VANCOUVER, British Columbia, May 30, 2024 (GLOBE NEWSWIRE) -- Central 1 Credit Union (Central 1) today reported its first quarter performance reflecting strong financial results across business lines consistent with plans and expectations.
“Central 1’s financial performance for the first quarter of 2024 remained stable,” said Sheila Vokey, Central 1’s President and CEO. “As we continue to monitor market forces and trends, our internal efforts remain focused on providing access to reliable services and core support for our members and clients.”
First quarter 2024 compared with first quarter 2023:
- Net income of $28.9 million, compared with net income of $1.3 million
- Net fair value gain1 of $34.5 million, compared with net fair value loss1 of $6.2 million
- Net interest income of $14.5 million, compared with net interest income of $11.9 million
- Return on average equity1 of 3.8 per cent, compared with 0.2 per cent
- Total assets of $11.2 billion as at March 31, 2024, compared with $11.2 billion as at December 31, 2023
Central 1’s net income for the first quarter of 2024 was $28.9 million, which increased by $27.6 million from the same quarter last year. The stronger financial results in the quarter were largely driven by credit spreads narrowing, which contributed to a net fair value gain1 of $34.5 million, compared to a $6.2 million net fair value loss1 reported in the same period last year. Net interest income was also up by $2.6 million due to higher asset yields and a lower funding allocation towards market issued funding.
Investments in strategic initiatives1, which include Payments Modernization and digital banking initiatives, continued at a moderated pace compared to the prior year and remained consistent with Central 1’s strategic priorities and plans, resulting in spending at $5.3 million lower year-over-year. Non-interest income, excluding strategic initiatives1, which primarily includes income generated from Central 1’s fee-for-service based business, remained steady compared to the same quarter last year. Non-interest expense decreased by $0.6 million year-over-year, reflecting the focus on cost management.
Treasury
For the first quarter of 2024, Treasury reported a net income of $34.4 million, up $30.4 million from the $4.0 million reported in the same quarter last year. Favorable movements of credit spreads resulted in a $34.5 million net fair value gain1 in the Treasury portfolio, compared to the net fair value loss1 of $6.2 million reported in the same quarter last year. Net interest income increased $2.8 million year-over-year due to higher asset yields and a lower funding allocation towards market issued funding. Non-interest income includes revenue generated from Treasury’s fee-for-service based business which remained consistent year-over-year. Provision for credit losses was $0.2 million in the current quarter, compared to a recovery of $0.7 million in the same quarter last year.
Efforts toward responsible investing and environmental, social and governance (ESG) goals continued, reflected by Central 1’s recognition in the UN Principles for Responsible Investment (PRI) annual assessment, in which the organization achieved a score of over 70 per cent across all categories, surpassing the average score by more than 15 per cent in three categories.
Payments & Digital Banking
Payments & Digital Banking reported a net loss of $3.1 million in the first quarter of 2024, compared to a net loss of $4.3 million reported in the same quarter last year. Net interest expense increased $0.3 million from the same period last year, driven by higher funding costs in the high interest rate environment relating to Central 1’s clearing position with the BoC. Non-interest income, excluding strategic initiatives1, remained consistent year-over-year supported by relatively stable transaction volumes and adoption of new products in digital and payments. Non-interest expense decreased $3.6 million year-over-year, driven by lower spend on strategic initiatives as planned.
Central 1’s Payments team continued to focus on supporting clients through building readiness for each stage of the Payments Modernization initiative. Central 1 made progress on its plan to enable core payments functions soon available through the platform model of delivery and continued work on a payments growth strategy to provide value to both existing clients and new clients outside of the credit union system.
Non-GAAP and Other Financial Measures
Management of Central 1 uses a number of financial measures and ratios to assess overall performance. Some of these measures do not have a standardized definition prescribed by Generally Accepted Accounting Principles (GAAP) and might not be comparable to similar measures presented by other companies. Presenting non-GAAP financial measures and ratios provides readers with an enhanced understanding of how management analyzes Central 1’s results and assesses the underlying business performance. The discussions of non-GAAP financial measures and ratios that Central 1 uses in evaluating its operating results are presented as footnotes in the respective sections of this MD&A together with the required disclosure below in accordance with National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure.
Non-GAAP Financial Measures
The following non-GAAP financial measures exclude certain items from the 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 Interim 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 three months ended March 31 | ||||||||||||
| $ millions | 2024 | 2023 | Change | |||||||||
| Gain on disposal of financial instruments as reported | $ | 30.2 | $ | 11.0 | $ | 19.2 | ||||||
| Change in fair value of financial instruments as reported | 4.3 | (17.2 | ) | 21.5 | ||||||||
| Net fair value gain (loss) | $ | 34.5 | $ | (6.2 | ) | $ | 40.7 | |||||
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 three months ended March 31 | ||||||||||||
| $ millions | 2024 | 2023 | Change | |||||||||
| Non-interest income as reported | $ | 41.8 | $ | 41.7 | $ | 0.1 | ||||||
| Less: strategic initiatives income | 0.9 | 0.3 | 0.6 | |||||||||
| Non-interest income, excluding strategic initiatives | $ | 40.9 | $ | 41.4 | $ | (0.5 | ) | |||||
Results by Segment
Payments & Digital Banking
| For the three months ended March 31 | |||||||||
| $ millions | 2024 | 2023 | Change | ||||||
| Non-interest income as reported | $ | 31.7 | $ | 28.6 | $ | 3.1 | |||
| Less: strategic initiatives income | 0.9 | 0.3 | 0.6 | ||||||
| Non-interest income, excluding strategic initiatives | $ | 30.8 | $ | 28.3 | $ | 2.5 | |||
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 three months ended March 31 | ||||||||||||
| $ millions | 2024 | 2023 | Change | |||||||||
| Non-interest expense as reported | $ | 51.2 | $ | 51.8 | $ | (0.6 | ) | |||||
| Less: strategic initiatives spend | 6.9 | 11.2 | (4.3 | ) | ||||||||
| Non-interest expense, excluding strategic initiatives | $ | 44.3 | $ | 40.6 | $ | 3.7 | ||||||
Results by Segment
Treasury
| For the three months ended March 31 | ||||||||||||
| $ millions | 2024 | 2023 | Change | |||||||||
| Non-interest expense as reported | $ | 10.1 | $ | 9.9 | $ | 0.2 | ||||||
| Less: strategic initiatives spend | 0.3 | 0.4 | (0.1 | ) | ||||||||
| Non-interest expense, excluding strategic initiatives | $ | 9.8 | $ | 9.5 | $ | 0.3 | ||||||
Payments & Digital Banking
| For the three months ended March 31 | ||||||||||||
| $ millions | 2024 | 2023 | Change | |||||||||
| Non-interest expense as reported | $ | 35.4 | $ | 38.5 | $ | (3.1 | ) | |||||
| Less: strategic initiatives spend | 2.5 | 7.9 | (5.4 | ) | ||||||||
| Non-interest expense, excluding strategic initiatives | $ | 32.9 | $ | 30.6 | $ | 2.3 | ||||||
Central 1’s first quarter Management’s Discussion and Analysis (MD&A) and Financial Statements have been filed on Central 1’s SEDAR profile at www.sedarplus.com and are also available at 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 March 31, 2024, 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.
Notes
1. These are non-GAAP financial measures and non-GAAP financial ratios. Refer to the "Non-GAAP and Other Financial Measures" section of this release or the MD&A for more information.
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 pandemic, 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.
Contacts
Media:
Heather Merry
Senior Manager, Communications
Central 1 Credit Union
T 1.800.661.6813 ext. 2355
E communications@central1.com
Investors:
Brent Clode
Chief Investment Officer
Central 1 Credit Union
T 905.282.8588 or 1.800.661.6813 ext. 8588
E bclode@central1.com
