Benchmarking Survey - Russell Brennan Keane

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Benchmarking Survey June 2016 Cathal Melia, Audit Partner

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Benchmarking 2016  6thh Annual Benchmarking survey  Trends from September 2015 to March 2016 Trends from September 2015 to March 2016  Financials  Mergers M  Risk and Compliance  Strategy

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The Survey y Context €70.0 €60.0 €50 0 €50.0 €40.0

€60.41m €48.37m

€50.48m €42.73m €39.14m €33.49m €39.38m

€30.0

€39.09m

€20.0 €10.0

2016 €33.54m

€18.01m €14.51m

€1.08m €1.24m €1.17m

€0 0 €0.0 Average Assets

Average  Shares

2015 2014

€14.47m

Average  Avergare Total  Average Gross  Investments Income Loan Book 3

The Loan Book Lending Restrictions from Central  Lending Restrictions from Central Bank 2016

Lending Restriction from  Lending Restriction from Central Bank 2015

20%

40.13% Yes

80%

No

58.79%

Yes No

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Increase / Decrease in Loan Book? Increase / Decrease in Loan Book? 100.00% 90 00% 90.00% 80.00% 70.00% 60.00% 50.00% 40 00% 40.00% 30.00% 20.00% 10.00% 0.00%

92.00%

63% 53.84% 2016

46.15%

36%

2015 2014

8.00%

% who saw increase

% who saw decrease 5

The Loan Book The Loan Book What is the Average Change in the value of New Loans issued year to date  compared to Prior Year?

5.00%

4 80% 4.80%

4.60%

4.00% 3.00%

2.30%

2016

2.00%

2015

1.00%

2014

0.00% Overall average

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Financials‐ Balance Sheet Financials Balance Sheet Gross Loan Book % Assets

0.4 0.35 0.3 0.25 0.2 0.15 01 0.1 0.05 0

29.81%

2016

35.00%

38 00% 38.00%

30.00%

2015

2014

2013 7

Financials ‐ Investment Performance Financials  Investment Performance What is the % Return on Investment? Income expressed as a % of Total  What is the % Return on Investment? Income expressed as a % of Total Investment

4.00% 2016

3 00% 3.00%

2015 3.10%

2.00% 1.00%

1.39% 1 39%

2014

1.73%

0.00% 8

Financials‐ Wage costs Financials Wage costs Wages % of Income Wages % of Income

25% 20% 15%

2016 24% 19%

10%

21%

20%

2015 2014 2013

5% 0% g Wages 9

Financials‐ Dividends Financials Did Your CU pay a dividend?

2016 2015 16% Yes

Yes No

84%

No

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Financials‐ Dividend Rates Dividend Rates Financials % Rate of Dividend Paid 1.00% 1 00% 0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00%

0.93% 0.68%

0.69% 0.57%

2016

2015

2014

Series 1

2013 11

Mergers Has your CU been involved in Merger Discussions  with other CU’s 67.50% 80.00%

54.10%

60.00%

45.90%

32.50% 2016

40.00%

2015

20.00% 0.00% Yes

No 12

Mergers What are your Credit Union'ss merger plans for the next 3 years? What are your Credit Union merger plans for the next 3 years?

5.40% 18.90%

16.20%

None Stay as we are but open to approached

29.70% 29.70%

Integrate/ complete mergers already in  progress p g Actively seeking a merger Other

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Mergers What was the biggest challenge in implementing merger?

80

76 68

70

66

63

61

60

54 48

50 40 30 20 10 0

Board Consensus

IT Intergration

Merger Integration

Increased  Profitability

HR Intergration

Resources to handle  Diversion from  the project normal business

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Risk & Compliance Risk & Compliance How are Risk, Compliance and Internal Audit of your CU resourced?

100%

93%

80%

63%

57%

60%

Internally

40% 20% 0%

33%

27% 0%

7%

Internal Audit  Function

10%

10%

Externally Shares

Risk Management  Compliance Officer Officer 15

Risk & Compliance Risk & Compliance What Risk Management software do you use? What Risk Management software do you use? 36.70%

36.60%

40.00% 35.00% 30 00% 30.00% 25.00%

16.70%

20.00%

10%

15.00% 10.00% 5.00% 0.00% g RISC Manager

ViClarityy

CalQRisk

Other 16

Risk & Compliance Risk & Compliance What are the top 3 obstacles to embedding risk & compliance further?

> Human resources/ time (100% of  Respondents) > Lack of Skills/Knowledge/Training(60%) Lack of Skills/Knowledge/Training(60%) > Staff Buy ‐In > Constant regulatory change 17

Risk & Compliance Risk & Compliance TOP 5 RISKS TOP 5 RISKS 90% 80% 70%

% of R Respondents

60% 50% 40% 30% 20% 10% 0% Declining  Income/Viability

IT Failures

Regulatory Breach

Lack of Resources  f (staff and Board)

Credit Risk

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Risk & Compliance Risk & Compliance Has your CU had a PRISM review from the Central Bank in the last 12 months? Has your CU had a PRISM review from the Central Bank in the last 12 months?

43.30% 56 70% 56.70%

Yes No

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Risk & Compliance Risk & Compliance What are the TOP 3 issues which arose from  your PRISM visit? your PRISM visit? > Succession planning > Strategic plan/Stress Testing > IT security

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Strategy Did the board/ management take a day out to review and update the strategic  plan in the last 12 months?

32.40% Yes 67.60%

No

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Strategic Plan Strategic Plan When was your Strategic Plan last re‐visited

63.40% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

54.10%

24.30% 22.00% 13.50%

0‐3 mths

3‐6 mths

2016 12.20%

6‐12 mths

2015 8.10%

2 40% 2.40%

12‐24 mths 22

Strategy How Effective is your Board? 0% ‐ 25% effective 3%

75% ‐ 100%  effective 41%

25% ‐ 50% effective 24%

50% ‐ 75% effective 32%

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Strategy What is your biggest challenge in implementing your Credit Union Strategy?

2016

21%

2015 Growing Loan  Growing Loan Book

12% 19% 34% 24% 38%

42%

9%

Central Bank People  Resources Other

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Strategy Is the ILCU advanced organisation proposal  a strategy you intend  to pursue? 

27.80%

22.20%

Yes

Other include: Other include: ‐ No board decision ‐ Need more information ‐ Not sure yet Not sure yet

No  Other 50%

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Strategy On a scale of 1‐10 how effective is your strategy implementation

No sign of improved financial performance > Significant concern in relation to viability from Regulator  and Sector  > Risk and compliance functions getting bedded in  > Selecting the correct strategy and implementing it are proving difficult > Resources are coming under pressure from  trying to meet Strategic as Risk &  compliance needs

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Thank You

Name Cathal Melia Title Audit Partner Russell Brennan Keane T: +353 9064 80600 E: [email protected]

Disclaimer While every effort has been made to ensure the accuracy of information within this publication is correct at the time of going to print, Russell Brennan Keane do not accept any  responsibility for any errors, omissions or misinformation whatsoever in this publication and shall have no liability whatsoever. The information contained in this publication is not  intended to be an advice on any particular matter. No reader should act on the basis of any matter contained in this publication without appropriate professional advice.

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