ANNUALREPORT2016

FIRST FINANCIAL INSTITUTION TO PROVIDE LOANS BASED ON THE BORROWER’S CHARACTER

FIRST PAYROLL DEDUCTION SERVICE FOR DEPOSITS AND LOAN PAYMENTS

FIRST DEBIT CARD SERVICE

FIRST TO LOAN TO WOMEN IN THEIR OWN NAME

FIRST VARIABLE

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FIRST RESIDENTIAL MORTGAGE REPAYABLE WITH NO PENALTY

FIRST PERSONAL LINE OF CREDIT

OWNERSHIP SPURS

INNOVATION

TABLE OF CONTENTS

ANNUALREPORT2016

1

Mission and Vision Statements

Report from the Board Chair, President and CEO

Report of the Audit Committee

Five Year Financial History

Report of the Independent Auditor on the Summarized Financial Statements

Statement of Comprehensive Income

Statement of Changes in Members’ Equity

Statement of Financial Position

Our Involvement in the Community

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OUR MISSIONWe serve our member owners as a proud and socially responsible financial services co-operative.

OUR VISIONAchieve growth, attract youth and reward our member owners with shared profits.

OUR VALUES

These values will guide our actions and decisions as we fulfill our commitments to our member owners, employees and communities.

PEOPLERecognizing that both knowledgeable employees and loyal

member-owners are the building blocks of our success.

INTEGRITYDemonstrating high ethical standards in order to maintain your trust.

INNOVATIONCapturing the future with creative solutions.

COMMITMENT

Guaranteeing that you come first.

PERFORMANCESustaining profitable growth in our communities.

CO-OPERATION

Differentiation through profit sharing.

MISSION & VISION S T AT E M E N T S

In a year of persistent corporate scandals affecting our environment, the banking sector, and other industries, it is comforting to know that the Strength of Ownership at Your Credit Union is always anchored to the seven Co-operative Principles. By aligning our operations with these principles, we have wrapped up another year of service excellence, membership growth and continuous care for our communities.

We proudly continue to improve the overall banking convenience at Your Credit Union:

• five branches plus a kiosk • 25% increase in staff• expanded business hours • an award winning mobile banking app

The result is asset growth of almost 6% and we welcomed 686 new member-owners. At the same time, these investments have increased our operating expenses and temporarily reduced our profitability. As with any good investment, we are expecting a healthy yield over the next several years.

Your Credit Union will continue to build our communities with direct employment opportunities and indirect job creation through our commercial services. We look to our membership, new and existing, to support our local ambitions by increasing their volume of business with us, taking advantage of our competitive service offering, and making us their primary banking partner.

We are now entering the second year of our three-year strategic plan, which has a number of objectives and goals. There are two metrics in particular that dominate the board of director’s focus:

• asset growth • membership growth.

Our vision is to build on Your Credit Union’s leadership strength in Cornwall and Ottawa by growing our base and expanding our reach in our communities:

• Cornwall East • Glebe• Orléans • Cornwall West• Cornwall Community Hospital • Nepean

And we’re only getting started.

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REPORT FROM THE BOARD CHAIR, PRESIDENT & CEOANNUALREPORT2016MISSION & VISION S T AT E M E N T S

REPORT FROM THE BOARD CHAIR, PRESIDENT & CEO

We live and work in these communities and as they grow and diversify, YCU will be there. In the coming year you can expect to see more of us in the community, engaging with current and prospective member-owners and exemplifying our commitment of enhancing our communities’ quality of life, environment, education and health.

Your Credit Union continues to be active in the credit union sector throughout the province. We work with fellow leaders and directors and are involved in the legislative changes that are taking place.

Credit Unions across Canada have, for a record ninth consecutive year, been awarded the Ipsos Best Banking Award in 2016. Our highly ethical and values-based approach to banking combined with our efforts to put people first has created a financial co-operative community of which we can be very proud.

We thank you for YOUR loyalty and trust as we share our great story with potential new member-owners across our entire region.

Co-operatively yours,

Joel LalondePresident & CEO

Tanya GracieChair of the Board of Directors

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The Audit Committee of the Board of Directors fulfills the responsibilities of the Audit Committee as set out the Credit Unions and Caisses Populaires Act (Ontario) (the “Act”) and conducts its affairs in accordance with the requirements of the Act and its accompanying regulations. The Audit Committee also fulfills certain other governance duties related to finance and risk management as prescribed by Board policy.

The Audit Committee, comprised of five members of the Board of Directors, held five meetings during the fiscal year ended September 30, 2016. The Committee meets at least quarterly and arranges its agenda so that, on an annual basis, the following duties are performed and appropriate action taken as a result thereof:

• Serve as the principal communication link between the external auditors and the Board of Directors and, in particular, review the terms of engagement and scope of the audit, and review the Credit Union’s annual financial statements prior to Board approval for issuance to the members.

• Obtain reasonable understanding of the significant elements of internal controls that are important to safeguarding the assets of the Credit Union, ensuring the accuracy of financial reports, and ensuring compliance with policies and procedures.

• Serve as the Board’s liaison with the internal auditor and review the internal audit mandate, work plan and reports.

• Review the policies, procedures and controls that relate to legislative compliance, with a particular focus on the requirements for liquidity, capital adequacy and interest rate risk management.

Based on its findings, the Audit Committee issues reports and makes recommendations to the Board of Directors or Senior Management, as appropriate, with respect to the matters outlined above and follows-up to ensure that the recommendations are considered and implemented. During the year, the Audit Committee received full co-operation and support from management to enable it to play an effective role in improving the quality of financial reporting to the Members and enhancing the overall control structure of Your Credit Union.

All significant recommendations made by the Audit Committee have been either implemented or are in the process of being implemented by management. In addition, there are no matters that the Audit Committee believes should be reported to the Members, nor are there any further matters which are required to be disclosed pursuant to the Act or the Regulations thereto.

On behalf of the Committee:

Kelly StorieChair of the Audit Committee

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REPORT OF THE AUDIT COMMITTEEANNUALREPORT2016

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FIVE YEAR FINANCIAL HISTORY

SEPTEMBER 30 (000’S) 2012 2013 2014 2015 2016 Statements of Comprehensive Income and Changes in Members’ Equity Interest income $8,209 $8,311 $8,335 $8,275 $8,517 Investment income 452 363 419 347 255Interest expense (2,775) (2,799) (3,204) (2,948) (2,723)Net interest income 5,886 5,875 5,550 5,674 6,049Provision for credit losses (102) (248) (590) (391) (361)Other operating income 1,493 1,394 1,612 1,804 1,685 7,277 7,021 6,572 7,087 7,373Operating expenses (6,698) (6,599) (6,332) (6,117) (6,813)Dividends on investment shares (9) (10) (11) (12) (12)Income before income taxes 570 412 229 958 548 Income taxes (98) (35) 6 (116) (15)Comprehensive income $472 $377 $235 $842 $533 Dividends on investment shares (79) (87) (214) (332) (347)Retained earnings, beginning of year 7,756 8,149 8,439 8,460 8,970Retained earnings, end of year $8,149 $8,439 $8,460 $8,970 $9,156 Assets Cash and cash equivalents $4,250 $13,783 $22,016 $5,640 $4,790 Investments 16,596 15,695 16,711 16,405 16,874Income taxes receivable 0 0 0 0 127Loans to members 177,033 185,200 191,731 202,389 215,228Property and equipment 5,154 5,554 5,200 5,286 6,065Other assets 1,089 1,294 1,214 837 770 $204,122 $221,526 $236,872 $230,557 $243,854 Liabilities and Members’ Equity Deposits from members $183,108 $202,825 $217,792 $210,436 $223,403 Borrowings 8,000 5,000 - - Other liabilities 1,388 1,680 1,228 1,555 1,375Membership and investment shares 3,477 3,582 9,392 9,596 9,920Retained earnings 8,149 8,439 8,460 8,970 9,156 $204,122 $221,526 $236,872 $230,557 $243,854

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Once again Credit Unions in Canada have received top

honours for customer service, automated banking and

the value our member-owners place on their relationship

with us. As fellow co-operatives, all credit unions share

this accomplishment and all are contributing to the steady

growth of credit union membership in Canada.

COMPREHENSIVE EXCELLENCEIt often surprises people to discover that the credit union

system introduced many of the automated banking

technologies we use today and continues to be recognized

for excellence in the delivery of these technologies.

SERVICE THAT IS SECOND TO NONE

FIRST FOR CUSTOMER SERVICE EXCELLENCE (12th consecutive year)

FIRST FOR BRANCH SERVICE EXCELLENCE (12th consecutive year)

FIRST FOR VALUES MYBUSINESS (9th consecutive year)

WINNER MOBILE BANKING EXCELLENCE

WINNER ATM BANKINGEXCELLENCE

WINNERONLINE BANKING EXCELLENCE

FIVE YEAR FINANCIAL HISTORY

Income Before Income Taxes1000

800

600

400

200

0

$548$570

$412

$229

$958

Total Income (000s)

7,500

7,250

7,000

6,750

6,500

6,250

6,000

2012 2013 2014 2015 2016

2012 2013 2014 2015 2016

$7,277$7,021

$6,572

$7,087

$7,373

Operating Expenses (000s)

7,000

6,750

6,500

6,250

6,000

5,750

5,500

2012 2013 2014 2015 2016

$6,813$6,698

$6,599

$6,332

$6,117

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FIVE YEAR FINANCIAL HISTORY

Retained Earnings (000s)

$8,149$8,439

$8,460

$8,970 $9,156

Deposits from Members (000s)

230,000

220,000

210,000

200,000

190,000

180,000

170,000

9,500

9,000

8,500

8,000

7,500

7,000

$183,108

$202,825

$217,792

$210,436

$223,403

2012 2013 2014 2015 2016

2012 2013 2014 2015 2016

Loans to Members (000s)220,000

215,000

210,000

205,000

200,000

195,000

190,000

185,000

180,000

175,000$177,033

$185,200

$191,731

$202,389

$215,228

2012 2013 2014 2015 2016

ANNUALREPORT2016

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REPORT OF THE INDEPENDENT AUDITOR ON THESUMMARIZED FINANCIAL STATEMENTS

To the Members of Your Credit Union Limited

We have audited the accompanying financial statements of Your Credit Union Limited, which comprise the statement of financial position as at September 30, 2016, and the statements of comprehensive income, changes in members’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of Your Credit Union Limited as at September 30, 2016, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Chartered Professional AccountantsLicensed Public AccountantsDecember 12, 2016

Deloitte LLP300 McGill StreetHawkesbury, Ontario K6A 1P8Canada

Tel.: 613-632-4178Fax: 613-632-7703www.deloitte.ca

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STATEMENT OF COMPREHENSIVE INCOMEYEAR ENDED SEPTEMBER 30, 2016(CDN DOLLARS IN THOUSANDS)

2016 2015 $ $

Interest income 8,517 8,275 Investment income 255 347 8,772 8,622 Interest expense 2,723 2,948 Net interest income 6,049 5,674 Provision for impaired loans 361 391 Net interest margin 5,688 5,283 Other operating income 1,685 1,804 Total operating income 7,373 7,087 Deposit insurance premium 174 181 Depreciation of property and equipment 437 337 Administrative and technology 2,806 2,343 Personnel expenses 3,396 3,256 Total operating expenses 6,813 6,117 Dividends on investment shares 12 12 Income before income tax 548 958 Income tax expense 15 116 Net income 533 842 Other comprehensive income for the year, net of income tax - - Total comprehensive income for the yet, net of income tax 533 842

ANNUALREPORT2016

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STATEMENT OF CHANGES IN MEMBERS’ EQUITYYEAR ENDED SEPTEMBER 30, 2016(CDN DOLLARS IN THOUSANDS)

Accumulated Other Membership Investment Retained Comprehensive Shares Shares Earnings Income Total $ $ $ $ $

As at September 30, 2014 567 8,533 8,460 - 17,560 Total comprehensive income - - 842 - 842 Net income - - (332) - (332)Net (decrease) increase in shares (21) 215 - - 194 As at September 30, 2015 546 8,748 8,970 - 18,264 Total comprehensive income - - 533 - 533 Dividends on investment shares - - (347) - (347)Net (decrease) increase in shares (20) 333 - - 313 As at September 30, 2016 526 9,081 9,156 - 18,763

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STATEMENT OF FINANCIAL POSITIONAS AT SEPTEMBER 30, 2016(CDN DOLLARS IN THOUSANDS)

2016 2015 $ $

Assets Cash and cash equivalents 4,790 5,640 Investments 16,874 16,405 Income taxes receivable 127 - Loans to members 215,228 202,389 Property and equipment 6,065 5,286 Other assets 770 837 243,854 230,557 Liabilities Deposits from members 223,403 210,436 Other 1,317 1,387 Income taxes payable - 110 Deferred income tax liability 58 58 Investement shares 313 302 225,091 212,293 Income before income tax Membership shares 526 546 Investment shares 9,081 8,748 Retained earnings 9,156 8,970 Accumulated other comprehensive income - - 18,763 18,264 37,526 36,528

On behalf of the Board

___________________ Director

___________________ Director

ANNUALREPORT2016

THE STRENGTH OF OWNERSHIP IS DRIVING THE GROWTH OF YOUR CREDIT

UNION.

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THE BENEFITS OF OWNERSHIP TAKE CENTRE STAGE In 2015 Your Credit Union told the market that there was strength in being an owner of your financial institution. In 2016 Your Credit Union defined the benefits of ownership through the promotion of specific products. A personal loan offer of 5.99% was used to attract new members who often join because they have been refused at their traditional bank or they are looking for a better rate. The personal loan campaign helped to increase new membership by 30% over the previous three years. Referrals from member-owners also increased but often in relation to the personal loan offer.

OWNERSHIP MEANS HIGHER RETURNSYour Credit Union wanted the public to know that ownership delivers a higher ROI. Term Deposits became the focus of a campaign that saw returns climb from 2.25% to 2.30% and now 2.35% on a 48-month term deposit.

An additional 20 million dollars in potential investment has been identified and actual term deposits have increased by 18%.

A TACTICAL APPROACH TO GROWTH In 2016 Your Credit Union adopted a more tactical approach to marketing utilizing targeted newspapers and online sites as well as consistent communication to existing member-owners. This approach will continue in 2017 with a focus on three targets and three messages. Mothers of young families, baby boomers and retirees all represent significant opportunity for new member growth. The term deposit and personal loan offers are attractive to these groups and these will be augmented with the most compelling benefit offered by Your Credit Union; we exist to meet the needs of our member-owners, not to profit from them. That is the strength of ownership.

ANNUALREPORT2016

Owners get better rates

YourCU.com 1-800-379-7757

14 Chamberlain Ave. • 1541 Merivale Rd. • 2016 Tenth Line Rd.

We are owned by our members and that means we can offer all of the products and services of the big banks, but with lower fees and higher rates of return.

And all the financial products you need, with service that befits an owner, that’s how we make banking better.

2.35% ON A 48-MONTH TERM DEPOSIT5.99%PERSONAL

LOANS

ORLÉANS NOW HAS A BETTER WAY TO BANK

At Your Credit Union we exist to meet your needs, not to make money from you. That means that we can reinvest our profits in lower fees and higher returns for our members.

So many reasons to start a better banking relationship

Whether you are tired of paying exorbitant banking fees or being denied by your big bank, there are many reasons to start a relationship with Your Credit Union:

• Personal loans at 5.99%• 48-month term deposits that pay an exceptional 2.25%

• All new members receive a fee-free chequing account for one year. • Become a member before September 1 and you could win an ipad!

Get the strength of ownership

At Your Credit Union you’re more than a number, you’re an owner. Drop by our Orléans branch or call us at 613-238-8001 and discover a better way to bank.

2016 Tenth Line Rd., Unit C8, Ottawa ON K4A 4X4 | YourCU.com |

Tenth Line Rd.

Innes Rd.

Dorima St.

Prestwick Dr. Lanthier Dr.

As a financial co-operative, Your Credit Union adheres to the principals of the international co-operative movement and one of the most cherished of those principles is “concern for community.” This means that we allocate a portion of revenue every year to support the communities we serve and we ask our member-owners how we should apportion those funds to achieve the greatest good.

MORE HELP FOR THOSE WHO HELP OTHERS In 2016 Your Credit Union launched a new initiative to fund organizations and groups that are providing important support to our communities. We asked our community of member-owners to nominate worthy recipients and then vote on the nominees to determine those that would receive funding. 10 organizations in Ottawa and Cornwall will each receive $2,500 to assist in furthering their programs of care and support.

These grants are in addition to the programs we run annually in support of various causes. Our “Swing for a Cure” golf tournament in aid of the Canadian ALS Society raised over $30,000 for research and treatment and an additional $5,500 was raised to assist our colleague Heather Greenhalgh who is valiantly dealing with ALS. We are a proud partner with Canadian Blood Services and their Gift of Life program that saw staff contribute 24 units this year. And, in memory of our colleague’s granddaughter, we continue to raise funds for the Children’s Cancer Network.

One of the most gratifying results of 2016 was the response to our support of the Cornwall Addiction and Mental Health Centre. We challenged the community to match our donation of $10,000 and they contributed a total of $42,300. These are just some of the many community support initiatives conducted by Your Credit Union and, as always, we are indebted to our staff and to our member-owners for their generous support.

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COMMUNITY SUPPORT IS IN OUR DNA

LEADERSHIP INFINANCIAL

SERVICES

FIRST FINANCIAL INSTITUTION TO PROVIDE LOANS BASED ON THE BORROWER’S CHARACTER

FIRST DEBIT CARD SERVICE

FIRST TO OFFER FULLY FUNCTIONAL ONLINE BANKING

FIRST OPEN

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FIRST

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SFIRST RESIDENTIAL MORTGAGE REPAYABLE WITH NO PENALTY

FIRST REGISTERED EDUCATION PLANS

FIRST PERSON

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FIRST

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YourCU.com 1-800-379-7757