2023 Annual Report
Sustainable Growth
Business Highlights
Growth and Diversification
2023 marked another outstanding year of growth and resilience for DUCA, navigating through a challenging macroeconomic landscape. DUCA’s on balance sheet assets climbed to an impressive $7.7 billion, while wealth management assets under administration (AUA) reached over $600 million. In total, DUCA’s assets under management (AUM), including on-balance sheet and wealth management AUA, totaled $8.3 billion, representing an 11% increase year over year. In 2023 pre-tax earnings rose to $21.7 million, as we continued our sustainable growth.
Our wholly owned subsidiary – Continental Currency Exchange (CCE) contributed an important and growing component of our earnings and is an example of our strategy to produce diversified and profitable growth for the Credit Union and expand product and service offerings for our Members.
The growth in DUCA’s AUM was comprised of over $650 million in loans and over $100 million in wealth management AUA. Additionally, our Membership grew again in 2023 to reach 93,428 Members. At the same time, we grew and further diversified our deposit and funding sources with total deposits increasing to $5.9 billion.
DUCA continued to strengthen, expand, and diversify our points of product and service delivery for our Members. Growth came from a balanced mix of distribution channels spanning strategic partnerships, and brokerage as well as DUCA’s direct channels that include Digital-direct, Branches, Mobile Teams, Member Connect, Commercial & Business Banking Account Managers, and Wealth Management Advisors. Our distribution strategy continues to support our ongoing sustainable and profitable growth and underpins our ability to serve our Members with their best interest at heart.
2023 also witnessed an important and noteworthy event at DUCA. We were honoured and delighted to be the partner in a merger of operations transaction with United Employees Credit Union (United) that closed prior to year-end. The transaction brings $53 million in assets, over 3,000 Members, and two additional branch outlets to DUCA. We are looking forward to continuing United’s proud tradition of delivering financial care to its Members as a part of the DUCA family.
As we propel forward, DUCA remains steadfast in our purpose-driven focus, helping and empowering our Members and Communities to Do More, Be More, and Achieve More!
Engaging Our Employees
As DUCA continues its sustainable growth, we steadfastly invest in our most valuable asset: our People. Rooted in our enduring Values—Do More, Be More, Achieve More—we prioritize cultivating a workplace where excellence thrives and innovation flourishes.
Central to our approach is a robust feedback ecosystem, ensuring that Employee voices resonate throughout DUCA. We've implemented a range of initiatives in 2023 to foster open dialogue, embracing both informal and formal channels for feedback.
In 2023, significant milestones underscored our commitment to Employee engagement:
Launch of The Nest Intranet: In early 2023, we unveiled The Nest, a dynamic intranet designed to foster connectivity and empowerment. Boasting an impressive engagement rate exceeding 90%, The Nest has become a hub for disseminating key business updates, providing seamless access to vital resources, and nurturing collaborative communities. Employee feedback has been overwhelmingly positive, highlighting how The Nest has enriched day-to-day experiences. The Nest, alongside other communication vehicles like weekly newsletters, serves as a conduit for transparent and inclusive corporate communication, fostering dialogue and amplifying diverse Employee perspectives.
Employee Experience Team: Throughout the year, our Employee Experience Team (EET) has undergone significant refinement, adapting to changing needs and leveraging a diverse array of feedback channels to inform our strategies. A key to our efforts is the documentation and understanding of pivotal moments in the employee journey, with a particular emphasis on fostering meaningful career conversations and development opportunities. As part of our ongoing commitment, we are soon piloting tailored career development plans for everyone, informed by the insights provided by the EET. These plans aim to empower every member of our team to pursue their personal purpose within DUCA. Furthermore, initiatives such as open discussion forums, Power Hours, and enhanced exit interviews have played a pivotal role in nurturing an inclusive environment where every employee voice is valued.
In line with our overarching vision, DUCA remains committed to nurturing a collaborative, inclusive, and vibrant workplace culture. By empowering Employees to engage, innovate, and thrive, we not only enrich individual experiences but also fortify our collective ability to drive positive change and make a meaningful impact within our Communities.
DUCA Impact Lab: Building Banking That Benefits All
At DUCA, we recognize the profound impact fair banking has on people's lives. Financial well-being is not just about money; it's about access to opportunities, quality of life, and even physical and mental health. That's why we're dedicated to pioneering new and innovative ways to make fair banking accessible to more people. Enter the DUCA Impact Lab.
The DUCA Impact Lab, a registered charity established by DUCA, is a catalyst for change. Through direct DUCA financial support, grants, research, and partnerships, we pilot and test new models of impact- focused lending solutions, all with a mission to "Build Banking that Benefits All."
Collaborating with community and technology partners, we design and test lending solutions to evaluate their social impact and assess their viability for those underserved by traditional banking services.
Our efforts have yielded remarkable results. The DUCA Impact Lab has not only conducted insightful research into fair banking opportunities in Canada but has also developed working capital solutions for underbanked small businesses and refinancing options for individuals trapped in predatory debt, such as payday loans. By the close of 2023, the DUCA Impact Lab was approaching $1.5 million in impact lending.
Escalator Loan: Empowering Financial Resilience
Amidst economic upheaval, many Canadians faced unforeseen financial challenges. The DUCA Impact Lab responded by focusing on its Escalator Loan program, offering relief to DUCA Members and Employees burdened by predatory debt.
The Escalator Loan provides a lifeline to individuals trapped in a cycle of predatory lending. By refinancing predatory debt with manageable payments tailored to each borrower's unique cash flow needs, shortening repayment terms, and offering a pathway to improved credit scores, the Escalator Loan empowers borrowers to break free from the debt spiral and achieve financial stability.
In 2023, the Escalator Loan pilot celebrated a significant milestone: funding its 100th loan and surpassing $500,000 in total lending. Each loan represents a life transformed, like that of “GG” and her family, who found themselves drowning in debt due to unforeseen circumstances. With the help of the Escalator Loan, GG and her family were able to regain control of their finances and embark on a path toward a brighter future.
At DUCA, we're not just providing financial services; we're building bridges to financial resilience and empowerment for all.
Environmental, Social & Governance (ESG) and DUCA’s Profits with a Purpose
Profits with Purpose: DUCA's Commitment to ESG and Social Impact
At DUCA, our purpose of helping Members, Employees, and Communities achieve more drives everything we do. This ethos guides our decisions, shapes our Member experience, and defines our role within our Communities.
Our primary responsibility is to provide financial care to our Members, understanding their needs, goals, and desired impact. Cooperative banking, when done right, can be a powerful force for social good. We actively manage our environmental and social impact while ensuring our cooperative governance aligns with our mission and profit-sharing ethos.
Continuously evolving our approach is essential to realizing our potential. DUCA remains committed to strengthening our Environmental, Social, and Governance (ESG) practices to enhance overall well-being. Our focus areas include:
- Measuring our carbon footprint and environmental performance to guide our sustainability vision.
- Expanding our Social Return on Investment (SROI) measurement to quantify social and environmental impact.
- Collaborating with the credit union sector to scale up community impact initiatives, including those led by our charitable foundation, the DUCA Impact Lab.
- Enhancing transparency in Diversity, Equity, and Inclusiveness (DEI) initiatives.
- Maintaining and advancing our status as a B Corp, symbolizing our commitment to social and environmental responsibility.
As we progress, DUCA remains dedicated to maximizing positive social impact while delivering financial services that align with our values and purpose.
Our social impact in action – Native Canadian Centre of Toronto Aboriginal BEST (Business & Entrepreneurship Skills Training) Program
The past year marked the second year of DUCA’s four-year, $100,000 commitment to support Indigenous entrepreneurs through the Aboriginal BEST program at the Native Canadian Centre of Toronto. The program gives Indigenous entrepreneurs an opportunity to refine their skills and business plans, as well as access coaching and marketplace services.
A summary of our investments is outlined in the table below:
B-Corp Certification at DUCA: Leading the Way in Social Responsibility
In 2017, DUCA made history as the world's first B-Corp certified credit union, signaling our commitment to transparently measuring our Environmental, Social, and Governance (ESG) performance. This certification goes beyond mere disclosure; it challenges us to uphold the rigorous standards of ESG performance set by B-Corp.
Through B-Corp certification, we undergo a thorough evaluation of our ESG performance across all facets of our operations, from community engagement to employee experience and environmental sustainability. This assessment provides us with valuable insights into our position relative to socially responsible companies worldwide, guiding our ongoing evolution of ESG practices.
Since joining the B-Corp community, DUCA has garnered recognition as a "Best for The World" company for our exemplary Governance and Workers practices. Our exceptional overall B-Corp score of 102.8 surpasses the standard score of 80 required for certification, far exceeding the median score of 50.9 for ordinary businesses undergoing certification.
As we prepare to renew our B-Corp certification in 2024, we remain committed to leading the charge in social responsibility and look forward to sharing our continued progress with the DUCA Community. Visit DUCA's Certified B-Corp profile page to explore our scores and learn more about our journey
DUCA Leadership Team
Executive Leadership Team
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Doug Conick
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Yan Xu
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Phil Taylor
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Karey Carson
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Pippa Nutt
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Riz Ahmad
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Aron Rogers
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Michael Creasor
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Tom Robertson
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Mo Mauri
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Afzal Hussain
Board of Directors
Financial Snapshot
2019 | 2020 | 2021 | 2022 | 2023 |
---|
1.0 | Key Financial Results and Metrics ($ in thousands) | |||||
1.2 | DUCA Net Income | $12,032 | $12,838 | $25,702 | $16,321 | $17,331 |
1.3 | ROE1 | 5.8% | 4.1% | 7.4% | 4.4% | 4.8% |
1.4 | Efficiency Ratio | 82.7% | 76.5% | 67.9% | 81.8% | 79.2% |
1.5 | Leverage Ratio | 7.3% | 7.0% | 6.8% | 6.3% | 5.8% |
1.6 | Risk Weighted Ratio | 16.5% | 17.4% | 14.2% | 13.0% | 12.0% |
2.0 | Balance Sheet Performance ($ in millions) | |||||
2.1 | Assets | $4,056 | $5,112 | $5,522 | $6,936 | $7,672 |
2.2 | Loans | $3,507 | $4,129 | $4,848 | $6,411 | $6,929 |
2.3 | Deposits | $3,005 | $3,841 | $4,555 | $5,596 | $5,963 |
2.4 | Securitization Debt | $605 | $698 | $468 | $436 | $824 |
2.5 | Regulatory Capital | $297 | $360 | $374 | $443 | $447 |
3.0 | Earnings Performance ($ in thousands) | |||||
3.1 | Net Interest Income | $49,026 | $66,789 | $84,294 | $76,949 | $53,516 |
3.2 | Fee and other income | $17,350 | $12,282 | $14,412 | $28,143 | $57,953 |
3.3 | Provision (Recovery) of Credit Losses | $(462) | $1,315 | $37 | $(927) | $1,448 |
3.4 | Operating Expenses | $54,902 | $60,466 | $67,012 | $85,974 | $88,296 |
3.5 | Pre-tax income before patronage | $11,936 | $17,290 | $31,657 | $20,045 | $21,725 |
1 Computed using net income before patronage
Corporate Governance
DUCA operates within the context of a robust legislative and regulatory framework. Our corporate governance policies and practices are consistent with requirements of the Credit Union and Caisse Populaires Act – 2020 (CUCPA-2020, the Act), related authority rules, and guidance including (not limited to) the Sound Business and Financial Practices Rule, the Capital Adequacy Rule and Liquidity Adequacy Rule. DUCA is regulated by the Financial Services Regulatory Authority of Ontario (FSRA) which oversees market conduct, administers and enforces authority rules of the Act, regulations and guidance, and provides deposit insurance through the Deposit Insurance Reserve Fund (DIRF) for deposits held at Ontario Credit Unions and Caisse Populaires up to prescribed limits. Within this context, the Board of Directors (the Board) approach to corporate governance is informed by the following guiding principles:
Values & purpose driven
The Board reinforces and champions the Credit Union’s organizational values
acting in a fashion that demonstrates trust, integrity and good governance. The
Board’s governance and
oversight supports the realization of DUCA’s purpose - to help Members
and Communities Do
More, Be More, and Achieve More. Values and purpose alignment enables the delivery
of
optimal and
sustainable outcomes for Members, Employees, Communities, and Stakeholders.
Stewardship
We act in the best interests of our Members, the Credit Union, and our stakeholders.
We
do this by following sound business and governance practices in our policy and
procedure frameworks
and fostering an environment of integrity. We exercise independent, sound, and
unbiased judgement in
our oversight and the constructive challenge, and support of management.
Strategic clarity
The Board ensures DUCA has a clear and focused strategy supported by business
priorities, goals, initiatives, and the financial and human capital resources
necessary to successfully
achieve its vision and fulfill its purpose.
Effective oversight
The Board ensures its effective oversight of the risk profile of the Credit Union
relative to its risk appetite, through enterprise risk and compliance management
frameworks, policies,
and procedures. The Board also reviews and monitors DUCA’s enterprise-wide
operational, business,
and strategic risks, and compliance status as well as its financial performance. Our
oversight ensures
DUCA operates within its risk appetite and in a fashion that results in an
appropriate balance of return
for risks.
Improvement mindset
We are committed to continually improving governance and oversight principles,
policies and practices. An improvement mindset helps the Board serve the best
interests of Members
and all stakeholders in the context of evolving Member and Community needs as well
as dynamic
operational, technological, regulatory, competitive, and economic environments. We
enable
improvements through regular evaluations of Board effectiveness, seeking third-party
advice, and
ongoing education and training of Directors of the Board.
Audit Committee
Standing committee of the Board to which the Board had delegated responsibility for overseeing DUCA’s financial reporting, control environment, and compliance.
The role of the Committee is to oversee and assess the:
(a) Integrity of the financial reporting process and
financial statements;
(b) Adequacy of the internal and external audit
functions;
(c) Adequacy and effectiveness of the risk management
process;
(d) Compliance with legal and regulatory
requirements;
(e) External auditor’s qualifications and
independence;
(f) Performance of the external auditors; and
(g) Performance of the internal audit function.
Nominations Committee
Standing committee of the Board to which the Board has delegated responsibility for overseeing the Director nomination and election process. The primary role of the Committee is to source, recruit, and oversee the election of Directors to the Board who meet the qualifications for the role and who will address any competency gaps identified in the Board Competency Matrix (as developed by the Governance Committee).
Governance Committee
Standing committee of the Board to which the Board has delegated responsibility for overseeing the quality and effectiveness of DUCA’s corporate governance. The primary role of the Committee is to ensure that the Board of Directors provides for effective governance with respect to Board composition, competency and oversight, as well as monitoring current, and evolving governance best practices.
Human Resources and Compensation Committee
Standing committee of the Board to which the Board has delegated responsibility for overseeing DUCA’s human resources policies. The role of the Committee is to oversee and assess the compensation of the CEO and members of the Executive Leadership Team and to manage the process of evaluating the CEO.
Risk Committee
Standing committee of the Board to which the Board has delegated responsibility for overseeing the effective operation of all risk taking operations and risk management functions of the Credit Union and ensuring appropriate risk governance processes are executed effectively. The Committee shall review the risk activities of the Credit Union, the associated corporate policies and any significant and emerging events and related action plans and shall recommend any improvements or changes to the Board as deemed necessary or desirable.
DUCA’s Board recognizes that diversity is important in ensuring its Directors possess the qualities, attributes, skills, education and experience required to effectively steward and oversee the strategic direction and management of DUCA. The Board recognizes the benefits of diversity, equity and inclusion toward attracting high-calibre Directors and maintaining a high functioning Board. Diversity, equity and inclusion enable diversity of thought, as such the Board considers diversity as an important factor in the optimum composition of the Board and its Committees.
Source: https://www.theglobeandmail.com/business/rob-magazine/article-top-canadian-women-business-leaders/
DUCA’s purpose is to help People, Businesses, and Communities Do More, Be More, and Achieve More. Underpinning this purpose is the philosophy and belief that cooperative banking can be a powerful force for social good. This means our approach to ESG is informed by and integral to DUCA’s purpose and mission as a Credit Union. Our focus is also shaped by the priorities of the social and environmental landscape in which we operate including climate change, matters of diversity, equity, and inclusion, and the financial well-being of the Communities we serve. Going forward, DUCA will progressively build on our ESG strengths through further refinement and amplification of goals, initiatives and measurements, and a governance framework that continues to evolve and support DUCA’s environmental and social impact.
The Board provides oversight to DUCA subsidiaries at an enterprise level in accordance with DUCA’s Enterprise Risk Management policy requirements for subsidiary governance which comply with the FSRA Sound Business and Financial Practices Rule. DUCA’s subsidiary governance policy and framework enables the Board’s oversight through defined procedures and practices along with mechanisms for informing the Board of subsidiary level risks, compliance, and governance matters as well as reporting on the subsidiary’s business and financial performance.
DUCA’s Board of Director remuneration is in accordance with its Member approved bylaws and Director Compensation and Expenses policy which adheres to FSRA’s Sound Business and Financial Practices Rule. The Board’s philosophy and approach to Director remuneration recognizes the importance of sound corporate governance as a key ingredient to corporate success. As such, it is important that DUCA’s remuneration for Directors is commensurate, fair, and reasonable when compared to organizations of similar size, complexity, and risk profile within the Credit Union sector. Accordingly, DUCA’s Board of Directors are remunerated at approximately the 50th percentile of Director remuneration for comparable organizations, with due consideration given to the required skills, education, experience, and commitment given DUCA’s nature, size, complexity, operations, and risk profile. The Governance Committee of the Board reviews Components of Directors remuneration at least every three years.
The Human Resources and Compensation Committee (HRCC) of the Board governs and oversees the remuneration programs of the CEO, senior management, and employees of the Credit Union. The Board and the HRCC ensure that remuneration programs of the Credit Union adhere to the fair and reasonable remuneration requirements codified in FSRA’s Sound Business and Financial Practices Rule. DUCA applies its remuneration philosophy and approach recognizing that it is our people that power DUCA’s ability to fulfill its purpose and achieve its corporate aspirations. On this basis, and within the context of its governance and regulatory frameworks, DUCA’s remuneration programs for the CEO, senior management, and all employees of the Credit Union, are in accordance with the following principles:
Equity, fairness, and alignment with DUCA’s
purpose
DUCA’s employee remuneration is aimed at
ensuring remuneration is commensurate, fair, and equitable for established roles
within the organization
as defined by job scope, complexity, job demands, required qualifications and
skills, and organizational
impact. We strive to appropriately pay for performance through the evaluation of
person-by-person
performance level against annually established objectives. We seek to ensure all
employees are
compensated in a fashion that aligns with DUCA’s business and social purpose and
philosophy.
Market competitiveness
Employee remuneration is geared to attract and retain the talent necessary to
enable DUCA’s ongoing strategic success and to support sustainable talent
development and
organization succession planning. Accordingly, DUCA’s employee remuneration takes
into account
market pay for similar or equivalent roles at comparable organizations taken from
the Credit Union and
financial services sectors.
Alignment to corporate goals and objectives
Remuneration frameworks are designed to support and
encourage strong performance and commitment to the Credit Union and incentivize
activity that
achieves DUCA’s organizational goals, objectives, and sound business and financial
practices. Ultimately,
this alignment enables delivering the best possible outcomes for Members and our
stakeholders.
Consistent with DUCA’s remuneration philosophy and approach, base salary takes into consideration market factors including pay competitiveness as well as factors such as complexity, required qualifications and skills, demands of the role and organizational impact. Salary is reviewed annually and adjusted as appropriate, with a comprehensive market-based review performed at least every three years.
DUCA’s variable compensation for the CEO and Senior Management comprises a short-term incentive plan (STIP) and long-term incentive plan (LTIP). Both plans are paid contingently upon the degree of achievement against Board approved business performance targets.
Short-term incentive plan (STIP)
DUCA’s STIP links compensation to the achievement of annual
performance objectives. The plan has two components:
- Personal performance based on an evaluation of delivery against annually established performance objectives at the individual level.
- Business performance, which is based on specific, board approved business performance targets linked to DUCA’s Annual Operating Plan (AOP).
The level of personal and business performance in a fiscal year relative to personal objectives and business performance targets determines the total amount of STIP paid. An illustration of the STIP payment formula for eligible employees is as follows: STIP = 1. bonus eligible earnings x 2. target bonus % based on job grade x 3. business performance result (ranging from a minimum of 0% to a maximum of 125%) x 4. personal performance result tied to achievement of individual objectives (ranging from a minimum of 0% to a maximum of 150%). The STIP is applicable to all eligible employees at DUCA. STIP payable for the CEO and oversight roles of Chief Risk Officer and Chief Financial Officer, is subject to an additional regulatory compliance factor which ranges from a min of 0% to a max of 100%.
The annually approved business performance target component of the STIP covers four dimensions of business performance: profitability, Member satisfaction, business diversification, and business growth.
Long-term incentive plan (LTIP)
DUCA’s LTIP is established and approved by the Board annually and
links compensation of the CEO and eligible members of senior management to the
achievement of
longer-term strategic objectives. LTIP is paid at the end of a three-year
performance period contingent
upon the achievement of three-year forward looking business performance outcomes
relative to Board
approved performance targets as per DUCA’s three-year strategic plan. The LTIP is
based upon a target
percentage of base salary for each of the CEO and eligible members of senior
management determined
by job grade. An illustration of the LTIP payment formula is as follows: LTIP
payable at the end of a three-
year performance cycle = 1. Base salary x 2. LTIP target award for a specific job
grade x 3. Business
performance outcomes relative to three-year forward looking business performance
targets (ranging
from a min of 0% to a max of 125%).
The annually approved, three-year forward looking LTIP business performance targets cover dimensions of business performance such as: cumulative profitability, assets under management (AUM), and capital ratio at the end of a performance cycle.
Proportion of CEO remuneration at-risk
The combination of CEO base salary, LTIP and STIP which are
contingent upon meeting performance objectives, results in approximately 50% of the
CEO’s total
remuneration being “at-risk”.
Retirement benefits
A defined contribution pension plan is available for all eligible employees at DUCA.
The degree of employer contribution and/or employer matching is determined based on
job grade and
applicable base salary. DUCA contributes 10% of base salary towards the CEO’s
retirement savings.
Benefits and perquisites
DUCA provides a market competitive benefits program to all eligible
employees covering health, dental, disability, life and accidental death and
dismemberment insurance
as well as market competitive vacation leave, employee and family assistance and
personal leaves. The
CEO, eligible members of senior management and vice presidents of DUCA also have
access to additional
health benefits including an annual health assessment and year-round care for urgent
medical attention.
The CEO is provided an allowance for expenses such as vehicle and commutation costs.
Details of the annual remuneration for the CEO and top remunerated members of senior management are available in the disclosures included in DUCA’s annual audited financial statements.