,319

First Nations Lending

$17,889

Total

Type of Loan

Balance

Business Loans

$805,314 $1,562,202

Consumer Loans

$442,945

Agricultural Loans

$407,714

Other Loans

$327,267

Total

Moving forward, we are committed to growing our social finance investments as well as identifying other financial services and products that support under-served populations.

Micro-Loans (Small Business Start-up)

Purpose of Loans (total outstanding December 31, 2014) (in thousands of deposits)

Consumer Mortgages

From construction financing for affordable housing developments, recreation facilities or childcare centres, to business start-up loans for entrepreneurs and co-operative or social ventures, to down-payment loans to help moderate income families get into home ownership, we are committed to increasing the availability of capital for social benefit. We also offer free and low cost account packages for small communities or non-profit organizations to support their work.

$3,545,442

$629 $71,968

Annual Report and Summary Consolidated Financial Statements

Social Enterprise Challenge We look for new and engaging ways to work with our members and communities to build a better world. So, in 2014, we invited members and the community to “co-invest” with Affinity to support a social enterprise initiative – or a business operated by a community organization that aims to address specific social or environmental issues.

The Business-for-Good Social Venture Challenge was a crowdfunding competition where three or more non-profits in Saskatoon and area competed for the chance to receive $50,000 in grant funding from Affinity for the launch or expansion of their enterprise. Our members and the general public selected the winner by “voting with their dollar”.

DECEMBER 31, 2014

21

Instead of just clicking on a button to vote online, we challenged people to become social investors themselves by “voting with their dollar” and making a contribution to the social enterprise finalists they believe had the most potential to build a better world.

The community spoke. The organization that received the most support – with 630 votes and $59,000 in contributions – was the Saskatchewan Environmental Society Solar Power Co-operative.

While they did not win, Bridge City Bicycle Co-operative Bike Shop garnered 454 votes and raised $17,634 and The Good Food Junction had 197 votes and raised $13,767. Both organizations were able to keep these funds to invest in their social enterprise ideas.

The competition was so successful that plans are afoot to run the competition again in 2015 in Saskatoon and Regina.

Great Member Perks It really does pay to be an Affinity Credit Union member.

Last year, Affinity introduced a pilot initiative that supports valuable arts and cultural events and organizations while providing exclusive perks to Affinity members, such as discounted ticket prices or even free admission. In 2014, by showing their Affinity member card, members were able to save money on tickets for select performances or events with the following partners:

Business-for-Good Social Venture Challenge finalists

Affinity staff and District Council delegates in the Saskatoon region selected three finalists from 12 excellent applications:

1 Bridge City Bicycle Co-operative Bike Shop, who would

use the prize money to establish Saskatoon’s first community-owned second-hand bike shop to refurbish and sell used bicycles and bike parts at affordable and accessible prices.

2 Good Food Junction is a co-operative grocery store with

a mission to provide access to healthy and affordable food in Saskatoon’s core neighbourhoods. It will use the $50,000 to expand the store’s services to include a deli and healthy and affordable prepared meal options.

3 Saskatchewan Environmental Society Solar Power

Co-operative would use the $50,000 to establish the first solar power co-operative farm in the Saskatoon region.

• • • • •

Shakespeare on the Saskatchewan Persephone Theatre in Saskatoon Regina Symphony Orchestra Golden Apple Theatre in Regina Saskatchewan Craft Council’s Winter Green Market in Regina

Through the Shakespeare on the Saskatchewan partnership alone, 1,248 members took advantage of the Affinity member discount, saving them $11,240. At the same time, our member perk offering helped Shakespeare on the Saskatchewan reach more people and increase its overall attendance numbers and financial sustainability. That sounds like a pretty good win-win.

Over the coming year, we look forward to putting more of our sponsorship dollars to work by offering Member Perks throughout Saskatchewan – by working together we can achieve more!

22

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

Affinity’s CEO, Mark Lane, (far left) joined other credit union leaders at the GABV annual meeting in Melbourne, Australia. (From second left) Tamara Vrooman, CEO Vancity and Board Member of the Global Alliance for Banking on Values; Jan O’Brien, Vancity Board Chair; Margaret Day, Assiniboine Credit Union Board Chair; Paula Martin, Advisor to the CEO, Vancity; Kevin Sitka, Assiniboine Credit Union President and Chief Executive Officer.

Global Alliance for Banking On Values Affinity is a member of the Global Alliance for Banking on Values (GABV), a network of the world’s leading values-based financial institutions. As a member of GABV, Affinity complies with sustainable banking principles and shares a commitment to finding global solutions to international problems and to promote a positive, viable alternative to the current financial system.

In 2014, Affinity’s Chief Executive Officer attended the GABV annual meeting in Melbourne, Australia and marked the fifth anniversary of this growing network of values-based banks. The event represented an opportunity to reflect on the development of a genuine sustainable banking movement and a chance to focus more squarely on increasing the success of the businesses in the GABV’s growing network.

Building on our co-operative roots and principles, we continue to deepen our commitment to values-based banking and corporate social responsibility.

– Mark Lane

Annual Report and Summary Consolidated Financial Statements

23

DECEMBER 31, 2014

COMMUNITY INVESTMENT Affinity supports, or partners with, a variety of organizations, projects and programs that strengthen our communities. In 2014, we provided a total of $2.1 million – or 8.1% of our pre-tax profits – to 497 initiatives or organizations as well as 101 young members across the province through our community funding programs.

Total Investments by Funding Program

Funding by District

# of Investments

Total $

District Council Community Development Funding

197

$814,812

Corporate & Branch Level Donations/Sponsorships

300

$996,709

Youth Scholarships – Branch and Elwood Harvey

101

$93,000

Community Spirit Fund – Employee Giving

1,080

$234,651

TOTAL

1,678

$2,139,172

affinitycu.ca

For more details on our funding programs and deadlines, visit our website and look under Your Community/Community Funding.

Enhancing Impact Through Strategic Focus Areas There are many important needs, initiatives and organizations in our communities and we know that we cannot meaningfully support them all. To strengthen the impact of our investments and contribute to tangible improvements in economic and social well-being in our communities, we are targeting a growing portion of our community investments into four strategic focus areas: local economic development; economic self-reliance; environmental sustainability; and building community assets and facilities. In 2014, 67% of our district council and corporate funding was invested in initiatives that contributed to our goals in these four focus areas.

District

Total $

North

$34,383

Central

$100,623

South

$111,116

East

$29,333

Langham

$33,873

Shellbrook

$86,162

First Nations

$54,884

Advantage North

$83,760

Advantage North East

$94,153

Spectra

$317,251

Saskatoon

$668,756

Province–wide Initiatives

$197,228

Funding by Strategic Focus Area Strategic Focus Area Local Economic Development

Funding $50,494

Economic Self-Reliance

$385,726

Environmental Sustainability

$154,729

Building Community Assets and Facilities

$811,073

TOTAL

$1,402,022

24

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

FOCUS AREA:

LOCAL ECONOMIC DEVELOPMENT

As a local financial institution, we know we have a strong role to play in facilitating economic development in our urban and rural communities. We take this role seriously, but can’t do it alone. We work closely with our members and community partners who help us make positive changes.

SEDA and Affinity share similar economic development goals. (From left) Manpreet Sangh, Economic Development Officer, Estevan Chamber of Commerce; Fred Khonje, Affinity’s Community Development Manager; Brent Lutz, Community Development Manager, City of Melfort.

In 2014, we teamed up with Saskatchewan Economic Development Association (SEDA) and provided $60,000 over three years to support their Coaching for Economic Capacity Program.

SEDA and Affinity share similar goals. SEDA works with communities and economic development organizations across the province to ensure they have the right tools, resources, knowledge and linkages to build prosperous local and regional economies and Affinity works to enhance their capacity to benefit local communities.

The Coaching for Economic Capacity Program helps community leaders and their staff develop the capacity to engage in economic development by providing coaching on funding,

needs assessments, feasibility studies, business retention and expansion. It also assists communities in developing an economic development committee, defining their vision and plan for the future and building the necessary volunteer staff and resources to further their goals.

SEDA’s Executive Director Verona Thibault said: “Determining economic development needs, issues and problems and coming up with solutions is central to our mandate. The growing number of small to medium-sized communities actively engaging in economic development are looking for simple and cost-effective tools and strategies to help them succeed. We are grateful to Affinity for supporting this valuable program.”

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

25

FOCUS AREA:

ECONOMIC SELF-RELIANCE

We think it is important to provide opportunities for all members of the community to be able to achieve a good quality of life and realize their goals and full potential. We help them achieve this by supporting initiatives that enhance their financial literacy skills, create employment opportunities and improve educational outcomes for vulnerable populations and youth.

Sponsor of St. Mary’s Oskayak Dance Troupe.

At Affinity we focus on development programs for young people so that they get the support they need to be successful and reach their full potential. St. Mary’s Oskayak Dance Troupe is just one of those programs.

It operates just like one big a family. With the help of elders, parents, community members and staff, students from St. Mary’s Community School in Saskatoon learn the values and traditions of the Aboriginal culture through singing, dancing and drumming and develop self-discipline and respect for others.

The dance troupe started in 1989 with 20 students. Today, that number has grown to over 90 dancers and drummers, 50 of which are kindergarten to Grade 8 students at St. Mary’s School.

In 2014, they celebrated their 25th year of enriching the lives of students, families and the entire city. Affinity Credit union is proud to be able to provide support and be a part of this amazing group.

26

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

FOCUS AREA:

ENVIRONMENTAL SUSTAINABILITY

The long-term social and economic wellbeing of our communities depends on the health of the environment, locally and globally. We address environmental concerns and promote environmental sustainability by investing in initiatives that reduce our environmental footprint and promote ecologically responsible practices.

Kirby Wirchenko, Executive Director of Broadway Theatre on the roof of the theatre, where 40 solar panels have been installed.

Saskatoon’s Broadway Theatre is going green thanks in part to a $20,000 grant from Affinity. The theatre has installed 40 solar panels on its roof in the hopes of offsetting 50 per cent of its energy usage.

With more than 60,000 visitors passing through the doors of the Broadway Theatre on an annual basis, Kirby Wirchenko, the theatre’s Executive Director, hopes the theatre can show how community power projects are possible to both the public and commercial entities.

Michael Hill, Chairman of the City of Saskatoon’s Environmental Advisory Committee, said, “If more businesses and more residences can think about this and try to adopt these types of practices and employ using solar power, that will go a long way towards making the city more sustainable and environmentally friendly.”

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

27

I wanted to inspire more people to think of cycling as a regular form of transportation.

– Alex Watson

Alex Watson, Affinity Development and Database Manager, took part in Bike to Work Day and cycled 19 kilometers from his home in Dalmeny to the Affinity Campus building in Saskatoon. “I wanted to help promote the bicycle as a healthy, convenient, low-cost and socially responsible form of everyday transportation,” said Alex.

Affinity partnered with Bridge City Bicycle Co-op and In Motion to sponsor the event and host a Bike to Work day station at the Affinity Campus. Our fabulous local coffee shop in the City Park neighbourhood, City Perks, provided refreshments.

Values-Based Banking Targets – Protecting the Environment We aim to reduce our greenhouse gas emissions as much as possible. In 2014, we created a baseline for ongoing improvements: • 1,113,125 kms in business-related travel • 309 tonnes emitted in greenhouse gas Paper comprises the majority of our waste. In 2014, we created a baseline for ongoing improvements: • 51,992 lbs total weight of paper consumed • 54 lbs total weight of paper per employee • 425 trees consumed

2015 targets: • 5% reduction in business-related travel • 15% reduction in paper use • Purchase of 50% post-consumer recycled paper for at least 50% of Affinity’s total paper consumption

28

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

FOCUS AREA:

BUILDING COMMUNITY ASSETS AND FACILITIES

A healthy community has the facilities and infrastructure it requires to meet the economic, social and cultural needs of its residents. We help our communities to develop, improve or expand buildings and other facilities that benefit the whole community and support economic, cultural and social vitality.

With support from Affinity and the local community, play time begins at Happy Hearts Childcare Centre. PHOTO CREDIT: Jordan Twiss, Shellbrook Chronicle

Happy Hearts Childcare Centre in Shellbrook is a brand new facility that opened in December 2014. The facility was an idea conceived by local mothers who were struggling to find realistic daycare solutions for their children that didn’t involve driving to other communities. From there, it wasn’t long before the idea gained momentum, as a board for the facility was formed, government grant applications were filled out, donations were sought and

fundraisers were held. Affinity supported this vision, contributing $5,000 in funding in 2013, $20,000 in funding in 2014 and providing financing for the construction.

The facility is now licensed for 33 children, including places for six infants, 10 toddlers, 12 pre-schoolers and five flex spots designed to accommodate children who don’t fit into those particular age groups.

Annual Report and Summary Consolidated Financial Statements

29

DECEMBER 31, 2014

MANAGEMENT DISCUSSION AND ANALYSIS This report is Management’s summary of the 2014 consolidated financial performance of Affinity Credit Union 2013. We have included a discussion of our key strategies and drivers, our 2014 results and outlook for the future and a discussion of capital adequacy and key risks.

Affinity Credit Union 2013, Consolidated Financial Highlights For the year ended December 31, (thousands of dollars) Assets

Cash and Financial Investments

Investment Properties Loans

Other Assets Total Assets Liabilities Deposits

Loans and Borrowings

Membership Equity

Other Liabilities Equity Total Liabilities and Equity Statement of Comprehensive Income

Net Interest

Credit Loss Recovery (Provision)

Other Income

Share of profit of equity accounted investees

Net Interest and Other Income

Actual 2014 $

$ $

$ $

Operating Expenses Earnings Before Tax and Distributions Patronage (Expense) Recovery Employee Recognition Provision for Income Taxes

Profit

Other Comprehensive Income, Net of Tax Total Comprehensive Income Statistics

Average Assets

Asset Growth

Loan Growth

Cash and Financial Investment Growth

Deposit Growth

Delinquency as a % of Loans (> 90 days)

Efficiency Ratio

Return on Average Equity*

Return on Average Assets

Net Interest Margin %

Tier 1 Capital as a % of Risk Weighted Assets

Tier 1 Capital as a % of Total Assets

Real Economy Assets as a % of Total Assets

Local Borrowing as a % of Total Assets * Ratio includes Membership Equity

Target 2014

672,195 4,534 3,545,442 107,465 4,329,636

$

3,934,945 2,101 3,208 46,453

$

342,929 4,329,636

$

Actual 2013

693,086 20,125 3,605,848 110,780 4,429,839

$

4,051,976 1,029 3,409 34,527

$

561,802 21,598 3,259,961 112,354 3,955,715

$

3,596,062 6,781 3,378 38,085

$

$

Actual 2011

363,009 17,205 2,023,979 69,729 2,473,922

$

2,229,796 4,370 10,624 24,239

$

425,066 15,229 1,838,328 55,350 2,333,973

$

2,116,050 713 11,270 24,163

$

1,947,677 2,317 11,438 24,222

120,017 $ (2,340) 44,365 452 162,495

93,794 153 36,427 52 130,426

(123,598) 38,223 – – (6,494)

(129,863) 32,632 – – (6,758)

(104,427) 25,999 (4) – (4,872)

(73,014) 26,748 36 (685) (3,312)

(70,851) 22,205 (2,245) (630) (3,355)

(69,312) 26,224 (2,237) (640) (3,977)

31,729 (209)

25,874 (1,083)

21,123 445

22,787 (71)

15,975 –

19,370 –

113,547 $ (865) 48,970 169 161,821

$

69,935 (194) 29,926 95 99,762

$ $

181,777 2,333,973

$

373,828 15,176 1,709,542 52,910 2,151,456

311,409 3,955,715

$

204,893 2,473,922

$

Actual 2010

$

$

338,898 4,429,839

$

Actual 2012

64,110 (1,608) 30,489 65 93,056

$ $

165,802 2,151,456 66,154 (1,189) 30,487 84 95,536

$

31,520

$

24,791

$

21,568

$

22,716

$

15,975

$

19,370

$

4,142,676 9.45% 8.76% 19.65% 9.42% 0.20% 75.97% 9.54% 0.76% 2.74% 12.09%

$

4,222,381 10.33% 11.35% 7.20% 10.76% 1.25% 79.00% 7.56% 0.59% 2.84% 11.46%

$

3,125,797 6.47% 12.28% -22.80% 6.95% 0.23% 80.16% 8.31% 0.69% 2.86% 11.61%

$

2,403,948 6.00% 10.10% -14.60% 5.38% 0.25% 73.05% 11.12% 0.94% 2.91%

$

2,242,715 8.48% 7.53% 13.71% 8.64% 0.87% 74.84% 8.63% 0.71% 2.86%

$

2,099,928 5.03% 0.55% 32.46% 4.72% 1.00% 71.66% 11.76% 0.92% 3.15%

85.44% 90.88%

85.50% 91.47%

86.56% 90.91%

8.63% 85.89% 90.13%

8.16% 82.89% 90.66%

8.06% 83.72% 90.91%

30

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

RESULTS AND OUTLOOK The financial results presented for all years are in accordance with International Financial Reporting Standards (IFRS). The Credit Union transitioned to IFRS effective January 1, 2010.

Affinity Credit Union’s consolidated results include the operations of 76 branches in 68 Saskatchewan communities, 4 commercial centres, 9 insurance agencies and several investment properties.

The 2014 target represents the financial annual operating plan as approved by the Board of Directors.

Growth

Lise de Moissac, Chief Financial Officer

Key Strategies and Drivers 2014 has been an energetic year for Affinity Credit Union. The operating period was characterized as aggressive business as usual combined with post partnership initiatives. Five credit unions joined Affinity in 2013 and the final integration work was completed late in 2014. We continued to operate in many Saskatchewan communities through an extensive branch network and through a number of commercial centres and insurance agencies.

The key financial drivers in 2014 were recapturing market share through growth of our balance sheet and doing so with a strong return to capital. Growth was achieved through very competitive pricing and a restructuring of service fee plans. At the same time, we leveraged a net gain through a number of non-recurring events and were able to end the year with both the growth we were seeking and a stronger capital position. These non-recurring items were not included in the 2014 budget.

Affinity continued to be heavily researched based, to better guide our decisions around member loyalty and experience. To that end, we were more informed about rates, service fees and innovative technology solutions. Research also spelled out the need for a more efficient credit union and we have used 2014 to chart a future course to make this happen.

The ability to grow our business is contingent on adequate capital levels. Through scenario modelling, we had determined that 10% balance sheet growth would provide an adequate return on capital and at the same time, not erode capital.

Accordingly, we set a stretch growth target for 2014 at 10.33% and planned to achieve this within the existing loan and deposit pricing models.

The 2014 asset growth result came very close to expectations at 9.45%. We achieved more than half of this growth over the last two quarters and this is similar to our prior period experience.

We realized early in the year that current pricing would not stand up to our competitive environment. We changed course and adopted more aggressive pricing in some sectors of our business and this approach allowed us to maintain our market position and achieve our plan. Our credit union peer group achieved an average asset growth of 7.63%.

Affinity had a number of avenues to finance growth. In addition to traditional financing, we had access to arranged borrowing facilities and loan securitization vehicles. We chose to rely almost exclusively on member deposits as a financing source and this supported the Board’s position to be very connected to the local economy. At the end of 2014, Affinity’s local borrowing through member deposits was 90.88% of the asset base. Any borrowing facilities were left available to support our liquidity management.

Our 2014 plan was to finance balance sheet growth through deposit growth of 10.76% and again this was a stretch target.

We achieved 9.42%, a very positive result against our peer group average of 6.08%. During the year we had good success in securing the business of a number of large depositors and in sales efforts during campaigns. We also moved away from the annual operating plan pricing and realigned our overall deposit pricing strategies relative to market. We surpassed our expectations in fixed term deposit categories but fell short in demand deposits and our overall success is significant in a competitive low rate environment.

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

31

Loan growth was budgeted at 11.35% and we achieved 8.76%.

Our good results were most notably seen in our consumer and agriculture mortgage business lines. We had less success with commercial loans throughout the year as the economy began its return to historical norms. As in our deposit business, we found it necessary to maintain loan specials for very long periods of time to price at competitive levels and achieve our growth targets. At the same time, Affinity was able to meet or exceed its retention standard throughout 2014 thereby lessening the efforts around new loan growth. We ended the year with a loan pipeline that was approximately double that at the end of the prior year, and we expect to fund this growth in 2015. Although we didn’t achieve our high target in 2014, we exceeded the 7.96% average loan growth of our peer group.

The impact of the margin compression was balance sheet growth.

Had we not changed our pricing strategy, we simply would not have generated the margin dollars to efficiently cover costs and build a strong bottom line. At the end of 2014, our margin was under budget by $6.47 million and this is a factor of slightly less than expected growth at a contracted margin percentage.

The shortfall in loan growth allowed some of our excess deposit growth to be maintained as investment liquidity. As a result of being slightly less lent out, the investment portfolio expanded by 19.65%, far ahead of our 7.20% target.

Other Income

Return on Equity and Efficiency The return on Affinity’s equity is largely determined by our ability to operate efficiently. Generating more dollars of revenue with each dollar of cost provides a better comprehensive income and return on our equity base. The 2014 budget preparation for revenues and costs was particularly difficult. We had very little history with our mid-year 2013 amalgamation partners and this put additional risk on our plans for return on equity and efficiency.

Net Interest Income Net interest income (or margin) represents the yield from loans and investments netted against the cost of deposits and other financing. We had planned for continuing margin contraction in 2014, but our actual results were far more pronounced than expected. We simply could not achieve our optimum balance sheet growth without realigning our rates to market to be much more member centric. Our competitors were prepared to maintain fixed five-year mortgage rates below prime rate for much of the year and at the same time, financial institutions were vying for deposits in a sustained low rate environment. In order to compete in both arenas, Affinity was prepared to allow the year over year margin percentage drop by 10 basis points, to 2.74%. Our peer group experienced the same challenge with an average margin of 2.78%.

Provision for Credit Losses The expense for credit losses represents any new 2014 loan loss allowance (loan principal we do not expect to recover). The current year provision was far below target and this coincided with a lower than expected 90 day delinquency rate of .20%.

The credit union also recovered significant expense of several previously impaired loans.

Other income for 2014 exceeded budget by $4.6 million. The budget had not included several non-recurring items: the full and partial gains on two of our Saskatoon city centre properties and a rural property and the write down of an investment property. The net of these amounts provided $4.9 million in unplanned revenues.

2014 was a year where Affinity transitioned to a new suite of demand deposit products with revised fee plan packages in an effort to be more member centric. This change happened later in the year and caused service fee income to be under budget.

However, this was more than made up with an unexpected commission bonus through the sale of loan insurance products.

Operating Expenses Operating expenses were significantly under budget by $6.3 million. With 2013 mid-year partnerships, we had very little history to create the 2014 budget and the actual cost experience in some categories was different than planned. Personnel cost provided the most variance to budget as we began to absorb many of our vacancies through attrition. This is typical in a postpartnership phase and also impacts benefit and education costs.

Overall, personnel costs were under budget by $5.0 million.

Our general business costs were also less than budget, as some estimates were overstated and some projects were deferred.

We also spent less on marketing, experienced lower consulting fees and did not incur costs associated with sold investment properties for the full year.

32

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

After tax, Affinity Credit Union achieved a 2014 return on equity of 9.54%, exceeding the target of 7.56%. This is the measure of the current year comprehensive income to members’ net worth (membership equity and equity). The credit union exceeded targets for provision for credit losses, other income and operating costs, and this more than offset the unanticipated margin compression and resulting low net yield. The after tax bottom line of $31.52 million exceeded budget by $6.73 million, allowing Affinity to add more to capital.

The efficiency of the credit union for 2014 was 75.97%, much better than the budgeted efficiency target of 79.00%. Affinity was able to retain more of each dollar earned to exceed expectations.

Without the impact of non-recurring items, the ratio would have been approximately 78%. Our peer group average for this metric was 73.69% and our internal target is 69%. A better efficiency ratio will be a mandate for future operating periods.

Outlook The 2015 budget year calls for reasonably aggressive growth.

Our capital modelling advocates growth in excess of 10%, but we have planned instead for more reasonable growth levels of 8-10%. We will continue to grow through a member experience that continuously improves, through rate, service standards and channel variety. Because we do not expect rates to recover and to subsidize a better member experience, we will carefully analyze our internal processes and eliminate effort and cost where it makes sense. We expect that less than normal credit losses may not be sustained in 2015 and have planned for this accordingly.

A better efficiency ratio to promote capital building will be a pressing immediate and long term goal.

CAPITAL AND RISK The capital position of Affinity has improved and this was a result of carefully managing balance sheet growth and maintaining a strong return on equity. We were not in this position a year ago when we saw our capital levels decline through our 2013 partnerships. Our plan reflected regulatory standards that were introduced in 2013. The budget called for a Tier 1 capital ratio of 11.46% and we achieved 12.09%. The internal capital target was 11.5%. Our regulator, Credit Union Deposit Guarantee Corporation of Saskatchewan mandates 6% Tier 1 Capital and this will increase to 8.5% effective in 2016. The average Tier 1 Capital for our peer group was 10.67%.

The current Affinity Capital Plan includes a calculation of the economic capital requirement for Affinity relative to our most significant business risks: credit, market, liquidity, strategic, business and operation. The economic capital requirement includes stress testing and assumes that all risks will present simultaneously. Affinity is expected to hold book capital in excess of economic capital of 30%. The result for 2014 was a capital surplus of 46.77%.

Adequate capital levels are required to protect the credit union from risk exposure. Affinity’s most significant financial risks are credit risk through lending, liquidity risk and market risk. Further capital management details can be found in Note 29 to the Consolidated Financial Statements.

Credit Risk The Credit Union faces credit risk for each loan committed. The level of that risk depends on the likelihood of borrower default and the strength of security attached to the loan. In the event of default, the credit union will reflect an allowance against the loan to the extent of any security shortfalls. When the allowance is recognized, an offsetting expense is recorded (provision for credit losses) and the full amount of the principal is classified as doubtful. At the end of 2014, Affinity maintained both a specific and a collective impairment assessment. The collective impairment assessment estimates the risk inherent in the portfolio not specifically identified. The collective assessment dollar amount was based on historical losses and represented 32.00% of total allowances.

At the end of 2014, there were a number of delinquent loans where payment had not been made for at least 90 days. Loan delinquency as a percentage of total loans was 0.20%, far below the credit union’s risk tolerance of 1.50% and less than the prior year result of .23%. There have been decreases in the delinquency of commercial and agriculture portfolios in 2014. This is due to a stronger loan portfolio, but it’s also due to a year over year 15% increase in written-off loans.

To properly determine the economic capital requirement for credit risk, the credit union used an evaluation tool that analyzed each loan based on the probability of default (borrower’s ability to pay), the loss given default (actual loss against delinquent credit) and the exposure at default (effort and cost associated with security collection). The tool also included several components of stress testing.

Annual Report and Summary Consolidated Financial Statements

Liquidity Risk Liquidity risk is the risk of the credit union not being able to satisfy current and future expected demands on cash. The Board and management have set targets of necessary surplus liquidity over a one year time horizon that leave a generous liquidity buffer to withstand the stress of unusual events and contemplate current expected cash flow. Intermediate targets have also been established to force action long before any critical shortfalls are experienced. Throughout 2014 and at year end, liquidity had been managed well within these parameters.

The liquidity standards of the credit union are in addition to the statutory liquidity requirement (10% of deposits and borrowings), maintained as an investment at SaskCentral. Affinity has a number of liquidity management tools that are used in concert and supplement daily cash flow monitoring.

We expect that in 2017, our regulator will require us to follow new Basel liquidity standards. Over the course of 2014, the credit union had tested its position against these new standards and consistently met them.

Market Risk Market risk to Affinity is the risk of loss on the value of a financial instrument or portfolios of financial instruments from changes in interest rates, foreign exchange rates and credit spreads amongst other factors. The Board and management have both long and short-term market risk metrics to manage the impact of interest rate risk on operating results and the market value of equity.

The credit union employs a statistical model that provides for a measure of stress testing through multiple rate scenarios. During 2014 and at year end, Affinity continued to reflect very low levels of market risk for both the near term (1 year) and long term (5 years). Affinity also remained well within its policy limit on foreign exchange exposure.

Financial risk management and associated metrics and discussion are included in Note 28 to the Consolidated Financial Statements.

Affinity has several active risk management committees to review and develop strategies to actively manage the financial risks to the credit union. These committees meet at least quarterly and decisions are then forwarded for review to the Strategic Risk Committee and to the Audit and Risk Committee of the Board.

DECEMBER 31, 2014

33

34

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying consolidated financial statements of Affinity Credit Union 2013 were prepared by management, which is responsible for the integrity and fairness of the information presented, including the many amounts that must of necessity be based on estimates and judgments.

These consolidated financial statements were prepared in accordance with financial reporting requirements prescribed by the Credit Union Act, 1998 of the Province of Saskatchewan, Credit Union Deposit Guarantee Corporation, and by statute. The accounting policies followed in the preparation of these financial statements conform to international reporting standards (IFRS).

Financial and operating data elsewhere in the annual report are consistent with the information contained in the financial statements. In discharging our responsibility for the integrity and fairness of the consolidated financial statements and for the accounting systems from which they are derived, we maintain the necessary system of internal controls designed to ensure that transactions are authorized, assets are safeguarded, and proper records are maintained. These controls include quality standards in hiring and training of employees, policies and procedures manuals, a corporate code of conduct and accountability for performance within appropriate and welldefined areas of responsibility.

The system of internal controls is further supported by a compliance function, which is designed to ensure that we and our employees comply with appropriate legislation and conflict of interest rules, and by an internal audit staff, which conducts periodic audits of all aspects of our operations.

The Board of Directors oversees management’s responsibilities for financial reporting through an Audit and Risk Committee, which is composed entirely of independent directors.

This Committee reviews our consolidated financial statements and recommends them to the Board for approval. Other key responsibilities of the Audit and Risk Committee include reviewing our existing internal control procedures and planned revisions to those procedures, and advising the directors on auditing matters and financial reporting issues.

Our Senior Compliance Manager and Chief Internal Auditor have full and unrestricted access to the Audit Committee.

Further monitoring of financial performance and reporting is carried out by the Credit Union Deposit Guarantee Corporation. It is given its responsibilities and powers by provincial statute through the Credit Union Act. Its purpose is to guarantee members’ funds on deposit with Saskatchewan Credit Unions and provide preventative services. Preventative services include ongoing financial monitoring, regular reporting and consultation.

Deloitte LLP, Chartered Professional Accountants appointed by the members of Affinity Credit Union 2013 upon the recommendation of the Audit and Risk Committee and Board, have performed an independent audit of the consolidated financial statements and their report follows. The auditors have full and unrestricted access to the Audit and Risk Committee to discuss their audit and related findings.

Mark Lane Chief Executive Officer

Lise de Moissac Senior Vice President and Chief Financial Officer

Saskatoon, Saskatchewan February 23, 2015

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

Deloitte LLP 122 1st Ave. S. Suite 400, PCS Tower Saskatoon SK S7K 7E5 Canada Tel: (306) 343-4400 Fax: (306) 343-4480 www.deloitte.ca

REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS TO THE MEMBERS OF AFFINITY CREDIT UNION 2013 The accompanying summary consolidated financial statements, which comprise the summary consolidated statement of financial position as at December 31, 2014, and the summary consolidated statement of comprehensive income, summary consolidated statement of changes in equity, and summary consolidated statement of cash flows for the year then ended, and the related note, are derived from the audited consolidated financial statements of Affinity Credit Union 2013 (the “Credit Union”) for the year ended December 31, 2014. We expressed an unmodified audit opinion on those consolidated financial statements in our report dated February 23, 2015.

The summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards. Reading the summary consolidated financial statements, therefore, is not a substitute for reading the audited consolidated financial statements of the Credit Union referred to above.

Management’s Responsibility for the Summary Consolidated Financial Statements Management is responsible for the preparation of a summary of the audited consolidated financial statements on the basis described in the note to the summary consolidated financial statements.

Auditor's Responsibility Our responsibility is to express an opinion on the summary consolidated financial statements based on our procedures, which were conducted in accordance with Canadian Auditing Standard 810, Engagements to Report on Summary Financial Statements.

Opinion In our opinion, the summary consolidated financial statements derived from the audited consolidated financial statements of the Credit Union for the year ended December 31, 2014 are a fair summary of those consolidated financial statements, on the basis described in the note to the summary consolidated financial statements.

Chartered Professional Accountants February 23, 2015 Saskatoon, Canada

35

36

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

AFFINITY CREDIT UNION 2013 SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31 (in thousands of dollars) 2014

2013

(Note 1)

(Note 1)

ASSETS Cash Financial investments Investment properties Loans Current income tax asset Other assets Fair value of derivative assets Investment in associates Property and equipment Assets held for sale Intangible assets Deferred income tax asset

$

41,881 630,314 4,534 3,545,442 363 6,265 3,510 169 73,172 20,930 3,056

$

30,019 531,783 21,598 3,259,961 8,631 4,478 150 72,092 1,935 21,261 3,807

$

4,329,636

$

3,955,715

$

3,934,945 2,101 41,290 3,510 1,388 265 3,208

$

3,596,062 6,781 132 30,673 4,531 2,475 274 3,378

LIABILITIES Deposits Loans and borrowings Current income tax liability Other liabilities Fair value of derivative liabilities Deferred income tax liability Deferred income Membership equity

3,986,707

3,644,306

343,003 142 343,145

310,658 351 311,009

EQUITY Retained earnings Accumulated other comprehensive income (loss) Equity attributable to owners

(216)

Non-controlling interest $

4,329,636

400 $

The accompanying note is an integral part of these consolidated financial statements.

APPROVED BY THE BOARD

..................................................... CFO

..................................................... Director

3,955,715

Annual Report and Summary Consolidated Financial Statements

37

DECEMBER 31, 2014

AFFINITY CREDIT UNION 2013 SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended December 31 (in thousands of dollars) 2014 (Note 1)

PROFIT OR LOSS INTEREST INCOME Loans Investments

$

INTEREST EXPENSE Deposits Borrowings and investment shares Personnel - defined benefit obligations

2013 (Note 1)

143,432 10,356 153,788

$

39,809 355 77 40,241

31,256 282 68 31,606

113,547 865 112,682

NET INTEREST PROVISION FOR CREDIT LOSSES (RECOVERY) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

115,961 9,439 125,400

93,794 (153) 93,947

48,970 169 49,139

36,427 52 36,479

161,821

130,426

66,217 42,027 8,690 3,244 3,420 123,598

57,829 34,266 6,331 3,137 2,864 104,427

-

4 4

PROFIT BEFORE INCOME TAX PROVISION FOR INCOME TAXES (RECOVERY) Current Deferred

38,223

25,995

PROFIT

31,729

OTHER INCOME SHARE OF PROFIT OF EQUITY ACCOUNTED INVESTEES

NET INTEREST AND OTHER INCOME OPERATING EXPENSES Personnel General business Occupancy Organizational Security ALLOCATIONS Patronage allocation

6,830 (336) 6,494

5,691 (819) 4,872 21,123

OTHER COMPREHENSIVE INCOME ITEMS THAT WILL NOT BE CLASSIFIED TO PROFIT AND LOSS Actuarial gain (loss) on employee benefits, net of tax

(172)

304

ITEMS THAT MAY BE CLASSIFIED TO PROFIT AND LOSS Unrealized gain (loss) on AFS financial instruments, net of tax

(20)

141

RECLASSIFICATION OF GAINS (LOSSES) ON Available-for-sale financial assets disposed of in the year

(17)

-

(209)

445

OTHER COMPREHENSIVE INCOME (LOSS) TOTAL COMPREHENSIVE INCOME

Total Comprehensive income attributable to: Affinity Credit Union Non-controlling interests from minority shareholders

$

31,520

$

21,568

$

32,136 (616) 31,520

$

21,567 1 21,568

$

The accompanying note is an integral part of these consolidated financial statements.

$

38

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

AFFINITY CREDIT UNION 2013 SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended December 31 (in thousands of dollars) 2014 (Note 1) Retained earnings including contributed surplus Balance, beginning of year

$

310,658

Accumulated other comprehensive income $

-

Addition to contributed surplus

Equity attributable to owners

351

$

311,009

-

Changes in other comprehensive income, net of tax Balance, end of year

343,003

(209) $

142

400

343,145

$

31,729

$

(216)

311,409 -

(616)

(209) $

Total equity

-

32,345

$

$

-

32,345

Total profit or (loss)

Non controlling interest

(209) $

342,929

2013 (Note 1) Retained earnings including contributed surplus Balance, beginning of year

$

204,588

Addition to contributed surplus

84,948

Total profit or (loss)

21,122

Changes in other comprehensive income, net of tax Balance, end of year

$

310,658

(94)

$

-

$

Equity attributable to owners

Accumulated other comprehensive income

445 $

351

$

204,494

Non controlling interest $

399

Total equity $

204,893

84,948

-

84,948

21,122

1

21,123

445

-

445

311,009

$

400

The accompanying note is an integral part of these consolidated financial statements.

$

311,409

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

AFFINITY CREDIT UNION 2013 SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS Year ended December 31 (in thousands of dollars)

CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Total profit Adjustments for Non-controlling interest Provision for credit losses Depreciation of property and equipment Amortization of intangible assets Loss (gain) on disposal of investment property Loss (gain) on disposal of property and equipment Loss on disposal of intangible assets Impairment of intangible assets Share of profit from investment in associates Realized (gain) on available-for-sale investments Unrealized loss on held-for-trading investments Amortization of premium/discount on held-for-trading investments Amortization of premium/discount on held-to-maturity investments Amortization of premium/discount on available-for-sale investments Amortization of premium/discount on loans and receivables Unrealized loss on investment property Unrealized loss (gain) on held-for-trading derivatives Proceeds from maturity of held-for-trading investments Loans Income tax expense

$

Changes in non-cash working capital Net change in accrued interest receivable and payable Other assets Other liabilities Deferred income

Cash interest received Cash interest paid Cash income taxes paid

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Dividends received from associates Net cash flow attributed to minority shareholders Net assets acquired through business combinations Proceeds from maturity of liquidity and term investments Purchases of liquidity and term investments Proceeds from maturity of available-for-sale investments Purchases of available-for-sale investments Proceeds from maturity of held-to-maturity investments Purchases of held-to-maturity investments Purchase of investment property Purchase of property and equipment Purchase of intangible assets Proceeds from disposal of property and equipment Proceeds from disposal of investment property

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Increase of deposits Repayment of loans and borrowings Issuance of new loans and borrowings Repayment of membership equity Sale of loans

2014

2013

(Note 1)

(Note 1)

31,729

$

21,123

616 865 5,349 1,712 (2,392) (6,197) 202 5 (169) (545) 114 (305) 62 1,074 137 1,543 (52) 2,783 (431,361) 6,505 (388,325)

(153) 3,643 1,299 116 2 9 (52) (345) 241 68 798 (178) (228) (23) 7,380 (434,754) 4,872 (396,182)

1,113 2,366 10,416 (9) (374,439)

(450) 2,164 4,026 33 (390,409)

153,361 (38,623) (7,390)

121,692 (28,420) (5,307)

(267,091)

(302,444)

150 (616) 457,692 (589,609) 15,026 (970) 7,777 (1,740) (267) (6,476) (1,588) 8,179 18,180

101 1 48,507 253,118 (166,008) 14,319 (6,988) 22 (4,165) (18,212) (1,485) 32 -

(94,262)

119,242

375,609 (4,505) 182 (170) 2,099

204,949 (3,859) 1,300 (9,064) 5,891

373,215

199,217

NET INCREASE(DECREASE) IN CASH

11,862

16,015

CASH, BEGINNING OF YEAR

30,019

14,004

CASH, END OF YEAR

$

41,881

The accompanying note is an integral part of these consolidated financial statements.

$

30,019

39

40

Annual Report and Summary Consolidated Financial Statements

DECEMBER 31, 2014

AFFINITY CREDIT UNION 2013 Note to the Summary Consolidated Financial Statements December 31, 2014 1. Basis of the summary consolidated financial statements The criteria applied by management in the preparation of these summary consolidated financial statements are as follows: a)

The information in the summary consolidated financial statements is in agreement with the related information in the Credit Union’s December 31, 2014 audited consolidated financial statements (the “Audited Financial Statements�); and

b)

The summary consolidated financial statements contain the information necessary to avoid distorting or obscuring matters disclosed in the Audited Financial Statements, including the notes thereto.

c)

The Audited Financial Statements can be obtained at any Affinity Credit Union branch or on-line at: https://www.affinitycu.ca/YourCreditUnion/About/Pages/HowWereDoing.aspx

d)

The detailed notes included in the Audited Financial Statements are not included in the summary consolidated financial statements as these notes are available in the Audited Financial Statements which can be obtained as described above.

AFFINITY CAMPUS

902 7th Avenue North Saskatoon, SK S7K 3P4 Mail to: PO Box 1330 Saskatoon SK S7K 3P4