Econ 101: liveblogging the Vancity AGM - 62nd Annual
Apr 22nd, 2008 by nancyzimmerman
I’m watching the Vancity AGM by webcast and will liveblog. (Can one ‘liveblog’ when watching a live webcast?)
Note: these are in no way to be construed as official minutes. I am giving this a shot! Sorta citizen journalism. I may or may not manage to accurately blog as I watch. [update: note I often used the word ‘we’ in the blog. I don’t mean to imply I’m part of the ‘we’, it was simply blogging using the word used by the speaker]
Chair of the board, Patrice, is going through the formalities - rules about how the business of the meeting will be conducted (eg. say your name and branch; if it’s personal, this isn’t the place etc.)
Commenting on the BikeShare program - take a bike, ride it a couple weeks, then pass it on. This is a symbol of how Vancity helps its employees and the community make positive change.
Year in review: saying goodbye to Dave Mowat, CEO, and welcoming Tamara Vrooman. A year of incredible market disruption. Achieving carbon neutral - Vancity started thinking about how to reduce its impact on the environment (energy use in building, how our employees commute, and eliminating use of paper). [ed note: I can testify to this - they really do encourage us to commute, including negotiating discounted yearly transit passes for us, and our garbage bins are teeny-tiny]. Dockside Green is another example of leadership - affordable housing development in Victoria shooting for Platinum LEED status.
Another leadership initiative: helping the ‘unbanked’ start banking. Inspired by Dr. Yunnus, Vancity has advanced its own micro credit program. Vancity offers a match-saving program - for every $1 a person saves, Vancity will match up to $3 - resulting in 9 people being able to purchase a home, in partnership with the Futures Foundation {?}.
Vancity is always, at heart, a financial institution. Patrice is reviewing the mergers and growth of Vancity over the past year.
Because it’s a cooperative, $5.2 million of the profits went right back to the members.
Now introducing CEO Tamara Vrooman [I heart her. She’s delightful, straight-shooting, competent]. She was deputy finance minister when the board found her. One of her first priorities was to meet with members to find out What’s working? What’s not? and swiftly discovered how to support our members and communities. She tells it like it is, whether good news or bad. [applause].
Ms. Vrooman informing the crowd of the Cdn essential: hockey scores up to the moment.
One of the things that interested her in Vancity was the opportunity to listen and talk face-to-face with members. This was not something she could do as deputy minister (her former job). Now she will tell us about the results.
Good news: VC fundamentals strong - assets under mgt grew by 15% - nearly a historical year. $17 billion, including assets at Credential. 14,000 new members through mergers; 19,000 new members through organic growth. Equity remains strong. Broke the $500million mark. Capital Adequacy Ratio had robust 12% (only 8% is required).
Community Leadership funds also strong.
Underperformance coming up now.
Profits fell by 32%. Particularly steep. 3 reasons: ABCP, general narrowing of margins in industry, increases in cost base.
Note: Subprime is new word chosen by the American Dialectic Society. America grew overzealous in its mortages; bundling mortgages to fund businesses. Vancity grew its assets by selling 2billion of packaged mortgages. But in the states, investors funding the bundles, discovered that some of the (non Vancity) bundles were subprime mtgs. Vancity could no longer securitize (ie. sell the bundles) even though Vancity’s mortgages were not subprime. We took a write down of 20%. About 30 of our members had invested in some of our […. ACK…. streaming crashed …] Vancity paid out those members (?), well ahead of Canaccord doing something similar for its investors. Ms. Vrooman is very proud of this.
Other tough news: both our employee engagement and our service performance scores have declined in 2007. What are we going to do about it?
Areas of concern - feedback from members she received -
1. Transactions take longer than they used to.
2. We could do more community initiatives.
3. It doesn’t seem like we’re equipping our staff.
4. We’re not first to market these days.
Staff agreed with these assessments.
So, in November, she restructured the leadership team to be more streamlined. Key Focuses:
1. Retail and branch review (including fees to atms, line-ups)
2. Wealth management (many members who don’t have large sized investments want quality advice)
3. Improved technology. Staff are nimble, do workarounds, but major look at new technology.
4. Innovation. We’ve been the first on so many things historically - ethical investing, enviro visas (1990), internet banking. Good ideas come from front line staff. Will start talking more to them.
5. Social Finance - recognizing we have a capacity to do business in a way that’s sustainable in terms of our communities and the environment.
6. Commitment to staff - we will do fewer things, do it with their direct input.
Tamara is inviting members to contact her directly. Her e-mail: tamara_vrooman@vancity.com
Closing with a reminder of our values - integrity, innovation, responsibility.
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Q&A time
Q: why is our efficiency ratio higher than banks? 87%
A: because we give more service. But 87% is still too high to be sustainable.
Q: What steps will be taken to avoid similar difficulties in the future, such as ABCP? eg. getting caught up in US-led problems.
A: VC is looking hard at this. $77million VC had in ABCP represents less than 1/2 of 1% of VC total assets. But still, we didn’t understand fully enough what we were investing in, and took others’ words for it. It was not transparent, it was intricate, bu