Central 1 Credit Union (Central 1) today announced its second quarter 2019 financial results. Financial income more than doubles to $28.7 million, up $15.7 million compared to the same period last year, driven by strong Treasury performance.
Higher earnings support the significant investments in strategic initiatives that continued throughout the second quarter of 2019. This is consistent with Central 1’s long-term strategic plan to deliver digital banking, payments modernization, expand treasury services, and continue delivering on core products and services.
Central 1 is accelerating the development of our Forge Digital Banking platform to enable our clients across Canada to create market-leading customized experiences for their customers. During the quarter, Central 1 secured many additional Forge client commitments giving Canadian financial institutions access to the tools and capabilities that come with the Forge platform. Forge implementation activities also expanded beyond the Champions to broader client availability.
Activities in the second quarter led to two additional milestones for Forge this summer. On July 31, Alterna Bank was the first to release the Forge-based mobile app. On August 1, we launched the full retail suite on Forge comprising a public website, mobile banking app and online banking capabilities. This means all three Forge services are now in active use across Canada. BC-based First West Credit Union is the first to release all three retail channels.
“We’ve had a strong second quarter. Our Treasury team has performed well, generating strong earnings, and we continue to invest in digital banking and payment solutions for our clients,” said Mark Blucher, President and CEO of Central 1. “With the rollout of our full retail suite on Forge, we’re creating a competitive edge for credit unions and other financial institutions. Our clients across Canada can now offer their members leading digital banking experiences. Central 1 is building momentum and making good strategic progress.”
Financial Results
Second Quarter
Central 1’s second quarter results reflected strong net financial income of $28.7 million, up $15.7 million at the same period last year. The securities portfolio continued to show strong net realized and unrealized gains as decreasing market yields and narrowing credit spreads drove up the fair value of securities.
Prior year’s comparative quarter results benefited from one-time gains of $37.1 million relating to transactions surrounding Central 1’s equity investments. Excluding these one-time gains, profit after tax for the second quarter of 2019 was $9.2 million higher than the same period a year ago.
Second quarter highlights compared to the same period last year:
- Profit after tax of $12.7 million, compared to $1.3 million, after excluding the one-time gains of $37.1 million reported in the same period last year. This represents a return on average equity of 4.5 per cent, compared to 2.2 per cent in 2018.
- Net financial income of $28.7 million, up $15.7 million from $13.0 million.
- Assets of $17.9 billion, down 7.3 per cent from $19.3 billion.
Year-to-date
Consistent with the second quarter results, decreasing market yields and narrowing credit spreads led to a $32.1 million increase in net realized and unrealized gains. Previous changes in our asset mix contributed to stronger interest margin in 2019. Year-to-date financial income was $38.7 million higher compared to the same period in 2018. Prior year’s year-to-date results benefited from one-time gains relating to transactions surrounding our equity investments. Excluding these one-time gains, profit after tax for 2019 was $36.5 million higher than a year ago.
Management’s Discussion and Analysis and Financial Statements have been filed with SEDAR and posted at www.sedar.com and www.central1.com/investor-