Fewer vaults, more money

Hey there, time traveller!
This article was published 28/03/2023 (1117 days ago), so information in it may no longer be current.

THERE are fewer than half the number of credit unions in the province today as there were a decade ago but the capital strength of these co-op banking institutions in Manitoba has doubled during that time.

In Credit Union Central of Manitoba’s just-published annual report for 2022, loans grew by $3 billion and system assets by close to $2 billion to $41.7 billion. In 2012 total assets were $22.4 billion.

By the middle of this year there will be only 17 different credit unions left in the province — there were 42 in 2012 and 57 in 2002 — with 190 locations. There are slightly fewer branches than a decade ago, when there were 216.

“The frequency and scale of credit union amalgamations has accelerated in recent years, and as the credit union system moves towards fewer and larger credit unions, these mergers are increasingly impactful,” said Paul Holden, chairman of the board of directors of Credit Union Central of Manitoba, in his message to members.

Going back a little further to 2002 Manitoba credit unions had combined assets of $8.3 billion. Even though there were only 20 left by the end of 2022 (including Caisse Financial Group) in the province, their combined assets were five times as much.

In 2022 a new credit union took over the ranking as the largest. Access Credit Union surpassed Steinbach Credit Union which had held the bragging rights for many years.

Access merged with Crosstown Civic Credit Union in 2021 and last year took in Noventis and Sunova.

At the beginning of this year it also added tiny Amaranth Credit Union, with just $18 million in assets and as of July 1 this year it will also be adding Carpathia and Casera credit unions.

Access Credit Union CEO Larry Davey said the growth does not have anything to do with wanting to be the largest.

“It is all about like-minded credit unions doing what is best for its members,” he said.

With credit unions being such a competitive force in the Manitoba marketplace — credit unions enjoy a 40 per cent market share in Manitoba from a capital perspective and more than 50 per cent of Manitobans do their banking there — it is not surprising that efficiencies and product enhancements are driving the consolidation in the industry that has been going on for a few years now.

“What we are finding in the industry is that there are significant technology changes and those changes come at a price,” Davey said. “We have been able to realize scale by bringing more organizations together. The over-arching view of most credit unions is that they want to do the best for their members and communities.”

Brent Thomas, the CEO of Casera Credit Union, said that technology and the increasing costs of compliance, for instance to defend again money laundering and cybersecurity risks, are becoming increasing costly.

Those were among the reasons that his credit union — which was originally started in the early ’50s to service workers at CN’s Symington Yards — decided to merge with Access.

“Based on how the landscape has evolved over the past seven-to-10 years it is becoming very, very costly to operate,” Thomas said. “We looked at how to become a lot more efficient to operate. Merging was obviously an option to look at.”

With $512 million in assets and three locations, Casera chose Access as its partner for the future. All employees have been guaranteed positions with Access.

Large credit unions like Access and Steinbach are able to provide cash-back bonuses to members based on the size of a member’s loans and savings. That is not something that all the smaller credit union are able to offer their members.

Davey said there are no plans yet regarding potential consolidation of locations. (There are about 80 communities in Manitoba where credit unions are the only financial institution in town.)

But that is not to say there might be closures at some point.

“As technology changes people’s behaviour we will always have to revisit the need for our locations,” he said

He pointed out that 10 years ago he would have said that ATM’s were the technology that everybody thought was necessary.

“Now ATMs are not used a lot because people don’t use cash as much and are using mobile devices or online services to do their banking,” said Davey. “As a result, transactions on ATMs are coming down faster than transactions done in a branch.

martin.cash@freepress.mb.ca