ANNUAL REPORT 2015

Getting there, Together

Calgary StaffStanding in back, from left to right:Elizabeth Snowball-Beggs, Bruce Wilson, Darryl Hovanak, Kristina Kemp, John Knight, Cindy Reid, Michele Poirier, Cynthia Solomon Imie, Vic Petersen, Elizabeth Spence-Noble, Shandy Daby, Marie-Line Fleming, David Alexander

Sitting in front, from left to right:Darcee Hurt, Dawn Konynenbelt, Badriea Taha, Nasim Khatibi, Trisha Herbert

Not in photo: Brandy Beveridge, Dennise Yambao & Irma Baysic

Scotford StaffFrom left to right: Debbie Kwashuk, Dorothy Lowrie, Shelley Scott

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Shell Employees’ Credit Union 2015 Annual Report Table of Contents

Agenda……………………………………………………………………….…..………..Page 2 Previous Meeting Minutes……….……………………………....………………………Page 3 Report of the Board of Directors……………………………………..…….…………...Page 7 Report of the Audit Finance Committee……………………………………………….Page10 Report of the Credit Committee……………….……………….………………………Page 13 Audited Financial Statements……………….…..……………………………………..Page 15

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AGENDA Shell Employees’ Credit Union Annual General Meeting March 9, 2016

1. Roll Call

2. Declaration of Quorum

3. Introductions

Board Members

Staff

4. Appointment of Scrutineers

5. Minutes of Last Meeting (p.3)

6. Report of Board of Directors (p.7)

7. Report of the Audit Finance Committee (p.10)

8. Report of the Credit Committee (p.13)

9. Report of the Nominating Committee

10. Auditor’s Report & Presentation of Financial Statements (p.15)

11. Bylaw Amendments

Proposed Changes to Existing Bylaw: Voting by Mail

Proposed Change to Existing Bylaw: Board of Directors

12. Compensation Disclosure Resolution

13. Greetings from Guests

14. Tribute to Margot Willison

15. Adjournment

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MINUTES Shell Employees’ Credit Union Annual General Meeting March 12, 2015 Carriage House Inn 1. ROLL CALL

134 Members Notes: 15 non-members and 12 board members 2. DECLARATION OF QUORUM A quorum was declared and the meeting was called to order at 6:06 p.m. by Adam Battistessa. 3. INTRODUCTIONS

The President, Adam Battistessa welcomed all members and guests and introduced the Board of Directors. The General Manager, Badriea Taha introduced Credit Union staff and guests.

4. APPOINTMENT OF SCRUTINEERS

The following individuals volunteered to be scrutineers: Maria Farias & Keith Hughes Motioned by Adam Battistessa, seconded by Liz Mah. Carried.

5. MINUTES OF LAST MEETING

Adam Battistessa moved that the Minutes of the Annual General Meeting of March 6, 2014 be accepted as presented. This was seconded by Sue Wells. Carried.

6. REPORT OF THE BOARD OF DIRECTORS

The President, Adam Battistessa highlighted the Board of Director’s report outlining growth and income of the Credit Union. Adam Battistessa made the motion to accept the Report of the Board of Directors; seconded by Debra Baranec. Carried. 7. REPORT OF THE AUDIT FINANCE COMMITTEE

Drew Harris, Chair of the Audit Finance Committee, presented the highlights of the Report for the Audit Finance Committee. Drew Harris moved that the Report of the Audit Finance Committee be accepted as presented, seconded by Guy Stuart. Carried.

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8. REPORT OF THE CREDIT COMMITTEE

Anthony Bessey, Chair of the Credit Committee, presented the Report of the Credit Committee, highlighting the volume and dollar value of loans granted for 2014. Anthony Bessey moved that the Report of the Credit Committee be accepted as presented, seconded by Jennie Wolter. Carried. 9. REPORT OF THE NOMINATING COMMITTEE

Adam Battistessa announced that the following director terms were maturing: Christine Ng Duncan Carey Nathan Turnbull Sarah Russell Crow Adam Battistessa announced the following members were nominated: Nathan Turnbull Colleen Lenahan Zitin Lamba Margot Willison 10. AUDITOR’S REPORT & PRESENTATION OF FINANCIAL STATEMENTS Michael Epp, External Auditor, presented the Auditor’s Report, Balance Sheet, Income Statement, and Operating Expenses for the Fiscal Year ending October 31, 2014. Dawn Middleton moved that the Auditor’s Report and Financial Statements be accepted as presented, seconded by Ada Adeleke-Kelani. Carried. 11. BYLAW AMENDMENTS Rebecca Nadel presented the Bylaw amendments for approval. Rebecca Nadel moved that the bylaw amendments be approved as presented, seconded by Ian Dankert. Carried. 12. GREETINGS FROM GUESTS Adam Battistessa introduced Wayne Fedorak, Manager of Regulation and Risk Management at Credit Union Deposit Guarantee Corporation. Adam Battistessa introduced Anne Gillespie, Chief Financial Officer at Alberta Central. Adam Battistessa introduced Bob Reczka, Chief Executive Officer at Celero Solutions.

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13. STAFF SERVICE AWARDS Dorothy Lowrie – 25 years

Bruce Wilson – 10 years Lise Twiddy – 5 years Kristina Kemp – 5 years

14. ADJOURNMENT

On a motion by Thora Budda and seconded by Guy Stuart the meeting was adjourned at 7:24

p.m.

15. DOOR PRIZE DRAWS

The following were winners of the door prizes:

Sponsor Prize Recipient

Celero Solutions Wine kit set Brenda Corbett

Bow Valley Insurance Tassimo coffee machine David Hagopian

Alberta Central Wine kit set Bill Shortridge

CUMIS (the Cooperators) Fire blanket Darlynn Yambao-Calalo

CUMIS (the Cooperators) Notebook and pen set Tinaca Ho

Genworth Financial Tote Bag, Cooler, & Golf Ball Set Marvin Popil

Miller Thomson LLP Wine set Lorene Prichard

Choice rewards MasterCard Fleece Blanket Alice Dietrich

Gibbons Law Office $50 CINEPLEX Gift Card Ian Dankert

Gibbons Law Office $50 Boston Pizza Gift Card Lorna Komery

Qtrade Investor Nutcracker Sweets Gift basket Lisa Marie Budda

Concentra Financial $50 Tim Horton's Gift Card Ivy Webb

NEI Investments Tea Set Stan Dalidowicz

Hawkings Epp Dumont LLP Vase Laura Dyck

CRI Canada $50 Restaurant Gift Card Dorothy O’Neill

CRI Canada $50 Best Buy Gift Card Linda White

Shell Employees' Credit Union Flower arrangement Dawn Middleton

Shell Employees' Credit Union Flower arrangement Kim Leung

Shell Employees' Credit Union Chocolate Gift Basket Jill Vandezande

Shell Employees' Credit Union Chocolate Gift Basket Sheila Fairweather

Shell Employees’ Credit Union $100 Restaurant Gift Certificate Anne Hansen

Shell Employees’ Credit Union $100 Restaurant Gift Certificate Thora Budda

Credential Asset Management Pen Set Paula Stroobant

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Credential Asset Management Golf Shirt Brenda Wallace

Harrison Bowker $100 Keg Gift Certificate Delores Habrun

Royal Canadian Mint Winners

Item Recipient

2015 Uncirculated Coin Set Ed Hoffman

2015 Uncirculated Coin Set Anne Hanson

2015 Uncirculated Coin Set Ian Dankert

2015 Uncirculated Coin Set Randy Stroobant

2015 Uncirculated Coin Set Nancy Low

2015 Uncirculated Coin Set Marvin Popil

2015 Uncirculated Coin Set Adekele Kelani

2015 Uncirculated Coin Set Mackenzie Budda

2015 Uncirculated Coin Set Debbie Sobb

2015 Uncirculated Coin Set Carol Hagopian

2015 Uncirculated Coin Set Audrey Shortridge

2015 Uncirculated Coin Set Lionel Paul

2015 Uncirculated Coin Set Dorothy O'Neill

2015 Uncirculated Coin Set Laura Lea Bennett

2015 Uncirculated Coin Set Murray Odeman

2015 Uncirculated Coin Set Linda White

2015 Uncirculated Coin Set Duncan Carey

2015 Commemorative Silver Coin Jim Dalidowicz

2015 Commemorative Silver Coin Steve McCauley

2015 Commemorative Silver Coin Alice Dietrich

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Board of Directors’ Report Fiscal Year Ending Oct 31, 2015 Despite another year of low interest rates in the market and the Bank of Canada continuing to lower overnight lending rates, the Shell Employees’ Credit Union (SECU) closed the year positively, showing an overall profit of $554k before taxes and the return of a 3% dividend to its members ($161k). The summarized year-over-year results were: Total Member Assets increased by 1.1% to $270M vs budget of $271M Deposits by Members increased by 1.2% to $252M vs budget of $254M Loans to Members decreased by 0.7% to $222M vs budget of $236M Membership decreased by 0.6% in 2015 to 6041 members vs budget of 6080

SECU continues to maintain a conservative business model due to the ongoing instability of the global financial industry and extremely low interest rates. We continue to make sure that our business strategies and activities are aligned and congruent with a low margin operation. The board continues to provide overall governance, risk management and ongoing regulatory reviews to ensure that we are well positioned to maintain robust, responsive, ongoing operations. “Earning the right to grow” by

2011 2012 2013 2014 2015 2016

Assets $254.15 $264.02 $265.19 $267.00 $270.01 $274.98

Deposits $238.97 $248.16 $248.54 $248.53 $251.96 $256.86

Loans $194.96 $203.40 $210.71 $223.42 $221.84 $223.63

$70

$120

$170

$220

$270

$320

Summary of Growth - Millions

Assets Deposits Loans

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finding cost savings and more efficient processes without compromising our governance will continue to be a strong corner stone to our business plan going forward. The review of the ICAAP (Internal Capital Adequacy Assessment Process) requirements supporting a strong capital growth program is one example of the oversight provided by your board. On an inception-to-date basis, 201 members have contributed up to the maximum of $5000 into their common share account, which accounts for almost $1.25M into the equity of SECU in only five years and this improves our capital base, particularly when capital growth is expected by our regulator. SECU equity to assets is 5.83%, which signals a strong capitalization given our risk profile and prudent loan governance. It has now been three years since we moved our Calgary office back to Shell Centre and we continue to see the benefits of our proximity and increased visibility to Shell employees. Our efforts at maintaining and fostering relationships with Shell focal points and employee network groups remain a top priority, especially now when staffing changes at Shell put these established relationship at risk of disintegrating. In 2015, we had the great privilege of being involved with Shell’s Parental Leave Information Session, United Way’s Annual Campaign, and of course, the twice-weekly onboarding of new hires at Shell – all results of opportunities brought to us by our members. This year, we are proud to say that we are linking up with the employee network AsiaNet to deliver not one, but a series of monthly Financial Literacy Seminars to Shell people. As a result of this initiative, we have also received expressions of interest for Financial Literacy Seminars at other Shell sites. Please know that as members, you play an integral part in being SECU advocates, so while we always appreciate member referrals, we are also open to any opportunities that would allow us to get in front of our members and any potential members. The enhanced visibility of being located on the main floor of Shell Centre has also helped us to recruit and attract diverse, top talent to our board, which in turn provides heightened governance, engagement, and oversight of our business. This year, we received 12 applications for our Board of Director vacancies - an impressive number that further highlights how invested and engaged our members are. There is of course the downside, which is the lease commitment on our Altius Centre space - still ongoing despite our continued work with realtors and our property management company to find suitable renters. The state of Calgary’s commercial real estate market has certainly added to the challenge of offloading this space, such that our team is now also looking at other opportunities to recoup some or all of our occupancy costs. Some examples include an invitation to submit Expressions of Interest proposals through the Calgary Arts Development and Art Spaces Program, as well through United Way. Again, we continue to ask you, our members, for any leads on interested parties, keeping in mind that this rental opportunity is not just available for commercial use, but also for non-profit organizations. The Board and Management continue to work on shaping our Employee Value Proposition with additional training and succession planning, as well as adjustments to employee pension and benefit programs, while keeping a low costs environment in mind. We continue to take advantage of

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opportunities to hone our employees’ leadership skills through the Alberta Young Leaders Program, where we have two participants graduating this year – John Knight and Dennise Yambao. We will also have a new candidate joining the program in April as a 1st year cohort. What a commitment to development and leadership continuity to our CU! The Marketing committee and management team worked on several exciting projects this year, such as the launch of e-newsletters and the unveiling of our re-designed and upgraded website, shellcu.com. We also had some memorable campaigns, namely our Valentine’s Day promotion on the Deposit and Wealth side, and our 1% cash-back MOREgage campaign on the Credit side. We continue to gain momentum on the Business Banking side, where one of the previous year’s most notable wins was acquiring the membership of a Shell Centre coffee shop. Overdraft accounts are now available to all members, and come at a time when members may benefit most from some protection and peace of mind. Lastly, our management, board, and AYL team performed a thorough review of our miscellaneous service charges to ensure competitiveness in the market, with an eye on proactively mitigating further margin compression. We continue to see training and development of Board and Staff as a high priority and commitment. In 2015, all board members completed mandatory Anti-Money Laundering training and three board members completed a Credit Union Director Achievement course while management and board members participated in the following conferences throughout the year.

Conference Number of attendees

Alberta Central AGM 2 Attendees

Canadian Central AGM and Conference 2 Attendees

I would like to thank our members for their support through this past year as we continue to grow and blossom in our new Shell Centre space. I would also like to recognize all of the dedicated, committed, hard-working Board Members, Management and Staff for ensuring the successful, ongoing operations of the Shell Employees’ Credit Union. Adam Battistessa President Board of Directors

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Report of the Audit Finance Committee Fiscal Year ending Oct 31, 2015 The purpose of the Audit Finance Committee is to provide for an independent review of the Credit Union’s operation. Specifically, the Committee provides assurance around the integrity of the financial data, adequacy of financial controls and overall adherence to sound business practices. To fulfill this mandate, the Committee meets throughout the year to evaluate the financial reporting and performance of the business as well as reviewing internal and external audit results, including management’s responses to any reported deficiencies. The Committee reports its activities to the broader Board as a part of every regular Board Meeting. During this past year three audits were undertaken by Alberta Central Audit Services. These audits confirm that the Credit Union’s overall controls are strong and the Audit Finance Committee is pleased with the progress that has been made. In light of solid audit results the Audit Committee supported reducing audit frequency from Alberta Central from three times a year to twice a year. This also has the added benefit of reducing audit support effort and costs. The Credit Union also changed external auditors this year. After many years with Hawkings Epp Dumont the change was made to Collins Barrow. This change provides a fresh perspective to the Credit Union and aligns with good governance practices. From an operating performance perspective, the Credit Union has weathered a significant downturn in the oil and gas industry, delivering another profitable year in 2015. Growth slowed in 2015 with asset growth of $3 Million and deposit growth of $3.4 million. During the same year loans declined by $1.6 million.

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Overall, financial margin growth was negative, settling at 1.37% of assets despite decreasing interest rates, falling behind the previous year’s 1.49%. Managing costs continue to be a key focus for the credit union with costs at 1.35% of assets. Conclusively, the Credit Union earned a $485,000 after tax profit for 2015. This was helped by a one-time patronage distribution after-tax of over $158,000. Costs continue to be key focus for the Credit Union. The Credit Union’s operating expenses continued to be burdened by the lease obligation at the former branch at the Altius building. Management continues to explore options for eliminating the additional cost associated with this obligation. The competitive marketplace and low interest rate environment continues to pressure the Credit Union’s ability to generate growth in the financial margin. The management and Audit Finance Committee continue to be diligent in its oversight of this important measure of profitability for the business.

Credit Union members once again enjoyed a dividend based on their common share ownership. This year’s payout reflects a dividend payout of just over $160,000 or 3% on each common share. This reflects a balance approach between growing equity to ensure a strong financial position, and providing solid returns for our members.

2011 2012 2013 2014 2015

Financial Margin 1.11% 1.25% 1.47% 1.45% 1.37%

Operating Costs 1.06% 1.06% 1.26% 1.32% 1.35%

PreTax Profit 0.18% 0.32% 0.34% 0.29% 0.21%

0%0%0%1%1%1%1%1%2%

Operating Ratios % of Assets

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In closing, the Credit Union management and staff delivered another profitable year of operation. Members have the added benefit of enjoying competitive products, personal service and profit sharing as well as having deposits and accrued interest 100% guaranteed through the Credit Union Deposit Guarantee Corporation. From a personal perspective, I’d like to thank the members of the Audit Finance Committee for their active participation and oversight as well as the Credit Union’s management and staff for delivering on a successful year. Nathan Turnbull Chair Audit Finance Committee

2011 2012 2013 2014 2015

Dollar Value $213,742 $216,928 $213,988 $208,369 $161,154

Dividend Rate 4.50% 5.00% 4.00% 4.00% 3.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000Dividends Paid

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Report of the Credit Committee Fiscal Year ending Oct 31, 2015 The Credit Union’s loan portfolio was $221.84M at fiscal year-end, October 31, 2015. This represents a decrease of $1.58M or 0.71% from 2014. We are pleased to see this stability in the loan portfolio given the economic challenges faced by Alberta and the energy sector this year. The Credit Union is proactively monitoring the external environment on an ongoing basis to identify potential impacts to our membership and lending portfolio. In 2015 the Prime Rate decreased twice in response to Bank of Canada rate adjustments, ultimately settling at 2.70%. Competitive interest rates and a strong demand for consolidation loans and vehicle purchases facilitated the increase in the consumer loan portfolio. The cooling housing sales market in the second half of the fiscal year contributed to the decrease in the residential mortgage portfolio. In addition, lines of credit decreased as this segment saw more pay down of revolving debt in response to economic uncertainty. The Credit Union continued to participate in syndicated loans, which are joint lending agreements to finance a credit request that exceeds another individual credit union’s lending limit. Syndicated loans earn a strong return helping to offset low mortgage lending rates. The annual volume variance in our loan products are categorized below: • Consumer Loans: $658 thousand 4.87% increase • Residential Mortgages: ($1.54 million) 0.90% decrease • Line of Credits: ($1.93 million) 5.58% decrease • Syndicated Loans: $1.24 million 32.54% increase The average loan rate was 3.25% for October 2015.

We are pleased to present that loan write-offs for the year totaled $0 and recoveries of prior year write-offs totaled $10,718. This past year and the 5 year average continues to be very low compared to industry experience and is a result of the Credit Union's low risk lending strategy. The Credit Union management and the credit committee constantly monitor delinquent accounts and staff work promptly with members to resolve any delinquency issues.

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I would like to take the opportunity to thank the Manager of Credit, the lending staff in our Calgary and Scotford locations and members of the credit committee for their hard work and dedication throughout the year. Belinda Simpson Chair Credit Committee

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Collins Barrow Edmonton LLP T. 780.428.1522 2380 Commerce Place F. 780.425.8189 10155 - 102 Street N.W www.collinsbarrow.com Edmonton, Alberta TSJ 4G8 Canada

INDEPENDENT AUDITORS' REPORT

We have audited the accompanying financial statements of Shell Employees' Credit Union Limited, which comprise the statement of financial position as at October 31, 2015 and the statements of income and comprehensive income, changes in members' equity and cash flows for the year ended October 31, 2015, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management 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.

Auditors' Responsibllity

Our 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 lo 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 auditors' judgement, 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 Credit Union'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 lo provide a basis for our audit opinion.

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Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Shell Employees' Credit Union Limited as at October 31, 2015 and its financial performance and its cash flows for the year ended October J1, 2015 in accordance with International Financial Reporting Standards.

Other Matters

The prior year's financial statements were audited by another firm of Chartered Accountants who expressed an unmodified opinion dated January 20, 2015.

Edmonton, Alberta Chartered Accountants

January 19, 2016

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MANAGEMENT RESPONSIBILITY To the Members of Shell Employees' Credit Union Limited: Management is responsible for the preparation and presentation of the accompanying financial statements, including responsibility for significant accounting judgements and estimates in accordance with International Financial Reporting Standards and ensuring that all information in the annual report is consistent with the statements. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgement is required. In discharging its responsibilities for the integrity and fairness of the financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded and financial records are properly maintained to provide reliable information for the preparation of financial statements. The Board of Directors and Audit Finance Committee are composed entirely of Directors who are neither management nor employees of the Credit Union. The Board is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial information included in the annual report. The Board fulfils these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management and external auditors. The Audit Finance Committee is also responsible for recommending the appointment of the Credit Union's external auditors. Collins Barrow Edmonton LLP, an independent firm of Chartered Accountants, is appointed by the members to audit the financial statements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodically and separately with, both the Audit Finance Committee and management to discuss their audit findings.

General Manager

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Statement of Financial Position

ASSETS Oct. 31, 2015 Oct 31, 2014

Cash and cash equivalents (Note 5) $ 872,147 $---

Income taxes receivable 103,585 45,652

Investments (Note 6) 45,790,460 41,996,217

Loans to members (Note 8) 222,017,299 223,607,744

Derivative financial assets (Note 7) 98,167 314,702

Other assets (Note 9) 286,171 62,008

Property and equipment (Note 10) 666,367 786,925

Intangible assets (Note 11) 174,181 189,469

$270,008,377 $267,002,717

LIABILITIES

Bank indebtedness (Note 5) $ --- $478,854

Member deposits (Note 13) 253,880,857 250,679,228

Accounts payable and accrued liabilities 291,575 285,811

Derivative financial liabilities (Note 7) 98,167 314,702

Deferred income tax liability (Note 14) 19,889 23,289

$254,290,488 $251,781,884

MEMBERS’ EQUITY

Dividends distributable (Note 15) $161,154 $209,086

Common shares (Note 15) 5,474,481 5,291,820

Retained earnings 10,082,254 9,719,927

15,717,889 15,220,833

$270,008,377 $267,002,717

Contingent liabilities and commitments (Note 18)

Approved on behalf of the Board

See accompanying notes to the financial statements

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STATEMENT OF INCOME AND COMPREHENSIVE INCOME For the Year Ended October 31, 2015 Financial Income Oct. 31, 2015 Oct 31, 2014

Interest on member loans $7,434,845 $7,658,963

Investment (Note 20) 824,447 899,044

8,259,292 8,558,007

Financial Expenses

Interest on member deposits 4,547,433 4,600,384

Interest on borrowings 33,522 8,761

4,580,955 4,609,145

Financial margin before provision for loan impairment 3,678,337 3,948,862

Provision for loan impairment (Note 8) 55,881 97,881

Financial margin 3,622,456 3,850,981

Other income (expenses) Service charges and other

544,414

443,175

Net operating income 4,166,870 4,294,156

Less: Operating expenses (Schedule 1) 3,613,148 3,515,810

Income before income taxes 553,722 778,346

Income tax expense (recovery) (Note 14)

Current income taxes expense 72,381 173,546

Deferred income taxes expense (3,400) (16,711)

68,981 156,835

Net income and comprehensive income $484,741 $621,511

See accompanying notes to the financial statements

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STATEMENT OF CHANGES IN MEMBERS’ EQUITY For the Year Ended October 31, 2015 Dividends

Distributable Common

Shares Retained Earnings

Total Equity

As at November 1, 2013 $209,866 $5,208,559 $9,259,808 $14,678,233

Total net income for the year --- --- 621,511 621,511

Share capital issued and redeemed for cash, net

---

(125,108)

---

(125,108)

Shares issued to settle allocation distributable

(209,866)

208,369

720

(777)

Dividends declared, net of tax recovery of $46,974

209,086

---

(162,112)

46,974

As at October 31, 2014 $209,086 $5,291,820 $9,719,927 $15,220,833

As at November 1, 2014 $209,086 $5,291,820 $9,719,927 $15,220,833

Total net income for the year --- --- 484,741 484,741

Share capital issued and redeemed for cash, net

---

(26,425)

---

(26,425)

Shares issued to settle allocation distributable

(209,086)

209,086

---

---

Dividends declared, net of tax recovery of $38,740

161,154

---

(122,414)

38,740

As at October 31, 2015 $161,154 $5,474,481 $10,082,254 $15,717,889

See accompanying notes to the financial statements

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STATEMENT OF CASH FLOWS For the Year Ended October 31, 2015 2015 2014

Cash flows from operating activities

Net income $484,741 $621,511

Adjustments for:

Non-cash items:

Net interest income (3,678,337) (3,948,862)

Provisions for impaired loans 55,881 97,881

Current income tax expense 72,381 173,546

Provisions for deferred income taxes (3,400) (16,711)

Depreciation of property and equipment 127,883 131,481

Amortization of intangible assets 65,011 67,385

Income taxes paid (130,315) (168,060)

(3,006,155) (3,041,829)

Changes in other assets:

Changes in other assets (224,163) 18,100

Changes in accounts payable and accrued liabilities

5,764

85,917

(218,399) (67,817)

Changes in member activities (net):

Changes in member loans 1,526,047 (12,874,915)

Change in member deposits 3,426,627 357,051

4,952,674 (12,517,864)

Cash flows related to interest

Interest received 8,294,810 8,607,597

Interest paid (4,805,954) (4,413,965)

3,488,856 4,193,632

5,216,976 (11,433,878)

Cash flows from financing activities:

Change in common shares 182,661 83,980

Change in dividends payable (47,931) (780)

Dividends payable (161,154) (209,086)

Tax recovery on investment share dividends 38,740 46,974

12,316 (78,912)

Cash flows from investing activities:

Net change in investments (3,821,244) 6,998,856

Additions to intangible assets (53,922) (3,425)

Additions to property and equipment (7,325) (20,391)

Proceeds on disposal of intangible assets 4,200 ---

(3,878,291) 6,975,040

Net increase (decrease) in cash equivalents 1,351,001 (4,537,750)

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(Bank indebtedness) cash and cash equivalents, beginning of year

(478,854)

4,058,896

Cash and cash equivalents (bank indebtedness), end of year

$872,147

$(478,854)

See accompanying notes to the financial statements

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Board of DirectorsBack from left to rightAdam Battistessa, Steve Delude, Jason Anderson, Nathan Turnbull, Saeed Kangarloo, Drew Harris

Front from left rightRebecca Nadel, Belinda Simpson, Haritha Devulapally, Huntley O‘Neill

Not in photo: Dominic Daemen, Jennie Wolter, Tim Bancroft & Zitin Lamba

COMMITTEES

EXECUTIVEAdam Battistessa, PresidentRebecca Nadel, 1st Vice PresidentSaeed Kangarloo, 2nd Vice President

AUDIT FINANCENathan Turnbull, ChairDrew HarrisZitin LambaHuntley O‘NeillJason AndersonHaritha Devulapally, DT

CREDITBelinda Simpson, ChairSteve DeLudeJason AndersonDominic Daemen, DT

MARKETINGHuntley O‘Neill, ChairBelinda SimpsonNathan TurnbullZitin LambaHaritha Devulapally, DT

RISKSteve DeLude, ChairJason AndersonJennie WolterDominic Daemen, DT

DIRECTOR TRAINEEHaritha DevulapallyDominic Daemen

Calgary Office117, 400 4 Ave SW Calgary, ABT2P 0J4Phone: (403)718-7770Fax: (403)262-4009

Scotford OfficeScotford Chemicals Admin Building55520 RR214, Fort Saskatchewan ABT8L 3T2Phone: (780)992-3578 or (780)992-3978 or (780) 992-3061Fax: (780)992-3523

/shellcu

/shellcu_ab

Getting there, Together