Financial Position Summary

Financial Investments

The credit union’s financial investments were primarily comprised of a liquidity reserve, term deposits, corporate and government bonds, a venture capital portfolio, as well as accrued interest earned on these investments.

Affinity concluded the year reporting financial investments at $1.37 billion, which was approximately $23.6 million lower than 2021. In 2022, the credit union continued its strategy of investing primarily in highquality, liquid investments with only limited exposure to higher risk venture capital funds.

Loans

Loans continue to form the largest component of Affinity’s assets throughout 2022. To best leverage our capital and mitigate risk, the credit union adopted a target loan mix for consumer (50-70%), agriculture (10-20%) and commercial portfolios (30-40%). Loan mix achieved by the end of 2022 was well within expectations.

At the end of 2022, Affinity achieved a 7.4% or $388 million growth in total loans. Member loan growth was 6.23% or $320 million.

Deposits

Deposits formed the largest component of Affinity’s liabilities and served as the primary source for financing asset growth.

Loans made up 78.78% of the credit union’s asset base on a normalized basis. The impact of Concentrarelated dividend reduced the ratio to 78.03%.

Typically, the higher the loan percentage, the larger the net interest margin contribution as more assets are deployed in higher yielding loans.

At the end of 2022 total deposit growth of $304 million or 4.99% was comprised of a $395 million increase in member deposits and a $91 million decrease (44.3%) in nominee deposits. As member deposit growth in 2022 exceeded expectations and outpaced loan growth, we have been comfortable to let a portion of the nominee book run off. Through the year, member demand deposits decreased by $228 million (7.13%) whereas Term and Registered Deposits increased by $444 million (22.3%) and $73 million (8.2%) respectively demonstrating the extent to which members have moved funds into fixed term deposits as interest rates increased throughout 2022.

Member deposit growth was lower than the previous two years. While our outlook for 2023 takes into consideration industry expectations of a run-off of deposits built up during the pandemic, the recent interest rate hikes continue to make consumer behaviour more difficult to predict.