EASTERN Credit Union posted a total comprehensive loss of $29.4 million for the year ended December 31, 2023, representing a 52% increase from the $19.3 million loss recorded in 2022.
According to its audited financial statements, total operating income fell by $3.9 million year over year, while total expenditure rose by $7.8 million, the credit union disclosed in its annual report.
Eastern reported a $12.2 million drop in interest on loans, which weighed on total operating income, and a $17.6 million increase in personnel costs, which drove up total expenditure. Personnel costs rose due to $9.5 million in retroactive back pay and a $7.9 million increase in salaries and other staff benefits year over year.
Loans and other receivables for directors, committee members, and key management personnel climbed from $5.7 million in 2022 to $9.9 million in 2023.
“Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial decisions. Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group. A number of transactions are entered into with related parties in the normal course of business. These transactions were carried out on commercial terms at market rates,” it stated.
Board and committee expenses rose from $3.3 million in 2022 to $4.2 million in 2023. Stipends increased from $1.2 million to $1.9 million year over year, while entertainment expenses jumped from $6,648 to $118,068.
Eastern’s investment property net book value more than doubled year over year, climbing to $31.2 million.
Investment properties include costs incurred to construct three properties located in Valencia, Sorzano Street, Arima and Auchenskeoch, Tobago.
“The property situated in Valencia is known as Hermosa Vista. The project will consist of the development of 16 acres of land and will be done in nine phases. During the financial year 2023, two contracts were awarded by the Group to develop four phases of the project. The four phases will contain one commercial building in the form of a mall with its cost included in investment properties and three townhouses with their cost included in Inventories,” it stated.
“The costs for Auchenskeoch, Tobago represent the purchase of land with an undetermined future use. An agreement was entered into for the construction of an apartment building at the Arima location at a contracted price of $6.2 million. As of December 31, 2023, the project was 80% complete and the amount paid to the contractor was $5,306,137. There is therefore a remaining contractual obligation of $893,863 as at December 31, 2023,” it stated.
The consolidated audited financial statements for 2023 are among the agenda items listed by Eastern for its upcoming 50th Annual General Meeting, scheduled for September 6 at the Le Rêve Conference Centre, C3, San Fernando.
Eastern’s president Arvin Isaac in his remarks stated that 2023 was marked by “strategic progress, renewed engagement, and deep reflection.”
Eastern celebrated its 50th anniversary on April 16, 2023.
“This golden jubilee marked five decades of service, growth, and unwavering commitment to our members. It was a moment of pride for the entire organisation, a time to honour our legacy while reaffirming our vision for the future,” he said.
Isaac said that throughout the year, the board demonstrated “vibrant enthusiasm and professional acumen in its approach to governance.”
Noray moves from president to CEO
“Their forward-thinking leadership and commitment to cooperative values have been instrumental in guiding the organisation through a dynamic and evolving financial environment,” he said.
“Complementing this strong governance foundation was the appointment of a chief executive officer (CEO). This addition to our leadership team has contributed to greater strategic focus, improved operational coordination, and a more agile approach to innovation and service delivery. During his tenure, we have seen increased emphasis on digital transformation, member experience, and organisational efficiency — areas that are essential to our continued growth and relevance,” Isaac said.
The new CEO is Richard Noray, whom Isaac replaced as president.
“He clarified the process of acquiring his post. He was previously a director, then president. As president he promised to take members out of the rain and sun and now there is a brand-new building that houses the Port of Spain branch. He stated that he went through many interviews over the period of one year, did an interview online while in Scotland that was rigorous and lasted an hour and a half. One week later he was informed that he got the job. He had to give up his job as a radio talk show host and requested time to inform his Principal and the Ministry of Education as well. To announce his position last year during the AGM would have been a violation of protocol,” the annual report stated.
In December 2021 former acting CEO Sherry-Ann Mc Donald-Joseph was sent on 30 days enforced vacation leave which was then followed by administrative leave before she was subsequently dismissed on March 23, 2022.
Noray, who was president at the time, said this removal was justified based on what he called “significant developments.”
Deputy CEO Kester Lashley had been acting in the role before Noray was appointed CEO.
Isaac said that Eastern had made “important strides” in managing loan delinquency.
“Strengthened internal controls, targeted recovery efforts, and a more proactive role for branch managers have contributed to improved performance in this area. However, the success of these efforts depends not only on internal systems but also on member responsibility. We encourage all members to meet their loan commitments, as doing so supports the financial health of the credit union and ensures continued access to credit for others,” Isaac said.
According to the board of directors’ overview in 2023, Eastern continued to respond to the effects of the pandemic.
“The pandemic saw the provision of moratoria to members for ease of financial burden; however, following the pandemic, members continued to experience financial distress. Their need for cash increased, their commitment to their loan obligations shifted and resulted in increased delinquency. The board, recognising this trend, sought to respond by focusing more heavily on debt recovery by hiring a delinquency manager,” it stated.
“The Society’s ability to generate surplus was affected by continued increases in delinquency as loan interest income remained below expectations; however improved performance by the investments buffered income streams,” the annual report stated.
Eastern stated that delinquency management is a critical function within the credit union, aimed at maintaining financial stability and protecting members’ assets.
“With the membership of the Society being wide range, from maxi-taxi operators to doctors, increased focus is placed on proactive identification, monitoring, and recovery of overdue loans to minimise losses and ensure responsible lending practices,” it stated.
“As part of our delinquency management, clear policies, early intervention strategies, and consistent communication with members to understand their financial challenges and offer workable solutions is undertaken. By balancing firm risk controls with compassionate member support, we aim to preserve member relationships and uphold our cooperative values. This approach is aimed to not only reduce default rates but also reinforce trust and loyalty among our membership base. We have begun to see the fruits of those efforts by improvements in the delinquent portfolio in 2023,” it stated.
According to a five-year analysis, delinquency at Eastern was valued at $185.8 million in 2019.
By 2023, it had risen to $335.7 million.
“A five -year analysis of the delinquency figures from 2019 to 2023 reveals a 3% marginal decrease from 2022 to 2023 due to a multi-prong approach to debt collection and bringing members loans out of a delinquent status. This exercise begun in 2023. Eastern continues with its zero tolerance approach to delinquency and this continues to yield positive results. Members with large outstanding loan balances were targeted for loan rescheduling arrangements. These structured repayment options gave financially strained members the opportunity to meet their obligations without defaulting further, which helped stabilise the delinquency portfolio,” it stated.
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