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Sunova 2012 Annual Report
June 13, 2013
2:32 pm
Yatti420
Canada
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June 16, 2013
7:16 pm
Stan
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So: Who are the winners . . . who are the losers?
Interest paid to members 16,245,430
Interest from members’ loans 31,649,833

Very same thing when it comes to investing in banks!!
Interest paid to depositors 1.10%
Dividends paid to investors 4.84%
So: Who are the winners . . . who are the losers?

June 17, 2013
8:49 pm
Yatti420
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I'm not sure what you mean.. Interest paid to members I assume will be what is paid monthly in interest credits.. Interest from member loans is what Sunova is bringing in?
a
You gotta remember as an account-holder of a CU you are also an owner.. I believe interest paid on shares last year was approx 4.8%.. I'm not sure if they are capping Hubert (should just be Sunova shares rebranded) shares for purchase..

July 7, 2013
11:15 am
Doug
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I looked into buying Sunova Credit Union shares (they seem well-capitalized and the only case where you'd lose the value of your shares is in the unlikely event of their assumption by another Manitoba-based credit union due to its insolvency) and was satisfied with the risks but the link that deterred me was they limit all Sunova Credit Union member-owners (Hubert-based members own the same class of share of Sunova Credit Union as regular Sunova-based members, according to my understanding) to $10,000 CAD value in shares. Each share has a par value of $5.00 (I believe) and so that would be 2,000 shares. I'm fine with the one-member, one-vote philosophy (so wealthy member-owners who own more shares don't carry greater "sway" like they do with wealthy bank shareholders) but I'd like to buy more than that. A historical yield of 4%+ annually with a share price that doesn't fluctuate gives it the appearance of a very solid, fixed (albeit not guaranteed) investment and one I'd be happy with, particularly in a TFSA since, I believe, these dividends are non-eligible for the dividend tax credit and would be treated as interest income. :)

I also looked into buying Entegra Credit Union shares but they currently do not allow you to purchase additional shares, which could mean they're sufficiently better capitalized than Sunova, wouldn't it? Greg?

Cheers,
Doug

July 7, 2013
11:38 am
GS1
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Doug said

[snip]

I also looked into buying Entegra Credit Union shares but they currently do not allow you to purchase additional shares, which could mean they're sufficiently better capitalized than Sunova, wouldn't it? Greg?

Cheers,
Doug

Are you asking ME something? Or a different Greg?

I, as usual, am confused!

Greg

July 8, 2013
10:01 am
Yatti420
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Doug said

I looked into buying Sunova Credit Union shares (they seem well-capitalized and the only case where you'd lose the value of your shares is in the unlikely event of their assumption by another Manitoba-based credit union due to its insolvency) and was satisfied with the risks but the link that deterred me was they limit all Sunova Credit Union member-owners (Hubert-based members own the same class of share of Sunova Credit Union as regular Sunova-based members, according to my understanding) to $10,000 CAD value in shares. Each share has a par value of $5.00 (I believe) and so that would be 2,000 shares. I'm fine with the one-member, one-vote philosophy (so wealthy member-owners who own more shares don't carry greater "sway" like they do with wealthy bank shareholders) but I'd like to buy more than that. A historical yield of 4%+ annually with a share price that doesn't fluctuate gives it the appearance of a very solid, fixed (albeit not guaranteed) investment and one I'd be happy with, particularly in a TFSA since, I believe, these dividends are non-eligible for the dividend tax credit and would be treated as interest income. :)

I also looked into buying Entegra Credit Union shares but they currently do not allow you to purchase additional shares, which could mean they're sufficiently better capitalized than Sunova, wouldn't it? Greg?

Cheers,
Doug

I'm not sure if the limit applies to Hubert account holders.. I would assume the $1000 limit or 200 shares also now applies to Hubert accounts also though.. I think the shares are issued upon request.. With Hubert you only need to purchase 1 share minimum.. There is no ongoing purchase plans unlike with a SunovaCU account. Sunova recently updated their website..

https://www.sunovacu.ca/ProductsServices#personal-banking-share

These shares are TFSA/RRSP eligible..

It's one of the biggest downsides to CU shares/accounts imo.. Theoretically opening an account at 18 with Sunova paying 25$ initial + $2.50 a month until a max of $1000 can be painful to ever get "free" banking.. Time and cost wise.. Hopefully the shares pay out more then you pay them with the dividend..

July 8, 2013
5:40 pm
Doug
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hey Yatti,

Thanks for sharing your insight & thoughts, as always! :)

I'm pleased the CU shares are TFSA/RRSP eligible - I did not know this; I suspected as much but this confirmation is useful.

As far as I know, Sunova, including its Hubert division (and all Sunova and Hubert customers are Sunova CU members under the same class of member equity shares), caps all share purchases per member at $10,000 CAD equivalent value (so, at $5 per share that is 2000 shares).

On the "free" banking aspect, I realize most 18 year olds don't have $10,000 to start (I think I only had maybe $3000-$5000 when I was 18 and that was money I had saved up through odd jobs, gifts from family, etc.) but you're right, the dividends the CU pays you could essentially be thought of as offsetting any service charges the CU charges you for your, let's say, monthly banking/chequing account in a similar way that interest earned on savings does. The nice thing is, the rate of return, while not guaranteed, is significantly better than interest on savings accounts so there's less "opportunity cost" by not having to hold as many shares versus dollars in a savings account to essentially "pay for" one's service charges.

I would highlight, though, that at least five credit unions (one in ON, one in MB, 1 in AB and 2 in BC) offer a free, unlimited day-to-day banking/chequing account and/or no-fee high-interest savings account. They are, in order of geography from east coast to west coast, FirstOntario Credit Union, Cambrian Credit Union (which also operates Achieva Financial, discussed widely here), First Calgary Financial Credit Union, Coast Capital Savings Credit Union and finally First West Credit Union which operates two branded divisions within the institution called Envision Financial and Valley First.

Hope this is helpful! :)

Cheers,
Doug

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