VANCOUVER, British Columbia, March 21, 2024 (GLOBE NEWSWIRE) -- Central 1 Credit Union ("Central 1" or the "organization") reported a consolidated net income of $25.4 million for the year ended December 31, 2023, compared to a net loss of $69.6 million in 2022.
2023 consolidated results compared to 2022:
- Net income of $25.4 million, compared to a net loss of $69.6 million in 2022.
- Net interest income of $54.3 million, compared to a net interest income of $75.9 million in 2022.
- Net fair value gain1 of $28.3 million, compared to a net fair value loss1 of $143.0 million in 2022.
- Return on average equity2 of 3.6 per cent, compared to negative 9.8 per cent in 2022.
- Total assets of $11.2 billion, compared to $11.9 billion in 2022.
Central 1's 2023 results reflect a strong year across business lines driven by a mix of fee revenue, higher payments volumes and increased use of our digital products. The fair value movement of financial instruments, which dominated 2022 performance, was less volatile throughout 2023 as our investment and lending portfolios performed well.
"As market challenges persisted throughout 2023, Central 1 remained focused on supporting our members and clients," said Sheila Vokey, Central 1 President & CEO. "While our lines of business performed well throughout the year, driving strong financial results, our expenditures remained higher due to strategic investments and activities needed to continually evolve Central 1 to better serve our clients and drive sustainability for the credit union system."
Treasury
For 2023, Treasury reported a net income of $56.1 million, compared to a net loss of $49.2 million in 2022. Treasury reported a $27.6 million net fair value gain1 year-over-year, compared to a $146.0 million net fair value loss1 reported in 2022 as a result of credit spreads narrowing during 2023 which contributed to the increased fair value of Treasury's Securities Portfolio. The lower credit spreads combined with lower deposits levels resulted in a $19.4 million decrease in Treasury's net interest income as compared to 2022.
Non-interest income, excluding strategic initiatives1 and non-interest expense, remained relatively stable year-over-year. Investments in strategic initiatives1 are also consistent with Central 1's strategic priorities.
Payments & Digital Banking Platforms and Experiences
Payments & DBPX reported a loss of $21.2 million, compared to a loss of $13.2 million in 2022. Non-interest income, excluding strategic initiatives1, increased $6.3 million year-over-year due to higher transaction volumes and adoption of new products in digital and payments.
Non-interest expense, excluding strategic initiatives1, increased $18.4 million year-over-year due to higher salaries and employee benefits reflecting inflationary pressures and building capacity and capability. Investments in strategic initiatives1, which included the Payments Modernization and Forge 2.0 initiatives were consistent with Central 1's strategic priorities.
Central 1's fourth quarter Management's Discussion and Analysis and Financial Statements have been filed on Central 1's SEDAR profile at www.sedarplus.com and are also available at www.central1.com/investor-relations.
About Central 1
Central 1 cooperatively empowers credit unions and other financial institutions who deliver banking choice to Canadians. With assets of $11.2 billion as of December 31, 2023, Central 1 provides critical services at scale to enable a thriving credit union system. We do this by collaborating with our clients, developing strategies, products, and services to support the financial well-being of their more than 5 million diverse customers in communities across Canada. For more information, visit www.central1.com.
Non-GAAP Financial Measures
The following non-GAAP financial measures exclude certain items from our financial results prepared in accordance with IFRS Accounting Standards. The tables below present reconciliations of these measures to their respective most directly comparable financial measures disclosed in Central 1's Consolidated Financial Statements.
Net Fair Value Gain (Loss)
Net fair value gain (loss) used across this MD&A is comprised of gain (loss) on disposal of financial instruments plus changes in fair value of financial instruments reported in the Consolidated Statement of Income (Loss). Reporting them combined provides better information on the fair value movements of Central 1's financial instruments to the readers.
| For the year ended December 31 | |||||||||||||||||||
| $ millions | Q4 2023 | Q4 2022 | Change | 2023 | 2022 | Change | |||||||||||||
| Gain (loss) on disposal of financial instruments as reported | $ | 4.5 | $ | 31.5 | $ | (27.0 | ) | $ | 21.6 | $ | 6.0 | $ | 15.6 | ||||||
| Change in fair value of financial instruments as reported | (0.4 | ) | (50.2 | ) | 49.8 | 6.7 | (149.0 | ) | 155.7 | ||||||||||
| Net fair value gain (loss) | $ | 4.1 | $ | (18.7 | ) | $ | 22.8 | $ | 28.3 | $ | (143.0 | ) | $ | 171.3 | |||||
Non-Interest Income, excluding Strategic Initiatives
Non-interest income, excluding strategic initiatives, presented in the Overall Performance and Results by Segment sections of this MD&A is derived by excluding Central 1's income from investments in strategic initiatives. Excluding income from strategic initiatives allows readers to better understand Central 1's recurring financial performance and related trends.
Overall Performance
| For the year ended December 31 | |||||||||||||||||||
| $ millions | Q4 2023 | Q4 2022 | Change | 2023 | 2022 | Change | |||||||||||||
| Non-interest income as reported | $ | 42.5 | $ | 36.3 | $ | 6.2 | $ | 161.6 | $ | 150.0 | $ | 11.6 | |||||||
| Less: strategic initiatives income | 1.0 | - | 1.0 | 2.5 | - | 2.5 | |||||||||||||
| Non-interest income, excluding strategic initiatives | $ | 41.5 | $ | 36.3 | $ | 5.2 | $ | 159.1 | $ | 150.0 | $ | 9.1 | |||||||
Results by Segment
Treasury
| For the year ended December 31 | |||||||||||||||||||
| $ millions | Q4 2023 | Q4 2022 | Change | 2023 | 2022 | Change | |||||||||||||
| Non-interest income as reported | $ | 8.9 | $ | 5.5 | $ | 3.4 | $ | 33.9 | $ | 29.6 | $ | 4.3 | |||||||
| Less: strategic initiatives income | 0.4 | - | 0.4 | 0.4 | - | 0.4 | |||||||||||||
| Non-interest income, excluding strategic initiatives | $ | 8.5 | $ | 5.5 | $ | 3.0 | $ | 33.5 | $ | 29.6 | $ | 3.9 | |||||||
Payments & DBPX
| For the year ended December 31 | |||||||||||||||||||
| $ millions | Q4 2023 | Q4 2022 | Change | 2023 | 2022 | Change | |||||||||||||
| Non-interest income as reported | $ | 31.4 | $ | 30.9 | $ | 0.5 | $ | 120.5 | $ | 112.1 | $ | 8.4 | |||||||
| Less: strategic initiatives income | 0.6 | 0.6 | 2.1 | 2.1 | |||||||||||||||
| Non-interest income, excluding strategic initiatives | $ | 30.8 | $ | 30.9 | $ | (0.1 | ) | $ | 118.4 | $ | 112.1 | $ | 6.3 | ||||||
Non-Interest Expense, excluding Strategic Initiatives
Non-interest expense, excluding strategic initiatives, presented in the Overall Performance and Results by Segment sections of this MD&A is derived by excluding Central 1's investments in strategic initiatives to develop and deliver solutions to support the growth of the credit union system. Excluding strategic initiatives allows readers to better understand Central 1's recurring financial performance and related trends.
Overall Performance
| For the year ended December 31 | |||||||||||||||||||
| $ millions | Q4 2023 | Q4 2022 | Change | 2023 | 2022 | Change | |||||||||||||
| Non-interest expense as reported | $ | 56.5 | $ | 54.0 | $ | 2.5 | $ | 214.0 | $ | 195.6 | $ | 18.4 | |||||||
| Less: strategic initiatives spend | 8.7 | 9.3 | (0.6 | ) | 37.9 | 39.5 | (1.6 | ) | |||||||||||
| Non-interest expense, excluding strategic initiatives | $ | 47.8 | $ | 44.7 | $ | 3.1 | $ | 176.1 | $ | 156.1 | $ | 20.0 | |||||||
Results by Segment
Treasury
| For the year ended December 31 | |||||||||||||||||||
| $ millions | Q4 2023 | Q4 2022 | Change | 2023 | 2022 | Change | |||||||||||||
| Non-interest expense as reported | $ | 10.2 | $ | 7.5 | $ | 2.7 | $ | 41.7 | $ | 37.3 | $ | 4.4 | |||||||
| Less: strategic initiatives spend | 0.7 | - | 0.7 | 2.3 | - | 2.3 | |||||||||||||
| Non-interest expense, excluding strategic initiatives | $ | 9.5 | $ | 7.5 | $ | 2.0 | $ | 39.4 | $ | 37.3 | $ | 2.1 | |||||||
Payments & DBPX
| For the year ended December 31 | |||||||||||||||||||
| $ millions | Q4 2023 | Q4 2022 | Change | 2023 | 2022 | Change | |||||||||||||
| Non-interest expense as reported | $ | 38.7 | $ | 35.9 | $ | 2.8 | $ | 151.9 | $ | 139.3 | $ | 12.6 | |||||||
| Less: strategic initiatives spend | 2.8 | 6.3 | (3.5 | ) | 22.0 | 27.8 | (5.8 | ) | |||||||||||
| Non-interest expense, excluding strategic initiatives | $ | 35.9 | $ | 29.6 | $ | 6.3 | $ | 129.9 | $ | 111.5 | $ | 18.4 | |||||||
Caution Regarding Forward Looking Statements
This press release and announcement contain historical and forward-looking statements. All statements other than statements of historical fact are or may be based on assumptions, uncertainties, and management's best estimates of future events. Central 1 has based the forward-looking statements on current plans, information, data, estimates, expectations, and projections about, among other things, results of operations, financial, condition, prospects, strategies and future events, and therefore undue reliance should not be placed on them. These include, without limitation, statements relating to our financial and non-financial performance objectives, vision and strategic goals and the economic, market and regulatory review and outlook for the Canadian economy and the provincial economies in which our member credit unions operate, as well as statements that contain the words "may," "will," "intends" and "anticipates" and other similar words and expressions. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made. Actual results may differ materially from those currently anticipated. Securityholders are cautioned that such forward-looking statements involve risks and uncertainties. Certain important assumptions by Central 1 in making forward-looking statements include, but are not limited to, competitive conditions, economic conditions and regulatory considerations. Important risk factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include economic risks, regulatory risks (including legislative and regulatory developments), risks and uncertainty from the impact of rising or falling interest rates, international conflicts, natural disasters or pandemics, geopolitical uncertainty, information technology and cyber risks, environmental and social risk (including climate change), digital disruption and innovation, reputation risk, competitive risk, privacy, data and third-party related risks, risks related to business and operations, and other risks detailed from time to time in Central 1's periodic reports filed with securities regulators. Given these risks, the reader is cautioned not to place undue reliance on forward-looking statements. Central 1 undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
Footnotes:
1This is a non-GAAP financial measure. Refer to the "Non-GAAP and Other Financial Measures" section of Central 1 Credit Union's Annual Management's Discussion & Analysis, available on www.sedarplus.com, for more information.
2This is a non-GAAP financial ratio. Refer to the "Non-GAAP and Other Financial Measures" section of Central 1 Credit Union's Annual Management's Discussion & Analysis, available on www.sedarplus.com, for more information.
Contacts
Media
Amanda LeNeve
Interim Head of Communications & Marketing
Central 1
E aleneve@central1.com
Investors
Brent Clode
Chief Investment Officer
Central 1
T 905.282.8588 or 1.800.661.6813 ext. 8588
E bclode@central1.com
