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Six B.C. credit unions plotting six-way merger/amalgamation
April 22, 2019
11:06 am
Doug
British Columbia, Canada
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By way of an amalgamation into a single legal entity, six B.C. credit unions based in the East and West Kootenay region of the province, have been in the midst of a massive merger plan since late 2017. The six credit unions are as follows:

  • Columbia Valley Credit Union
  • East Kootenay Community Credit Union
  • Grand Forks & District Credit Union
  • Heritage Credit Union
  • Kootenay Savings Credit Union
  • Nelson & District Credit Union

They'd originally plotted a seven-way merger that would've included Creston & District Credit Union, but their board opted not to proceed in December 2018, the most recent update. Nevertheless, the six remaining organizations plan on reviewing and approving the revised plan (where they're at now) and then submitting it to the Financial Institutions Commission (soon to be renamed Financial Services Authority of British Columbia) for approval to hold member votes. Following that, member approval would be sought and they would amalgamate into a combined entity.

Although six credit unions are involved in the proposed, revised amalgamation plan, the assets of each are such that the combined credit union would not increase in size that much. Still, it would mean that the current 43 registered B.C. credit unions will be reduced to 38 (note that only 36 of those are consumer-facing as Central 1 Credit Union is a back-office service provider and Stabilization Credit Union is an administrative credit union where the regulators are forced to temporarily assume a member credit union's assets and liabilities pending the sale or transfer to another B.C. credit union). If First West Credit Union ultimately is continued as a federal credit union and Westminster Savings Credit Union and Prospera Credit Union ultimately consummate their second chance at the "altar", then the number of consumer-facing B.C. credit unions will drop further to 32.

So, how big is each of these six credit unions?
According to the fourth quarter 2018 statistics from the Canadian Credit Union Association and, where required (since the report lists only the top 100 credit unions by asset size), from individual credit union financial reports or my own logical estimates (noted in parentheses following each), by credit union, each had the following the assets, number of branch locations, and members:

  • Columbia Valley Credit Union
  • - CCUA System Rank: Not in the Top 100
    - Assets: $158,317,959 (assets as at December 31, 2018)
    - Number of Branch Locations: 1
    - Branch Locations: Golden
    - Members: Not available

  • East Kootenay Community Credit Union
  • - CCUA System Rank: #88
    - Assets: $374,872,429
    - Number of Branch Locations: 4
    - Branch Locations: Cranbrook, Elkford, Fernie, and Sparwood
    - Members: 10,997

  • Grand Forks & District Credit Union
  • - CCUA System Rank: Not in the Top 100
    - Assets: $194,841,464 (assets as at December 31, 2018)
    - Number of Branch Locations: 1
    - Branch Locations: Grand Forks
    - Members: Not available

  • Heritage Credit Union
  • - CCUA System Rank: Not in the Top 100
    - Assets: $180,000,000 (estimated, based on estimated continued $7 million annual growth in assets from 2016-17 at which point they had approximately $173,000,000 in assets as at December 31, 2017, the most recent FY for which financial data is available)
    - Number of Branch Locations: 3
    - Branch Locations: Castlegar, Greenwood, and Slocan Park
    - Members: Not available

  • Kootenay Savings Credit Union
  • - CCUA System Rank: #37
    - Assets: $1,205,883,658
    - Number of Branch Locations: 11
    - Branch Locations: Castlegar, Fruitvale, Invermere, Kaslo, Kimberley, Nakusp, New Denver, Radium, Salmo, South Slocan, and Trail
    - Members: 37,340

  • Nelson & District Credit Union
  • - CCUA System Rank: Not in the Top 100
    - Assets: $230,227,931 (assets as at December 31, 2018)
    - Number of Branch Locations: 3
    - Branch Locations: Crawford Bay, Nelson, and Rossland
    - Members: Not available

With the exception of Castlegar, there is no geographic overlap so it is unlikely that any branch closures would result, which is a good thing. Keeping two Castlegar branches, if they're located in different parts of town, is also a distinct possibility, too. sf-cool

So, overall, this seems like a good merger. sf-cool

Combined, and assuming no branch closures, they would have $2,185,825,482 in total assets (give or take $10 million or so, based on the estimated assets for FY 2018 for Heritage Credit Union), which would still be good enough to bump them up from Kootenay Savings' current 37th place position to 26th, just ahead of Gulf + Fraser Fishermen's Credit Union and Sunova Credit Union (parent company of the Hubert Financial virtual banking branch/division). By total branches, they would have 23 branches.

No word on what the combined entity would be called, but Kootenay Savings would be the likeliest continuing name unless they opt to choose an entirely new name not defined by geography, particularly if they bring in further partner(s) (i.e., Summerland and District Credit Union, which is based in the South Okanagan).

Also note that Kootenay Savings has an insurance brokerage subsidiary that recently acquired Summerland and District Credit Union's insurance operations. Moreover, Heritage Credit Union and Creston & District Credit Union jointly own Kelowna Valley Insurance Services, Ltd., an insurance brokerage with two offices in Kelowna.

And finally, with all these mergers happening, the barrier to entry for inclusion in the CCUA's "Top 100 Credit Unions" semi-annual report will decrease as there will be room for close to 10 new credit unions over the next two years, assuming no further mergers. sf-wink

Cheers,
Doug

April 22, 2019
4:58 pm
AltaRed
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In my not so humble opinion (IMNSHO), it is about time to see these amalgamations. These tiny CUs have nowhere to go in this rapidly expanding era of digital banking and fintech advances. I can foresee a day where there will be less than 10, or even less than 5, CUs in BC.

Added: It is crazy the number of 'financial' institutions in the central Okanagan. They could reduce brick and mortar branches by 50% and not miss a beat. Virtually none of them are 'busy'.

April 22, 2019
5:11 pm
Doug
British Columbia, Canada
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AltaRed said
In my not so humble opinion (IMNSHO), it is about time to see these amalgamations. These tiny CUs have nowhere to go in this rapidly expanding era of digital banking and fintech advances. I can foresee a day where there will be less than 10, or even less than 5, CUs in BC.

Added: It is crazy the number of 'financial' institutions in the central Okanagan. They could reduce brick and mortar branches by 50% and not miss a beat. Virtually none of them are 'busy'.  

Do you live in Kelowna, too, AltaRed? I knew you lived in the Southern Interior of B.C., but didn't realize you also lived in Kelowna possibly.

There are quite a few branches in the Central Okanagan, yes, especially TD Canada Trust. TDCT has cutback its branch hours at a number of branches so, if I had to "guess," I would say that, potentially, their Glenmore branch would be the most likely to close only because it's not even open past 4-5 pm most days and is closed on Saturdays now. (Full Disclosure: at one of the self storage facilities I worked at until 2016, one of the facility's owners also owned Sandalwood Plaza in Glenmore that leases space to TD Canada Trust.) BMO and CIBC have already cut back their branches to, what, 3 branches a piece in Kelowna plus 1 a piece in West Kelowna, so they're the least likely to cut further branches. I could potentially see HSBC Bank Canada further consolidating their Bernard Ave Branch downtown into Orchard Plaza Branch and definitely closing their Westbank Branch (where I worked) as that branch never got over 500-600 unique customers and was not profitable/cash flow positive. Even with the staff cutbacks, they're just not making money at branch.

Scotiabank will probably close their 2nd Vernon branch at some point in the next couple years, consolidating everything into their downtown branch. RBC Royal Bank has a lot of branches, yes, but not sure which ones they'd close. Their newest branch, at Okanagan Lake Shopping Centre atop Bridge Hill by the WFN band office would be the likeliest possibility, but it's also their newest branch even though likely they're most under-used branch.

I do worry about branch closures among the credit unions but, thankfully and barring First West merging with Interior Savings, the only one I potentially see closing branches would be First West with their Downtown Kelowna branch being the likeliest possibility (no drive-thru ATM, hasn't had a renovation, no insurance operations, etc.).

Cheers,
Doug

April 22, 2019
9:36 pm
AltaRed
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I am in the "Kelowna area". My comment was more focused on needed consolidation (as much as 50%) in the number of CUs and CU branches but agree the big 5 banks will see further branch closures as well. They are all deadly quiet any time I've walked by any of them. I suppose they get busy around a few pay days though.

April 23, 2019
9:37 pm
Doug
British Columbia, Canada
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AltaRed said
I am in the "Kelowna area". My comment was more focused on needed consolidation (as much as 50%) in the number of CUs and CU branches but agree the big 5 banks will see further branch closures as well. They are all deadly quiet any time I've walked by any of them. I suppose they get busy around a few pay days though.  

Ah, yes, and I agree with you on that in terms of consolidating into less credit unons (maybe the same amount of branches) province-wide. Whether that will happen in the short- to medium-term, I'm not sure.

I don't live in Kelowna either, but am in West Kelowna, as you might've guessed.

Cheers,
Doug

April 24, 2019
4:08 pm
Dean
Selkirk Mountains, British Columbia
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I live in the West Kootenay area of Castlegar/Nelson. Most people I know are looking forward to this merger.

I'm of the mind that it should have happened years ago.

sf-cool " Live Long And Prosper " sf-cool

April 24, 2019
4:17 pm
Doug
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Dean said
I live in the West Kootenay area of Castlegar/Nelson. Most people I know are looking forward to this merger.

I'm of the mind that it should have happened years ago.  

Thanks, Dean...that's good to hear. Yeah, I was always surprised that Heritage Credit Union had a branch in Greenwood and was separate from Grand Forks & District Credit Union. Greenwood is located closer to Grand Forks than Castlegar. So yeah, it definitely makes sense. I don't think they would close branches, either, because each community is completely separate and isolated from each other. The only one they might close would be one of the two Castlegar branches, but if both are profitable and not located across the street from each other, they might just keep them. And, a good thing of them doing this as an amalgamation is they'll consolidate all of the member accounts onto a single banking system such that you'll now be able to access your accounts in-branch whether you're in Cranbrook or Castlegar. sf-cool

Do you think they will go with Kootenay Savings as the continuing name, or will they pick a brand new name?

Cheers,
Doug

November 26, 2019
1:55 pm
Doug
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The six credit unions, following consultations with members of each, have selected a new name for the combined credit union, which should commence operations early in 2020...

*drumroll*

It is Elevatus Credit Union (as in Elevate Us Credit Union).

Web Link: https://www.exploringstrengthandunity.ca/awesometogether.html

Cheers,
Doug

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