we are Kootenay Savings.

SUMMARIZED ANNUAL REPORT 2017

The Kootenay Savings brand is much more than our name and logotype. It is everything that comes

to mind when someone – member or non-member –

encounters our credit union.

It is a unique emotional connection that is the sum of

every single interaction that person has had with us.

Everything they’ve ever heard or read about Kootenay

Savings. Everything they’ve ever seen or experienced

for themselves, in our branches, online, on the phone,

in the media and in the community.

Our brand is their understanding of who we are as an

organization – and who we are as people. Which brings

us to the stars of this annual report: our employees, the

amazing individuals who bring the Kootenay Savings

brand to life every day…

we areprogressive professional savvy experienced knowledgeable passionate problem solvers community champions financial wizards trusted advisorsinnovatorsbusiness leaderscaring inclusivesocially responsiblepeople helping people

OUR BRAND BEGINS WITH OUR PEOPLE 2

COMMUNITY REPORT 5

CORPORATE CITIZENSHIP REPORTING 9

BOARD AND MANAGEMENT REPORT 11

EXPLORING STRENGTH AND UNITY 14

EXECUTIVE LEADERSHIP TEAM AND BOARD OF DIRECTORS 15

FINANCIAL REPORTS 16

SUMMARIZED FINANCIAL STATEMENTS 18

“Prior to the Emerging Leaders Program, I thought of leadership as an inherent trait – you either have it or you don’t. It taught me leadership is actually something that can be cultivated, both in ourselves and in those around us.” Angela Simpson Senior Member Service Representative, New Denver Branch

When you walk into a Kootenay Savings location, you don’t see a brand. You see people. And at the heart of it, that’s who we are. People helping people improve their financial lives.

That simple but powerful statement has been the basis of our brand since 1969. Almost 50 years. And for all those decades, our employees have been our greatest asset and our most influential brand advocates. They live and breathe our brand every day.

It is a brand they can believe in because it’s built on truth – on ideas and values that are embedded in our corporate culture. It is a brand that honours who we are and what we stand for. Fairness. Value. Innovation. Community. Accountability. Social Responsibility. Respect.

People bank and work here because they believe in what we do. The passion and engagement our employees feel carries through in their day-to-day work for and with members. When a Kootenay Savings employee gives you the kind of service that makes you say “wow” and tell your friends about us, that’s the magic that brings our brand to life.

We are a team.Whatever banking channel you use at Kootenay Savings, there’s a whole team behind it – 224 talented individuals who have your best interests at heart. In some way, shape or form, all of these people have interactions with members, be it directly, such as the advisors in our branches and Member Service Centre, or indirectly, like the essential employees behind the scenes in areas such as administration, training, technology and marketing who ensure everything runs smoothly.

Whatever their job, every Kootenay Savings employee has a role to play and everyone understands his or her role, whether they’re long tenured or recently hired. Each is a critical cog in the wheel to ensure our members’ needs are met. Every day our employees carry out their roles and deliver that seamless

experience our members deserve. This consistency and service excellence evoke trust and confidence in us.

We deliver on our promises.By empowering our people and giving them the skills and resources to deliver on our service promises, we build loyal relationships with members and keep them coming back. We promise to:• Treat you professionally• Make it easy to do business with us• Provide anywhere, anytime access• Give high value service and trusted advice• Take ownership of your requests• Make you feel like an honoured guest

We are a great place to work.As well as being the best financial provider in the communities we serve, we want to be the best employer. The values-based culture at Kootenay Savings resonates with people, making us a place they are excited to belong to and proud to work for – a competitive advantage that helps us attract and retain top talent.

“As you can see, we are our brand. A brand ready to work alongside you, be your financial partner and help you reach your financial goals. I am humbled and so very proud to be part of this amazing team.”Brent TremblayPresident & CEO, Kootenay Savings

we are Kootenay Savings. Our brand begins with our people.

A key part of our Member Experience Strategy is to equip and engage our people and also provide them with opportunities for learning and development. This, in turn, improves the service they provide to members and ultimately strengthens our brand. Among the development options we offer are:

Emerging Leaders ProgramFifteen employees with a desire to prepare for advancement and an identified career path in management or leadership roles took this exciting program in 2017. They completed multiple assignments and spent time coaching partners to stretch themselves as leaders. Along with existing managers in our organization, they took part in a Legacy

Leadership Workshop. This seminar focused on five best practices: developing yourself and developing others; collaboration and teamwork; positively influencing others; holding vision

and values; and setting goals and tracking progress. Based on its success, we are offering this opportunity to a new group of

keen candidates in the coming year.

Financial Service Representative ProgramOur training department reached out to experts within our organization

to develop a program for employees who want to hone their deposit and loan advisory skills as well as those who aspire to be a financial service representative in the future. The first phase of the program, a five-part series of webinars on deposit services, was delivered in 2017. Although participation was optional, uptake by staff was outstanding. This clearly demonstrates their eagerness to continuously learn and better serve our members. Trusted Advisor ProgramThis multi-level program focuses on development of product knowledge, sales and service skills, leadership qualities and financial literacy. Its objective is to equip employees with the skills and knowledge required to become our members’ trusted advisors. Currently close to 70 employees have completed the first level. The dedication and hard work they put into their studies is yet another example of their passion for service.

Sales Leadership ProgramOur leadership team also benefited from training in 2017. Their learning focused on ways to empower and bring out the best in their people through coaching and skill building. This was especially valuable for our branch and assistant managers who play a key role in the development of our trusted advisors.

The power behind our brand.In this age of social and digital marketing, we often find ourselves looking for new ways to develop our brand by forging an emotional connection with audiences through new channels. While we know technology will never replace humanity, we believe technology partnered with people will position us well for the future. Our people are dedicated and determined. Committed and connected. They go that extra mile, above and beyond, to help our members reach their financial goals. Through them, we are harnessing the collective genius of our organization and building our brand from the inside out.

2 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017 3

lisa savage Senior Registered Plans and Estate Representative, Centralized Administration Department

COMMUNITY REPORTInvesting in our communities is an integral part of the Kootenay Savings brand. As people, we’re Kootenay through and through. We don’t just like living here, we love it and are inspired by it. Every day we are fortunate to work with individuals and organizations from all corners of the Kootenays to help create lasting legacies that will nurture our communities for generations to come.

Locally owned and operated, Kootenay Savings is focused on bringing about positive change in the place we call home. You’ll see us in many capacities – financial partner, corporate sponsor, business leader and dedicated volunteer – at board meetings, schools, community events and celebrations all across our great region, all year long.

Let’s take a look at some of the ways we worked together with our members and community partners in 2017 to make the Kootenays an even better place to live, work and play.

Saluting our employeesSadly we can feature only a few of our wonderful Kootenay Savings brand ambassadors in this annual report, but believe us, they aren’t alone. It takes a village to do what our employees do in the community. Together in 2017, they volunteered 7,843 hours of their time and expertise to causes they hold near and dear. They joined forces with our community foundation to raise and distribute $18,484 through our Care Wear Program. They fundraised an astounding $58,638 over the year through raffles, chili cook-offs, bingo nights, barbecues, bake sales and more. They wore Plaid for Dad, led Earth Day activities, held anti-bullying events and added extra sparkle to Canada’s 150th birthday. We could go on, but you get the message; our employees’ passion for giving back knows no bounds and we thank them from the bottom of our hearts.

Creating philanthropic partnershipsAnother way we help our region continue to thrive is through the auspices of the Kootenay Savings Community Foundation, which distributed $132,815 in grants and endowments in 2017. In addition to the community support provided by the foundation, our Corporate Community Investment Program also gave out $97,646 in monetary and in-kind donations to support hundreds of teams, organizations and individuals – generosity that benefited the big, small, young, old and everyone in between.

Helping youth fund their futuresThe Kootenays are full of bright and talented students, many of whom will be the influential leaders of tomorrow, and we are proud to help them go places today. To ease the burden of pursuing post-secondary education, we awarded eighteen $750 bursaries at ten different high schools, seven $500 bursaries at the College of the Rockies and made a $10,000 endowment to Selkirk College.

We also continued to reward the superheroes in our schools for using their powers for good. The recipients of our 2017 Community Champs bursaries – Lynsey Gray (Salmo), Tori Maybuck (Invermere), Cameron Olson (Nakusp) and Matthew Yorston (Fruitvale) – demonstrated a selfless dedication to helping others and we were pleased to award them each $2,000 to put towards future schooling.

Highly appreciative of the recognition, Cameron Olson said: “It is an absolute honour to have been chosen for the 2017 Kootenay Savings Community Champs Bursary. With the financial help from this award, I will have completed my first step to reach my entrepreneurial endeavours. Thank you!”

You’d never hear Lisa Savage claim she knows everything about her area of the business – she’s far too humble – but after close to 35 years in positions throughout our organization, Lisa’s wealth of knowledge makes her the go-to gal for many of her peers at Kootenay Savings. The person they can rely on to know the answer to their question or show them how to find it in 50 seconds or less.

Whether it’s a colleague needing expert advice on an estate matter or the Training Department asking for help with a webinar, Lisa is there. With her enthusiastic outlook, generosity and willingness to go over and above the norm, she exemplifies the team spirit and resourcefulness that are part of our brand.

Aside from her natural teaching abilities, there’s another key characteristic that makes Lisa such an incredible mentor and coach: “I love my job and the people I work with. My position is helping my co-workers who in turn help our members improve their financial lives. It’s very gratifying work. There is no better feeling than knowing you’ve helped someone.”

we are

“The reason I give back to the community is that I think we can all make a difference. Every small act of kindness or volunteering to help has a ripple effect. Help a person, improve your community, change the world.” Terri Lightfoot Assistant Manager, Invermere Branch

KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017 5

A number of our youth members also received education awards from the Credit Union Foundation of BC, who provides financial assistance to post-secondary students belonging to BC credit unions. In 2017 alone, $11,000 was distributed by the CUFBC to Kootenay Savings members to help continue their educations in academic, technical and trades programs.

Learning isn’t just about hitting the books though. That’s why we once again paid the way for four local youth to attend YES Camp at Lake Cowichan on Vancouver Island. Every year, this leadership retreat brings together teens from across the province encouraging them to grow as individuals and create positive change in themselves and their communities. It’s all done in a fun environment that includes canoeing, swimming, hiking, dance parties, improv theatre and many other interactive activities. Nicola, one of our 2017 campers, gave it an enthusiastic yes: “I had a life changing experience at YES Camp that I will remember forever. This week I learned how to be my true self and how to deal with situations involving leadership and inclusion. Thank you so much for giving me this amazing experience!”

Financial literacy: Know your doughThere are undeniable benefits to becoming financially literate at a young age. Yet, until only recently, Canadians never had much in the way of financial education at school. At Kootenay Savings, we’re actively working to change that.

Since its launch in 2013, our Kootenay Kids Cash workshop has introduced thousands of elementary and middle school students to money concepts such as saving, spending and budgeting in a fun and engaging way. In 2017, we brought our interactive workshops into the classrooms of 12 elementary and middle

schools across the region helping 323 more students build essential life skills.

With the transition from high school to college and the workforce come added obligations and opportunities. Let’s Talk Finances, our financial literacy workshop designed for teens in grades 11 and 12, helps make that transition more manageable by taking the mystery out of borrowing, budgeting, saving and investing. In total, 114 students at four schools took part in the workshops in 2017 and gained more confidence to take control of their financial futures. Teacher Kathleen Edwards and her students at Mt. Sentinel Secondary School found the seminar “both relevant and engaging. Through the well-organized presentation, the students were introduced to a variety of financial topics ranging from credit cards and debt to saving plans, investment strategies and tips and tricks to keep costs low such as choosing the right banking plan. The students even had the chance to win a bit of money, which of course was a big hit!”

In addition to our financial literacy work with youth, we offer valuable money coaching for people of all ages in our branches. Working one on one with a Kootenay Savings advisor, members learn about their spending and saving habits, budgeting, responsible borrowing and how to meet future financial goals. We also hold financial wellness workshops in the community. One held in November 2017, in conjunction with the Columbia Basin Alliance for Literacy (CBAL) and Nidus Personal Planning Resource Centre, focused on life transitions for seniors and the documents required to manage and protect their financial affairs.

Our kids’ calendar goes globalEvery fall we produce our very own Kootenay Kids’ Calendar showcasing artwork from elementary school students across the region. Our calendar theme is always local in nature, but for 2018 the scope was more international. Kootenay Kids: We Are the World celebrates the amazing diversity and multicultural heritage of the Kootenays. We received more than 1,500 thought-provoking entries from 26 local schools. As a thank you for participating, we gave every school $500 to put towards art supplies and enrichment activities, and the 13 featured young artists were presented with custom canvas prints of their masterpieces.

After 45 years in Nakusp, the last four working at Kootenay Savings, Jackie Watson is so much a part of her community people literally follow her around. She laughs, “Yes, outside of work I’m always organizing a group hike, snowshoe walk or scavenger hunt somewhere in the Valley. I love spending time in our natural beauty with anyone who wants to come along.”

Volunteering has been a vital part of Jackie’s life since high school. As a young adult, she was on the board of directors of the local ski hill and active in minor hockey. More recently she’s lent her impressive organizational skills to the Nakusp Music Festival, the Medieval Society, Nakusp’s annual Art Party, and the community’s Canada 150 celebrations, which were spearheaded by a society she helped found. The same group organized Nakusp’s Christmas parade and downtown festival this past winter. “Just seeing how this community can come together and make something great happen is awesome!”

It’s no surprise Jackie also takes the lead on many Kootenay Savings sponsored events. The good work we do in the community couldn’t be done without Jackie and employees like her. We thank every one of them for stepping up.

jackie watsonMember Service Representative, Nakusp Branch

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“Some members can be overwhelmed by financial stress, living paycheque to paycheque and seriously in debt. There is no way to explain how great it makes me feel to help turn things around for them through money coaching.” Angel ChristensenInvestment Specialist, Invermere Branch

6 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017

Fighting hunger close to homeOur annual Outdoor Movie Nights, traditionally held the weekend after Labour Day, are a much anticipated opportunity for Kootenay citizens of all ages to support their local food banks and take in a family film under the stars. Unfortunately this past year heavy smoke from forest fires in the region forced the cancellation of these special events in Kimberley, Trail and Radium Hot Springs. Only our movie night in Nakusp was able to go ahead as planned.

Despite our best efforts, we weren’t able to schedule make-up events for the impacted communities. It was still vitally important for us to continue our support for the food banks though; at the end of the day that’s what our movie nights are all about, communities coming together to help one another. And with that in mind, we launched the Caring for Community Food Drive to help put food on the tables and smiles on the faces of those in need. Members and the community at-large were encouraged to drop off a non-perishable food donation at our Kimberley, Trail and Columbia Valley branches during the months of November and December.

We knew it would be near impossible to collect the literal tonnes of food typically donated by our moviegoers, but the power of community once again surprised us. We were thrilled to gather food donations valued at nearly $2,000 via the in-branch collection bins – on top of the estimated $600 in food collected at the Outdoor Movie Night in Nakusp! It’s that kind of community spirit and compassion that inspires us to host our movie nights year after year.

In closing, thank you to all the employees, members and community partners who worked alongside us in 2017 to make the Kootenays better together. We couldn’t have done it without you.

COLUMBIA $127,805.59Castlegar, Kaslo, Nakusp, New Denver, Salmo, South Slocan

corporate citizenship reporting

224 Total workforce

4822.7 Total employee and director training hours during the year

21.53 Average training hours per employee/director

35 Total number of external courses taken by employees/directors

EMPLOYEE DEVELOPMENT

COMMUNITY INVESTMENT & INVOLVEMENT

$9,242 Dollar amount contributed to charities and organizations by the employees and directors through the Care Wear Program

$180,757 Dollar amount contributed by the Kootenay Savings Community Foundation

$156,284 Dollar amount contributed by way of sponsorships, in-kind donations and fundraising

$18.42 M Direct economic value generated by employee compensation

7,843 Total employee volunteer hours reported

$207,996 Total value of volunteer hours(Calculated using Statistics Canada 2017 average wage in BC)

$639,446 Total profit sharing paid to members for 2017

1.75% Dividend paid on membership shares, deposit/loan/mortgage interest, and existing patronage dividends

COMMUNITY INVESTMENT 2017

= $346,282.94 TOTAL INVESTED IN OUR COMMUNITIES

Community Foundation grants

and donations

$132,815.00

Monetary sponsorships

$73,381.51

Funds raised at community

and special events

$58,637.94

Education and youth

awards

$38,700.00

Employee Care Wear

program

$18,484.00

In-kind donations

and support

$24,264.49

+++++

KOOTENAY $218,477.35Fruitvale, Invermere, Kimberley, Radium Hot Springs, Trail

SIGN OF THE TIMESBy the end of the year, we had converted all branches and facilities to energy-efficient LED lighting. We are now replacing our exterior signage with LED options. The work at Kimberley and Trail branches is complete and several others are on the docket for 2018. WE ❤ E-STATEMENTSPrior to 2014, more than 237,000 paper statements were mailed to our members each year. This has declined by 61% in three years. The annual number mailed is now 91,495. Even 70% of our seniors receive their statements online. PHONE IT INOur new Member Service Centre is helping us shrink our carbon footprint by reducing the number of trips members need to make to their branches. Everything from loan applications to investments can now be done by phone.

CLEAN AND GREENWe use non-toxic, scent-free, environmentally friendly cleaners, soaps and paper products in all Kootenay Savings facilities.

ENVIRONMENTAL SUSTAINABILITY

MEMBER RELATIONS

We are Kootenay Savings and we are proud to be your trusted financial partner. Proud to offer you and your fellow members the best in financial products and services, expert advice and leading edge technology. We are your socially responsible choice in banking. From financing local homes and businesses to sponsoring food drives and Little League teams, we’re making a difference in our communities every day. Doing all that would not be possible without the passion, hard work and commitment of our 224 incredible employees. And before we report on the successes of the year, we would like to take this opportunity to express our gratitude to them for bringing our brand to life.

Our corporate focus in 2017 was delivering on our Member Experience Strategy and ensuring we continue to meet consumer demands in a fast evolving environment. The previous year had its challenges, but we came out of it in a strong financial position and we were pleased to start the year by rewarding qualifying members with a 1.00% patronage dividend for 2016. As a member-owner, you received a piece of $426,144, part of the remarkable $70.2 million we’ve given back since we introduced profit sharing in 1992.

Despite a highly competitive marketplace, we made significant gains during 2017. Total assets grew to $1.1 billion while total dollars under management increased by 2.11% to $2.3 billion.

Kootenay Savings MoneyWorks, our wholly owned subsidiary, also experienced a successful year with assets topping $271 million – more than $24 million in growth over the previous year. A key tool introduced to our wealth management team last fall, the Personal Investment Plan, allows our investment specialists and planners to gain a clearer understanding of their clients’ current financial status, goals and attitudes towards risk. Through providing a framework to hold more effective conversations, it also helps them better identify clients’ needs and suggest the most appropriate solutions.

Our insurance arm, Kootenay Insurance Services Ltd. (KIS), continues to thrive, a testament to the dedication and professionalism of its team, now numbering more than 50 employees. In June of 2017, KIS welcomed a new partner, Summerland and District Credit Union, and its insurance division, McBain Insurance Agency. This addition of a fourth partner and seventh location will provide security and stability for both the employees and clients of KIS and McBain.

At Kootenay Savings, you have a team of dedicated professionals in our retail, wealth management, insurance and commercial divisions behind you every step of the way in reaching your financial goals. On the commercial side, we partnered with many small businesses over the year to make their dreams a reality. Expanding a home-based business into a storefront operation. Purchasing and renovating a boutique hotel. With our expert advice and financial help, these dreams and more came true for our members.

Embracing new banking channels Our members want to bank when they want, where they want and how they want. We are making that happen. Our Member Service Centre (MSC), established in 2016, was expanded in 2017 to include service to all eleven Kootenay Savings branches. Additional staff were hired and the new advisors were put through an intensive two-week training and role playing program to prepare for their positions. In October, personal loans and lines of credit were added as MSC services allowing members to complete loans from start to finish by phone. Members can now use this convenient channel to make general inquiries and requests, book appointments, apply for a personal loan or line of credit, renew their mortgage and make investments such as term deposits, RRSPs and TFSAs. Offering members easy access to their accounts is a key component of our Member Experience Strategy and consumers are readily embracing this channel as evidenced by the 22,230 calls that come into the centre on average each month.

BOARD & MANAGEMENT REPORT

paul butlerBranch Manager, Fruitvale Branch

For Paul Butler, our newest branch manager, giving back to the community is part of his DNA. “I grew up believing if you want to see something happen, get out and volunteer for it. It’s ingrained in me. My parents, grandparents, aunts, uncles are all active in community life. My grandmother was actually one of the first female mayors in the Kootenays.”

Only in his first year here, Paul is already well on his way to making a mark in the economic development of the region. He serves as a director on the boards of the Trail and District Chamber of Commerce, the Kootenay Boundary Regional Hospital Health Foundation and the Lower Columbia Initiatives Corporation where he is also treasurer. As District Manager Kevin Jolly puts it, “Paul’s values reflect our values of business excellence and being responsible to the community. He champions the Kootenay Savings brand.”

Ask his staff and they’ll say he is the kind of manager who leads by example, always out there with them at parades and fundraisers. Paul is modest about it. “I am committed to helping the Kootenays thrive – enriching lives and making our communities healthier, more inclusive places to live. A place I want to live.”

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KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017 11

In this busy world, the convenience of banking with the touch of a finger or click of the mouse is a must. The overwhelming majority of our members take advantage of our online, mobile and phone banking

services conducting 91% of basic transactions through these and other unassisted channels. In 2017, we averaged 184,437 logins per month to online/mobile banking and over 107,000 calls annually to phone banking. Deposit Anywhere™, a mobile banking feature that allows members to snap a photo of a cheque and deposit it into their accounts, is becoming increasingly popular with both business and retail members alike. More than $67 million dollars was deposited using this channel over the year.

Communications through social media channels increased and so did engagement with our members. We saw increases of likes, page views, comments and shares across all networks –

Facebook, Twitter, Instagram, LinkedIn and our blog. We encourage everyone to keep providing comments and suggestions as your feedback is extremely valuable to us.

Expanding options for cash and creditResponding to member requests, we piloted U.S. cash dispensing at our ATM in downtown Trail. With 24/7 access, members can now simply insert their card at their convenience and hit the road for their next adventure south. We are looking at offering this service to other select locations in the future. Late in 2016, Interac Flash®-enabled debit cards were introduced to our members to add another level of convenience to their retail experience. In 2017, we continued to issue Flash cards and most members are now enjoying the speed and ease of the new tap technology. Also, we spent much time during the year training and laying the groundwork for the launch of our new suite of credit cards in 2018. Together with our partner, Collabria Financial Services, we are now pleased to offer eleven different Kootenay Savings Visa®

cards including the U.S. Dollar Visa, a perfect card for snowbirds, businesses and frequent travellers to the States.

Investing in our employeesJust as members are using new technology, so too are our employees. Internal system enhancements made in 2017 helped us work more productively and efficiently. Our Technology Systems Department improved upon their helpdesk system to provide a simpler method for staff to seek assistance. Servers housing the banking system were upgraded to increase performance, stability and recovery. Access to DocuSign®, our electronic signature solution which lets members sign loan and deposit documents remotely, was expanded to allow employees to submit expense forms and invoices quickly and seamlessly – a move that is saving time, effort and paper.

Many ideas for improvements come straight from our employees. By going directly to the source, we get the best feedback – accurate information right from the end user. The processes implemented in 2017 resulted in a cost

savings to the organization of $116,880. Additionally the 3,304 hours saved have allowed employees to be more efficient in their jobs and focus more time on providing value-added service to members.

Our people are critical to our success and we are committed to maintaining opportunities for them to gain new skills and knowledge in this rapidly changing industry. Continual education and up-to-date product knowledge are essential for employees to fulfill our mission of improving members’ financial lives. In 2017, training and workshops were held for many roles in the organization – from new employee orientation and role specific training for member service staff to new manager sales training and face-to-face leadership building for our department and branch heads. There was also organization-wide learning to support corporate initiatives such as the launch of Flash debit cards.

The health and wellness of our employees on and off the job is of vital importance to us. With that in mind, we offer several programs designed to help them achieve a healthy lifestyle and work/life balance. Added rebecca moen

Member Service Advisor, Kootenay Savings Member Service Centre

Every single interaction people have with Kootenay Savings adds to their understanding of who we are. Sometimes something as simple as a friendly voice on the phone can make a difference. Rebecca Moen is one of those voices.

As an advisor in our new Member Service Centre, Rebecca helps members from all our branches. On an average day, she can talk to 40 or 50 callers, all with unique requests that can often be completed entirely over the phone. “I once had someone call to move her account as she was relocating to Calgary. She was upset because she loves doing business with us. I assured her she didn’t have to move her account. We have many channels that can give her full access to her money, no matter where she is. Investments can be handled over the phone, and if documents or signatures were ever required, we could send them electronically. She was thrilled.”

Why is this important to Rebecca? “I like members to know how easy it is to do business with us. I care about all of my members and I want to provide the best service possible.”

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“Helping train the new MSC employees allowed me to tap into the knowledge I’ve gained in my 11 years here and share it with my co-workers. The best part was they all had a lot to teach me in return.” Jess Stajduhar Senior Member Solutions Advisor, Member Service Centre

12 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017

to those resources in 2017 was WorkForce Now, an all-in-one system that allows employees to request time off as well as access their timecards, pay information and benefit coverage. In addition to empowering employees by giving them direct access to their personal information, it’s saving time and money. We greatly value the opinions and feedback of our employees and have begun acting on the results from the surveys and focus groups conducted in 2017.

Investing in our communitiesAt Kootenay Savings, giving back to the community is embedded in our culture. It is part of who we are and a key brand differentiator. Throughout the year, we shared a total of $346,282.94 by way of sponsorships, donations in kind, volunteerism and our community foundation. A significant portion of this community investment was distributed through the Kootenay Savings Community Foundation, which helps fund many non-profit groups and organizations throughout the region. In total over the year, the foundation gave $82,815 in new grants, $50,000 to local charitable foundations, $38,700 for youth achievement and educational awards, and $9,242 to match our employees’ Care Wear contributions.

Through our foundation, we have put more than $4.4 million into non-profit cultural, educational, environmental, health and social projects since 2000 and we were happy to add another $50,000 to its coffers in 2017. Every investment we make in our communities contributes to their strength and sustainability. Lending a hand or writing a cheque, our goal is always to make the Kootenays better together.

Exploring strength and unityAs a member you may be aware that the Board of Directors and senior leaders of seven credit unions in the Boundary, Kootenay and Columbia Valley region are exploring how an amalgamation could enhance the way that the seven credit unions operate. This is only the beginning of an exploration and no decisions have been made. In the end, our members will ultimately make the final decision for our credit union by way of a membership vote.

At this point, we would like to thank everyone working on the amalgamation project here at Kootenay Savings. The committees have put in countless hours compiling the business case for our credit union. We realize how much it has added to already heavy workloads and your efforts are truly appreciated. Members looking for more details are encouraged to read the information provided here and visit www.exploringstrengthandunity.ca for updates.

Looking to the futureWhile the world is changing and we are excited by the opportunities we see ahead, you can be confident some things will never change. The “we” in we are Kootenay Savings includes you, too. You will always be treated as our honoured guest. You will always have the entire Kootenay Savings team working for you backed by technology you can bank on anytime, anywhere. Serving you, our members, is a distinct privilege and we thank you for your continued loyalty and support.

Brent Tremblay Forrest DrinnanPresident & CEO Chair, Board of Directors

Exploring: Together, the Boards of Directors at Columbia Valley, Creston & District, East Kootenay Community, Grand Forks, Heritage, Kootenay Savings, and Nelson & District Credit Unions are exploring the pros and cons of an amalgamation to determine if it is the right choice for their respective operations.

Strength: By sharing resources and expertise, it is believed that a new organization could achieve significant benefits for its members, its employees, and its communities.

Unity: For years Credit Unions across this region have been collaborating in many different ways on various projects. These collaborations have proven to be very positive and progressive, and are the driving force behind this exploration.

LEFT TO RIGHT Dean Civitarese, Director, Risk ManagementLeanne Proulx, VP People & CultureBrent Wray, VP Wealth ManagementBrent Tremblay, President & CEORon Johnston, VP Finance & CFONancy Crockett, VP Sales & Member ExperienceBrian Moroney, VP Credit & Support ServicesTroy Kusy, VP Technology Solutions

EXECUTIVE LEADERSHIP TEAM

BOARD OF DIRECTORS

LEFT TO RIGHT D. Robert Parkinson, Vice ChairForrest Drinnan, ChairRoberta HallRon AndersonKeith SmythMike KonkinLinda MacDermidMike MartinAmed NaqviMark Martin

14 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

To the Members of Kootenay Savings Credit Union:Management is responsible for the preparation and presentation of the accompanying summarized consolidated financial statements, including responsibility for significant accounting judgments and estimates and ensuring that all information in the annual report is consistent with the complete consolidated financial statements. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.

In discharging its responsibilities for the integrity and fairness of the summarized consolidated 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 consolidated financial statements.

The Board of Directors and Audit 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 Audit Committee has the responsibility of meeting with management, internal auditors and external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues. The Committee is also responsible for recommending the appointment of the Credit Union’s external auditors.

MNP LLP, is appointed by the members to audit the summarized consolidated 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 Committee and management to discuss their audit findings.

March 8, 2018

Brent Tremblay Ron Johnston President & CEO VP Finance & CFO

INDEPENDENT AUDITORS’ REPORT

To the Members of Kootenay Savings Credit Union:The accompanying summarized consolidated financial statements, which comprise the summarized consolidated statement of financial position as at December 31, 2017, the summarized consolidated statements of changes in equity and cash flows and comprehensive income for the year then ended, are derived from the audited consolidated financial statements of Kootenay Savings Credit Union for the year ended December 31, 2017. We expressed an unmodified opinion on those consolidated financial statements in our report dated March 8, 2018.

The summarized consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards that were applied in the preparation of the audited consolidated financial statements of Kootenay Savings Credit Union. Reading the summarized consolidated financial statements, therefore, is not a substitute for reading the audited consolidated financial statements of Kootenay Savings Credit Union.

Management’s Responsibility for the Summarized Consolidated Financial Statements Management is responsible for the preparation of a summary of the audited consolidated financial statements in accordance with Canadian Auditing Standards.

Auditors’ Responsibility Our responsibility is to express an opinion on the summarized consolidated financial statements based on our procedures, which were conducted in accordance with Canadian Auditing Standard 810, “Engagements to Report on Summary Financial Statements”.

Opinion In our opinion, the summarized consolidated financial statements derived from the audited consolidated financial statements of Kootenay Savings Credit Union for the year ended December 31, 2017 are a fair summary of those financial statements, in accordance with Canadian Auditing Standards.

Chartered Professional AccountantsKelowna, British ColumbiaMarch 8, 2018

16 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017 17

summarized consolidated statements of changes in members’ equity and cash flows

YEAR ENDED DECEMBER 31, 2017 (000s CANADIAN DOLLARS) 2017 2016

Members’ equity, beginning of year 70,033 69,480

Net income 3,041 1,747

Patronage (213) (137)

Refundable dividend taxes recovered – 11

Net redemption of member shares (1,215) (1,068)

Unrealized loss (140) –

Members’ equity, end of year $ 71 ,506 $ 70,033

Cash flows provided by (used for)

Operating activities 4,930 4,265

Investing activities 27,614 20,037

Financing activities (32,150) (35,192)

Increase (decrease) in cash and deposits 394 (10,890)

Cash and deposits, beginning of year 142,963 153,853

Cash and deposits, end of year $ 143,357 $ 142,963

NoteReaders are cautioned that these summarized consolidated financial statements do not include all the disclosures required for complete and fair presentation. The Kootenay Savings 2017 Annual Report, complete with full financial statements and auditors’ report, can be obtained at kscu.com and at any Kootenay Savings branch.

summarized consolidated statement of financial position

AS AT DECEMBER 31, 2017 (000s CANADIAN DOLLARS) 2017 2016

assetsCash and deposits 143,357 142,963

Loans, net of allowance for impairment 915,244 867,217

Property, plant, equipment, intangible assets & investment property 24,857 25,886

Other assets 27,705 28,455

$ 1,111,163 $ 1,064,521

liabilities and members’ equityDeposits from members

- demand 564,373 502,882

- term 273,830 290,433

- registered plans 185,334 183,539

- shares 3,649 3,952

1,027,186 980,806

Other liabilities 11,013 11,885

Patronage payable 639 426

Income taxes payable 212 324

Deferred tax liabilities 607 1,047

Member equity shares 15,474 16,689

Retained earnings 55,614 52,786

Accumulated other comprehensive income 418 558

$ 1,111,163 $ 1,064,521

approved by the directors

FORREST DRINNAN MIKE KONKIN

NoteReaders are cautioned that these summarized consolidated financial statements do not include all the disclosures required for complete and fair presentation. The Kootenay Savings 2017 Annual Report, complete with full financial statements and auditors’ report, can be obtained at kscu.com and at any Kootenay Savings branch.

18 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017 19

summarized consolidated statement of comprehensive income

YEAR ENDED DECEMBER 31, 2017 (000s CANADIAN DOLLARS) 2017 2016

Interest income 36,847 35,887

Interest expense 10,695 12,197

Net interest income 26,152 23,690

Securitized loan income 419 923

Other income 8,249 8,644

34,820 33,257

Provision for credit losses 2,049 1,617

Net interest and other income, after provision 32,771 31,640

Operating expenses

- personnel 18,422 18,306

- other 10,242 10,322

28,664 28,628

Net income before other items 4,107 3,012

Patronage and dividends

Patronage dividends - 1.75% (2016 - 1.00%) 295 208

Dividends

- Membership equity shares - 1.75% (2016 - 1.00%) 3 1

- Patronage shares - 1.75% (2016 - 1.00%) 60 37

358 246

Loss on assets 326 648

Contributions to Kootenay Savings Community Foundation 50 –

734 894

Net income before taxes 3,373 2,118

Current taxes 771 527

Deferred taxes (439) (156)

Net income 3,041 1,747

Other comprehensive loss, net of tax (140) –

Total comprehensive income $ 2,901 $ 1,747

NoteReaders are cautioned that these summarized consolidated financial statements do not include all the disclosures required for complete and fair presentation. The Kootenay Savings 2017 Annual Report, complete with full financial statements and auditors’ report, can be obtained at kscu.com and at any Kootenay Savings branch. debbie field

Financial Service Advisor, Fruitvale Branch

Meet Debbie Field, professional problem solver. Some days Deb’s job seems equal parts fairy godmother and rescue worker; a loan for a dream home is approved for one member while the next needs emergency money coaching to survive a financial storm. Whatever the challenge, her members can rely on Deb’s expertise and the diverse skill set she’s acquired after 25 years with Kootenay Savings.

Well connected in the community, Deb encounters many prospective members. “I don’t push, but when there’s an opportunity for us to help someone, I’m in. One Friday night new friends sent me a text saying they were purchasing a home and had hit a dead end with their long-time bank. I met with them and my manager the next day. By making credit decisions locally, we were able to offer what the bank couldn’t. The result: a sweet mortgage deal for them, plus all their investments and business account moved to us as well.”

Deb’s confidence comes from having the members’ best interests in mind. “I feel passionate about my role and the positive contribution I make to people’s lives. I’ve gained the trust of the membership I deal with and that’s a wonderful thing.”

we are

20 KOOTENAY SAVINGS SUMMARIZED ANNUAL REPORT 2017

CASTLEGAR605 20th StreetCastlegar, BC

FRUITVALE1945 Main StreetFruitvale, BC

INVERMERE 1028 7th AvenueInvermere, BC

KASLO437 Front StreetKaslo, BC

KIMBERLEY200 Wallinger AvenueKimberley, BC

NAKUSP502 Broadway StreetNakusp, BC

NEW DENVER411 6th AvenueNew Denver, BC

RADIUM HOT SPRINGS7517 Main Street WestRadium Hot Springs, BC

SALMO619 Highway 6Salmo, BC

SOUTH SLOCAN 2804 Highway 3ASouth Slocan, BC

TRAIL1199 Cedar AvenueTrail, BC

CORPORATE OFFICES220 – 1101 Dewdney AvenueTrail, BC

MEMBER SERVICE CENTRE1.800.665.5728

KOOTENAY SAVINGS MONEYWORKS1.877.691.5769

KOOTENAY INSURANCE SERVICES1.844.467.8748

kscu.com