Embed Size (px)
Citation preview
Deposit Insurance Corporation of Ontario
Leadership - Stepping Up To The Challenge
September 19, 2001
Credit Union Managers’ AssociationCredit Union Managers’ Association
2
Overview
Key Messages
Quick Updates
Future Challenges
Questions & Dialogue
3
Key Messages
System is in relatively good shape
DICO ahead of plan
Can’t be complacent - challenges in
future
4
Quick - System Condition at 2Q01 ( from 2Q00)Quick - System Condition at 2Q01 ( from 2Q00)
310 institutions 23 7 under capitalized ( 11) Average size $52 M from $45 M System Assets $16.1 Billion 7.9% System Capital 6.6% 6.7% Liquidity 17.5% from 17.8% Commercial loans 23% Overall Risk Level appears stable
5
Quick System Performance at 2Q01 ( from 2Q00)Quick System Performance at 2Q01 ( from 2Q00)
Margins from 3.19% to 3. 25% Non-interest expenses stable at 3.49% Non-interest income by .02% Loan Costs from .14% to .17% Gross Delinquency 1.34% to 1.40% ROA 39 bp from 41bp Overall performance stable
6
Quick - DICO PlanQuick - DICO Plan
DICO 2001 estimated financial results– new insurance losses to date, negligible– gross operating expenses 6.8% below budget– estimated fund of up to $25 million by
December 31 Plans for 2002
– average premium just over $1– actuarial review of target fund size
7
Reserve Fund Projections 2001 - 2003Reserve Fund Projections 2001 - 2003
-10
0
10
20
30
40
50
$ M
illio
ns
1999 2000 2001 2002 2003
8
Differential Premium SystemDifferential Premium System
How to Improve Risk Rating– Quantitative measures– OSVs - wait for next OSV or engage inspector
to review corporate governance score Review Procedures for DPS Rating:
– Level I - with staff– Level II - with Risk Management Committee of
the Board of DICO
9
Distribution of Assets By Risk Category 2Q01Distribution of Assets By Risk Category 2Q01
8
4138
12
105
1015
2025
3035
4045
50
Per
cen
t
1 2 3 4 5
10
Differential Premium SystemDifferential Premium System
Some Issues: premium levels & fund size measuring earnings - after taxes &
distributions measuring corporate governance
(management) through OSVs measuring interest rate risk - shock test
11
Quick - DICO OperationalQuick - DICO Operational
On-Site Verifications (OSVs)
125 completed/in progress as of August 31, 2001
68% still rate credit management as requiring improvement
Guide to DICO’s OSV Process & OSV Manual available on DICO’s Web site
Regional presentations
Summary of OSV FindingsSummary of OSV FindingsRisk Management Practices % Member Institutions
Rated Effective *2000 2001* Improvement
Corporate Governance 50% 64% 14%
Capital Management 67% 89% 22%
Credit Management 20% 32% 12%
Investment Management 60% 76% 16%
Asset/Liability Management 55% 76% 21%
Liquidity Management 74% 95% 21%
Internal Controls 66% 87% 21%
* to July 31, 2001
13
Summary of Corporate Governance (Management) Scores as at 2Q01Summary of Corporate Governance (Management) Scores as at 2Q01
DPS Points # of MIs % ofAssets
20 40 28%
15 20 3%
10 96 34%
5 38 15%
0 116 20%
310 100%
14
Quick - DICO OperationalQuick - DICO Operational
On-Site Verifications (OSVs)Some issues:
exit interviews are standards too tough? Suppliers - CUCO withdrawing
15
Quick - DICO OperationalQuick - DICO Operational
Intervention Programs 28 on Watchlist - mostly resulting from
OSVs 13 under Supervision 6 pending Supervision Sustained non-compliance
16
Future Challenges
DICO loan guarantee
FSCO/OSC merger
possible legislative review
Ontario/BC Central merger
Federal Act - new competition
uncertain economic environment - ie.
interest rate risk, credit risk
17
Key Messages
System is in relatively good shape
DICO ahead of plan
Can’t be complacent - challenges in
future
