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Coast Capital Savings Federal Credit Union 2019 AGM
May 17, 2019
10:00 am
Doug
West Kelowna
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First, Coast Capital Savings Federal Credit Union held its inaugural AGM in 2019 yesterday as a federal credit union, which it also webcast and which the webcast can be viewed in archival format from this website (if you are not a member, just select either "Contact Centre" or pick a random branch so you can view the AGM). sf-cool

Sadly, I was all set to join in and ask my question(s) on when Coast would bring in Me-to-Me Transfers (a.k.a. bank-to-bank transfers) and make Interac e-Transfers free & unlimited, but missed the AGM. Nevertheless, it seemed like it was a fairly active AGM, which I've now viewed.

For the most part, the formal business part of the meeting was fairly boring, with mostly platitudes and other generic statements on the credit union's re-thinking their corporate strategy and the like. Among some of the financial highlights, which were in its 2018 annual report, Coast welcomed 17,000 net new members, bringing them to 572,000, which new CEO (who was previously one of the founders and CEO of Qtrade before originally selling it to Desjardins and which has now since merged with Credential and is owned, in the majority, by Desjardins and, in the minority, by the credit union centrals in Canada and CUMIS Group/The Cooperators) Calvin MacInnes stated was the "largest federal credit union in Canada". He did admit there were only two federal credit unions in Canada currently, but was a bit misleading. It shows they're singularly focused on being the biggest as they kept touting that they're the biggest credit union in Canada by members and were "narrowing the gap" between it and Vancity in terms of assets (they failed to mention that, if you include Desjardins, Vancity would be #2 in assets and Coast #3 in assets). They originated 9,000 new mortgages and gave back $3.7 million in Help Extras. (Help Extras are Coast's cash back program for new mortgages whereby Coast members get at least $1,000 in cash back to invest in myriad ways.)

One of the most riveting parts of the AGM was the Auditors' Report. A member, who spoke in quite broken English, raised the point that, to his knowledge, KPMG LLP had been the credit union's auditing firm for more than seven years and cited that it is prudent, common even, for companies to switch auditing firms after seven years in keeping with good governance practices so that the auditing firm doesn't get too cozy with the Board and senior management team. The member wanted to know for how long that KPMG has been the firm's continuous auditor. The new Board Chair thanked the member for the question and he and the CEO answered the question by saying only that the Board puts out a competitive process every three years. The CEO added that KPMG has been the firm's auditor since 2003, to which the CFO clarified from the back of the room that it's been since 2001. He tried to justify it by saying that they do switch KPMG partners "every few years" within KPMG's Vancouver area offices, but that's the extent of the switch.

In the Members' Open Forum, which was surprisingly active albeit with no webcast questions, the first question came from a member named Jeff Holm (spelling?) who asked about Coast being potentially offside with OSFI Regulations and Bank Act provisions with Coast Capital Savings Insurance Services, Ltd., still operating out of many Lower Mainland and Vancouver Island area branches despite having been sold to Desjardins a number of years ago. The Board Chair deferred the question to the CEO, who deferred to Lisa Skakun, Coast's General Counsel and appointed Parliamentarian for the AGM, who did indeed confirm that Coast originally sold Coast Capital Savings Insurance Services, Ltd., to Western Financial Group more than five years ago, and that WFG was in turn acquired by Desjardins and Desjardins has recently sold WFG (including CCIS) to Wawanesa. She said that OSFI has given them a transition period to physically segregate the insurance offices from their branches (presumably, by installing separate entrance(s), alarm systems, and physical walls) and, now that they're a federal credit union, CCIS will also be renamed legally and rebranded, presumably, as Western Financial Group or as some other name. She expected that to be complete by the end of 2019.

Another member, Raj, asked three questions, in sequence:
(1) Coast's apparently outdated ATMs that do not allow him to select specific bill denominations (i.e., $10);
(2) Coast not issuing "bonds" directly to members; and,
(3) The perceived energy inefficiency of its new Help HQ building on King George Blvd. whereby computer monitors and lights can be seen "on" at all hours of the day, even when Coast is not operating.

To question # 1, the CEO answered somewhat vaguely, only stating that they are "looking at" replacing and upgrading their ATMs, but that it's "not high" on their priority list. Somewhat interestingly, and perhaps disturbingly, he added that they're looking at how quickly Canada is moving to being a cashless society and whether they want to even dispense cash from their ATMs or even their branches over the long-term. Raj followed up that question by stating that Coast has "long queues" in their branches and that by adding bill selection to ATMs, they could reduce their queues, to which the CEO took his point and said it's something they're looking at.

On question # 2, the Board Chair thanked Raj for his interest in investing in Coast, and that the Board does regularly review its capital funding needs and that this is something they are looking at, whether as preferred shares or bonds.

On question # 3, Calvin answered vaguely, stating only that the building is LEED certified but he'd look into the after-hours electricity usage. He did add, somewhat humourously, that if Raj sees lights on at 5 am, it's likely him and the Finance department as he is often there at that hour. πŸ˜‰

Another younger member, Neil, remarked on how pleased is generally with his switch a number of years ago to Coast Capital Savings, but that he wanted to know when Coast would bring in envelope-free ATMs for depositing cash and the like and cited an example of an envelope-free ATM National Bank had installed in the Vancouver area and what a good experience it was, to which the CEO mostly reiterated earlier comments. He also asked about some problems with his Coast Capital Savings Desjardins credit card and wondered if Coast might in-source their credit card offering. The CEO did acknowledge his point and said he figured that Coast's credit cards would be the #1 complaint/feedback point he hears from members. He also added, somewhat surprisingly, that Coast is actually in the middle of an investigative and competitive process to look at other credit card issuers (potentially, Collabria, which is part-owned by Desjardins, or CUETS Financial, which is owned by TD Canada Trust, though didn't name any parties). He said Desjardins is aware of this competitive process and that they may switch. No timeline for a decision, but indicated something could be announced later this year. Also, no indication as to whether they'd buy out existing Coast credit card accounts from Desjardins, or start anew and let Desjardins rebrand those legacy cards as straight Desjardins Visa cards.

Neil's third question was on Coast's T&C that state he should hold on to his cheques deposited by mobile app for 90 days. He said he loved the service, but added none of the other banks recommend holding onto cheques for that long. The CEO demurred to the Chief Risk Officer, Bruce Schouten, who'd previously served as Interim President & CEO, who added that this was just Coast's recommendation for how long the members should hold onto the physical cheque in the unlikely event of a problem, not how long Coast holds cheques.

Another member asked how come Coast doesn't have a profit sharing program like Vancity, and remarked "how cheap" it was for Coast to only provide cookies at their AGM. She said it would've been nice for Coast to offer something more, whether refreshments and appetizers or, perhaps, a meal, considering it was supper time. The Board Chair took the profit sharing question and said that many credit unions follow this model, but that Coast, in keeping with its creed and vision, wants to follow the tack of instead returning money to its members' communities in the form of charitable donations and contributions (7% of budgeted pre-tax earnings). The CFO, Helen Blackburn, who previously led Central 1 Credit Union as its President & CEO, added to that they also consider offering "no fee and low fee (bank) accounts" to be part of their commitment to returning value to members.

Another unnamed member, who had the assistance of Coast's Chief Member and People Experience Officer as he was hearing and speech impaired, asked a question about offering jobs for people with hearing and speech impairments. The CEO turned the question to the Chief Member and People Experience Officer, who answered rather disappointingly on them striking a Diversity & Inclusion Committee.

Another question from Jeff Holm, who may be former Interior Savings Credit Union board member Jeff Holm, wanting assurances from Coast, having followed Coast's federal incorporation closely, that Coast will not demutualize and convert member shares to common shares in an initial public offering. The Board Chair took the question, thanked Mr. Holm for challenging the Board on this, but added, unequivocally, that Coast indeed has no plans to convert to a for-profit corporation with share capital (i.e., publicly-traded bank). He did add, somewhat interestingly, though that it's an issue that comes up regularly at board meetings, which surprised me in that (a) I didn't expect him to be so candid and (b) that it actually comes up - multiple times, and assured Mr. Holm that it's always a "short conversation" and is readily dismissed.

Finally, the member who was dissatisfied with the cookies at the AGM said she was extremely disappointed that the results for the 4 x $1,000 term deposits for casting a ballot in the Board of Directors election would not be announced at the AGM. She said many members travelled great distances to attend this meeting in person, so it sounds like that was their sole reason for attending. General Counsel Lisa Skakun took the question and answered it generally stating that because they are a federal credit union now, they opted to go that route. Not sure I buy that, personally, since members would have voted in advance online and by mail and, of those voting in person at the meeting, they already had those results, too.

Speaking of Board of Directors Election, in case you're interested, voter turnout was approximately 16,500 ballots (down significantly from last year). Assuming there are at least 500,000 members 18 years of age or older or business members, that equates to a voter turnout of 3.3%. It would be less than that if my estimates are too liberal. So, not surprisingly, the recommended Board candidates and incumbents were all re-elected. πŸ™

Edit: Peter, there seems to be an error in the file upload. "2019-05-17 08_13_45-CCS_2019_AGM_Director_Election_Results.png: Error 108 - Could not create user folder". CHMOD issue, possibly when you did the server backup/maintenance over the weekend?

Cheers,
Doug

May 17, 2019
12:43 pm
Loonie
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Thanks for the entertaining report! The British Columbians in attendance seem to be a more spirited and feisty group than the Ontarians you reported on earlier.

May 17, 2019
1:02 pm
Shawguy
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Still no launch date though?

May 17, 2019
4:27 pm
Doug
West Kelowna
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Shawguy said
Still no launch date though?Β Β 

Nope...it seems like their more pressing rationale for federal incorporation might be to solicit commercial banking, commercial lending, and equipment financing business.

To be honest, I personally wouldn't recommend for the same reason I wouldn't recommend Vancity or HSBC Bank Canada: they don't have bank-to-bank transfers, with no plans on when they'll be added. I also don't like their Take Charge Money Manager personal finance tool provided by a third-party in the U.S., but at least you can opt out of it. Additionally, they charge $1.50 for each Interac e-Transfer. πŸ™

Also, their rates have dropped markedly, probably after having brought in almost $4 billion in new deposits in the past two years, which has outpaced their loan book growth. I suspect they'll be in belt-tightening mode for next couple years as they intend to try and maintain their deposits or grow them only modestly.

Cheers,
Doug

May 17, 2019
6:59 pm
GICinvestor
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I can only say......once the rest of the country sees how poor the systems, service and attitude in general is......I hope they crash and burn.

See here

May 17, 2019
9:52 pm
Loonie
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I think more than one of these FIs may b cash-rich at the moment.
I was told by a source I don't want to identify that one of the larger CUs in Ontario has more than it knows what to do with and is looking for places to invest it - for instance.

i'm not convinced that Coast had or has no plans to do national retail personal banking. They did, after all, tell us to sign up for email regarding their expansion and said they weren't available in other provinces "yet". They may have dropped the idea, but some sort of statement should be offered if that's the case. The question may not have been asked at the AGM because, for most local members, it's not a pressing concern.

May 18, 2019
7:39 am
Doug
West Kelowna
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Loonie said
I think more than one of these FIs may b cash-rich at the moment.
I was told by a source I don't want to identify that one of the larger CUs in Ontario has more than it knows what to do with and is looking for places to invest it - for instance.

i'm not convinced that Coast had or has no plans to do national retail personal banking. They did, after all, tell us to sign up for email regarding their expansion and said they weren't available in other provinces "yet". They may have dropped the idea, but some sort of statement should be offered if that's the case. The question may not have been asked at the AGM because, for most local members, it's not a pressing concern.Β Β 

I'm not convinced, either, they are abandoning the idea of offering personal banking services either, but I wonder if they've shifted their strategy somewhat. The reason I say that is because they have a completely paperless, electronic new-to-bank onboarding process in place. Sure, they do lack free Interac e-Transfers and bank-to-bank transfer capabilities, but that's not essential to launching. They've got a fully staffed Member Contact Centre and have updated their account opening brochures to be compliant with FCAC Access to Basic Banking and Access to Funds Regulations. They're the equivalent of a Schedule I Chartered Bank as a federally-chartered credit union.

Initially, they said they'd plan to launch digitally first and open branches out of province where they see strong digital growth, but I'm wondering if they have shifted this to a branch first. That is, they won't launch in a given province until they've either (a) opened a branch (or branches) in that province or (b) amalgamated with a provincially-regulated credit union in that province.

They've talked recently about seeing "strategic partners" who share their like-minded vision and have national ambitions, so with them being federally incorporated, they would be an easier route to going national than submitting a separate federal credit union continuance application or incorporating a chartered bank subsidiary.

So, on that note, I think they likely want to get into Ontario and Alberta first. I could see them launching organically in Alberta, with branches in 2020-2021 in each of the two main cities, Edmonton and Calgary. In terms of Ontario, I see them looking at potential merger partners and I think Libro Credit Union would be the likeliest partner. They have similar operating models, employee titles, colour schemes, marketing materials, and even Libro Credit Union is the closest to Meridian Credit Union in terms of its bond of association as they permit out of province residents to join Libro if they declare themselves to be potentially "a future Ontario resident."

So, they seem most likely, aside from Meridian and Alterna that have national banking operations, to want to go national. DUCA is another possibility, but I see them more likely to either (a) retain their 'DUCA' brand (which is, arguably, not that wow-y) so they could potentially merge with a future First West Federal Credit Union in 2022-2025; (b) submit their own federal continuance application; or (c) incorporate a DUCA Bank subsidiary.

You're quite right, though, in that credit unions (and banks) are awash in cash. Some, like Oaken, which doesn't exactly need the deposits with something like an unheard of 20% Common Equity Tier 1 Ratio, are choosing to continue to offer top-tier term deposit rates in a bid for medium- to long-term market share gains. Others, that also don't need the cash, like Coast, are choosing to cut their current rates dramatically in an effort to lower their effective average interest rate and thereby increase their net interest margin. They'll likely report over $100 million in net income (profit) next year.

Cheers,
Doug

May 18, 2019
1:26 pm
Loonie
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Doug, I find it too difficult to read your middle paragraph. If you organize your thoughts into smaller ones, I'll try. thx

May 18, 2019
4:34 pm
Doug
West Kelowna
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Loonie said
Doug, I find it too difficult to read your middle paragraph. If you organize your thoughts into smaller ones, I'll try. thxΒ Β 

Thanks for the feedback, Loonie. I've tried shortening that paragraph and breaking it up into about 4 paragraphs instead of one longer one. Let me know if that helps, or if it still needs work and then I'll do some more extensive editing. πŸ™‚

Cheers,
Doug

May 18, 2019
5:48 pm
Loonie
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Yes, thanks, Doug. Much better.

I didn't know or had forgotten that Coast was planning branches.

Surprised you picked Libro as a partner but understand your reasoning.
Upon further reflection, I think but am not sure that they are a successor to what used to be St Willibrord's CU in London Ont.
St. W's was a Dutch community CU, and so is DUCA, FYI, but of course they now serve everybody.
A good friend of mine belongs to Libro and quite likes it but is not as pernickety about rates as I am. He likes the service.

I find that DUCA still retains its Dutch flavour in-branch as many staff have Dutch names. That may account for the first two letters of DUCA name? It may not be a "wow" but it is better than motusbank! It's also reminiscent of the Latin verb ducere, to lead, which makes some sense. Ducere is the root of various English words such as educate, induce etc.

It's starting to feel like a crowded market around here. New Meridian branches are springing up all over the place. Coast might do well to take their time.I don't think Coast is a name that would have a whole lot of cachet around here although it used for a sporting goods store chain.
Names don't necessarily matter though. I mean, what would you think of ComTech Fire as a name?! Yet they are expanding here.

May 18, 2019
7:35 pm
Doug
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Loonie said
Yes, thanks, Doug. Much better.

I didn't know or had forgotten that Coast was planning branches.

Surprised you picked Libro as a partner but understand your reasoning.
Upon further reflection, I think but am not sure that they are a successor to what used to be St Willibrord's CU in London Ont.

St. W's was a Dutch community CU, and so is DUCA, FYI, but of course they now serve everybody.
A good friend of mine belongs to Libro and quite likes it but is not as pernickety about rates as I am. He likes the service.

Oh, interesting. I didn't know that about Libro. Libro could also be a partner for Servus Credit Union of Alberta, but Servus has given no indications of national ambitions. They seem intent on amalgamating with virtually every Alberta credit union such that there are eventually only Servus and Connect First credit unions in that province. I spoke with a Libro contact centre representative by phone and she was very prompt, friendly, and helpful. She said they definitely would prefer to have clients be Ontario residents so they can be serviced in-branch (or upsold, more accurately albeit somewhat cynically!) in a more fulsome manner, but conceded that, yes, indeed someone could become a deposit client through their online account opening method if they lived out of province. Their rates aren't anything special, but I thought they had an 18-month 3% GIC promo or something. And, their branch design is both modern and cute.

I find that DUCA still retains its Dutch flavour in-branch as many staff have Dutch names. That may account for the first two letters of DUCA name? It may not be a "wow" but it is better than motusbank! It's also reminiscent of the Latin verb ducere, to lead, which makes some sense. Ducere is the root of various English words such as educate, induce etc.

Interesting...didn't know DUCA had its origins as a Dutch community credit union, but I can see that. It does make sense. I wonder why they changed to restricting membership to Ontario residents. They were surprisingly innovative technology wise - one of the pioneers of the Cumulus digital account opening application system that Coast, Meridian, VantageOne, FirstOntario, and others all use. They were the Canadian financial institution partner of short-lived Zenbanx Canada, which was headed by the Canadian founder of ING DIRECT Canada. And, they seemed to have good service. In those ways, I often thought DUCA reminded me kind of the Hubert Financial/Sunova Credit Union of Ontario. Too bad. πŸ˜‰

It's starting to feel like a crowded market around here. New Meridian branches are springing up all over the place. Coast might do well to take their time.I don't think Coast is a name that would have a whole lot of cachet around here although it used for a sporting goods store chain.

True, but Coast loves to spend money on marketing. They'd likely be only too happy to refresh the branding of the amalgamated credit union, update signage, give branch exteriors a fresh coat of paint with new colours, and update the interiors over the medium term.

Names don't necessarily matter though. I mean, what would you think of ComTech Fire as a name?! Yet they are expanding here.Β Β 

Now that you're talking names...yes, Ontario has some rather odd names for credit unions, some that are poor choices. ComTech Fire is indeed one of those! I assumed that was a former closed bond credit union, or possibly two in that a tech company's employees credit union merged with a firefighters' credit union perhaps? Surprised they never picked a new name when they merged, if that's what happened.

I think Alterna, Libro, Mainstreet, FirstOntario, and maybe DUCA have the best names. Meridian has an OK name but I love their logo. Why couldn't they have picked another name besides "Motus Bank" and "motusbank" and perhaps incorporated that yellow smiley mouth below the new bank subsidiary, to give it some commonality? I really love Mainstreet's logo - it might be my favourite credit union logo (and website) of all credit unions in Canada. They seem like their service might be exceptionally good, but their products are nothing to write home about. PenFinancial is a poor choice of name, but I like the leaf over the "i" in the logo. Momentum Credit Union is a good name; they might also be a potential partner for Coast or Servus, if Servus ever changed its mind and developed national ambitions. Another bad name is Rapport Credit Union...why would you call yourself the French word for report? Tandia is a nice name, nice logo, good products, and really nice website. Only problem with Tandia is I have absolutely no idea what it means. πŸ˜‰

Cheers,
Doug

May 18, 2019
9:39 pm
Loonie
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Your Western bias may be showing, Doug!sf-wink
Perhaps you're not aware that the word "rapport" is bilingual, and Ontario is an officially bilingual province. So I think it's quite suitable, especially as it implies that people get along and have something in common.
https://dictionary.cambridge.org/dictionary/english/rapport

Tandia explains how they came up with the name on their website. It's a made-up word.

May 19, 2019
8:00 am
Doug
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Thanks, Loonie. Admittedly, I hadn't delved too deeply into Tandia's website (and their logo is really nice, too). Luminus Financial is also a nice name, but you've mentioned in other forum threads some issues with dealing with them if you don't live near a branch (presumably, due to lack of online banking functionality and other technologies).

As far as rapport goes, after I posted that comment above, I realized I think I had the definition wrong and that it was more of a feeling of mutual understanding, but thought I'd let you correct me. πŸ˜‰

Nevertheless, I still don't like the name. Too generic. It's almost as bad as Your Neighbourhood Credit Union or, in B.C., Sharons Credit Union.

Cheers,
Doug

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