Volume 21 Spring 2007

NEWSLETTER

Members are reminded of the AGM to be held on Wednesday, April 11, 2007at the Castlegar Recreation Centre. Registration is at 7:00 p.m., with themeeting commencing at 7:30 p.m. Please join us to hear your Board ofDirectors and management recount the activities of another successful yearand to enjoy some refreshments. You may end the evening with your namebeing drawn for a door prize.

DIRECTOR NEWS We would like to congratulate Julie Morrison, Dan Wack and Kenyon McGeewho were successfully re-elected by acclamation to the Board of Directors.We are also pleased to welcome Margaret Poohachoff to the Board ofDirectors. Margaret’s election by acclamation fills the last vacancy on the Board. The other current Directors are: Bruce Gerrand, Edward Rohn, Larry Brown, Deb Robertson & Jamie Keen.

INSURANCE REMINDERMortgage and/or Chattel LoansPlease remember that if you have a mortgage and/or chattel lien withHeritage Credit Union, under the terms and conditions of the mortgageand/or chattel lien, you must maintain insurance to the full insurable valuewith loss, if any, payable to Heritage Credit Union as Mortgagee.

ChannelAGMNOTICE OF ANNUAL GENERAL MEETING

EASTER HOLIDAY HOURSMembers are reminded that our offices will be closed for the Easter Holiday on Friday April 6, Saturday April 7, and Monday April 9, 2007. We will re-open for business on Tuesday April 10, 2007 with normal business hours in effect.

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� growth financial

� HG Insurance

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Growth Financial Corp, our Wealth Management division jointly owned with Creston & DistrictCredit Union, has had a busy and exciting year. In late summer Growth Financial purchased theshares of Whitlock Insurance Agency in Trail. This is a growing, well managed agency that offeredthe opportunity to expand wealth management services into the Trail market. We look forward tothis location being a valued and vital part of our future success going forward.

The second major event for Growth presented itself in late fall. The company was able tocomplete negotiations for the purchase of Creston Valley Insurance, a very successful full service insurance agency in Creston. With the full integration of services and products in thespring of 2007, we will have 3 Financial Planning Offices and 2 full service Insurance Offices.

� technology corner

Did you know that Heritage Credit Union offers self-serve electronic features that can helpyou and your business “work smarter”? If your business account is signed up to accessOnline Banking through our website there is a section in Bill Payments specifically for sending payments to the Canada Revenue Agency. These payments usually require a “remittance report” to be completed as well as money sent, and if you have to pay GST,Corporation Tax or Payroll and Source Deductions you can skip past all the paperwork and be done in just a few clicks!

For businesses with employees on payroll, our internet-based, secure electronic funds transferfrom your business account into your employees’ accounts is a simple, efficient way to getthis job done. This can help save service charges on your account by reducing debit items,as well as save you money on cheque orders. Whether you enter and maintain your payrollinformation manually, or upload it from a number of compatible software programs (e.g. Simply Accounting), Heritage Credit Union can assist you every step of the way.

As with the Credit Union, our insurance subsidiary has undergone an identity change aswell with its name change from Castlegar Insurance Agencies. HG Insurance Agencies is inthe process of further developing its customer experience to mirror the promise that the Credit Union adheres to. Promoting our new name and brand experience will be a major focus going forward.

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� message

Money Laundering and Anti-Terrorism

The Proceeds of Crime (Money Laundering)and Terrorist Financing Act imposed a numberof rules and reporting requirements on theCredit Union and other financial institutions.This resulted in the creation of the FinancialTransaction and Reports Analysis Centre ofCanada (FINTRAC). Pursuant to Section 71(1)of the Act, FINTRAC is required to report theresults of its operations’ and also audit finan-cial institutions like our Credit Union. In orderto comply with the law, our Credit Union hasdeveloped an Anti-Money Laundering & Anti-Terrorist Financing Compliance Policy, someof which is reproduced below.

“It is the policy of the Board ofDirectors of Heritage Credit Union that theCredit Union complies with the require-ments of the legislations and regulations asthey relate to the Proceeds of Crime (MoneyLaundering) and Terrorist Financing Act.This policy is to be communicated to allemployees of Heritage Credit Union andwhen appropriate, to our members.

It is also the policy of this Credit Unionto detect and deter terrorist activity financ-ing transactions and to freeze propertiesowned or controlled by terrorist groupswhere it is within the capacity to do so. TheCredit Union accepts as its public duty, theobligations to co-operate with law enforce-ment agencies in their lawful investigationof criminal activities committed, or reason-ably believed to have been committed, withrespect to laundering proceeds of crime orterrorist activity financing.

Heritage Credit Union will report to FIN-TRAC, and provide information to the RCMP,CSIS and/or FICOM as required by legisla-tion or court order, and will file the requiredreports for all suspicious and prescribedtransactions. A record of all incidents involv-ing suspected money laundering or terroristfinancing will be maintained for inspectionby FINTRAC.”

As always, Heritage Credit Union com-plies with the laws applicable to it. Anyquestions in regards to this article shouldbe directed to our Compliance Officer,Karen Wasilenkoff @365-7232.

HEAD OFFICE CASTLEGAR BRANCH#100 - 630 - 17th Street, Castlegar, B.C. V1N 4G7Tel: 250-365-7232 Fax: 250-365-2913Email: hcu@heritagecu.ca

SLOCAN VALLEY BRANCH3014 Hwy 6, P.O. Box 39, Slocan Park, B.C. V0G 2E0Tel: 250-226-7212 Fax: 250-226-7351Email: slocan@heritagecu.ca

WEST BOUNDARY BRANCH256 S. Copper, P.O. Box 76, Greenwood, B.C. V0H 1J0Tel: 250-445-9900 Fax: 250-445-9902Email: greenwood@heritagecu.ca

HG INSURANCE AGENCIES LTD.#100 - 630 - 17th Street, Castlegar, B.C. V1N 4G7Tel: 250-365-3368 Fax: 250-365-2313Email: castlegar@hgins.ca

3014 Hwy 6, P.O. Box 98, Slocan Park, B.C. V0G 2E0Tel: 250-226-7216 Fax: 250-226-7633Email: slocanpark@hgins.ca

GROWTH FINANCIAL CORP.#100 - 630 - 17th Street, Castlegar, B.C. V1N 4G7Tel: 250-365-0095 Fax: 250-365-2913Email: cmcfadden@growthfinancial.ca

TRADITIONAL SERVICE

IN PERSON & ONLINE

www.heritagecu.ca

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A full set of financial statements can be obtained from your credit union.

Auditors’ Report on Summarized Consolidated Financial Statements

To the Members of Heritage Credit Union

The accompanying summarized consolidated balance sheet and consolidated statements of earnings and retained earnings and cash flows are derived from the complete financial statements of Heritage Credit Union as at December 31, 2006 and for the year then ended on which we expressed an opinion without reservation in our report dated February 23, 2007. The fair summarization of the complete financial statements is the responsibility of management. Our responsibility, in accordance with the applicable Assurance Guideline of The Canadian Institute of Chartered Accountants, is to report on the summarized consolidated financial statements. In our opinion, the accompanying consolidated financial statements fairly summarize, in all material respects, the related complete financial statements in accordance with the criteria described in the Guideline referred to above. These summarized consolidated financial statements do not contain all the disclosures required by Canadian generally accepted accounting principles. Readers are cautioned that these statements may not be appropriate for their purposes. For more information on the credit union’s financial position, results of operations and cash flows, reference should be made to the related complete consolidated financial statements. Vancouver, Canada GRANT THORNTON LLP February 23, 2007 Chartered Accountants

Summarized Consolidated Balance Sheet December 31 2006 2005

AssetsCash resources $ 18,315,709 $ 15,508,975 Loans 77,701,487 69,776,140 Investments and other 1,709,639 1,457,653 Property and equipment 2,197,470 2,336,799 Goodwill 157,343 157,344

$ 100,081,648 $ 89,236,911

LiabilitiesDeposits $ 93,642,893 $ 82,467,548 Payables and accruals 887,098 584,615 Borrowings 478,482 1,539,642 Non-controlling interest 203,468 202,215 Retained earnings 4,869,707 4,442,891

$ 100,081,648 $ 89,236,911

On behalf of the Board Director Director

Summarized Consolidated Statements of Earnings and Retained Earnings Year Ended December 31 2006 2005

Financial income $ 4,998,501 $ 4,626,677 Financial expense 2,231,063 2,075,373

Financial margin 2,767,438 2,551,304

Provision for loan losses 67,244 68,814 Other income 1,805,037 1,649,686

Operating margin 4,505,231 4,132,176 Operating expenses 3,972,163 3,727,330

Earnings from operations 533,068 404,846 Non-controlling interest 27,014 30,342 (Gain) loss on equity investment (14,863) 26,634

Earnings before income taxes 520,917 347,870

Income taxes 94,101 53,163

Net earnings $ 426,816 $ 294,707

Retained earnings, beginning of year $ 4,442,891 $ 4,148,184

Net earnings 426,816 294,707

Retained earnings, end of year $ 4,869,707 $ 4,442,891

Summarized Consolidated Statement of Cash Flows Year Ended December 31 2006 2005

Cash flows provided by (used in)

Operating activities $ 1,255,985 $ 550,718 Financing activities 9,905,591 2,808,167 Investing activities (8,354,842) (5,022,113)

Increase (decrease) in cash 2,806,734 (1,663,228)

Cash, beginning of year 15,508,975 17,172,203

Cash, end of year $ 18,315,709 $ 15,508,975

� report4

Bruce Gerrand,Director

Edward Rohn,Director

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