Like many building societies, The Hanley has worked hard in recent years to demonstrate true member-engagement using various initiatives to keep in touch with our members and to invite dialogue. Our website,our member newsletters and our quarterly Customer Forums with myself and board colleagues have proven very valuable in ensuring that we are steering the business on a course which members can understand and support. Again this year we were proud to achieve 24% of members voting on our AGM resolutions as this level of voting will be amongst the very highest in the building society sector. These voting members gave the board outstanding backing with 97% in support of our annual report& accounts for our financial year 08/09,96% in support of the re-election of directors and 91% in favour of our remunerations policy. We are extremely grateful to our members for their unstinting loyalty and support, which we never take for granted and we know we must continue to earn in such difficult recessionary times. May I take this opportunity to wish all our members a very happy Christmas and a healthy and fulfilling 2010.

BSA ANNUAL LUNCH

Last week I attended the annual lunch hosted by the Building Societies Association (BSA) in London, along with Chief Execs from about 20 other building societies and representatives from regulators, government departments and business partners. The lunch itself was punctuated by a very strong and thought-provoking speeech given by Graham Beale, Chairman of the BSA, whose day job is Chief Exec of Nationwide. Graham spotlighted the resilience of building societies in the face of the current economic storm and our ability to just get on with doing what we always do, despite unfair and heavily-subsidised competition from those banks which are part or wholly owned by the government following their financial collapse last year. I know that Hanley members are bemused by the savings rates being offered by the likes of Northern Rock and Natwest banks as I have first hand experience of trying to explain how our own self-sufficiency makes it impossible to match those deals! Graham also focused on the future threat to the building sector as a whole if FSA proposals to reclassify certain external capital products (known as PIBS) come to fruition. All in all a very earnest mood was in the air. However I found my own enjoyment of the lunch was enhanced greatly by the fact that I sat next to Loretta Minghella , Chief Exec of the FSCS. As well as being a very interesting professional with a legal background and a sound grasp of the challenges facing small building societies like The Hanley, Loretta is also the sister of the late Anthony Minghella,one of Britains finest ever Film Directors with a body of work that includes Cold Mountain, The English Patient and The Talented Mr Ripley. Anthony died aged only 54 in March 2008 . I was completely captivated by Loretta's stories about her brother and her candour and warmth put some of our business challenges into very clear perspective for me.

MORTGAGE MARKET REVIEW

The FSAs recent discussion paper on the future shape of the UK mortgage market is a sobering read.Restrictions on self cert lending and fast-track loans alongside an increased focus on "toxic" combinations of risk and on granular checks on affordability are a predictable regulatory reaction to the perceived shortcomings of lenders and intermediaries. Lets not be coy; a review is necessary. There have been significant failures in the mortgage market, an absence of risk-pricing and over-supply of easy credit.A review is needed to understand what happened and to make sure the big mistakes are not repeated in future. BUT the UK mortgage market was not uniformly flawed nor was it full of failed business models. The market has been innovative, competitive and effective in helping many people buy their own home. The review is timely but it needs to take a proportionate and measured view of the mortgage market, so that a healthy baby is not hastily despatched with the bathwater. My hope would be that we all learn lessons from the events of the past 2 years but that we also acknowledge the value in the choice, competition and diversity in the UK mortgage market so that a refreshed market emerges rather than the unintended consequence of restricted customer access to suitably tailored products.

FTSE ON THE MEND?

Whilst few people are claiming that the UK economy is on an inevitable pathway toward sustained recovery , the FTSE index has given us plenty recent signs of optimism. The FTSE 100 index has actually risen by just over 50% since its low level in March this year and in the most recently reported quarterly growth figures investors have seen gains of over 20% in just 3 months, the best quarterly performance in the FTSEs 25 year history! Of course the damage done to stock markets around the world by the credit crunch and recessionary conditions means that the base point of comparison is a low one, but that doesn't alter the fact that recent investors in FTSE stocks have had a very fine 2009. This compares very starkly with the historically low interest rates on traditional savings accounts.Of course the risks and rewards are different when you compare a building society account with a FTSE related product and that is why anyone contemplating an investment in the latter should undertake a full fact-find with an Independent Financial Adviser(IFA) to establish the most suitable portfolio based on their risk appetite. But clearly our customers will want help in weighing up all their options and so I'm proud that The Hanley is one of only a handful of building societies with its own subsidiary IFA business (Hanley Financial Services) so that our members and customers can get exactly that sort of professional,trustworthy advice. Retail savings from high street providers can co-exist with FTSE linked investments.......the link is the customer need and the provision of independent financial advice.

FTSE ON THE MEND?

BSA DEPUTY CHAIRMAN

Last week I was privileged to be elected Deputy Chairman by fellow members of the Building Societies Association Council. The present Chairman is Graham Beale the Chief Executive at Nationwide so I'm delighted to be in such exhalted company! My brief will be to assist the Chairman in promoting and protecting the interests of the building society sector during this period of seismic change in our financial landscape. Specifically I want to represent small,local building societies whose franchise with customers remains very strong despite the turbulence in financial markets and whose traditional business model should be nurtured and strengthened , and certainly not damaged by the inevitable regulatory focus which will (rightly) emerge as a consequence of the demise of some of our larger UK banks. Small building societies have a key role in providing choice and distintiveness in our marketplace .If the credit crunch and the recession have taught us one lesson it should be that big isn't necessarily beautiful. What matters is the quality of a business and it's proximity to customers needs , not it's asset-size, and that is another great reason for mutuals to be optimistic about thriving in the emerging new financial services world.

HAPPY NEW YEAR

For historical reasons our financial year begins on 1st September, which makes us unique amongst UK building societies where most favour a match with calendar year-end in December or tax year- end in March. However, we quite enjoy being different, especially as this will give is the chance to display how well we have hurdled over the various barriers that 2009 has presented us with. This week we'll spend many hours crunching the final figures for our year just gone but we already know that we have much to be proud of in generating a strong surplus (profit) and continuing to cut our costs. We've completed less mortgages than in previous years but that wont surprise anyone, given the fragility of the housing market and our reputation for avoiding risky lending.We've also lost some retail balances to the part-nationalised banks, which is a bit galling as they've been able to use taxpayers subsidies to artifically inflate their interest rates on some accounts. But our strong local membership remains intact and our tremendous confidence in a bright future for The Hanley is undiminished. In fact our annual report and accounts for year ending 31/08/09 will confirm that we are a strong, local building society in fine fettle, well-prepared for the inevitable challenges of the coming year and beyond. A very happy new year to all Hanley members and to all our future customers.