Description

Surrey Metro Savings is a credit union that operates in British Columbia, in the areas surrounding
Vancouver. The company trades below book value. At September 30, 2000, book value per
share was $16.78 and by the end of fiscal 2000, the book value should be north of $17.00.

Surrey Metro earns about a 12% return on equity. 75% of the loans are residential
mortgages, so the asset quality is high. Surrey has been consistently profitable over
the last 10 years.

Surrey should earn approximately $1.75 to $1.80 in fiscal 2000 (Q4 earnings will be
out shortly) and should earn around $2.00 in 2001.

British Columbia is currently in a recession and as conditions improve, Surrey Metro
should have more opportunities to increase earnings. Furthermore, the Canadian
banking sector should undergo consolidation meaning the big 5 Canadian banks would
merge forming 3 or 4 and the Canadian government would allow credit union to become
a national force (meaning that a larger credit union such as VanCity may buy out Surrey).

Surrey also pays a $0.40 annual dividend.

Please note that all numbers are in Canadian dollars.

Catalyst

Surrey trades below book value, so the bargain price and the coming consolidation in the Canadian banking
sector over the next 3 to 5 years should surface value.