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Alterna’s second merger with a Toronto area credit union in less than six months.
May 4, 2019
6:05 am
hwyc
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FYI -
https://www.investmentexecutive.com/news/industry-news/alterna-savings-merges-with-city-savings-credit-union/
>> Ottawa-based Alterna Savings and Credit Union Ltd., the second-largest financial cooperative in Ontario, has merged with Toronto-based City Savings & Credit Union, the firm announced on Wednesday.

https://www.alterna.ca/AboutUs/News/NewsArticles/
>> 2019 May 1st press release.

[p.s.] Apparently, news is about the parent. Alterna Bank (= "CS Alterna Bank" listed on Canadian Bankers Association?) was created in 2000 as a subsidiary of Alterna Savings, a 110 year-old credit union, and the first in Canada outside of Quebec.

May 4, 2019
6:56 am
Bud
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City savings was originally suppose to merge with Pace and interesting Alterna had a deal to merge with Pace in 2014

https://www.ctvnews.ca/mobile/business/pace-credit-union-alterna-savings-agree-to-merger-1.1760644

July 24, 2017 (Vaughan, ON) – The Board of Directors of City Savings & Credit Union Ltd., (City Savings
Financial Services), and PACE Savings & Credit Union Ltd., are pleased to announce they have signed a Letter
of Intent to enter into an Asset Purchase Agreement.

GIC King

May 4, 2019
8:53 am
Doug
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Yeah, this merger was announced late last year and Alterna's CEO even mentioned it was due to close "shortly" at their AGM last month. sf-cool

There's been a flurry of credit union merger activity in Ontario in the past few years, with more on the way. The DICO "list of members" website is out of date, too, in that they're still listing as "divisions" of the amalgamated credit union the names of the former credit unions even though those divisions are no longer operating separate websites and have been integrated from a banking system and merged membership perspective. So, it appears longer than it actually is. I'll have to revise my earlier estimate from last month and now predict within the next 2 years (call it April 2021), Ontario will have only one dozen independent credit unions left. The tiny closed bond credit unions just can't afford the compliance and technology upgrades that need to come, on generally declining memberships, so I think Alterna, Meridian, Libro, PACE, etc. will be the ones that assume them. They're nice tuck-in mergers, too, because often they're single branch credit unions in urban areas that can be easily closed because there's a nearby merged credit union branch.

Interesting it was done as an asset purchase agreement, instead of an amalgamation, though. I think you'll see further City Savings branch closures where they're located nearby to Alterna Savings branches. sf-cool

Cheers,
Doug

June 13, 2019
7:58 pm
abclink
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City Savings did have two branches in Willowdale, but now appears just to have the one after appearing to close their location at the "old" North York city hall. The one remaining location is in an older small strip mall with limited parking and I can't imagine is suitable as an Alterna CU location, however it's great to see Alterna back in Willowdale after they closed their location in the Federal building at 4900 Yonge St a few years ago. The 4900 location harkens back to Alterna's (CS Coop's) earliest foothold in Toronto when they acquired the old Dominion Income Tax Credit Union in 1986 which subsequently expanded into locations at 4 Revenue Canada / federal offices.
With respect to Pace, I personally wonder whether the investigation into the father son duo that headed up Pace https://www.theglobeandmail.com/business/article-downfall-of-a-deal-making-duo/ will lead to Pace's assets being acquired by another CU. Alterna might be the logical choice and may help to explain why after raising $75 million two years ago in a preferred share offering they are back two years later for an additional $50 million.

June 14, 2019
9:23 am
Doug
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Thanks for the useful update on the City Savings branches, one of which has now closed and one of which is being rebranded as an Alterna Savings branch. 🙂

As for a potential PACE merger, it's possible, to the extent that it's possible/probable PACE may merge with another Ontario credit union; however, I don't think this is the reason for the capital raise. Credit unions have to have, as a percentage of their total assets and their risk-weighted assets, what's called risk capital, which consists generally of retained earnings (i.e., profits not paid out as dividends and retained as investments on the credit union's balance sheet), common, and preferred shares. It's more likely that Alterna's past mergers and their organic growth in assets have necessitated the capital raise to bring their capital above or well above the required levels. As well, they may have used some of those retained earnings to finance some of their branch openings, new HQ office space, and other renovations, which would mean they'd needed to have raised capital.

Don't get me wrong, I don't think Alterna's done merging by any stretch and will continue to consolidate 1-2 credit unions per year whilst opening branches and growing organically. However, there's a fair bit of overlap with PACE Credit Union in terms of geographic footprint (the Competition Bureau may not like that) and DICO bringing in the former CEO of WealthOne Bank of Canada suggests to me DICO would like to see it remain a standalone credit union. Once their forensic audit is complete and they've implemented stronger risk controls, PACE is already a well-capitalized credit union...I could totally see them, along with Meridian, Alterna, Libro, and Tandia being the five major consolidating credit unions that amalgamate with the smaller credit unions and closed bond credit unions.

Cheers,
Doug

June 15, 2019
2:56 pm
here2day2
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Alterna and Pace did announce a merger agreement in 2014; however nothing came out of it and it hasn’t been mentioned since:

https://www.ctvnews.ca/mobile/business/pace-credit-union-alterna-savings-agree-to-merger-1.1760644

June 17, 2019
6:56 am
Koogie
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Doug said
The DICO "list of members" website is out of date, too, in that they're still listing as "divisions" of the amalgamated credit union the names of the former credit unions even though those divisions are no longer operating separate websites and have been integrated from a banking system and merged membership perspective. So, it appears longer than it actually is.
Cheers,
Doug  

It would be my guess that the credit unions that have been taken over will likely continue to be on the DICO lists until such time as any term deposits they have issued mature out and only then will they be fully wound up.

June 17, 2019
1:08 pm
Doug
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Koogie said

It would be my guess that the credit unions that have been taken over will likely continue to be on the DICO lists until such time as any term deposits they have issued mature out and only then will they be fully wound up.  

It's a good theory, but in most cases, that's not necessary since the term deposits become term deposits of the amalgamated entity prior to their maturity. They'll still be insured separately until maturity, if that's how DICO's rules are, but this can be tracked internally via product codes, account number prefixes or suffixes, and the like. In almost all cases, Ontario credit mergers have been true amalgamations in that the former brand is dropped and the two credit unions amalgamate onto a single, common core banking platform. In some instances, they might retain a modified branch name (i.e., Peterborough Community Savings) in terms of branch signage for a single branch or network of branches from a previous merger.

Keeping all these "divisions," when in most cases, they don't even exist as divisions anymore, is confusing for patrons because, most merger, all new or added deposits are insured within the combined entity's deposit insurance limits. They also imply there's some sort of distinction in brand names and legal entities. In my view, it's sloppy. So, hopefully, post-DICO, which should occur in the next 6-9 months, I suspect, we'll see a cleaning up of this membership list once the Financial Services Regulatory Authority of Ontario ("FSRA Ontario" or "Ontario FSRA") finalizes how things will shake out. I suspect the deposit insurance regime will become a separate, segregated in some fashion, deposit insurance fund that the FSRA will administer or regulate. The FSRA's board may ultimately appoint a sub-committee, independent of itself or consisting of FSRA board members, that will provide governance oversight for the successor deposit insurance fund.

Cheers,
Doug

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