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Minutes of 2023 Annual General Meeting

ST ALBANS DISTRICT CREDIT UNION LIMITED

Twenty-first Annual General Meeting

Monday 20th March 2023 7,30pm via Zoom

Minutes of Meeting

Present: Chairman, Isabel Dolan; Treasurer, Joanne Clarke; Secretary, Colin Metcalfe and 18 other members

1. Apologies for Absence

A list of apologies is available on request.

2. Minutes of Twentieth Annual General Meeting held on 28 March 2022

The minutes were approved without amendment.

3. Chair’s Report

Isabel Dolan presented her report together with a PowerPoint presentation. The data presented showed the development of the Credit Union over the year:

Year 2021/22 Year 2020/21

Members:- Adult

Junior

Total 1223 254 1477 1307 303 1610

Savings:- Adult

£000 Junior

Total 1109 114 1223 1117 110 1227

Loans granted:- CU

£000 Other

Total 99 29 128 118 32 150

Out on loan:- CU funds

£000 Other funds

Total 193 76 269 205 83 288

Total Assets £000 (year end) 1495 1504

Income £000 60 62.5

Expenditure £000 65.8 55.4

Surplus £000 (after tax) (5.8) 5.0

The dual factors of inflation and recessionary sentiment has and is continuing to impact on all parts of the Community Bank. This has resulted in the financial year 2021/22 showing a net loss of £5,800 compared to a profit of £4,957 in 2021.

The capital/ asset ratio remains healthy at 11.7% (2021 = 12%)

We have been hard at work recruiting new volunteers, both Directors and non Directors, with specific skills to help us move forward over the medium term.

We have seen a significant increase in loan applications, particularly during the second part of 2022, however for reasons described later, the number of loans granted has been lower than in 2021.

We are mindful of our responsibilities to those in financial difficulties and are working closely with them to try to find solutions where their debt obligations are proving challenging.

We refresh our strategy each year and we are currently looking at new area to target for lending to different types of borrower, in different markets, and also expanding our core geographic reach

We were founded more than twenty years ago and had a lovely party in May to celebrate our anniversary.

The overall number of members and junior savers has fallen during the year possible as a reflection of the economic conditions facing some of our members and as a result of the closure of a number of our low balance dormant accounts.

The total value of members deposits remained broadly the same as last year, with a slight fall of £4,000 compared to 2021, made up of a small decrease in the value of adult savers partly offset by a small increase in the value of junior saver balances.

The income of a Credit Union comes from a number of sources, however one key to increased income (and profitability) is being able to lend funds to borrowers, earning higher rates on cash than would otherwise be earned on deposit with other banks.

As a not for profit, volunteer-led, fully regulated organisation which is part of the credit union movement, our purpose is to provide loans at fair rates and secure, accessible savings to people living or working in Hertfordshire. We provide a real alternative to commercial banks, and we need to spread this message wider.

There is currently an inherent tension between wanting to increase our loan book in order to drive increased income, and the requirement from a social, financial and regulatory point of view to ensure that we lend only to those who can afford it.

There was a slight decline in the number and value of loans granted compared to 2021 as a result of this tension.

As our loan portfolio continues to be repaid and there is a slower rate of new lending, the overall loan balance has reduced to £269,000 as at September 2022.

The total value of loans granted since the founding of the Community Bank is approximately £2.825m.

Since the year end, we have seen a marked increase in loan applications, however very few of these are affordable to the applicant and so our conversion to actual loans is currently very low.

We made a loss of approximately £5,800 in 2022, which was disappointing and was as a result of a decrease in grant income, higher running costs and higher bad debt provisions.

Our asset base has reduced slightly as a result.

The year also showed a decline in the number of loans granted under our agreement with St. Albans City & District Council, to help the Council meet it’s obligations under the Homelessness Reduction Act to assist local families into private sector housing.

One of the main reasons for this is the difficulty that potential borrowers under this scheme have in finding local affordable accommodation.

However, during 2022, our partnership with the Council has resulted in the granting of 17 new loans (2021: 22) with a total value of £29,000 (2021: £32,000) and the Council has since provided additional funding to us to continue this initiative.

Our work within the Community continues

We are kindly and generously supported by grants and donations from local charities and other organisations, for which we are extremely grateful.

We have been working with Herts County Council on their ‘Building Life Chances’ programme which has extended from pandemic support into a wider cost of living initiative.

We continue our work with the Illegal Money Lending government team to work to stamp out Loan Sharks and unauthorised lending.

We have spent some time this year ensuring that our wider team has access to signposting and referrals information so that we can assist members facing financial emergency situations, but where we are unable to provide a loan.

We celebrated our 20th Anniversary in 2022 and it was a pleasure to welcome members, volunteers, local councillors, the Mayor of St. Albans and St. Albans MP, Daisy Cooper, to our party in May,

During last year, Freda Chaloner, our Operations Director retired in July after 10 years as a director. Freda remains a member of our Loans Committee.

Iain Campbell joined the Board in October 2022 and has assumed responsibility for the Chairmanship of the Credit Committee from Anthony Baker, who retires from the Board at this AGM.

Iain’s previous background in Supervisory Credit Risk roles at the Bank of England, and in senior credit roles for mainstream banks will hold us in good stead as we enter down turn and credit tightening times.

Andy Petch, our Director of Recoveries retired in December 2022 and John Lickiss, our IT Director will step down as Director at this AGM.

Both Andy and John will continue as volunteers once they have retired from the Board, ensuring a smooth handover.

Anthony Baker was one of the founder Directors of the Credit Union 20 years ago and has been the lynchpin of our organisation throughout this period. All members, staff and

volunteers owe him a debt of gratitude for his hard work and dedication on their behalf over the two decades. We will continue to benefit from Anthony’s expertise as he remains a member of our Credit Committee.

Andy Petch was an early member of the Community Bank and has served as a volunteer and Director in many different functional teams. The breadth and depth of his knowledge of how we work, and his wisdom as a Director have been invaluable over the years.

John Lickiss patient management of our IT infrastructure on extremely tight budgets has ensured that volunteers and staff have been able to access the systems needed to perform their roles.

He has led systems migrations, technology changes and many office moves. He was also pivotal in the ability of the Community Bank to move to remote working at very short notice at the start of the CoVid 19 pandemic in early 2020. This meant that we were able to provide continuity of service to our members and borrowers, as well as safeguarding the welfare of our staff and volunteers.

Simon Lascelles has joined us as a volunteer and will be proposed for election as IT and Operations Director later during this AGM. Simon’s board level expertise in IT, technology and process improvement will be of considerable assistance on our journey to streamline our operations.

Clare Curtis is joining us as a Director having been Director or Head of Compliance and Risk in a number of major UK and International banks, as well as having spent her early career with the regulator.

Our heartfelt thanks go to our retiring Directors for their services to the Community Bank over the years, and also for the professional way in which they are handing over to incoming Board members.

Looking forward, the uncertain economic environment is giving rise to challenges for our members and current Bank of England information provided to us indicates that this is likely to last for the next 2 or more years. This makes our social and community purpose more important than ever before.

We introduced our Community Bank mobile phone App in March 2022. The App offers secure access to our services for all members, and is particularly helpful for those that do not have easy access to computers, laptops or tablets. It also helps us communicate with younger members, who tend to manage their finances through their mobile phones. Members can access this App by contacting our office.

There is some movement in the Credit Union sector to improve the provision of new technology-based services that may hopefully in turn allow us to improve both our efficiency and our services to members.

We now operate a hybrid working model, with our offices at 55, Catherine Street in St. Albans open to the public three mornings a week, and some of our other teams are working remotely.

Work on the improvement of our internal processes continues in all areas of the Community Bank, with the intention of enhancing our service to members, as well as making sure that work is fulfilling for our staff and volunteers.

We have 32 volunteers and one part time member of staff. During the year we have progressed our ‘People Project’ actions from 2020, including work on our succession planning and enhancing our HR compliance and systems.

Our ‘Future Focus’ initiative was launched in February 2022, and has resulted in clearer articulation of our values and behaviours, and also in some excellent ideas for the future of our Community Bank.

We are researching new markets for our lending business and matching this research with marketing initiatives to help us reach new borrowing members. Our objective is to increase our associations with larger organisations with a view to increased payroll savings and lending schemes and this is beginning to gain some traction.

We would like to thank our members for their continued confidence and support in maintaining their deposits, which allows the Community Bank to be a valuable asset to the community.

We are especially grateful to our staff and volunteers who work with energy and enthusiasm, and without whom the Community Bank could not continue to offer the services that we do to our members.

4. Treasurer’s Report

Joanne Clarke used slides for her presentation.

Looking at the Income (or Revenue) for 2022 compared with 2021, at £60,730, Income was £1,751 lower than last year. Whilst the Credit Union received grants of £9,320, these were lower than the previous year (-£9,017) but this was partly offset by a £2,364 increase in the interest from loans and higher bank interest on deposits (+£3,520).

The expenditure for 2022 of £63,524 was £8,125 higher than last year. There was small increases in office and computer costs, but the largest increase was a £11,085 increase in impairment costs on loans to members. As a result, we made a loss for the year of £5,590 after tax and dividends (2021 + £4,957)

The surplus was 0.37% of average assets. To put this into context, the international benchmark for credit unions is a surplus of 1% of average assets.

Joanne then turned to the Balance Sheet. Total assets at year end were £1,504k, showing a small reduction of £9K over the previous year. Shares (being members’ savings) reduced marginally over the year (-£4,000). Reserves were slightly down (-£1,590)

Joanne explained that the regulator, the PRA, monitors the credit union’s capital/asset ratio on a quarterly basis. The ratio is a measure of financial strength and ability to absorb losses. The ratio remained stable for the year at 12.1%. The trade association’s comparative data for similar sized credit unions showed that STADCU’s capital/asset ratio is broadly in line with that of its peers. Liquidity at financial year end remained healthy at 19.5%, up from 2021.

Finally, David thanked the Finance team of Joanne Clark, Chris Hall, Claire Willott and John Lickiss for all their help.

5. Dividend Distribution

As a result of the current and continuing economic uncertainties and the loss made by the Credit Union in the year, the Board believes the organisation’s reserves need to be preserved and are not recommending the payment of a dividend to members for the 2021/22 financial year. The resolution to approve this action was passed unanimously.

6. Auditor’s report and Adoption of Accounts

The Treasurer noted that the audit had again been carried out remotely and confirmed that there was nothing significant to report. The audit report together with the full accounts are available to view on the Credit Union’s website. The Auditors’ opined that the Credit Union was able to continue to trade and that the financial statements gave a true and fair view of the state of the Credit Union’s affairs and had been properly prepared in accordance with the relevant legislation.

A resolution to adopt the accounts was passed unanimously.

7. Supervisory Committee Report

Sola Akinola presented her report on the work of the Committee covering the year to 31/12/2022 using slides for her presentation.

Sola opened by noting that the Supervisory Committee’s operational programme was controlled using a calendar of supervisory tasks derived from a model produced by ABCUL.

During the year the following supervisory tasks were carried out in the areas below:

Business Plans and Strategy

• Attended Management Board meetings and participation in discussions relating to the efficient running of the credit union.

• Attended strategy planning sessions.

• Verified that the CU has business plans going forward and that these are regularly reviewed at both a short term and a strategic level

Financial and Internal Controls

• Reviewed cash control procedures and undertook a surprise cash check in February

• Checked the documents and procedures associated with a sample of new loans.

• Reviewed printed material produced by the CU such as forms, newsletters, flyers etc.

• Reviewed the possible money laundering implications of large deposits.

• We verified that all audit issues had been responded to and acted upon.

• Reviewed a sample of closed accounts and making recommendations on the process.

• Reviewed a sample of mailings from the EOY general issue

• Reviewed the files of our directors, including those with loans.

• Reviewed the internal controls in the area of investments.

• Reviewed the documentation for a sample of new members.

• Verified that our Fidelity Bond has been renewed.

• Verified that the CU’s operating budget includes funding for external auditing.

• Validated directors’ expenses claims where appropriate

Overall Operating Health and Compliance

• Reviewed new products

Reviewed new technology and the needed security for such.

Sola confirmed that the Committee’s checks revealed that there were no major concerns identified and the necessary controls were in place.

Sola thanked her team as well as the Board and officers of the Credit Union who have always responded promptly to all the Committees queries.

8. Election of Directors

Under the rules, one third of directors are required to retire each year. Marva Hall and Colin Metcalfe are retiring by rotation and offered themselves for re-election. Isabel reported that Anthony Baker, John Lickiss and Andy Petch had notified the Board of their intention to retire as directors at the AGM. As a consequence, Iain Campbell, Clare Curtis and Simon Lascelles offered themselves for election as directors. The election of directors was approved unanimously.

Prior to the election, Iain, Clare and Simon gave a brief resume of their background and experience.

9. Election of Members of Credit and Supervisory Committees

a. Credit Committee: Anthony Baker, Freda Chaloner, David Moore, Dianne Steel and Keith Whiteford offered themselves for re-election, and Iain Campbell offered himself for election. The Chair apologised that Dianne Steel had been omitted from the Agenda distributed prior the meeting. The election was approved unanimously.

b. Supervisory Committee: Olusola Akinola, David Barnett and Mike O’Hagan offered themselves for re-election. The election was approved unanimously.

10. Appointment of Auditors

The re-appointment of Appleby & Wood as Auditors was proposed and approved unanimously.

11. Any Other Business

There was no further business or questions asked.

Meeting closed.