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Hubert - merger with Access CU (Accelerate Financial)
January 23, 2022
5:57 pm
cgouimet
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Loonie said
I think some of this is over my head, but what is 'operating income', then? Is this what they get from fees and spreads?

Hubert has higher number than Access for Efficiency. Does that mean it is considered less efficient?

I'm happy for it to be less efficient if it continues to give good service and has enough capital reserves and can meet necessary expenses. That is, ideally, the whole point of a credit union, seems to me.  

Operating income = pre-tax profit

CGO
January 23, 2022
7:05 pm
Loonie
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Thanks. So the Efficiency number for Hubert sounds healthy, then, and does not, in itself, indicate a problem or need to merge with CU that is more "efficient". At least that would be my interpretation.

If so, then why are they wanting to pursue more Efficiencies? I envision cuts in service, rates etc. Or is there something I'm missing?

January 23, 2022
8:41 pm
Doug
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Loonie said
Thanks. So the Efficiency number for Hubert sounds healthy, then, and does not, in itself, indicate a problem or need to merge with CU that is more "efficient". At least that would be my interpretation.

If so, then why are they wanting to pursue more Efficiencies? I envision cuts in service, rates etc. Or is there something I'm missing?  

Well, yes, but remember there's forthcoming Payments Canada-mandated modernization initiatives that will mandate expensive upgrades to core banking systems and online banking platforms. These will likely be sizable costs and hit smaller credit unions particularly hard. One upside of this is we should see reduced payment hold tests and perhaps even real-time EFT clearing, but it's at a significant economic cost to FIs.

Cheers,
Doug

January 23, 2022
8:48 pm
Doug
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Norman1 said

gicjunkie said
FYI: I don't know if I am using the correct site for this information, but according to the one I checked out (below), as of quarter #2, Access is the #12 credit union in Canada, except for Quebec (based on total assets), Sunova (Hubert) is #26 and Noventis is #41. It would seem to me that Access would be the resulting entity or dominant partner, not Sunova as others have suggested.

That is correct.

Access is the dominant participant in the merger. That was shared in the merger info. It is not a merger of equals:

  Combined Access Noventis Sunova
Balance sheet assets $9.49B $6.03B $1.14 B $2.32B
Assets under management $10.07B $6.36B $1.23B $2.48B
Members 169,700 92,000 28,000 49,700
Employees 796 FTE 396 FTE 150 FTE 250 FTE
Branches 52 26     12   14
Efficiency 66.04% 63.05% 72.55% 68.16%
Equity 6.28% 6.47% 5.71% 6.09%
Loan portfolio $7.67B $4.79B $867M $2.01B
Capital adequacy 12.86% 12.55% 13.50% 13.52%

The merged credit unions will carry on with the Access name:

Have you decided what the name of the new credit union would be?

All three credit unions are well-respected and well-known organizations in their operating areas. After much discussion, all three boards identified the strength of the Access name and the applicability and relevance of their brand when reflecting on the mission, purpose, and shared values for all organizations. …

… And, while we will adopt the Access name, we are confident that many attributes of the Sunova and Noventis brands will integrate well into the brand for the ‘new’ Access, and the best elements of our respective cultures will live on as part of the new organization.

  

Wow, for what it's worth, those efficiency ratios are quite healthy. On capital adequacy, Access is actually the weakest link of the three.

For context, the Big 5 banks routinely have efficiency ratios in the low to mid 50s; Canadian Western Bank is usually in the mid 40s to low 50s. Equitable Bank and Home Capital Group are usually in the low 30s to low to mid 40s. HSBC Bank Canada, despite its cost cutting over the years, persistently remains in the upper 50s to low to mid 60s. And, the much-ballyhooed Coast Capital Savings and First West consistently have efficiency ratios in the mid 70s to mid 80s, which is atrocious, considering they persistently say that merging = greater efficiency. Something is not right here...perhaps it is executive compensation. 😉

Cheers,
Doug

January 23, 2022
11:31 pm
Loonie
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Yes, Hubert did mention that the changes necessary technologically would be an issue financially, but I have no idea how much of an issue or whether Sunova can withstand it or how it would be financed, whether it has been budgeted for, etc etc.

The more I try to digest all this, I am inclined to think they put the cart before the horse in their merger proposal to members.
They tried to tell us a number of "positives" about it, many of which will only be relevant to some members, without ever telling us clearly why the idea had come up in the first place.

You don't do a merger in order to keep everyone employed or donate more to charity or to set up a patronage dividend system - all of which were stated as positive outcomes.
If it's really about "efficiencies" or technology change costs, then they should show how it would achieve that goal, not assume it; and it should be front and centre in the appeal, with some projections about the "efficiencies" anticipated. Otherwise, it sounds like shot in the dark.

January 24, 2022
1:55 pm
Norman1
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Loonie said

The more I try to digest all this, I am inclined to think they put the cart before the horse in their merger proposal to members.
They tried to tell us a number of "positives" about it, many of which will only be relevant to some members, without ever telling us clearly why the idea had come up in the first place.

I think they are early too.

The consumer-directed finance and Payments Canada modernizations are still in development. There is also the question of how useful those are to the Sunova members.

Consumer-directed finance (open banking) allows outside parties to access one's banking data, including transactions and ID info. It is not that useful to people who bank mainly with one bank. It is also a federal government initiative that may not have jurisdiction with provincially regulated credit unions.

Similar with Payments Canada modernizations. One of them is under-one-minute transfers through a Real-Time Rail.

Employers may not want to pay extra for under-one-minute transfers. They may continue to use the current ACCS system to deliver payroll direct deposits into employee accounts by bank branch opening of each payday.

Utilities also may not care if the monthly customer bill payment shows up in 60 seconds or in the next two business days.

January 24, 2022
2:12 pm
cgouimet
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Our CU leaders, paid to plan ahead, are telling us merging will enable enhancements a number of us are saying we don't want/need and may never want/need cause all we need to know is how to operate a simple calculator to allow us to post here. 🙂

6/12/18 months from now, I wonder how many of us who voted against the merger will be asking where those badly need enhancements are.

Just wondering ...

CGO
January 24, 2022
5:21 pm
Loonie
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I've been really trying hard to see the merit in this proposal because I wouldn't want Hubert to fail because it ought to have merged but didn't.

But I just can't see it, and Norman's last post has clinched it for me.
I will be voting "no".

It's starting to feel like a bit of a "snow job", and I'm wondering who or what is behind it. It doesn't feel good. Maybe they really did fall for "bigger is better", taking it as a given.

I also think Sunova should have fought for a bigger role than being equal to Novartis in a merger. It's clear form Norman's chart that Sunova is in a much stronger position, perhaps stronger than both of the others simply because it has excellent customer service, which is nearly impossible to find in this industry and will be absolutely critical to success in the branchless future.

I really hope the managers and board members of these 3 organizations are reading this thread.

January 25, 2022
8:18 am
Winnie
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Voting is opened now.
Happy voting for Happy Savings and Happy Interest Rates:

https://www.sunovacu.ca/mergervote

January 25, 2022
9:41 am
Norman1
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Loonie said

It's starting to feel like a bit of a "snow job", and I'm wondering who or what is behind it. It doesn't feel good. Maybe they really did fall for "bigger is better", taking it as a given.

The question of being better is a complicated one.

Bigger is better for organizational survival. More members, larger geographic footprint means a more diversified loan book and deposit book.

Think Royal Bank with its loans and deposits diversified across Canada across all kinds of people and businesses. It is one of things that gives the Big 5 Banks staying power.

In contrast, think of a hypothetical credit union exclusively for airline employees.

But, bigger isn't better for market leading deposit rates.

I don't think the interests of all the Sunova members are the same. Members who are employees have a slightly different set of interest than the brick-and-mortar branch banking members. The interests of the online-only Hubert members are also a bit different.

I think whether or not the proposed merger will form something better for a member will depend on the kind of the member.

January 25, 2022
10:40 am
DGS
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Just a couple of questions/comments.

On the chart, which I also saw on the Access site, showed the assets of each CU, does anyone know the source of the $6BN+ of the Access number? Their last (2020) consolidated F/S showed $3.2BN.

From the comments I read, I wonder whether there might be some confusion as to equating Hubert to Sunova. I have been unable to find the ratio of assets or membership or ??? between Hubert & Sunova. What might be good for Sunova may not be good for their Hubert Division. Any help out there?

I would not be surprised that Hubert votes NO and Sunova votes YES and the merger goes through.

January 25, 2022
11:11 am
Norman1
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The asset numbers in the table are as of June 30, 2021.

The 2020 financial consolidated statements were as of December 30, 2020. According to Note 26, two days after the 2020 statements, Access merged with Crosstown Civic Credit Union that had $2.68 billion in assets:

26. Subsequent event

During the year the members of the Credit Union voted in favour of the Credit Union merging with Crosstown Civic Credit Union Limited. The merger is effective January 1, 2021. The amalgamated Credit Union will operate as Access Credit Union Limited.

Hubert Financial doesn't legally exist separately from Sunova CU. It is just the name of a department or division in Sunova CU. There's no separate vote for the Sunova shareholders who are online-only Hubert Financial clients.

January 25, 2022
12:19 pm
DGS
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TY Norman.

I did not read the subsequent event note. So that makes A @65%, S @24% and N @12% re total assets after the merger.

i understood the status of Hubert vis a vis Sunova but was wondering whether there was other info out there that may have better defined their relationship.

Given what I have read about Access, Crosstown, Sunova & Noventis, I can only deduce that the Hubert Division may be the outlier.

I'm hoping for more relevant info before the 27th, but realistically I don't think the Hubert minority will make a difference other than " giving notice" to the new CU.

So IMHO, as of now, we will vote NO and hope the NEW CU notices that the Hubert's rates, products & services that we value will be maintained.

January 25, 2022
1:57 pm
rhvic
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The voting email I got from Hubert today has this lengthy note from the Hubert Managing Partner, Tara Dowsett:
---------------------
Hello,

My name is Tara Dowsett. I’ve been Managing Partner of Hubert Financial for the past eleven years, and this year will mark my twenty-first anniversary with the organization. (Time sure flies, eh?) Today, January 25 at 9:00 am CST, online voting for the proposed merger between Access, Noventis, and Sunova Credit Union begins. Voting will end at the Special Meeting of the Membership on the evening of January 27. Pre-registration is required if you wish to attend the virtual Special Meeting.

If you attended the virtual member forum on January 18, you would have learned a little bit about why each respective CU’s Board of Directors is recommending this merger to the Hubert Financial membership.

Before you head on over to the voting site to cast your vote, I’d like to answer some questions that we’ve been getting over the past few weeks.

If the merger goes through, what will happen to Hubert?

If the respective memberships vote in favour of the merger, the two online divisions, Hubert (Sunova) and AcceleRate (Access) would continue to operate as they do today. Any decisions about the blending of those two online divisions, or the other subsidiaries operated by all three credit unions, will be made after the official merge date in July 2022.

Will the high-quality service stick around, in addition to my favourite service representatives?

Over the past eleven years, I’ve enjoyed getting to know Hubert members and speaking to you directly on the phone, and I know my staff feels the same way. I can confidently say that we are committed to upholding our service standards, and there are no plans whatsoever to transition over to any type of automated system. You will always have the opportunity to speak to a well-trained and knowledgeable call-centre staff member. (During regular business hours, of course).

There will be no layoffs as a result of the merger; however, some roles may change, retirements will occur and some positions may be added. With an organization this size, there will likely be additional opportunities that require more in-depth knowledge or specialization in order to serve members and internal staff effectively. In addition, many executive members here at Sunova and Hubert would continue to remain at the leadership level to influence the decisions of the potential new organization.

What about products and rates?

As we continue to work through the process, we will complete a thorough review of all products and service plans available at each credit union, and the same would be done for the online divisions at a later point in time. While the exact specifics of the products, services, and rates members will have access to will be finalized after the new organization is formed, the commitment to our membership and desire to provide an optimal banking experience is top of mind and one of the key drivers of this proposed collaboration.

If you missed it at the forum, Sunova and Hubert will transition over to the banking system used by both Access Credit Union and Noventis Credit Union, likely in early 2023. Currently, Hubert offers a lot of appealing products and services that AcceleRate members do not have access to. Integration in this scenario means consolidating onto one system while including the very best features/services available at each. This means Hubert members won’t lose any valued functionality, and members of both credit unions would likely experience some enhanced functionality moving forward.

Lastly, there will be a continued focus on enhancing the virtual banking experience, without losing sight of the service and key benefits members appreciate most on each platform.

--

This proposed merger is recommended because we truly believe it will be better for our members, our staff, and our communities. And I hope you all have some comfort in knowing that Sunova has always prioritized our staff and our member experience within our strategic planning and our decision-making. Happy and engaged staff = great service for our membership, and that is very much rooted in the foundation for this decision to (hopefully!) merge with these two like-minded credit unions.

Thank you for your patience as we’ve navigated through this process, thank you for your ongoing trust in Hubert’s products, services, and staff, and thank you for choosing Hubert as your online financial institution. I look forward to the future of Hubert Financial.

Sincerely,

Tara Dowsett

Managing Partner, Hubert Financial
----------------

January 25, 2022
1:59 pm
Loonie
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I suppose that if I were a Sunova in-person member, I might find the idea of more branches attractive.
But I'm not and, even if I were, there is no guarantee those branches will survive. I voted No.

Sunova members may not outweigh Hubert people. it really depends on how many bother to vote. If attendance at AGMs is any indicator, it could be very very low. They haven't really done much to promote voting.

January 26, 2022
7:22 am
cgouimet
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I responded to Tara Dowsett yesterday, expressing an interest in knowing how many votes for and against by MB voters and non-MB voters once all the votes are counted.

I don't know whether they can or want to tell us that but it would be interesting to understand how much influence us "remote" clients/members had on this merger decision ...

CGO
January 26, 2022
8:04 am
savemoresaveoften
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In my mind, getting bigger means less attractive rate offerings... I voted accordingly.

January 26, 2022
10:05 am
Dean
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savemoresaveoften said

In my mind, getting bigger means less attractive rate offerings... I voted accordingly.  

Sometimes 'Yes' ... sometimes 'No'. For examples of 'No', just think of the likes of Oaken (by Home Trust/Bank), EQ (by Equitable Bank), etc.

After reading though all the WorryWarting and HandWringing that's been going on here in this thread, it hasn't changed my mind a bit. But what it has exposed, is the mindset of some here.

FWIW, I voted 'Yea' ... Let the arrows Fly ❗

    Dean

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

January 26, 2022
3:55 pm
mmlt
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"But what it has exposed, is the mindset of some here"
Yes and your post speaks volumes about you.

January 27, 2022
5:50 pm
christinad
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Not a surprise, the merger is going ahead, 75% in favour. (I attended the meeting)

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