Armagh Credit Union Strategic Plan ( )

Transcription

1 Armagh Credit Union Strategic Plan ( ) This was adopted by the Board of Directors of Armagh Credit Union Ltd. Signed: Position Position Date:

2 Introduction About us History in Brief History Armagh Credit Union was founded in May 1962 in Handel House. By January in savings had been accumulated and the first loans were issued to members. By the end of that year due to increased membership and a greater volume of business the Credit Union moved to Market Street. The first manger was appointed in 1967 and the Credit Union purchased the old cinema in Russell Street from where it continues to operate its expanding business. We now have around 8000 members with total shares and reserve in excess of 22 million and loans issued in excess of 7.8 million, a measure of the success of the credit union and of the esteem in which it is held by its members. Armagh Credit Union prides itself on being a community focused organisation, meeting many of the financial needs of its members. Regulation & Affiliations The credit union is authorized/regulated by the FCA/PRA and is affiliated to the Irish League of Credit Unions (the League). It is one of 27 credit unions in Chapter 4 of the League. The affairs of the Armagh Credit Union are managed and controlled by the 1. Board of Directors 2. Supervisory Committee 3. Credit Control Committee 4. Loans Committee The Directors are elected by the Credit Union members at the Annual General Meeting. Directors and committee members are appointed for a period of up to three years, after which they may be eligible for re-election. In the event of casual vacancies on any of these bodies the Board may approve the co-option of Directors or Committee members who will serve until the end of their term subject to FCA approval.

3 Values Credit union transcends colour, class and creed and provides each one of us with the opportunity of fulfilling their obligations to their fellow man. Mission The Mission of Armagh Credit Union Limited is to provide a friendly, courteous, and targeted financial service to our Members, for the overall benefit of our Members and of our Community. Vision That the symbolic hands of the Credit Union hold our Members and our Community in a supportive kindly embrace. IT System Armagh Credit Union uses the Octagon member bookkeeping system. Common Bond Our Common Bond covers the following areas: Armagh City, Tirgrave, Tullygoonigan, Knockaconey, Aughnacloy, Moneyree, Ballygason, Ballygasey, Drumily, Ardee, Turcarra, Mullaghbane, Tirnascobe, Drumbee, Beg, Edenknappagh, Calone, Killycapple, Outlack, Latmacollum, Lisnadill, Drumconwell, Ballinagalliagh, Moneyquin, Lislea, Aghavilly, Killynure, Ballyhoy, Tirealy, Tamlaght, Knockgraffy, Ballydoo, Cullentragh, Bracknagh, Ballybrocky, Lisbane, Tullysaran, Ballymartin, Tullynicholl, Cloughfin and Creaghan. Qualification for admission to membership of the credit union shall be restricted to persons living or working in the common bond area. The following are some statistics relating to our Common Bond: The estimated population of this Common Bond is ~20,000, which means that we have ~35% penetration. The unemployment rate in our Common Bond is around 10%, compared to a national average of ~8%. 60% of residents own their own dwellings and 40% are tenants. Member Base Our member demographics are similar to most community credit unions. 54% of our 8000 members are female and 46% are male. 22% of our members are under 30 years of age. A further 36% are aged between 30 and 50, with the remaining 14% aged over 55. In 2013, we granted in excess of 4,400 loans amounting to just over 4.5 m. Products & Services o Savings All of our savings are held by way of 1 shares in the credit union. o Loans Our primary loan market is small to medium sized personal loans, typically between 200 and 3,000. The current

4 maximum loan limit is 30,000, although we do have some older loans which exceed this figure. Typical loan purposes are: Home Improvements and Repairs Motor Vehicles and Motor Expenses Holidays and Travel Medical, Health and Funeral Expenses Occasions (Christmas, Communions, Confirmations, Weddings) Household needs Educational and Student Loans Standard interest rate 12% (APR 12.68%) Key Issues & Challenges Falling Loan Demand Our Loans to Assets ratio is 38% but has deteriorated in recent years, due primarily to a fall in loan demand. It will be at 36% by year-end This assumes that our savings continue to grow at current rates; if they were to stabilise or increase the Loans to Assets Ratio would be even lower. Falling Income Loan Interest Income has fallen in line with the fall in loan balances, which were 8.4m in September 2009 and were down to 7.9m in September This has been offset to some extent by a good performance on Investment Income. However, the latter is also likely to falling as general market interest rates fall. As a result, our income is expected to decrease from 1.3m in 2013 to 1.2m in Static Expenses While low by national standards, our operating expenses (salaries and management expenses) have not decreased in line with our income. The combination of these factors means that our surplus of income over expenditure is decreasing, thereby impacting negatively on our ability to fund our Reserves and pay a dividend to our members. SWOT Analysis Strengths Member loyalty, reputation, quality of staff, personal knowledge of our members and their needs, good capital and solvency ratios, community focus, opening hours. Weaknesses Poor loan demand, ageing membership, difficulty in getting our message across to members and potential members. Opportunities Difficulties of the banking sector, availability of approximately 11m to lend, potential use of social media, under-

5 served parts of our Common Bond. Threats Internet banks, money-lenders, over-regulation, further economic deterioration, falling investment returns. Our Response to Date Actions that the Board has taken to address the challenges that we face are as follows: Staff Training We have just introduced an appraisal system and an incentive system to encourage more staff training. Board Training Board members have attended various FCA meetings/workshops. New Board Members The credit union has recently recruited two new Board members with the kind of skills that we require to meet the increasing governance-related demands that we face. Policy Update & Development We have updated 33 policy documents. The Future The remainder of this document sets out our plan for the development of the credit union over the next three years and for addressing the issues and challenges set out above. It is written on the basis that Armagh will continue as a stand-alone credit union for the foreseeable future. Our high level priorities are as follows: Ensuring best practice in the area of Governance the required standard has been raised in recent years, which has placed increased demands on the Board of Directors. Meeting current and future levels of regulatory compliance and reporting compliance requirements have increased dramatically in recent years and will continue to do so. It is vital that the credit union is able to respond to these requirements in an efficient and timely manner. Meeting our members expectations these have changed in recent years due mainly to advances in technology and the trend towards home banking. The credit union will have to improve its capability to deliver services in the manner required by members. Ensuring that our services reach all parts of our Common Bond it is vital for the future of the credit union that we attract both new and young members. To do this we will have to exploit the potential in our Common Bond, especially parts that are not currently well served. Making better use of information technology, e.g. our website. Ensuring that our staff and Board of Directors are adequately skilled and trained to deal with our future requirements the demands on our people are increasing daily, but not necessarily in traditional areas; new skills and flexibility will be required to

6 deal with the challenges of the future. Increasing our loan portfolio in a prudent manner loan interest is the key driver of income and sustainability in our business model but lending is also the biggest generator of costs, so it must be done prudently. Managing arrears and credit control given that the current poor economic climate is likely to continue for several years at least it is vital that we continue to allocate appropriate resources (both personnel and monetary) to this process. Continue to generate surpluses to enable us to pay a dividend to members. To deal with these priorities, we now look at the future under seven linked headings, each of which deals with its own set of challenges and opportunities. A summary of these headings and their objectives is as follows: 1. Business Development Our key objective is to increase our loans to assets ratio from 38% today to 40% in We aim to achieve this goal by a combination of targeted marketing initiatives (aimed at current and potential members) and an analysis of our member database aimed at identifying lending opportunities. At the same time, we aim to retain our savings, so the monetary value of the required increase in loans is 11m. 2. Governance & Management Our key objective is to ensure that we have a governance and management system that is fit for purpose and of the highest possible standard. This will be achieved by a combination of training and of identification of appropriate skills. 3. Structure & Administration Our key objective is to ensure that the committee and staffing structures are appropriate for the achievement of our strategy. To achieve this, we will require the flexibility to re-deploy some of our staff and to introduce more flexible rosters so that a wider range of tasks can be completed by our existing staff. Finally, we will ensure that / Board interaction is optimal. 4. Member Services & Support Our key objective is to ensure that we are meeting our members needs by providing the services that they require while remaining conscious of the cost of providing these services. With this in mind, we will aim to satisfy as many of our members as possible, thereby avoiding cross-subsidization of one group of members by another. 5. Financial Performance Our key objective is to ensure that all Board, Committee and staff members are aware at all times of our key financial performance indicators. We acknowledge that not all of these people are financial experts so we will develop a performance dashboard system that displays the necessary information in a simple (and where possible a graphical) format. We will also put in place a robust budgeting and performance measurement system to enable us to manage and control our costs and to measure our performance against our strategic targets. The forecasts in Appendix 1 will form the basis of these budgets and targets. 6. Training & Development Our key objective is to ensure that all employees have the required knowledge and skills to carry out

7 their assigned role(s). These will include website management. We also expect to see an increased focus on credit control in the next three years. We will put in place a performance management and appraisal system for all staff and will ensure that all staff are given the training and support that they need to achieve their potential. 7. Communications, Marketing & Promotion Our key objective is to ensure that we get our message across to all of our members and potential members in a manner most suited to them. To achieve this, we will increase our focus on our website. We will also maintain our work in the local schools and will critically evaluate our sponsorship spend annually.

8 1. Business Development Action Timescale Resources Required Introduce a quick Board small loan system for a trial period Carry out a detailed analysis of our member database to examine the profile of our current and past borrowers to identify any potential for new borrowers. Time IT supplier Responsibility Board Outcome In light of the above analysis, carry out a targeted marketing campaign aimed at increasing our loans to assets ratio to 40% by Time Marketing Budget Increase loans to assets ratio by year-end 2015.

9 2. Governance & Management Action Timescale Resources Required Responsibility Outcome Prepare a wish-list of all of the skills that our credit union will need to deal with future Governance & Management requirements. Director's time ILCU President Treasurer A full picture of the skills required, which will help us to identify potential gaps. Carry out a skills audit of our current Board of Directors to identify what we have and what gaps exist. Director's time President Treasurer Carry out a skills audit of our Management team and staff to identify what we have and what gaps exist. Directors President Training Officer Carry out a Training Needs Analysis for our Board and put in place a training schedule. Training Officer Treasurer Preview the Strategic Plan for the next three years. The Board Board Put in place a quarterly review of our progress in achieving Board of Directors Board Time allocated at

10 our strategy. Board quarterly Board meetings to discuss performance.

11 3. Structure & Administration Action Timescale Resources Required Responsibility Outcome Carry out an analysis of staff skills in the credit union offices. IT Supplier Training Liaison Officer, Treasurer To determine the current optimum deployment of staff resources. Assess the likely future staffing requirements for member services. Management The Board Treasurer To determine how many staff will be required for front-line operations. Assess the likely future staffing requirements for back office functions Using our skills audit, determine if surplus staff (if any) can be redeployed to Management Treasurer Management Treasurer To determine how many staff will be required for back office roles and to see if there are any gaps. To determine whether any gaps can be filled from within our existing staff base.

12 back-office functions and to identify any training requirements.

13 4. Member Services & Support Action Timescale Resources Required Responsibility Outcome Introduce a Member Satisfaction process to find out if members are satisfied with the services that we provide. The Board The Board Carry out a limited member survey. The Board The Board To see if our current range of products and services and the quality of our member care is valued by our members and to identify suggestions for improvement

14 5. Financial Performance Action Timescale Resources Required Responsibility Outcome Organise a training session on Credit Union Finance for Board, Supervisors and senior staff Time Funds Training Liaison Officer

15 6. Staff Training & Development Action Timescale Resources Required Responsibility Outcome Allocate and train staff to review the credit union s website. Review our training budget Train staff to do the monthly accounts using SAGE IT Supplier A Budget The Board A dedicated process to ensure that our website is up to date and relevant to members and potential members. Ensure that staff fulfill their training requirements annually with relevant courses and seminars. Ongoing A Budget /Training Liaison Officer/ The Board

16 7. The Building Action Timescale Resources Required Responsibility Outcome Re-arrange the office space, storage space and install a lift Time Funds Board Upgrade our hardware & software Time/ Funds Board