Affinity Credit Union
2024 Annual Report
Credit Union Deposit Guarantee Corporation (the Corporation) functions as the deposit guarantor for Saskatchewan’s provincially regulated credit unions (Saskatchewan Credit Unions) and serves as the primary regulator for Saskatchewan Credit Unions and Credit Union Central of Saskatchewan (SaskCentral). Collectively, these entities are referred to as Provincially Regulated Financial Institutions or “PRFIs”. The Corporation operates under provincial legislation, namely, The Credit Union Act, 1998 and The Credit Union Central of Saskatchewan Act, 2016. The responsibility for overseeing the Corporation is assigned to the Registrar of Credit Unions with the Financial and Consumer Affairs Authority of Saskatchewan as specified by provincial legislation. Established in 1953, the Corporation holds the distinction of being the first deposit guarantor in Canada,
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Our Purpose
Connecting people and communities to financial possibilities.
In late 2024, we introduced our new purpose statement to define our core motivation and the impact we strive to make every day – not only for our members but for Saskatchewan communities. It clearly explains why Affinity exists and guides each and every one of our actions and decisions.
This significant milestone was over a year in the making. We started out by surveying our employees to find out their thoughts on our current vision, mission and values. What we learned was invaluable, as we needed a purpose statement that truly reflects who we are, why we exist and the impact we make in the lives of our employees, members and communities.
How did we land on our purpose statement? Great question! We created a vision & purpose champion group with employees from all areas of our organization and throughout the province to find statements that spoke to them as employees and members. They played a crucial role in developing a statement that resonated with all employees and most importantly, aligned with our core values as a credit union of being open, honest, inclusive and committed.
“Connecting people and communities to financial possibilities” is not just a declaration; it’s a commitment to each other, our members and the communities we serve. It’s here to guide us in our daily work and help us stay aligned to empowering financial possibilities for all.
Our purpose is the reason we exist and our values are the core of our identity and the foundation of our culture. Our values are rooted in our history, the cooperative values and principles, and reflect who we are, what we believe in and how we engage in every interaction.
From Our Chair
As always, we begin each year focused on our members’ financial needs and with the rising cost of living, we knew how important that truly was in 2024. Despite high economic uncertainty and rising mortgage rates, we continued to offer our members sound advice, enabling them to make their best financial decisions. As the year progressed and the financial headwinds slowed, the Bank of Canada started decreasing rates. This enabled us to lower mortgage rates for our members.
2024 was a pivotal year as we welcomed Nilesh Kavia as our new Chief Executive Officer. Nilesh is ready to guide your credit union into the future with a continued commitment to you – our members – through our skilled and valued team of employees. Our employees support new generations in building wealth by offering tailored experiences, relevant products, digital innovations and our continued commitment to our communities.
In April, we closed the doors to our St. Mary’s Advice Centre, which proudly served the Pleasant Hill community in Saskatoon since 1949. This was a difficult decision made by your Board, but due to a series of incidents, it was the right path forward to prioritize the safety of our employees, members and the public. Our members have entrusted us with their financial needs and that’s a legacy
From Our CEO
Leading Affinity Credit Union has been a privilege and my focus this past year has been on you, our valued members and the dedicated team of employees supporting you.
Despite economic challenges at the start of the year, we prioritized you and solidified our legacy as a leading credit union in Saskatchewan. With the volatility in interest rates in 2024, we continued to offer very competitive rates to our members for loans and deposits, reaffirming our commitment to helping you achieve your financial goals.
As Saskatchewan communities continue to grow, we’re here to contribute to that growth in any way we can. This is why we launched many new initiatives and programs in 2024, including our New to Canada program, which offers tailored products and services for our newest neighbours.
we’re proud to have. While we have said farewell to this advice centre, we remain committed to our St. Mary’s members, employees and the surrounding community.
Local communities are the reason that Saskatchewan is a great place to work, live and play. Our values as a cooperative are our compass in everything we do and that’s why we’re happy to announce that in 2024, your credit union funded $2.18 million to organizations, charities and initiatives that are local to you, our members.
On a personal note, as I prepare to end my time as a member of the Board after 14 years, I want to celebrate what we have achieved for our members and extend my gratitude to everyone I have worked with over this time. Affinity is a thriving cooperative deeply rooted in purpose, serving our members and communities while building a resilient business for the future.
As we look ahead, we’re reimagining how we connect with existing and new members in ways that will set us apart from our competition. We’re excited for the opportunities the future holds and to think bigger than we ever have before. We’re here to connect people and communities to financial possibilities.
Mitchell Anderson Board Chair
With our deep connection to Saskatchewan’s rural heritage, we take pride in being an integral part of the local communities where we live and serve. Over the past year we’ve witnessed the expanding needs of our members, enabling us to address the dynamic requirements of our farmers. While we did see some challenges in this sector, in 2024, our Ag team achieved a milestone of over $1 billion in loans.
The Affinity Wealth Management team, focused on financial planning to help members achieve their financial goals also hit a prestigious milestone in 2024 of reaching $2 billion in managed wealth.
As we look ahead this year, we are deeply grateful to you, our valued members. Your support allows us to demonstrate our passion for innovation and community, all while prioritizing your financial well-being.
Nilesh Kavia Chief Executive Officer
(l-r): Mitchell Anderson (Board Chair), Nilesh Kavia (CEO)
$10.5B IN MANAGED ASSETS
51,000
New to Canada Program
The communities in Saskatchewan are growing and we’re committed to playing an active role in supporting this growth in every possible way! Recognizing the importance of welcoming and integrating new residents, we launched our New to Canada program in 2024. This program is designed to provide customized products and services that cater specifically to the unique needs of our newest community members, ensuring they feel supported and valued as they settle into their new community.
New Online Banking and Affinity Mobile App Features
Enhancing your member experience is our priority. In 2024, we introduced new features to our online banking and Affinity Mobile app to continue creating a seamless digital experience for you. Saving for your first home is important and we wanted to make it easy to get started! That’s why we made it possible to open a First Home Savings Account directly online. Additionally, you can now link Aviso Wealth*, Qtrade Direct Investing® and Qtrade Guided Portfolio® accounts directly to your online banking for a more integrated view of your investment portfolios!
*Online brokerage services are offered through Qtrade Direct Investing. Mutual funds and other securities are offered through Aviso Wealth. Qtrade Direct Investing, Qtrade Guided Portfolios and Aviso Wealth are divisions of Aviso Financial Inc.
206,831
CALLS TO OUR CONTACT CENTRE WITH AN AVERAGE WAIT TIME OF 2 MINUTES AND 7 SECONDS
Launch of Wealth Website
Our Affinity Wealth Management team provides professional advice to guide you along your personal financial journey. With that in mind, we launched a dedicated wealth website. This site features content for our wealth members, including a comprehensive review of our services, team introductions, online appointment scheduling and more!
100% owned BY MORE THAN 144,000 members
45,368 ENROLLED INTERAC® SIGN-IN SERVICE USERS
840 INCREDIBLE EMPLOYEES
$428,345 INVESTED IN EMPLOYEE TRAINING AND DEVELOPMENT
Lending Services
As an Affinity member, your money is put to work through investments that support your community. Member deposits fund loans for your neighbours to buy homes, start new businesses, continue their education and more! You’re helping drive the Saskatchewan economy forward with these investments, making our province a great place to call home!
DECEMBER 31 PORTFOLIO BALANCES: 2024 2023
6,000,957,380
Impact Lending
At Affinity, making a difference in our communities is a top priority. Whether it’s assisting those with little or no credit history, providing affordable housing loans, or helping to make small business dreams a reality – we’re here to support you.
*Impact lending present loans funded in the respective year as opposed to cumulative outstanding balances.
Governance at Affinity
The Board is committed to transparent, accountable, open and ethical governance.
Board Governance
The Board of Directors is comprised of 12 highly qualified individuals, evaluated through a rigorous and competitive process by the Board Nominating Committee and elected by the membership.
The Board provides oversight and direction to Affinity Credit Union. As a Provincial Systemically Important Financial Institution (P-SIFI), this includes achieving the highest standards of corporate governance, overseeing and approving the Strategic Plan, Corporate Governance Framework, Risk Management Framework and financial performance of the organization.
The Board meets at least quarterly to discharge their primary responsibilities to approve and oversee items essential to prudential oversight of Affinity Credit Union, such as strategy, risk appetite, capital plans and key policies, and to provide challenge, advice and guidance to senior management.
In 2024, the Board accomplished the following key deliverables:
• Approved the 2025-2027 Strategic Plan, which is designed to exceed the evolving needs of our members, employees and communities across generations.
• Refreshed Affinity’s Purpose and Vision statements in alignment with a forward-looking 2025-2027 Strategic Plan.
• Approved a Corporate Governance Framework, which sets out the structure, principles, policies and practices of the Board, and enables Affinity to meet governance expectations of the regulator and stakeholders.
• In alignment with the approved Ideal Board Profile, directors identified the skills and competencies required to constitute an ideal board. Director candidates were evaluated against this criteria and qualified director candidates were presented to the membership for election.
• Conducted director performance peer assessment as part of the annual performance review cycle to assist in determining areas for individual development.
• Onboarded the new Chief Executive Officer (CEO).
Continuing Education
The Board is committed to education and professional development to ensure that the directors have the knowledge and skills necessary to fulfill oversight responsibilities. The Board has three general approaches to continuing education: onboarding, training and continuing education.
In 2024, the following Board education sessions were held to address topics considered to be particularly important, including federalization, the credit union system and Affinity’s strategy, Board’s role in strategic oversight, cooperative education on values and Affinity credit card education session. The four incoming directors also participated in orientation and mentorship programs.
Our Board of Directors
Our Board of Directors has a fiduciary responsibility to Affinity and follows the standards set out in the Credit Union Act 1998, the Standards of Sound Business Practice, regulatory requirements and all applicable legislation. Affinity’s independent Board of Directors is led by the non-executive Board Chair. The day-to-day management of Affinity is delegated to Affinity’s
Chief Executive Officer. The Board of Directors approves policies and ensures Affinity operates with integrity, honesty, fairness, professionalism and the highest ethical standards.
Back row (l-r): Wendy Becenko, Kent Kraft, Pauline Ziehl-Grimsrud, Leanne LaPrise, Joseph Rybinski, Tracy Arno, Deirdra Ness (Vice Chair)
Front row (l-r): Cara Bahr, Mitchell Anderson (Chair), Kurt Holfeuer, Cindy Anderson, Nathaniel Cole
Meeting Attendance
2024 Director Meeting Attendance
January 1 – December 31, 2024
Chair
addition to the regular meeting cycle, the Board met on seven different occasions for strategic planning.
Board Committees
The Board has overall responsibility for corporate governance and for the work undertaken by committees. Board oversight and committee authority is provided for in the respective committee terms of reference, through Board appointment of committee members and assurance that the required technical skills and competencies are met. Based on self-assessment in 2024, each committee discharged its duties as outlined in the terms of reference and workplans.
BOARD COMMITTEE
Audit and Finance
Risk & Conduct
Review Committee
Human Resources & Compensation
Governance
Nominating
*As at December 31, 2024
AD HOC COMMITTEE
ESG
*As at December 31, 2024
BOARD COMMITTEE MEMBERS * RESPONSIBILITIES
Wendy Becenko
Nathaniel Cole
Kent Kraft
Deirdra Ness (Chair)
Pauline Ziehl-Grimsrud
Tracy Arno
Cara Bahr
Kurt Holfeuer (Chair)
Leanne LaPrise
Cindy Anderson
Mitchell Anderson
Tracy Arno (Chair)
Deirdra Ness
Cindy Anderson
Nathaniel Cole (Chair)
Kent Kraft
Joseph Rybinski
Mitchell Anderson
Leanne LaPrise
Joseph Rybinski (Chair)
Ensures adherence to a Financial Control Framework for the protection of members’ assets. The Framework ensures adherence to regulatory financial controls and reporting standards.
Responsible for oversight of the Risk Management Framework, legal and regulatory compliance frameworks. Oversees adherence to the principles of ethical conduct and responsible business behavior.
Oversees the Compensation Strategy and Human Resource Policy Framework. Provides performance management and succession planning for the CEO.
Provides oversight of Affinity’s governance model, including the Board Governance Framework.
AD HOC COMMITTEE
MEMBERS
Cara Bahr (Chair)
Wendy Becenko
Kurt Holfeuer
Pauline Ziehl-Grimsrud
Responsible for the oversight of the nomination and election processes.
RESPONSIBILITIES
Responsible for the oversight of the development and approval of an ESG Framework, organizational tactics and reporting.
Remuneration
2024 Board Director Compensation
BOARD DIRECTOR
Wayne Amos
Cindy Anderson
Mitchell Anderson
Tracy Arno
Cara Bahr
Wendy Becenko
Debra Chobotuk
Nathaniel Cole
Scott Flavel
Kurt Holfeuer
January – April
January – December
53,556 January – December
31,124 January – December
22,924 April – December
25,861 January – December
12,676 January – April
January – December
January – April
January – December Kent Kraft
Leanne LaPrise
Deirdra Ness
Joseph Rybinski
Larry Spratt
Pauline Ziehl-Grimsrud
April – December
April – December
January – December
29,049 January – December
8,967 January – April
19,836 April – December Total
2024 Executive Leadership Team Compensation
*Variable pay amounts are accrued as an expense in the fiscal year earned and paid the following year. The above table represents the timing based on when these amounts are actually paid.
**CEO Compensation includes both the outgoing and incoming CEO in 2024 – change effective February 1, 2024.
***Include active and departed members of the Executive Leadership Team throughout 2024.
CONTACTING THE BOARD
Do you have question for our Board of Directors? Reach out to us at: governance@affinitycu.ca or Corporate Secretary
Affinity Credit Union 902 7th Avenue North Mail to: PO Box 1330 Saskatoon, SK S7K 3P4
Our Executive Team
At Affinity, our members are our top priority. Guided by decades of expertise and experience we’re committed to the future of your credit union.
We live by our cooperative principles in both leadership and our communities. You’ll see us living these values by leading committees we’re passionate about and engaging in programs and initiatives in the communities across Saskatchewan.
We’d like to welcome our new CEO, Nilesh Kavia and look forward to his leadership to shape the future of your credit union. His vast expertise will help strengthen our commitment to delivering remarkable service to you — our members.
As a team, we work together to continually enhance your credit union and your feedback is important as it guides our strategy to provide you with the products and services that matter most.
(l-r): Heather Sully, Chief People Officer; Tammy Martins, Chief Experience & Operations Officer; Richard Schwan, Chief Banking Officer; Nilesh Kavia, Chief Executive Officer; Corina Farbacher, Chief Risk Officer; Cammy Ouellette, Chief Financial Officer; and Mike Elchuk, Chief Information Officer.
Working at Affinity
Our employees are essential to our organization, showing up each day with a dedication and passion for our purpose. We look to attract, motivate and retain top talent by offering programs, career opportunities and an environment that allows employees to bring their whole selves to work.
At Affinity, we live our values daily by volunteering in our communities and supporting initiatives that promote our commitment to diversity and inclusion. This is demonstrated by our Executive Leadership Team
and employees participating in events like Rock Your Roots, The Jim Pattison’s Childrens Hospital Radiothon or even decorating smile cookies for Tim Hortons to raise money for organizations such as Hope’s Home.
We aim to provide our members with a remarkable experience, starting with our employees. From the moment they walk-in, we want them to feel supported and know that Affinity is a safe space for everyone to do their best work.
Our Remarkable Employee Experience
Our Remarkable Employee Experience (REX) incorporates all the ways in which we connect with, motivate and support our employees, and ways in which we attract prospective talent to Affinity. In 2024, we extended the visibility of REX by launching the REX Handbook, which allows employees to quickly access information on all programs, benefits and opportunities available to them as Affinity employees!
In the fall of 2024, we launched our annual Employee Engagement Survey, which provided valuable feedback and insights into our employee experience. A total of 93% of employees participated in the survey and our results placed Affinity in the top decile of overall engagement scores, when compared to other Canadian-based, medium-sized organizations! We’ve begun organizing the valuable insights gathered from the survey results to inform the fine-tuning of our REX.
In 2024, we continued to support a variety of programs aimed at sustaining the mental, physical, emotional and overall well-being of our employees. One example is the Just for My Well-being program which funds a wide variety of products, services and experiences aimed at nurturing our employees’ well-being, in a truly flexible and individualized manner. Through this program alone, in 2024, we invested a total of nearly $225,000 directly to employee well-being.
We are dedicated to celebrating teamwork and social connection! We re-focused and streamlined our Employee Care Program in 2024. This program is jointly funded by employees and Affinity and enables them to show support, care and to celebrate life’s milestones with each other! Some of the life events recognized through this program are obtaining Canadian citizenship, bereavement, birth/adoption of a child, first home and farewells. Another way in which we build team appreciation at Affinity is through peer-to-peer recognition. Cheers for Peers is our program where employees are encouraged to recognize individuals or teams for a job well done. We saw a record-breaking total of 5,521 cheers sent to employees across the organization in 2024. This is what makes our work environment so unique!
We continue to empower our employees to be captains of their careers and to pilot their individual learning and growth. In 2024, we transitioned all learning content into the Human Resources Information Systems
(Dayforce) to improve our employees’ experience, to offer more curated job-specific learning opportunities, and to enable enhanced analytics. In 2024, we saw over 200 courses made available to employees and nearly 5,000 course completions recorded in Dayforce. In 2024, we also drew attention to self-directed career development whereby 93 employees completed the initial course in a new two-part series focused on career discovery and exploration.
“I love that I can make a positive impact on my team through advice, encouragement and leadership. Coming to work here was an easy choice as Affinity’s values resonate with me and I appreciate the focus on putting members first.”
In 2025, we’ll continue to enhance our training opportunities, namely in developing new career pathing learning plans. We’ll also continue to focus on building leadership capacity across the organization through launching new leadership courses or plays and maintaining our Emerging Leaders program, which is aimed at new people leaders and those aspiring to people leader roles.
We’re committed to supporting a work environment where each person finds purpose, takes accountability for meaningful work, excels and grows their career!
Christina Diaz Advice Centre Team Lead Eighth Street
Our Commitment to Truth and Reconciliation
We recognize reconciliation is built on consistent and continuous action. Building on our progress and acknowledging areas for improvement, development is underway to create a new roadmap to guide our focus into the future.
Informed by Indigenous voices and perspectives, this roadmap will outline our intentions and actions to advance reconciliation. We remain committed to building meaningful relationships of trust with Indigenous Peoples and understanding our role in supporting their economic prosperity.
Guided by our commitment to Truth and Reconciliation, we focused on the following:
KNOWLEDGE RECONCILIATION
Create opportunities for learning and discovery of the history, truth and importance of reconciliation for our employees, members and communities.
ECONOMIC RECONCILIATION
Develop connections to expand employment, education and economic prosperity with Indigenous Peoples, communities and businesses.
VALUES RECONCILIATION
Foster an environment that’s inclusive, respectful and welcoming.
In 2024, we invested more than $250,000 in Indigenous-led programs, projects and initiatives.
nêhiyawak Language Experience
The nēhiyawak Language Experience (nLE), started in 2003, is an annual week-long, summer nêhiyawêwin (Cree language) and land-based gathering held here in Saskatchewan. Their vision is for nêhiyawak (Cree people) to reclaim, restore and relearn nêhiyawêwin to enhance and share nēhiyaw identity.
This year marked the 20th anniversary of the camp’s community language gathering, illuminating intergenerational transmission in Cree revitalization. Affinity is a long-time supporter of this program and in 2024, provided $25,000 to fund teachers and support the creation of even more Indigenous language learners.
Indigenous Learning Day
Part of our commitment to reconciliation is supporting opportunities for learning and celebrating Indigenous culture and traditions through Indigenous voices. In 2024, we provided $4,500 to Spruce Ridge School to help host an Indigenous Learning Day, enabling them to invite Knowledge Keepers to share their traditional First Nations and Métis history and culture with students.
Celebrating Indigenous Culture
Honouring Indigenous culture through pow wows and celebrations are important to preserve and celebrate the rich history and diversity of Indigenous traditions.
We provided over $40,000 to Indigenous cultural events and pow wows across the province, including $10,000 to the week-long Back to Batoche celebration. This annual event welcomes participants from around the world to learn the significant and resilient history of the Métis and their role in Canadian history.
Community Impact
Member Councils
Member Councils are Affinity’s grassroots connection to our members. They put our values into action and connect Affinity to our members.
Member Councils identify opportunities for Affinity support, review and approve Community Development Funding and award the Elwood Harvey Cooperative Leadership scholarships.
The Member Councils met four times in 2024, three times as individual councils and once as a group from across the province. In 2024, they accomplished the following key deliverables:
• reviewed over 400 Community Development Funding applications and distributed $1,055,554 to community initiatives;
• awarded 21 scholarships to young leaders; and
• updated and approved Community Development Funding guidelines, including funding priorities and eligibility criteria.
These are your Affinity member representatives as of December 31, 2024:
SASKATOON
Debbie Brown
Lisa Brundage
Jasmin Carlton
Nadine Connoly
Temitope Dele-Oni
Hilary Gough
Lise LeBlanc
Joan McAulay
Palash Sanyal
Len Usiskin
Charlie Wong
INDIGENOUS
Michael Bob
Sadie Bowman
Robert Merasty
Riel Moran
Terrance Okemow
NORTH
Roy Eichendorf
Ron Gurski
Neil Paetkau
Darrell Reddekopp
Rhonda Thiemann
Peggy Walker
Salton Willems
NORTH EAST
Stephanie Gerwing
Devin Hinz
Cindy Placsko
Cindy Porter
Larry Sparks
Marilee Sterner
NORTH WEST
Stephanie Gosselin
Diana Herzog
Jaeyden Hupaelo
Elaine McMillan
Jonathan Small
Charlene Tebbutt
Adena Viczko
EAST
Brianne Braaten
Rosalie Daisley
Rod Gardner
Jason Harbor
Sharon Nelson
Vicky Piwtorak
Barb Trofimenkoff
SOUTH
Davida Bentham
Joyce Fraser
Bryan Leier
John Maczko
Kathryn Markwart
Virginia Wilkinson
Sherry Wolf
SOUTH CENTRAL
Richard Goulet
Mike Heinrich
Patricia Isherwood
Marie Nadeau
Owen Sebastian
Joni Zdunich
SOUTH EAST
Chelsea Brock
Christie Castellano
Jo-Anne Cushon
Laura Hoimyr
Kevin Sliva
Dyon Stadnick
Vern Symons
Community Investment
It’s because of you, our members, that we’re able to invest these profits back into our local communities. To us, giving back isn’t just the right thing to do, it’s who we are – it’s who you are! Thank you for making these community investments a reality!
Funding by Program
COMMUNITY INVESTMENT (CONTINUED) Funding by District
The year 2024 was marked by the generous contribution of our employees, who volunteered their time to various causes to the equivalent of more than
285 WORK DAYS!
Each One, Teach One (EOTO) Financial Literacy Workshops
Affinity employees are trained to facilitate Each One, Teach One workshops. These financial literacy workshops cover over 17 different money management topics, all delivered in a way that’s easy to understand, helping to build confidence in the participants!
“As a facilitator for Each One Teach One, I have seen the positive impact of financial literacy in participant’s lives. From teens and youth, to seniors, to newcomers to Canada, it’s about empowering people to make informed decisions that lead to achieving financial stability and overall well-being.
Financial literacy plays an integral role in helping people achieve their goals, whether it’s building an emergency fund, saving for a car, or simply budgeting for
everyday expenses. It provides the knowledge and skills to navigate the complex world of finance, making it easier to avoid debt, invest wisely and build a secure future.”
Tracy Lysyk Director, Operational Risk
and dedicated EOTO facilitator
15
Food Security & Inclusion
Affordable access to nutritious food is essential for building resilient and thriving communities. In 2024, we invested over $135,000 to food security programs across Saskatchewan including food banks and food pantries, school nutrition programs, community cooking classes and more.
Fueling young minds
For the past six years, Food for Students has been a source of nourishment for the 150 students at Watson School. The belief that no child should have to face the school day on an empty stomach drives this initiative.
“I firmly believe that there’s a lot of things these days that can cause distractions for kids in their learning. I don’t believe that hunger should be one of them,” says Inga MacLaine, Educational Assistant and organizer of the breakfast program.
The school serves students from Kindergarten to Grade 12 foods such as cereal, milk, hard boiled eggs and fresh fruit every morning before classes begin. Not only does the daily breakfast promote a nutritious and balanced diet among students, but the positive social start to the morning also sets the tone for a productive day of learning and growth.
The program’s success is also attributed to the support from local businesses and organizations, including $5,000 in Community Development Funding from Affinity. This funding has allowed for more flexibility in purchasing fresh fruit and whole grain breads, ensuring that the students receive the best quality food possible.
Inga hopes to expand the program further, continuing to provide nourishment and support to even more students. For now, the breakfast program stands as a shining example of what can be achieved when a community comes together to support its youngest members. With each meal served, the program not only fills hungry bellies but also nurtures young minds, setting them on a path to a brighter future.
$5,000 WATSON FOOD FOR STUDENTS
Community Assets
Our local communities are the heart of who we are, and communities thrive when they have places to gather, play and support one another. That’s why in 2024, we invested over $400,000 in building, repairing and strengthening community assets such as pools, childcare centres, community halls, playgrounds, libraries and more.
Setting the stage for a community hub
Since 1989, the Darkhorse Theatre has been entertaining residents of Shaunavon and surrounding area with drama productions and dinner theatres that are 100% produced, directed and acted in by community volunteers. For years the theatre company practiced and performed in different facilities around town and when the decommissioned United Church went up for sale, they jumped at the chance to have a permanent home.
Renovations were completed to suit the theatre’s needs, all while maintaining the integrity of the church, repurposing old wood and other materials wherever possible. But their new facility isn’t used just for theatre productions — Darkhorse Theatre is able to rent out their facility to groups and individuals for events, weddings, etc., making it an important community asset.
Since the church was built in 1929, some upgrades to the heating systems were required. Replacing the old boiler with a furnace, ductwork and air conditioning means the facility can be used for more summer events, while cutting heating costs in the winter. The money raised from raffle tickets and tickets sales from each production gets the Darkhorse Theatre one step closer to their facility upgrade goal.
Seeing the pivotal role not just the theatre but the building plays in the community, Affinity was delighted to contribute $5,000 in Community Development Funding toward their heating and cooling upgrade project.
“Affinity’s donation takes some weight off our shoulders and shows that local businesses support us,” says Angie Illerberun from Darkhorse Theatre. “This support
motivates us to strive even more, knowing that people believe in what we’re doing and want to help. It confirms we’re on the right path and allows us to start projects sooner than expected. We’re very thankful for that!”
$5,000
SHAUNAVON DARKHORSE THEATRE
Financial & Social Inclusion
Investing in financial and social inclusion programs is essential for creating equitable opportunities and fostering a sense of belonging. In 2024, over $255,000 was invested in programs and initiatives that promote inclusion and connect people and communities through mentorship, literacy and social well-being.
Bundles of support
Little Red Hens — a remarkable initiative born out of necessity and compassion. Inspired by a simple yet impactful gesture — a box of diapers given as a gift to a new mom from a thoughtful individual — Sarah Johnson and her best friend decided to turn this simple gift into something bigger. They envisioned a support system that had no barriers to entry and could be consistent regardless of the circumstances. Thus, the idea of providing monthly bundles of diapers and wipes to mothers was born. This initiative aimed to remind mothers that they were seen, supported and valued.
With the support of the community and $2,500 in Community Development Funding from Affinity, Sarah and her friend set up a network of volunteer drivers and established a system to distribute the bundles every month. The response was overwhelming, with an average sign-up rate of one family per week. By the end of the first year, they were supporting 50 families, and the number has since grown to 67.
Little Red Hens has become a lifeline for many mothers. It not only provides practical support but also offers emotional reassurance. The monthly bundles serve as a reminder that someone is on their team, helping to alleviate both financial and emotional pressures. The impact of this support is profound, as one mother shared how the extra support allowed her to extend her maternity leave — precious time she would have otherwise missed.
The success of Little Red Hens is a testament to the power of community and the importance of supporting one another. Volunteers from all walks of life come together to make a difference. The initiative has expanded to include additional communities, local businesses and individuals, as they continue to provide crucial support.
As Little Red Hens approaches its second anniversary, the team reflects on their journey and the lives they have touched. They have grown from a small group of friends to a well-organized network with a board of six members and 10 volunteers. The initiative has even received additional support from local businesses and organizations, further solidifying its impact.
Looking ahead, Sarah and her team are excited about the future. They continue to seek ways to expand their reach and provide even more support to mothers in the area. With each bundle of diapers and wipes, they send a message of hope, reminding mothers that they are not alone and that their efforts are appreciated.
$2,500 CANWOOD LITTLE RED HENS
Environmental Sustainability
We’re dedicated to understanding our environmental impact and our role in fostering a more sustainable future. While we’re still in the early stages of this journey, we acknowledge and celebrate the significant contributions made by our community partners, members and employees in 2024.
Repair Cafés and Warm Hearts
Repair Cafés foster a culture of sustainability by providing communities with opportunities to repair items and divert waste from landfills. With pop-up events across Saskatchewan, dedicated volunteers share their expertise and skills to fix household items, passing on valuable knowledge for a more sustainable future!
Thanks to the support of the Saskatchewan Waste Reduction Council and local community organizations, seven Repair Cafés were held in 2024, with many communities holding their second or third annual event. A new addition was the community of Humboldt, which held their first Repair Café through a partnership with the Humboldt Community Gathering Place.
2024 marked the third year of the Saskatchewan Waste Reduction Council’s Warm Hearts Jacket Repair Project. Mendable jackets are collected from the public, repaired by volunteers, then donated to community groups who give them away to those in need. This diverts mendable jackets from the landfill and helps our communities stay warm. Over the past three years, 582 jackets have avoided the landfill and kept someone warm!
We’re honoured to provide ongoing support to the Saskatchewan Waste Reduction Council’s Repair Cafés and Warm Hearts Jacket Repair Project, promoting repair and reuse while bringing communities together.
Bridge City Bicycle Co-op
At Affinity, we’re all about connecting people and communities. This aligns perfectly with the Bridge City Bicycle Co-op (BCBC), a non-profit cooperative with a vision that everyone should have access to a bicycle.
Through the BCBC, programs have been created such as the Youth Build-a-Bike Workshop, where children and youth gain bicycle mechanic skills and repair a bicycle to own at no cost. To enhance sustainable transportation, BCBC started the Bike Diversion Project, diverting hundreds of bicycles from Saskatoon Regional Waste Management Centre for community reuse since 2017.
This volunteer-run organization offers drop-in workspaces, tools, supplies and bicycle maintenance education, making it accessible to everyone in the community. Since 2015, we’ve been a supporter, and most recently directing $10,000 to the Youth Project in 2024. We’re excited to partner with this amazing organization that’s helping communities thrive, one bicycle at a time!
Management Discussion and Analysis
This Management Discussion and Analysis (MD&A) enables readers to assess material changes in the financial condition and operating results of Affinity Credit Union (Affinity or the Credit Union). This MD&A is the responsibility of management and was dated as of March 10, 2025. It was prepared in conjunction with the Consolidated Financial Statements and Notes for the year ended December 31, 2024, and should be read along with that document.
Forward-Looking Statements
This MD&A contains forward-looking statements about the operation, objectives and expected financial performance of Affinity. These statements are subject to risks and uncertainties. Actual results may differ depending on several factors, including but not limited to, legislative or regulatory changes, interest rates, inflation, technological changes, fluctuations in capital markets, economic downturn, climate change, pandemics, as well as consumer and competitor behaviour.
2024 Economic Overview
At Affinity, economic factors significantly influence decision-making and outcomes. These factors are continually monitored to ensure informed and effective business decisions.
In 2024, the Bank of Canada, after multiple rate hikes in 2023, cut its policy rate five times consecutively in 2024, surpassing many forecasts.
Canadian real Gross Domestic Product (GDP) growth in 2024 exceeded expectations however, GDP growth per person did not meet expectations. Canada has grown through reliance on immigration to counter an aging population and declining birth rates but will require infrastructure investment to address affordability and shortage issues that were apparent in 2024.
The Saskatchewan economy had several positives in 2024. Saskatchewan led the nation in construction investment, while maintaining one of the lowest unemployment rates among the provinces. The resource sector in Saskatchewan demonstrated significant strength, with growing interest in small nuclear reactors increasing demand for uranium. Additionally, the ongoing Jansen Lake potash expansion continued to bolster the province’s economy.
In the agricultural sector, rising global beef demand led to a strong year for ranchers however, crop producers faced challenges from falling commodity prices, Chinese bans on Canadian canola, and adverse weather in many areas of the province.
2025 Outlook
The economic outlook for Canada and Saskatchewan in the upcoming year is highly dependent on the uncertain tariff and economic policies of the U.S. This uncertainty has been compounded by a prorogued parliament and an impending Canadian federal election. The following comments regarding the 2025 outlook exclude any potential impacts from these uncertainties.
The Canadian economy is projected to grow modestly at around 1.5% in 2025, an improvement from 2024 but still below potential, marking the third consecutive year of subpar growth.
Saskatchewan’s economy is expected to grow by approximately 2%, driven by strong resource exports, particularly uranium, leading construction investments, and a recovery in the agricultural sector amid global wheat supply disruptions. Saskatchewan also boasts one of the lowest unemployment rates in Canada, positioning it well to withstand economic shocks.
On the monetary front, inflation has stabilized within the Bank of Canada’s target range for the year ahead. Despite elevated interest rates, the impact on overall inflation has lessened. The Bank of Canada cut rates more than forecasted in 2024, with additional cuts anticipated in 2025 at a measured pace.
Financial Highlights
2024 was the final year of Affinity’s three-year “Hitting our Stride” Strategic Plan. This plan leveraged Affinity’s member-owned financial cooperative values to deliver a remarkable member experience as the Credit Union aspires to be the financial institution of choice in Saskatchewan. The strategies outlined in the Strategic Plan informed the 2024 Annual Plan objectives, supported by a refreshed Capital Plan.
Affinity’s Capital Plan emphasized the need to generate optimal value for members through competitive pricing of both loan and deposit products while demonstrating prudent financial management to maintain our strong capital surplus.
Affinity delivered on both its Strategic Plan and its Capital Plan by focusing on personalizing member experiences, further integrating our data and technology to improve member journeys and focusing on attracting the next generation of Affinity members, while continuing to provide comprehensive financial advice and competitive rates to members.
The Credit Union achieved strong organic loan and deposit growth, grew its fee and diversification income, and effectively managed costs to deliver strong financial performance despite the continued compression of net interest margin and inflationary pressures on operating expenses experienced in the year. In the year Affinity achieved two incredible financial milestones with over $8 billion in balance sheet assets and over $10 billion in managed assets. Affinity maintained healthy capital and liquidity surpluses to withstand economic downturns and capture opportunities to provide additional value for members as they arise.
On-book assets totaled $8.28 billion following $552 million (or 7.1%) in growth for the year. This enabled the Credit Union to maintain its position as the largest in Saskatchewan based on asset size. Total managed assets grew to $10.47 billion driven by 20.2% growth in off-book wealth assets, which offset a decrease in administered loans from repayment or refinancing of Canada Emergency Business Account (CEBA) loans. Affinity’s ability to grow its membership and assets is key to supporting its long-term financial and capital targets.
Affinity achieved a 5.2% overall Return on Member Equity (ROE) in 2024, exceeding both the annual plan of 3.6% and prior year results of 4.8%. The increase resulted from higher comprehensive income which is explained in the Operating Summary section of this MD&A.
Operating Summary
Comprehensive Income
The key components of Affinity’s comprehensive income included net interest income, provision for credit losses, other income, operating expenses and provision for income taxes.
Net Interest Income
Net interest income represents the interest revenue Affinity earned through its loans and investments net of deposit and borrowing interest expense. Strong asset growth coupled with improved loan yields led to a $50.0 million increase in interest income over the prior year. However, net interest income increased only $6.0 million to $151.9 million. This compression in net interest margin was from competitive market pricing on loans and deposits, strong term deposit growth, and from organic loan growth primarily occurring in the second half of the year.
NET INTEREST MARGIN
Affinity achieved comprehensive income of $42.8 million, exceeding both the annual plan of $29.5 million and the prior year results of $37.5 million. The changes in the key components of comprehensive income are discussed in the following sections.
Net interest margin, calculated as net interest income as a percentage of average assets, declined to 1.90%.
The lower net interest margin percentage is reflective of Affinity’s commitment to return exceptional value to members in the form of competitive rates. The Credit Union expects benchmark interest rates to further decline in the first half of 2025. This is expected to increase Affinity’s net interest margin in 2025 as its shorter duration term deposits will reprice to the lower rates more quickly than loans.
Provision for Credit Losses
The provision for credit losses is an estimate of the Credit Union’s current year changes in potential losses, due to credit risk. Affinity’s sound credit underwriting processes coupled with effective loan rehabilitation practices and improved recoveries of prior loan losses, limited its provision for credit losses to $1.1 million in 2024.
LOAN DELINQUENCY
Credit quality remained high in 2024. Overall delinquency greater than 90 days finished the year at 0.40% of total loans compared to 0.47% in the previous year. The improvement was from a decline in commercial loan delinquency as consumer and agricultural loan delinquency remained relatively unchanged.
Other Income
Other income includes service fee revenues, credit card interchange fees, dividends, earnings from associates, and gains and losses (realized and unrealized) from foreign currency, venture capital investments and derivatives. It also includes diversification revenues from Affinity Insurance Services, Affinity Wealth Management and Affinity Financial Strategies.
OTHER INCOME ($ MILLIONS)
Affinity finished 2024 with $64.2 million in other income up $9.0 million from $55.2 million in the prior year. Diversification revenue increased $2.3 million to $26.8 million primarily from increases in Wealth resulting from strong organic growth and market performance and in Affinity Insurance Services resulting from strong organic growth. Other increases included credit card interchange fees, loan prepayment fees and earnings from Affinity’s SaskCentral associate. These were slightly offset as banking fees and service charges continued to decline as part of the Credit Union’s commitment to providing competitive fees to its members.
Operating Expenses
Affinity’s operating expenses include the broad categories encompassed by personnel, general business, occupancy, organizational and security.
OPERATING EXPENSES ($ MILLIONS)
Efficiency Ratio
Efficiency ratio is a measure used to assess the operational efficiency of a credit union by comparing its operating expenses to the total of its net revenues including net interest income and other income. A lower result indicates more efficient management of resources.
Affinity’s operating expenses increased $13.2 million over the prior year to $159.2 million but were below the Annual Plan of $159.8 million due to effective cost management despite continued inflationary pressures and strong growth. Personnel costs increased $5.9 million over the prior year resulting from the addition of new positions for future-proofing initiatives and for member services, as well as from inflationary increases to compensation required to maintain competitive wages. General business expenses increased $7.4 million over the prior year from general inflation, increased credit card costs from growth and a full year of owning the portfolio, clearing and settlement fee price increases, and software license increases. These were partially offset by decreases in consulting expenses, legal expenses, fraud-related costs and IT maintenance costs.
Operating expenses as a percentage of average assets was 1.99%, up from 1.95% in the prior year.
Affinity’s efficiency ratio increased slightly from 72.6% in the prior year to 73.7% in 2024. This increase was primarily a result of compression in net interest margin and from increases in operating expenses discussed previously. It’s expected that the ratio will return to below 70% by 2026.
Provision for Income Taxes
Provision for income taxes is the estimated amount of consolidated corporate income taxes based on the total from each subsidiary of Affinity. This provision includes both a current, as well as a deferred portion. The increase in the provision for income taxes from $12 million in 2023 to $12.9 million in 2024 is attributable to an increase in income before tax, partially offset by favorable tax adjustments for venture capital investments and higher refundable taxes from intercompany dividends.
Financial Position Summary
Financial Investments
Affinity’s financial investments were primarily comprised of a liquidity reserve, term deposits, corporate and government bonds, a venture capital portfolio, cash, as well as accrued interest earned on these investments.
Affinity ended the year with investments of $1.81 billion compared to $1.51 billion in the prior year. In 2024, Affinity effectively deployed excess liquidity primarily by investing in high-yield investment-grade corporate and government bonds.
Loans
Loans continued to form the largest component of Affinity’s assets throughout 2024. The loan portfolio remained within Affinity’s established target ranges throughout 2024, consisting of 49% consumer loans, 34% commercial loans and 17% agricultural loans.
LOAN GROWTH
Affinity achieved 3.7% or $225 million in loan growth in 2024, which includes organic growth from its members of 4.2% or $248 million. This was an exceptional result in a year when many members deferred borrowing in anticipation of interest rate decreases. The largest contributors to growth were $103 million in commercial mortgages, $47 million in consumer mortgages and $40 million in agricultural mortgages.
Loans made up 75.2% of Affinity’s asset base, which was slightly lower than both the Annual Plan and the prior year however, the loan-to-asset ratio is expected to increase over the duration of the Capital Plan. Typically, the higher the loan-to-asset ratio, the larger the net interest margin contribution as loans generally have higher yields than low-risk financial investments.
Deposits
Deposits formed the largest component of Affinity’s liabilities and served as the primary source for financing asset growth.
DEPOSIT GROWTH
Affinity achieved 7.7% or $524 million in net deposit growth in 2024, including exceptional member deposit growth of 7.4% or $501 million. Excluding accrued interest, term deposits increased by $456 million or 12.6% to $4.1 billion, while demand deposits increased $25 million or 0.80% to $3.1 billion in the year. With attractive term deposit rates available for the majority of the year, the trend in deposit mix migrating towards term deposits and away from demand products continued for the first three quarters of the year but reversed in the last quarter following several reductions in prime interest rates.
Capital and Liquidity Management
Capital Management
As a regulated financial institution, Affinity is required to maintain an adequate level of capital reserves to mitigate risk. A strong capital position protects the Credit Union against the impact of unexpected losses and can be leveraged to support ongoing growth in our traditional business lines or through diversification opportunities. With Affinity’s main source of capital being derived from retained earnings, building capital is dependent upon generating strong earnings.
On an annual basis, a Capital Plan is developed to ensure Affinity generates sufficient capital to meet our strategic objectives, provide the Credit Union with the ability to withstand economic downturns or extraordinary events, while still maintaining the minimum regulatory capital requirements. The 2024 plan considered various growth scenarios and the impact on key financial performance indicators for return on member equity and efficiency to determine an optimal level of growth. The plan also evaluated Affinity’s internal economic capital requirement to ensure capital levels were appropriate for the Credit Union’s unique risk profile. Our capital position was monitored on a regular basis by forecasting changes in our business model against capital adequacy to support ongoing business decisions. This included a regular assessment of existing and emerging risks to ensure the adequacy of both the internal capital requirements and the minimum regulatory requirements.
Our regulator, Credit Union Deposit Guarantee Corporation (The Corporation) measures capital adequacy as total capital as a percentage of risk weighted assets. The Corporation’s minimum requirement is 11.5%, which aligns with our Provincially Systemically Important Financial Institution (P-SIFI) designation. Affinity’s capital adequacy policy requires an additional 2% buffer over the greater of (i) the regulatory minimum or (ii) Affinity’s economic capital requirement. For all measurement dates, Affinity’s economic capital requirement was lower than the regulatory minimum of 11.5%, meaning that inclusive of the buffer, Affinity’s minimum capital requirement in 2024 was 13.5%. Affinity’s capital continues to exceed all minimum policy and regulatory thresholds.
Affinity maintained its strong capital position ending the year at 16.7%, up 30 basis points from 2023. This level of capital continues to strengthen Affinity’s capacity to withstand economic uncertainties and provides flexibility to pursue new opportunities.
In 2024, the Credit Union introduced a Capital Contingency Plan (CCP) that clearly sets out strategies for addressing capital shortfalls in emergency situations. The CCP outlines the roles, responsibilities, procedures and action plans required to respond to a severe capital event. It incorporates a number of early warning indicators and trigger events that would initiate the CCP or Affinity’s Recovery Plan, developed in accordance with the P-SIFI directive’s assessment criteria. The CCP and Recovery Plan are reviewed and tested annually.
Internal Capital Adequacy Assessment Process (ICAAP)
ICAAP quantifies the Credit Union’s economic capital requirement. The ICAAP model identifies key risks and evaluates the impact to capital from any residual, unmitigated risk to determine the base economic capital requirement. A stress test is then applied to each identified risk using a plausible yet severe stress scenario. The combined base capital together with the additional capital allocation for the stress scenario forms the Credit Union’s total economic capital requirement. All key risks are monitored using a risk register, which is reviewed and refreshed on a quarterly basis.
Liquidity Management
Adequate liquidity is critical for the overall safety and soundness of the Credit Union. Affinity’s Liquidity Management Framework aligns to the liquidity risk management principles issued by The Corporation. These principles complement the regulatory liquidity adequacy standards and cover all facets of liquidity management ranging from the initial setting of the Board’s risk appetite to the daily liquidity management function, including appropriate debt facilities and interaction with third-party liquidity providers. Finally, the principles address the identification, management and resolution of a liquidity crisis event.
In 2024, liquidity management included continual monitoring of liquidity sources across multiple time periods to ensure that Affinity could satisfy cash demands. The Board has established policy limits for minimum operating liquidity surpluses over a one-year timeline to ensure sufficient liquidity is available to satisfy all expected cash outflows, while including an adequate buffer to withstand the stress of an unusual or unexpected event. During 2024, we consistently exceeded the minimum policy limits.
From a regulatory perspective, Affinity is required to maintain a portfolio of statutory liquidity investments with Credit Union Central of Saskatchewan (SaskCentral)
equal to 8.65% of the Credit Union’s deposits and borrowings, thereby supporting the provincial credit union system’s liquidity program. The Corporation requires all credit unions to maintain a minimum 100% Liquidity Coverage Ratio (LCR). The LCR is a ratio between the Credit Union’s high-quality liquid assets and the cash outflows associated with the expected deposit run-off from a prescribed 30-day stress scenario. Affinity’s Board established a higher policy minimum of 120% for the LCR. Throughout 2024, we exceeded Affinity’s LCR policy threshold and the statutory liquidity requirement.
Affinity’s borrowing capacity is a key element of the Credit Union’s overall liquidity management program. Affinity currently has access to $254 million in committed credit facilities. Throughout 2024, these stand-by facilities were largely unused, but they remain a significant source of funding support during a stressed liquidity event. Affinity participates in the Canada Mortgage and Housing Corporation (CMHC) Mortgage-Backed Security (MBS) program. Affinity issued and held MBS pools totaling $100 million at year-end, that can be readily sold to provide additional liquidity if required. Affinity also participates in the CMHC Canada Mortgage Bond (CMB) program. Affinity continues to develop its securitization capabilities in its pursuit of reliable funding sources.
The Credit Union also maintained a Contingency Funding Plan (CFP) that clearly sets out strategies for addressing liquidity shortfalls in emergency situations. The CFP outlines the roles, responsibilities, procedures and action plans required to respond to a severe liquidity event. It incorporates various early warning indicators and trigger events that would initiate the CFP or Affinity’s Recovery Plan. The CFP is reviewed and tested annually.
Overall, Affinity maintained a healthy liquidity position, enabling support of increased economic activity and the ability to withstand downward economic pressures.
Risk Management
Overview
Affinity exists to provide value to its members and stakeholders. We do this by taking on strategic risk to create, preserve and realize value.
When taking on strategic risk, we are inherently exposed to other material risks which are consistent with our industry. Affinity’s material risk categories are strategic, credit and counterparty, operational, legal and regulatory, liquidity, market and reputational risk. We consider our reputation as a strategically important asset and actively manage risks to our reputation as part of our overall Risk Management Framework. Our Risk Appetite Framework contains risk appetite metrics for all material risk categories.
The Board-approved risk appetite limits are designed to:
• serve as guideposts in strategy setting;
• support achievement of Affinity’s strategic objectives;
• identify and communicate acceptable parameters for the creation of returns and value for members and stakeholders;
• provide protection against exposure to losses Affinity cannot withstand;
• assist stakeholders to perform within legislative and regulatory standards;
• provide an objective basis against which to report status of risk;
• support risk management dialogue with governance, management and employee stakeholder groups; and
• support dialogue within the control structure.
Risk Philosophy
The Credit Union balances risk and reward to meet goals for our members, community, employees, growth and financial sustainability. In pursuit of these goals, we accept risks we understand and can manage within prudent levels.
Risk Culture
At Affinity, we understand that our risk culture is influenced by the actions of our people, how work is done and the manner in which decisions are made. Our risk culture is congruent with Affinity’s desired culture and is fostered and supported through strong Board oversight, an integrated risk governance structure, awareness and education, risk appetite, policies, program guides and procedures and a variety of tools that support identification, measurement, analysis, risk communication and reporting and risk-informed decision making.
Risk Governance
Affinity’s Risk Governance Framework provides overarching guidance to our risk program by outlining our risk philosophy, policy structure, how we categorize the types of risk we are exposed to and our risk management governance. In addition, it provides the foundation for the Board of Directors’ oversight to management’s risk-based decision making.
Our Board-approved Risk Governance Framework, primarily based on Committee of Sponsoring Organizations of the Treadway Commission (COSO) Enterprise Risk Management Integrated Framework provides an integrated approach to enterprise risk management that encompasses all elements of risk governance.
Members Require Strength, Stability and Safeguarded Assets
Board Desired Key Performance Indicators
Risk Appetite
Legal and Regulatory Compliance Requirements
External Rating
Legal and Regulatory Risk
Reputational Risk
Integrated Enterprise Risk Management
The diagram above provides an overview of Affinity’s approach to risk governance through an integrated risk management approach.
Affinity utilizes the three lines of defence model to segregate and clarify segregation of risk management accountabilities. Under this model, ownership for risk resides at all levels of Affinity. This provides a structure to organize Affinity’s risk management roles and responsibilities; each line of defence is clearly defined in terms of business lines, roles and accountabilities and is functionally independent.
Risk Management Committee Structure
Our integrated Risk Management Program supports the Board in understanding our key risks and the activities to manage them. The Board has delegated its responsibility to the Risk Committee to oversee risk management and understanding of the types of risk Affinity is exposed to. The diagram below outlines Affinity’s risk management committee structure.
Board of Directors
Risk Committee Audit & Finance Committee Governance Committee HR & Compensation Committee
Strategic Risk Committee (SRCo)
Asset Liability Committee (ALCo)
Operational Risk Committee (ORCo)
Credit Risk Committee (CRCo)
Risk Management Committees
The Strategic Risk Committee (SRCo) includes all members of executive management and sets the ‘tone from the top’. It provides oversight of the Asset Liability Committee, the Credit Risk Committee and the Operational Risk Committee. SRCo is responsible to be aware of and direct action on key risks that have the potential to impact successful execution of strategies and annual operating plans, as approved by the Board of Directors. In addition, SRCo monitors internal and external environments to identify and assess existing and emerging risks and the resulting business implications. Subsequently, it directs actions to ensure risks are maintained within the Credit Union’s risk appetite and makes recommendations to the Risk Committee for approvals of policies, frameworks and matters of significance that arise from the other risk management committees.
The Asset Liability Committee (ALCo) provides forward-looking balance sheet management and execution within the parameters of Board-approved risk appetite and policy. It reviews economic trends, interest rate forecasts, investment portfolio risk and performance, liquidity, foreign exchange exposures and capital adequacy. The purpose of the committee is to develop and recommend balance sheet risk management strategies to SRCo and approve and monitor balance sheet risk management tactics.
The Credit Risk Committee (CRCo) assesses historical and emerging credit risk by reviewing internal reporting and environmental scanning. The committee assesses new areas of credit opportunity and recommends actions to SRCo to manage risks within approved tolerances, while supporting planned growth and profitability objectives.
The Operational Risk Committee (ORCo) comprises cross-functional subject matter experts to identify, discuss and mitigate current and emerging operational risk issues that affect, or have the potential to affect, the successful operation of the Credit Union. Further, it identifies and promotes opportunities to improve service to members, creates an operational risk-aware culture, contributes to operational improvements and fosters cross functional synergy.
Material Risk Categories
Strategic
Risk
Strategic risk is the risk Affinity ineffectively or improperly implements its strategies or is unable to adapt to changes in the business environment to meet the needs and expectations of members, other stakeholders or achieve expected benefits. It also includes the failure of organic growth initiatives.
Management identifies risks to achieving the Credit Union’s strategy and develops action plans to mitigate risks that exceed risk appetite. Quarterly, SRCo reviews the strategic risk register and status of action plans. Subsequently, Risk Management provides risk status reporting to the Board of Directors.
Key Strategic Risk
Competition & Evolving Technology – the financial services industry is highly competitive coupled with the increasing demand for digital banking services. New entrants are entering the marketplace offering new digital solutions to meet the evolving needs of our members. Affinity’s technology roadmap contains initiatives to expand our digital solutions to ensure our technology remains competitive and relevant to our members.
Credit and Counterparty Risk
Credit risk is the risk Affinity faces when a borrower, guarantor or counterparty fails to meet its financial or contractual obligations.
Affinity manages credit risk by establishing credit risk policies, delegation of authority and concentration limits including maximum limits on individual and connected accounts. Prudent underwriting standards are designed to ensure an appropriate balance of risk and return. The Credit Union has approved residential mortgage portfolio limits and limits on relative segments of Affinity’s residential mortgage portfolio in alignment with the Corporation’s Residential Mortgage Underwriting Guidelines.
Management monitors credit risk exposures including portfolio concentration on a regular basis and proactively implements enhanced account management of higher risk accounts. This has been effective at resolving problem accounts before they turn delinquent or incur a loss. A strong monitoring process is in place for larger borrowers that are encountering difficulty.
Residential mortgages comprise a significant amount of our credit portfolio. At December 31, 2024, Affinity’s residential mortgage gross carrying value was $2.55 billion (2023 $2.50 billion). The following table provides a breakdown between insured (including those by both CMHC and Genworth) and uninsured mortgages:
Mortgages
The Credit Union has established policies and procedures for maximum amortization periods for residential mortgage loans, specific to the loan product.
At December 31, 2024, the Credit Union’s residential mortgage portfolio original amortizations are outlined in the table below. Portfolio percentages are illustrated for both the outstanding mortgage balance and the number of mortgage loans.
2024
Operational Risk
Operational risk is the risk of loss resulting from people, inadequate or failed internal processes, controls and systems or from external events, including the risk of fraud. Operational risk is inherent in all activities within the Credit Union, including processes and controls used to manage other material risks, such as credit, market, liquidity, legal and regulatory and reputational risk. Unlike other material risk categories taking on operational risk does not generate financial gain; however, Affinity weighs the cost of mitigating against the cost benefits.
Risk Control Self-Assessments (RCSAs) are the primary tool Affinity uses to identify key controls and assess operational risk exposures. The RCSA process is one component of Affinity’s Internal Control Framework. The Credit Union utilizes an Operational Risk Taxonomy to ensure a consistent approach for categorizing and aggregating risks across the organization.
Key Operational Risks
Cyber Risk – Consistent with other financial institutions, Affinity is inherently exposed to increased risk from a variety of cyber attacks. Affinity has a dedicated IT Security team that manages a comprehensive IT security program to help protect against these threats. The team ensures appropriate security and operational controls are in place which includes performing regular internal and external penetration testing, alerting of potentially suspicious security incidents, disaster recovery testing, employee training, phishing campaigns and ongoing monitoring.
Third-Party Service Providers – Affinity relies on the services of third-party service providers. These third parties provide benefits to our members, however the Credit Union is accountable to manage and minimize risks related to the services provided by third parties. Our Vendor Risk Management program is our primary tool to manage third-party service provider risk.
Fraud Risk – Fraud incidents are constantly evolving and becoming more sophisticated. Affinity’s Fraud Department resides in the second line of defence and maintains a Fraud Risk Management Framework that outlines the governance and processes to proactively manage and govern fraud risk. In addition, the Credit Union utilizes various prevention, detection and monitoring tools to protect members.
People Risk – Affinity’s ability to execute on its strategic objectives is highly dependent on its people. The Credit Union’s people risk includes its ability to attract and retain talent ensuring sufficient capacity and appropriate competencies. Affinity’s Human Resources Department is responsible to manage people risk and deploys various initiatives.
Data Governance – Affinity relies on data to inform decision-making and develop accurate reporting for the Board of Directors, management, regulators and for marketing purposes. Potential data risks include unreliable, incomplete, inaccessible and outdated data. Affinity maintains a Data Governance Framework that outlines the governance and management of data.
Legal
and Regulatory Risk
Legal and regulatory risk is the risk Affinity faces when failing to comply with governing laws, satisfying contractual obligations or meeting regulatory requirements.
Affinity operates in a heavily regulated industry. We actively monitor and evaluate potential impacts of regulatory developments. Appropriate policies, procedures, training, internal oversight functions and our Code of Conduct ensure we are successful in meeting regulatory obligations.
As a Provincial Systemically Important Financial Institution (P-SIFI), our regulator holds us to a higher standard of regulatory rigor.
Key Regulatory Risk
Regulatory requirements are increasing along with reforms to existing requirements. Affinity utilizes a Regulatory Compliance Management Framework to actively manage and mitigate regulatory risks. The Compliance department residing in the second line of defence is responsible to monitor regulatory changes and support business lines in establishing processes and tools to meet regulatory requirements.
Liquidity Risk
Liquidity risk is the risk of loss due to an inability to access funding sources or having insufficient cash or cash equivalents to meet financial obligations as they come due in a timely and cost-effective manner.
Affinity prudently manages liquidity to ensure sufficient liquidity is available to meet its obligations. Strategies in place to manage liquidity levels include
borrowing facilities with SaskCentral and other financial institutions, deposit gathering programs and an asset securitization program.
The Credit Union maintains sufficient levels of unencumbered high-quality liquid assets, as prescribed by the Credit Union Regulations 1999 and the Standards of Sound Business Practices established by the Corporation.
ALCo reviews liquidity risk and liquidity position and provides reporting to SRCo. Quarterly, an operating liquidity report is provided to the Board of Directors.
As a P-SIFI, Affinity provides quarterly Net Cumulative Cash Flow (NCCF) reporting to its regulator. NCCF measures the time horizon for net positive cash flows to capture the risk posed by funding mismatches between assets and liabilities under mildly stressed conditions. This metric measures the net cashflow for various time bands for a 12-month time horizon.
Market Risk
Market risk is the risk of loss from decreases in the value of financial instruments or portfolios of financial instruments due to changes in interest rates and timing differences in the repricing of assets and liabilities. This also includes changes from the volatility of foreign exchange rates.
Affinity actively manages its market risk by modeling several interest rate change scenarios and their impacts to our short-term interest rate margin and long-term value of equity. ALCo reviews interest rate simulation reports and recommends strategies, such as derivatives to manage interest rate risk. Derivatives are limited to interest rate swaps, forward rate agreements, caps and floors and purchased interest rate options. Interest rate strategies are limited to activities permitted under the Credit Union Act, Regulations and Standards of Sound Business Practices.
Reputational Risk
Reputation risk is the risk of financial loss, business sanctions or additional oversight, due to deterioration in stakeholders’ perception of Affinity from negative publicity, whether true or not. Reputation risk generally arises from a deficiency in managing another risk. All employees, the Board and member representatives are responsible to manage Affinity’s reputation risk.
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying summary consolidated financial information for Affinity Credit Union has been 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.
The summary consolidated financial information was 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 IFRS Accounting Standards. Financial and operating data elsewhere in the annual report are consistent with this financial information.
In discharging our responsibility for the integrity and fairness of the summary consolidated financial information 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 well-defined 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 team, 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 Finance
Committee, which is composed entirely of independent directors. This Committee reviews our consolidated financial information and recommends them to the Board for approval. Other key responsibilities of the Audit and Finance 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 Compliance Manager and Chief Internal Auditor have full and unrestricted access to the Audit and Finance 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.
KPMG LLP, Chartered Professional Accountants appointed by the members of Affinity Credit Union upon the recommendation of the Audit and Finance Committee and Board, have performed an independent audit of the consolidated financial statements. The auditors have full and unrestricted access to the Audit and Finance Committee to discuss their audit and related findings.
Nilesh Kavia Cammy Ouellette Chief Executive Chief Financial Officer Officer
Saskatoon, Saskatchewan March 10, 2025
The accompanying note is an integral part of the summary consolidated financial information. Approve d by the Board
Summary Consolidated Statement of Comprehensive Income Year ended December 31 (in thousands of CDN $)
The accompanying note is an integral part of the summary consolidated financial information.
The accompanying note is an integral part of the summary consolidated financial information.
The accompanying note is an integral part of the
Affinity Credit Union
Note to the Summary Consolidated Financial Information Year ended December 31, 2024
1. Basis of the Summary Consolidated Financial Information
The criteria applied by management in the preparation of the summary consolidated financial information are as follows:
a) The content in the summary consolidated financial information is derived from the Credit Union’s December 31, 2024 audited consolidated financial statements (the “Audited Financial Statements”); and
b) The Audited Financial Statements can be obtained on-line at: https://www.affinitycu.ca/meet-affinity/how-we-re-governed/annual-reports-andbylaws
Member Council Map
AFFINITY CAMPUS
902 7th Avenue North
Mail to: PO Box 1330 Saskatoon, SK S7K 3P4
affinitycu.ca
