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Board of Directors’ Report 34 Executive Team
Executive Team
Roxann Linton
Chief Executive Offi cer
Quilston Harrison
GM - Credit Administration & Loan Risk
Emil Williams
GM - Finance & Treasury
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Christine Bucknor
GM - Human Resource Development
Karlene Mullings
GM - FHC Investments Limited
Juven Montague-Anderson
AGM - Marketing, Communications & Member Experience
Karlene Simpson
AGM - Operations & Shared Services
Management Discussion & Analysis
The year 2020, through the ongoing pandemic, has made it distinctly clear what really matters most in life: our health, our relationships and fi nancial security. First Heritage Co-operative Credit Union Limited (FHC) fully understands this and has been playing an essential role in the lives of those we serve. Throughout the pandemic, we have been diligent in taking the steps to secure the safety and well-being of our members and team members. In addition, we have mobilized resources to protect the sustainability of communities within which we serve. The challenges of the pandemic provided the unprecedented opportunity to test and confi rm the Credit Union’s operational resilience and eff ective risk management processes. We are pleased that the strength of the Credit Union’s fi nancial position enabled us to manage through signifi cant volatility and uncertainty, while we devised ways to assist our members and serve other stakeholders.
The eff ects of the onslaught of the COVID-19 pandemic impacted our ways of doing business, however we embarked on various strategies designed to bring even greater value to our members, so as to ensure that their needs and expectations would be met and surpassed. As we navigated the year, our dedicated team members adapted and adjusted to the new conditions, with the common goal of ensuring that the high level of service that Members were accustomed to was maintained.
FINANCIAL PERFORMANCE
Despite the challenging economic environment, we are proud to report a Net Surplus of $106.2 Million for 2020. The contraction over the previous year’s Surplus is congruous with the signifi cant economic disruption resulting from the pandemic, which led to increased unemployment and a decline in business activity. Notwithstanding, we were able to assist our members with fi nancial solutions which included loan disbursements totaling $4.21 Billion for the period. OUR STRATEGIC PRIORITIES
As we work towards our 2040 Vision, it is very important to ensure that we continue to streamline our strategic priorities to safeguard our success. Our strategic initiatives are constantly reviewed and updated and are geared towards ensuring that all aspects of our business are fully optimized. We are deeply rooted in our Member At The Centre philosophy, which continues to inspire us as we continue to engage our members and our communities.
OUR VALUED MEMBERS
Deepening Member Relationships Despite a rather challenging year, that saw many of our planned activities being muted, our team was very resilient and strategic in their eff orts at navigating and conquering the many obstacles that were faced daily. Our sales negotiations were undoubtedly impacted, as some members sought to suspend discussions in favour of a wait and see attitude. Many were hesitant to commit to new loan obligations, as their employment status became uncertain, as the nature of the pandemic required either closure or reduced working hours for most businesses. In addition, the Credit Union was impacted by curfews and quarantines, with four (4) of our branches closed for over two (2) months.
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We were, however, innovative and dynamic in our response planning, as we continued to meet the needs of our members. A Sales Centre was set up at the Annex of the Eureka location to accommodate the overfl ow of sales team members from the closed locations, as well as to actively process members who were seeking help under our Member Assistance Program. This was established to help those members struggling to meet loan payments and assisted greatly in keeping the wheels of production turning. This strategy was very successful and our members were very appreciative of the gesture as they have expressed the feeling of being valued and connected.
Notwithstanding the ravishing eff ects of the COVID-19 pandemic on our economy, and the resulting fi ercely competitive banking landscape, our deposit portfolio experienced strong growth. While our loan disbursements experienced some softening, we tailored our off erings to create greater access for members which proved to be attractive and of real value. As we continued to pursue our eff orts at improving levels of member service and experience, an enhanced operating structure was introduced at the Member Care Centre. This adjustment sought to refresh the image of the Centre and to heighten the sales and service skills of the team members. This has been generating great results, as the Unit has been meeting and exceeding the monthly targets. Products, Services and Promotions As we sought to preserve our connection with our Members, communication became a critical factor during the period. We knew that the pandemic was having a devastating impact on some of our members and that they needed assistance and assurance. As such, ensuring that our Members knew that our Member Assistance Programme was available was a top priority. With the pandemic containment guidelines in place, we had to change the modus operandi of our Member Engagement activities. We adapted quickly, by embarking upon digital strategies through our monthly Webinars under the “Feeling The Joy” theme. These webinars served as a tool for reinforcing hope, providing peace of mind and also fi nancial education. In addition, relative to business development activities, virtual modalities were also employed with members who were more comfortable with those approaches. Emphasis was placed on our Alternate Channels as we encouraged our Members to utilize these modalities more and encouraged them to remain safe. Some of the channels included our internet banking platform, iTransact, Access Plus Debit Cards, Bill Express Payment Services, as well as Electronic Bank Transfers. These channels proved to be extremely convenient for our members as we experienced numerous restrictions which directly aff ected the number of persons we could accommodate in our branches at any given time. Throughout the year, we continued to promote our products and services, as we launched several initiatives and campaigns to help our members. These included: 1. The Member Assistance COVID-19 Relief Programme - Numerous off erings were extended to our members to help to buff er the many challenges that were being experienced. These included waivers, moratoria and other options. 2. The Summer Reset Loan Promotion - This promotion off ered Members the opportunity to get back on track and reset their plans through our loan off erings.
Management Discussion & Analysis
3. Brighter Days Christmas Loan Sale - As we continued to promote our loan products, special features were added to further assist our members during the sale period as we tried to brighten their Christmas holidays. 4. The Family Indemnity Plan & The Family Critical Illness Insurance Plan - Various promotional strategies were engaged in as we encouraged our members to participate in these off erings which off ered them peace of mind. Member Engagement Activities Great emphasis was placed on connection as we sought to ensure that we kept our Members engaged during this time of social distancing. Due to the limitations of face to face contact, more attention was placed on our digital strategies via social media, email marketing as well as the use of the webinars.
Civil Service Week
Civil Servants of The Year Awards - We were once again pleased to sponsor the 2020 Civil Servants of The Year Awards. The winners from the three categories awarded were:
NAME CATEGORY DEPARTMENT
Mrs. Juliet Lakeman Management Ministry of Education, Youth & Information
Mr. Stephen Williams Middle Management Ministry of Justice Ms. Marie Hall Technical Support Ministry of Education, Youth & Information
Credit Union Week - Member Appreciation Day activities were held in all branches on International Credit Union Day, on October 15, 2020, under the theme “Inspiring Hope for a Global Community”. A special Webinar was hosted for our Members on the same day under the theme “Inspiring Hope” and feedback received indicated that members were appreciative of the helpful tips provided, which would help them to navigate the uncertainties and diffi culties of the pandemic. FHC Christmas Show - The FHC Christmas Show was held virtually on Sunday December 20, 2020. This was a success and saw both team members and friends of FHC performing. Community Outreach Activities - As we continued to assist numerous groups who were aff ected during the pandemic, assistance was provided through care packages to some students on the University of The West Indies Campus as well as some communities in Kingston and St. Catherine. As the University of The West Indies went into remote learning we were once again able to assist students with data packages so that they could access online platforms to sit their fi nal and end of semester examinations. OUR PEOPLE AND CULTURE
Our Resilience
Transformational, life-changing, surreal and challenging are just some of the adjectives used by our team members to describe the year 2020. As a work family, we faced many challenges, particularly as a result of the COVID-19 pandemic. Nevertheless, we quickly adapted to the demands of the
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new work environment and implemented several initiatives to ensure our team remained safe, focused, engaged and productive, closing out yet another successful year. 2020 began with our high-energy Gladiator themed Blast-Off “Greatness In Action” which challenged our team to be bold, resilient and fearless and, throughout the year, the team demonstrated their true “Gladiator-grit” working through lockdowns and transitioning to new modes of work.
FHC Civil Servants of the Year Awards
Posing with their many awards are the Civil Servants of the Year, at front (l-r) Management Category-Juliet Lakeman; Middle Management Category - Marie Hall and Technical Category-Stephen Williams. Sharing in the moment are (l-r) FHC Board of Directors, Leodis Douglas, O’Neil W. Grant and CEO of FHC, Roxann Linton and at the back other Nominees share the spotlight.
Our Team Engagement • Team Member Experience (TME): A major highlight during 2020 was the Zoom Party launch of our Team Member Experience (TME) initiative in July. This initiative focuses on providing a positive experience at work for our team members as we create an environment where they feel motivated and engaged. The Team Member Experience is built on four (4) tenets: Engendering a culture of RESPECT; RECOGNITION of team members who go the extra mile; Provision of REWARD for excellent performance and; Getting team members
READY for Work in a holistic manner.
• Thoughtful Thursdays: Conversations with the CEO With the restrictions on physical movement, the team remained connected through scheduled conversations with the CEO over a six (6) week period. During the sessions, team members were able to discuss matters of importance to them and ask questions regarding the business. This engaging initiative was well received and appreciated by the team.
• COVID-19 Pandemic Sensitization
In addition to on-going COVID-19 pandemic bulletins aimed at keeping our team informed, we hosted a sensitization session with a medical expert to educate team members on the facts of the virus and reinforce the need for compliance with established health protocols in our workspace. The session was well supported by team members as they got an opportunity to express their concerns and receive information that helped them to protect
Management Discussion & Analysis
themselves and their families.
• Our Quarterly Themed Fridays continued despite our inability to gather physically and a fun Four Thursdays of Christmas activity was hosted in lieu of the usual end of year party.
These events were benefi cial in keeping team spirits high and generating camaraderie. Our Learning and Development In complying with physical distance measures to safeguard our team, all planned face-to-face training programmes were cancelled early in the year as we embraced new modes of learning. We capitalized on the opportunity to utilize various electronic platforms to deliver impactful and cost-eff ective training such as: • A Self-Care Webinar, “Staying Grounded in Turbulent Times”, was hosted to equip our people leaders with the techniques to better navigate and care for themselves and their teams during the pandemic; • An all-team training and simulation exercise on Earthquake Awareness & Preparedness for our Safety Wardens and team members; • Data Protection Sensitization webinars to prepare team members to comply with the impending regulations; • Virtual workshop on Developing Others Through Coaching & Mentoring for emerging leaders as part of our Succession Plan and • Information Technology Security Awareness training to mitigate our exposure to IT
Security risks. Our Online Learning platform was also fully utilized throughout the lockdowns and quarantines as team members seized the opportunity to complete self-development courses to ensure their minds remained active and engaged. Our Corporate Social Responsibility • Developing Young Minds
Through our annual Summer Employment Programme, the Credit Union continued to off er valuable work experience to students enrolled at secondary and tertiary institutions. To comply with physical distance protocols, we were only able to accommodate 17 students over the summer period, nevertheless, both students and the departments benefi tted greatly from the programme. In February, we partnered with Junior Achievement Jamaica (JAJ) to host the “Manager For
A Day” initiative where we welcomed students from the Holy Childhood High School and exposed them to diff erent career options. The initiative was benefi cial to the students and also our team members who acted as Mentors for the day. We also participated in the University of the West Indies’ Career Awareness Month by helping to prepare prospective graduates for job interviews as they enter the world of work. The Credit Union continues to support activities that positively impact young minds.
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Manager for A Day 2020 Teachers and students of the Holy Childhood High School take a commemorative photo with CEO of First Heritage Co-operative Credit Union, Roxann Linton (center) after learning what it takes to be “Manager for a Day”.
• Care and Compassion Throughout the year, team members continued to contribute to the St. Stephen’s Feeding
Programme via salary deductions as we encouraged a spirit of compassion. Although signifi cantly curtailed, again because of the pandemic and gathering limits, we were able to provide Care Packages and Lunches to the less fortunate during the Easter and Christmas seasons.
Team members also participated in a Talent Exposé & Christmas Charity Event to raise funds for (3) charities of their choice, thereby living our Vision and Mission of enhancing the communities in which we operate. Indeed, 2020 had its challenges, however as true Gladiators, our team bravely weathered the upheavals and we ended the year on a strong note. No doubt, 2021 will continue to be challenging, however, we remain committed to promoting a positive team member experience as we attract, develop and engage a team of professionals who see FHC as a place where they will be respected, recognized, rewarded and ready to embrace opportunities while advancing the business of the Credit Union.
OUR STRONG RISK CULTURE
Loan Risk and Credit Administration
During 2020, as the pandemic heightened and we began to see the impact on our borrowing members, we were challenged to employ analytical and problem-solving skills to develop successful strategies and approaches, most of which have been incorporated in an interim Credit Policy. The strategies included proactively communicating with our borrowing members, to determine the impact of the pandemic on their salaries, businesses, and industries. Moratoria were widely granted as the main tool to address temporary setbacks, with consolidations and loan restructuring being extended as longer-term solutions. “People Helping People” remained at the heart of our actions.
Management Discussion & Analysis
The Centralized Loans Unit doubled their eff orts and strategized in ways that saw an overall improvement in meeting the company standards and service quality requirements both to our external and internal customers. The Credit Administration and Loan Risk team continued to focus on enhancing processes to improve turn-around time. The Collections Team embraced the challenge of maintaining delinquency below a projected 10%, ending the year at 8.79%. The Loan Portfolio increased from $9.25 Billion to $9.77 Billion, an increase of 5.62% during the year. The growth was mainly infl uenced by increases in the Motor Vehicle (18.44%), One & Move Taxi (39.80%), and DBJ Secured (24.90%) loans. We continue to encourage our Members who may be facing diffi culties in meeting their loan obligations to seek dialogue with us so that solutions may be formulated. Enterprise Risk Management We remain committed to the principles of sound business practices to create and build value for our members and ensure growth and sustainability of the Credit Union. We recognize that risk management is an integral part of good management practice and is necessary for us to achieve our Vision and Mission. By taking a disciplined approach to risk management, we seek to ensure that our members continue to have confi dence in us.
1. Enhancement of the Enterprise Risk Management Framework to better facilitate the identifi cation, prioritization and management of risks in a coordinated manner; and 2. Improved systems of control to facilitate the mitigation or management of risk. The key objectives of our Enterprise Risk Management Framework are: 1. Oversight: To identify, manage and monitor all critical risks under a holistic approach consistent with Board approved risk appetite; 2. Accountability: To assign ownership of risk to Management who shall be responsible for identifying, evaluating, mitigating and reporting risk exposures; and 3. Assurance: To provide reasonable assurance to the Board, Management, Members and Stakeholders that risk is being appropriately managed within defi ned levels so as to bring value to the Credit Union. We have identifi ed 12 key enterprise risks inherent to the activities and business processes of FHC under the risk headings: AML-Compliance, Information Technology, Operational, Credit and Liquidity. Accountability for managing each risk has been assigned to the relevant member of the executive management team. Our overall approach to managing risk is to balance business opportunities with sound risk discipline in order to achieve the mandate of our Vision and Mission.
Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) We believe that it is crucial for our team to have a thorough understanding of anti-money laundering and counter fi nancing of terrorism requirements. Our culture supports this belief through ongoing training and development to ensure customer due diligence and reporting of transactions that are suspected to involve illicit assets or terrorist activities.
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• Implementation of new systems and process, inclusive of world class Regulatory and
Financial Technology to comply with AML/CFT risks; and • Review of existing AML/CFT controls. Emergency Management and Business Continuity Plan In 2020, we undertook a number of activities to enhance our disaster recovery eff orts. This included commencing the development of processes to ensure the continuity of our business operations in the event of any signifi cant interruptions to buildings, facilities, systems or employees with the ultimate objective of effi ciently restoring the business operations to predisaster levels. The key deliverables of the project include the documentation of the following procedures: 1. Emergency Response Plan; 2. Business Continuity Plan; and 3. Information Technology Disaster Recovery Plan. Foreign Account Tax Compliance Act (FATCA) During 2020, FHC Investments Limited maintained compliance with the reporting obligations under FATCA.
FOCUS ON OPERATIONAL EFFICIENCY
Support was provided by the Disbursement Unit which played an integral part in the Credit Union in ensuring that the loans were disbursed in an effi cient and timely manner. The Securities Unit continued to employ a robust follow-up system aimed at ensuring that our loan collaterals are intact and current. Some progress was made in this area; however, we still experienced challenges with members providing the documents upon request. With the passing of the Data Protection Act, we commenced work on our Data Protection framework to ensure compliance with the impending Regulations. Signifi cant work was also done in reviewing our Business Continuity Plan to ensure that our business recovery process is most eff ective and this was actively demonstrated during the period. The Credit Union’s Information Technology Infrastructure saw systems being put in place as well as upgraded to mitigate data and system breaches. Preparations also started for the implementation of the new core banking system Smart Universa in 2021. OUTLOOK
Although the COVID-19 pandemic is still very active, we remain hopeful that this will be curtailed soon through the roll out of the vaccination programme. The impact of the pandemic will continue to aff ect our economic and health sectors, therefore impacting us all. While challenges will persist in the new year, as 2020 demonstrated, FHC has the strength to adapt and will remain focused on delivering value for members, team members and our communities.
Management Discussion & Analysis
With foresight and vision, we will continue to assess our organization to ensure that it remains strong and sound, as well as assist our Members throughout the challenges they may face. As the fi nancial landscape changes, we continue to prepare and position ourselves for the anticipated oversight of the Bank of Jamaica and the Data Protection legislation. Remaining connected to our membership is a core objective of the Credit Union. Our Member at The Centre Mantra will continue to assist us as we engage our Members so as to become more aware of their needs to create value added products and services. Built on our member experience tenets of valued, connected and trust, we remain committed in ensuring that our Members have access to all the opportunities aff orded to them through their Credit Union. With this we look positively towards the future guided by the philosophy of “People Helping People”. GRATITUDE
We are extremely grateful for the year 2020, despite all the challenges it brought. We would like to thank all of our Members, our Team Members, Board of Directors and Volunteers who worked tirelessly together to ensure that the year was a success. Our Credit Union is built on resilience and with purposeful planning and execution we will be able to prevail.
_______________________________ Roxann Linton Chief Executive Offi cer
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