2021 Investor Presentation - May 2021 - Concentra Bank
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2021 Investor Presentation
May 2021
Disclaimer: Forward-Looking Statement
From time to time Concentra Bank (“Concentra”) makes written and verbal forward-looking statements based upon material assumptions that
management of Concentra considers appropriate. These are included in the MD&A, periodic reports to shareholders, regulatory filings, press releases,
Concentra presentations and other Concentra communications. Forward-looking statements are made in connection with business objectives and targets,
Concentra strategies, operations, anticipated financial results and the outlook for Concentra, its industry, and the Canadian economy. Forward-looking
statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of
transactions, performance or achievements of Concentra to be materially different from those expressed or implied by such forward-looking statements,
including but not limited to risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic
conditions, legislative and regulatory developments, changes in accounting standards, the nature of our customers and rates of default, competition,
regional and national responses to the COVID-19 pandemic and other risk factors that may not yet be known to Concentra.
All material assumptions used in making forward-looking statements are based on management’s knowledge of current business conditions and
expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting
Concentra and the Canadian economy. Although Concentra believes the assumptions used to make such statements are reasonable at this time, there
may be other factors that cause results not to be as anticipated, estimated or intended. Certain material assumptions are applied by Concentra in making
forward-looking statements, including without limitation, assumptions regarding its continued ability to fund its lending business, a continuation of the
current level of economic uncertainty that affects market conditions, continued acceptance of its products in the marketplace, and the current tax regime.
There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Concentra does not undertake to
update any forward-looking statements that are contained herein.
This presentation is intended for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of
Concentra. This presentation should not be considered to be an offering memorandum under the securities laws or regulations of any jurisdiction in
Canada.
2
Table of 1. Overview of Concentra Bank
2. Financial Performance
Contents 3. Capital and Liquidity
4. Questions
3
Concentra Bank
Overview
4Overview of Concentra Bank
Core strategy built around specialization, partnership, and innovation
– Striving to be Canada’s leading mid-market digital-first bank
– Expanding our existing model to add new direct to customer businesses
A Schedule I Chartered Bank regulated by OSFI
– Canada’s 13th largest Bank1
Co-operatively owned
– Deep, long-standing partnerships with over 90% of credit unions in
Canada2
Recent by-law change provides opportunity and flexibility to expand ownership
outside of the co-operative system
343 employees across Canada
– Experienced leadership team
– Offices in Regina, Saskatoon, Surrey and Toronto
Investment grade long-term issuer rating at A (low) and short-term rating at R-
1 (low) with a Negative trend from DBRS Morningstar
– Conservative asset mix
– Total assets of $11.1 billion at the end of 2020
1.
2.
In terms of total assets
Excluding Quebec
52020 by the Numbers
$11.1B $8.8B $121M $25.4M 5.2% 12.8%
Total Total Net Net Return on CET1
Assets Loans Revenue1 Income Equity2 Ratio3
Values as of December 31, 2020
1. Net Revenue = Net Interest Income + Non-Interest Income
2. Return on common equity
3. The standardized approach is used to calculate credit risk weighted assets
6Concentra’s Corporate Structure
Concentra had its origins in the co-
Other operative movement, which is
SaskCentral Co-operatives Credit Unions
Centrals reflected in the current ownership
structure of the bank
84.02% 10.14% 4.41% 1.43%
In 2005, SaskCentral and Co-
operative Trust joined forces to
establish Concentra under the
Concentra Bank Cooperative Credit Association Act
(“CCAA”)
100% Through continuance under the Bank
Act on January 1, 2017, Concentra
became a Schedule I chartered bank
Concentra
Trust Concentra maintains its ties to the
credit union system
7Experienced Executive Leadership Team
Our leaders have a depth &
breadth of industry experience
Don Neal Philippe
Coulter Oswald Sarfati
Chief Operating
President & Chief Risk Officer
Officer
CEO
Paul Ryan Diane
Masterson Graham Tom
Chief Financial Chief Banking
Head of Trust
Officer Officer
Brian Tanya
Guillemin Jayleen Groff Postlewaite
Chief Digital Chief People Officer Corporate Secretary
Officer
Ben
Douangprachanh
Chief Internal Auditor
8Concentra’s Strategy House - Purpose, Mission & Strategy
Execution of the new strategy commenced in 2018
Purpose
Mission
1) Specialization 2) Partnering 3) Innovation
Commercial Lending Consumer Lending
Niche Retail Wealth/Trust
Smart Digital
Enhanced People Capabilities
Grow Partnerships with Credit Unions
Strengthened Foundation/Operational Excellence (1)
1. Strengthened Foundation includes strengthening of internal controls, operations, technology and enhanced risk
management.
9Concentra’s Unique Business Model
Strategic Partnerships Model
Asset Origination & Revenue Generation
Leveraging strategic Direct to Customer Indirect via Broker Partnerships Banking as a Service
partnerships is a
core element of
Concentra’s
business model
Suite of Products & Services
Credit Unions
Over 90% of Canada’s Commercial Lending
Residential
Credit Unions1 are Retail Banking & Equipment Trust Services
Mortgages
clients of Concentra Financing
Securitized & Non-Securitized Retail Deposits Commercial Lending Registered Products
Key Fintech Direct & Indirect Sourcing Nominee GIC Deposits Commercial Deposits Corporate Trust
Partnerships Insured & Uninsured Consumer Loans Equipment Financing Personal Trusts and Estates
• Financeit Foreign Exchange
• Neo Financial
• SAVVYY
• BVCI
• Cinchy Retail & Commercial Credit Union
Securitizations Capital Markets
Deposits Deposits
Funding Sources
1. Excluding Quebec 10Strong Integrated Risk Governance Framework
Our risk management culture has been maturing over the past four years,
as Concentra became a Schedule I bank
We only take on risk that can be identified and Risk Appetite
understood, is transparent and can be managed
Risk Appetite
Framework
Credit &
Model Risk Market Risk
We only take on productive risk to grow our business Counterparty Risk
while maintaining a stable risk profile
Liquidity & Funding
Operational Risk Strategic Risk
Risk
We have a consistent approach to taking on risk that
supports our customer strategy, delivers on our Legal, Regulatory & Reputation Risk
commitments and sustains our business practices in the
long term
3 Lines of Defence
Risk Management
Business & Corporate Line Governance, Risk, & Oversight
1st 2nd 3rd
Framework
Independent Assurance
Accountabilities Function Accountabilities
Dual Stream Adjudication Process
1st Line of Defense recommends a transaction, 2nd Line of Defense (RMG) conducts an
independent assessment before concurring with 1st Line’s recommendation
11Financial Performance
12Revenue and Earnings Remained Strong through 2020
Bank remained strong and resilient through COVID impacts of F2020:
• Net revenue consistent year over year
• F2020 Net Income was $25.4M, resulting in a ROE1 of 5.2%
130
CAD Millions
(CAD millions) 2017 2018 2019 2020
Summary Income Statement 120
121.0 121.3
Net Interest Income 83.5 90.4 96.4 95.9 114.9
110
Non-Interest Income 23.1 24.5 24.6 25.4
106.6
Total Net Revenue 106.6 114.9 121.0 121.3 100
Operating Expenses (60.0) (66.5) (71.4) (77.6) 96.4 95.9
90
Pre-Provision Profit 46.6 48.4 49.6 43.7 90.4
Provision for credit loses (0.6) 7.6 (6.9) (8.9) 80 83.5
Income before tax 46.0 56.0 42.7 34.8
70
Net Income (after tax) 33.6 40.6 30.1 25.4
60
2017 2018 2019 2020
Net Revenue
Net Interest Income
1. Return on common equity
13Well-Diversified & Growing Asset Base
23.7% growth
Total Assets 12
CAD Billions
11.1
10%
Residential Mortgages 9.7
10 9.1 8.9 6%
Residential Mortgages - Insured
0.9
Residential Mortgages - Uninsured 8 0.5
Consumer Loans
6
$8.8B
Commercial Lending Total Loans 56%
28%
Cash & Securities 4 7.4
Other Non-Earning Assets
2
-
2017 2018 2019 2020
Credit Portfolio Composition
Low risk loan portfolio (31 December 2020) Atlantic
4.6%
• 67% of residential BC
mortgages are insured 13.4% AB
19.7% SK MB
• Assets national in scope ON
6.6% 1.9% QC
across Canada 51.3% 2.5%
14COVID-19 Market Impact
Well-executed COVID action plan supported by strong risk management framework
All customer deferrals have been resolved
• Strategically reduced the commercial portfolio by lowering our risk exposure to vulnerable industry sectors, such as
hospitality, construction, and commercial real estate. This was achieved through:
– Strategic loan sales
– Managing the renewal process to limit credit exposure on higher risk accounts in industries impacted by the
economic slowdown
• The loan portfolio has minimal direct exposure to the oil & gas sector1
• Established the Special Account Management Unit (“SAMU”) to provide oversight and day-to-day management of our
high-risk commercial loan portfolio, with the objective of reducing exposure and minimizing loan losses
1. Oil & gas exposure of 0.07% of total loans
15Provision for Credit Losses Remain Consistent
While the appropriate allowances were taken in 2020 given the economic conditions due to COVID, these
were offset by reduced risk overall in the balance sheet, with growth through insured prime mortgages
and a reduction in commercial loans
Provision for Credit Losses as a % of Gross Loans
0.18%
5 Year Average
0.10%
0.06% 0.09%
0.01%
2016 2017 2018 2019 2020
-0.09%
16Capital & Liquidity
17Consistently Strong Risk Based Capital Ratios
Concentra Capital Ratios1 Industry Comparable Capital Ratios2
22% 22%
20% 20%
18% 18%
17.5% 17.9%
16% 17.1% 16% 17.1% 15.8%
16.1%
14% 14% 14.6%
12% 13.1% 13.3% 12.8% 12% 12.8% 13.1%
12.6%
11.8%
10% OSFI Min Total 10%
OSFI Min Total
Capital Ratio 9.6% Capital Ratio
8% 8% 8.8%
6% OSFI Min CET1 6% OSFI Min CET1
Ratio Ratio
4% 4%
2% 2%
0% 0%
2017 2018 2019 2020 Concentra Equitable Bank Laurentian CWB
CET1 to RWA
Total Capital to RWA
1. Concentra uses the standardized approach in calculating RWAs.
2. Ratios as at Q4 2020, Source: Companies’ annual reports
18Strong Liquidity Positions
Strong growth in Credit Union deposits through F2020
Bank maintained a stable funding base with high levels of liquid assets
Regulatory Liquidity Measures HQLA breakdown
2.5
CAD Billions
• 198% Liquidity Coverage Ratio (“LCR”)
6%
• Diversification of liquidity sources 2.0
• $2.3 billion in high quality liquid assets & non- $2.1B (94%)
operational cash Level 1 Assets &
1.5
60% Non-Operational Cash
• Committed lines of $400 million with external parties,
in addition to $100 million operating line with
SaskCentral 1.0
Level 2
• Active management of seasonal liquidity flows Level 1
• Access to large players in the nominee deposit market 0.5 Non-Operational Cash
34%
-
2020
19Funding Profile
Funding profile is diversified by source with scheduled maturities out to 5 years
Funding By Source Maturity Schedule
12 6
CAD Billions
CAD Billions
10.5 51%
10 5
9.1
8.5 8.4
8 4
6 3
4 2 18%
12%
9% 10%
2 1
- -
2017 2018 2019 2020Question & Answer Period
21Contacts Paul Masterson, CPA, CA, MBA
Chief Financial Officer
paul.masterson@concentra.ca
306.531.9497
Christina Wang, CFA
VP Corporate Treasurer
christina.wang@concentra.ca
365.292.3406
concentra.ca/investor
22© Concentra Bank, 2021
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