Annual General Meeting 2010
Board Of Directors Report For Year Ended 31 December, 2010

Fellow Co-operators,

The Board of Directors is very pleased to present its report on the performance and operations of the Credit Union during the Year 2010.  I am pleased to report that since our last Annual General Meeting, your credit union earned from the Jamaica Co-operative Credit Union League, the awards of:

  • Mega Credit Union of the Year
  • Most Outstanding Parish Credit Union.

The awards were based on our sterling performance in the Year 2009 even as we battled with a global recession which was having serious deleterious effects on the local economy.  The recession, which commenced in the Year 2008, presented a fresh set of challenges in 2010. There was widespread unemployment and some economies experienced very little or no growth.  Several large economies went bankrupt and had to borrow heavily from international banks in order to refloat their economy.  

Jamaica’s economy suffered from the effects of several quarters of ‘negative growth’.   At the end of the Year 2010, annual inflation stood at 11.7% against a target of 7.5% to 9.5% for the year.  The Jamaican Dollar appreciated against its US counterpart from $89.66 in January 2010, $86.63 in June 2010 to $85.90 in December 2010 and the United States Dollar hit parity with the Canadian in December 2010.  Interest Rates on benchmark Treasury Bill Investments declined during the year to 7.48% at the end of December 2010; that was the difficult environment in which we operated in 2010.

Your Credit Union

However, your directors continued to pursue the objectives of:

  • Creating and building wealth for our members
  • Continuing to build and maintain the capital base of the Credit Union
  • Seeking to identify and favourably manage the risks faced by the Credit Union
  • Offering a suite of products and services to match our members needs and demands
  • Maintaining the Credit Union as a viable business

Companies face, always, a series of challenges born out of interactions among finance, marketing, operations management and accounting interactions. Your directors sought to manage those challenges in 2010 in such a way that the Total Assets of the Credit Union and your wealth, would grow in 2010 and beyond.    Finance deals with decision making so this area took on major importance in our oversight of the Credit Union. 

Whilst we recognize that income maximization rests on the efficient use of resources, we know that we cannot ignore the interplay between Risk and Expected Return which bear a definite relationship to each other.

We have, therefore focused on:

  • Making good investment decisions
  • Inventory  management and cost containment
  • Financing decisions
  • Marketing strategies
  • The development of our people who execute the decisions.

We are of the view that “A good idea may not be a good opportunity” (e.g. the market may not like it) and what may seem to be the patently obvious solution may not be so because converting opportunities to winners are market driven.  Therefore, we engage in various analyses before taking decisions so that the Credit Union may grow and members may participate in and own a viable entity.

In this challenging economic environment the goal is to “do more with less”.  We have had to focus on the little things because we have found that small changes can bring gigantic results.  We have also found that members do not run to the Credit Union because we are the same as others and we have therefore sought to introduce new products, based on your expressed need for them.  Consequently, we introduced during the year five new products, viz:

  • Wealth Master Gold Savings Account
  • Pay Day Advance Loan “PDA”
  • Home Owners Insurance Loan
  • The 13.5% Mortgage Busta
  • Auto Insurance Loan

 

We invite members to visit our website at firstregionalcredituniom.com and to follow us on twitter and Facebook in order to stay attuned with what is happening at your credit union during the course of the year.

Although on the debit side of our business we have seen global and local recession, lower income on investments, reduction in our members income coupled with arrears in the payment of loans, there is on the credit side, the passion and commitment of members, employees, managers, directors and other volunteers whose determination, skill and efforts have resulted in a successful business.

The Credit Union achieved another of its several consecutive years of growth.  It has consistently earned world-class or Grade 1 ratios as displayed by its ability to maintain efficiency ratios above 50%, high Solvency, strong Capital Base and  sufficient Liquidity  resulting in our being Mega Credit Union of the Year on a number of occasions. However, for 2010 there was no significant growth in Total Assets.  We were in an environment where the norm in the financial sector was for entities to see growth diminished or non-existent, margins depressed as interest rates declined and massive increases in delinquency.

Capital Formation

We must be well capitalized to survive, strive and grow.   Capital erosion at a financial institution is a sign of serious trouble.  Consequently, we always seek to maintain high levels of capital to cushion us against risks which may not even be foreseen.  We will, therefore recommend to members at this AGM that they pass a Resolution to increase their equity in the Credit Union by increasing their level of Permanent Shares from $400.00 to $1,000.00. This will help to maintain our capital ratios above 15% of Total Assets. 

Human Resources

Whereas the loan portfolio may be our largest asset, our employees are our most valuable. Recognizing that our staff members are the ones who drive the day-to-day business processes, we have invested in their personal development, welfare and training.   The training included:

  • Microsoft Office Training
  • Laws relating to compliance with regulatory issues
  • Telephone Etiquette
  • Customer Service Skills
  • Marketing

We had already instituted a program for assisting with the cost of education for our employees and we are now concentrating on promoting wellness at the workplace.

Information Technology

We believe that our employees require up-to-date technology to assist them in discharging their responsibilities quickly and efficiently in order to enhance service delivery. We are therefore, improving IT facilities to achieve our aim of being online real time 99% of the time.  We will continue to strive to be on the cutting edge of technology in order to be able to deliver fast, efficient service to our members.

Corporate Social Responsibility

The raison d’être for credit unions is to cater to the financial and social well being of their members.  That, we believe, must translate into our expressing our care for the communities in which our members reside.  We recognize that we rely on our communities and that there are mutual obligations between our Credit Union and its immediate environs.  Consequently, we continued to make meaningful donations to schools, youth clubs, governmental institutions, civic groups, churches and other charitable institutions.

 

Scholarships

There is an annual scholarship programme through which four scholarships are awarded to students who have been successful in the GSAT exams.  In 2010, the following awards were made:

  • The Leyland Walker Scholarship  to Roanna Bowers
  • The Reynold Smith Scholarship to Denique Bailey
  • The Herman Ming  Scholarship to Monique Clarke
  • The First Regional Co-operative Credit Union Scholarship to Malcolm fisher
  • Bursary to a tertiary institution to Sheriane Shaw

The Future

In considering the future, we have been guided by the following quotation
“Old beliefs do not always lead to new success. Change happens to all of us…and we will do better when we can adjust to it – quickly. The Arrogance of Success will keep us from… what had once been working well.”

We need to enjoy change in order to succeed.  We need to seek out new products services, facilities and strategies. We will continue to invest capital to maintain superiority in terms of improving the Branches, expanding product development and consolidating operations. Accordingly, we:

  • Have been improving the physical facilities and have recently renovated the Port Maria and Annotto Bay Branches. 
  • We intend to improve the facilities in Ocho Rios and Highgate and Guys Hill Branches
  • Intend to install a new state of the art telephone system
  • Expand product development

Clearly, 2010 was a successful year for First Regional in terms of growth and expansion. We held the loan portfolio above the international standard of 60% of Total Assets in an environment where the recession deepened and some financial entities lost significant chunks of their loan portfolio. Delinquency increased, as it did in most financial institutions, and we had to redouble our efforts to collect.

 

In going forward we need to remember that we must be competitive when it comes to keeping costs and expenses in line relative to our income from fees. We need to examine how we may conduct “Business at the Speed of Thought” -to borrow a phrase from Bill Gates.  Members need to remember, always, that they own the Credit Union and whether we access its benefits in terms of reduced rates on loans, some level of dividend or enhanced savings and loans products, it is all ours.  We should therefore strive to build our Credit Union as we build our wealth as a Movement and as a people.

 

Acknowledgment

On behalf of the entire Board of Directors, I thank you, our members for your continued support of your Credit Union.  I also wish to thank the following for their continued support and guidance in ensuring the success of the Credit union:

  • Our dedicated management and members of staff
  • The Credit and Supervisory Committees
  • The Jamaica Co-operative Credit Union League for their oversight and support during the year
  • The Department of Co-operative and Friendly Societies for their guidance
  • The National Union of Co-operative Societies and CUNA Mutual for providing insurance for our members
  • My fellow directors for their unstinting support and for their giving selflessly as they provided oversight of the Credit Union.

 


Hopeton C.D. Henry
President