MANITOULIN— The Espanola and District Credit Union ( EDCU ) held an open house in Little Current last week, together with the senior staff of the Northern Credit Union, to share the plans of the merger between the two credit unions and the news that without it, the EDCU’s future is grim.
Jim Gilpin, chair of the EDCU board, gave opening remarks on behalf of the board, telling the group of largely employees and board members that the merger will be a positive thing for members and employees.
Lindsay Liske, EDCU CEO, told the audience that there is a large shift starting within the credit union system. “Banks and other credit unions are becoming more aggressive,” he said, noting the decreased margins being seen and even pointing to the large layoffs announced by TD Canada Trust. In 2009, there were 186 credit unions in Ontario and by 2014 there were only 117, this due largely to mergers.
Money is going out at a low interest rate and it’s those margins that keep the branches going and employees paid, Mr. Liske added. He also pointed to an aging membership, a lack of advertising dollars and the stiff competition from the “free of bricks and mortar” institutions like PC or ING Direct. Northern, he added, has the means to deal with all of this, extolling the virtues of Northern’s $1 billion in assets. In fact, he shared, the EDCU had picked up a new major client that week because of the news of the proposed merger. Currently, the EDCU can give a commercial loan up to $560,000—Northern can give a commercial loan topping $12 million.
“It’s currently costing $110,000 a year just to run the banking system,” Mr. Liske continued. “It’s getting prohibitive to offer extra services.”
He noted that last year, the EDCU made $250,000 and projections for next year come in at around $210,000. Mr. Liske warned that he only expects the EDCU to be financially viable for another two years, maybe three, without the merger.
“There are trade-offs,” he said. The prime rate will go from four percent to 4.75 percent and there will be $7 yearly dues for the banking system paid by each member, something the EDCU covers currently. However, no staff will lose their jobs and no branches will close. On top of higher lending limits, Northern also offers a wealth management team and a ‘deposit anywhere’ feature (taking a photo of a cheque with your mobile device and uploading it to the financial institution). They also plan to have a contact centre, live online chat function and ‘anytime, anywhere, any device’ banking.
With the merger, the former EDCU catchment area would have one board member on the Northern board for a three-year term with 16 delegates, eight of whom are voting delegates. Branch members elect the delegates at the branch annual meeting (also new). Each branch is entitled to one vote for each 500 members but no branch shall be entitled to less than two votes. Delegates can also be youth delegates (13 and up).
“We can survive for a few more years, but not after that,” Mr. Liske said.
A merger with Northern Credit Union offers a great deal of security, he reiterated, noting the always-present fear of the end of operations of Domtar in Espanola and what it would mean for the EDCU. A merger would keep the branches safe from harm should such an event occur.
Northern Credit Union also offers expertise on agriculture financing, which would be of benefit to the people of Manitoulin, he added.
Al Suraci, president and CEO of Northern, also spoke, explaining that this has been a two-year process of studying one another and getting to know each other in order to ensure a good fit. “It’s also a fit geographically,” he added, pointing to a map of Northern’s 30 branches surrounding Manitoulin. Including ones to the south in the Grey-Bruce region.
It is his vision to see Northern Credit Union branches stretching across the North between the Manitoba and the Quebec borders.
“I believe it is a natural fit and the time is right,” Mr. Suraci said. “Capital is king.”
“You’ve been doing just enough—serving members, keeping the regulator at bay, but I think it’s visionary that the board has come to terms with the fact that it may not be sustainable in three years’ time,” he added.
Mr. Suraci boasted that in 21 years, they have never closed a branch, but have continued to open them.
“It’s been a collaborative, cooperative process,” the president and CEO continued. “It’s taken longer than usual, but we’ve gotten to know one another too.”
Mr. Liske also listed the EDCU’s importance to the Manitoulin community in terms of support, naming donations to the tune of $15,000 to the Mindemoya hospital, $5,000 to the Manitoulin Centennial Manor, $5,000 to the Diabetes Association, $1,500 toward the hospital bed campaign and a soon-to-be-announced donation to the Manor’s call bell system campaign.
The vote for the merger will be held Thursday, November 5 at the Knights of Columbus Hall at 6:30 pm in Espanola. Advanced polls will also be held at both of the Manitoulin branches: Monday, November 2, Mindemoya branch, 11 am to 2 pm; Tuesday, November 3, Little Current branch, 11 am to 2 pm; and Wednesday, November 4, Espanola branch, 11 am to 2 pm. It is important to note that a two-third majority vote is needed by the membership to see this merger move ahead for December. Mr. Liske and Elizabeth McQuarrie, credit manager, will be on hand at each of the advanced polls to answer any questions from the members.
“I can’t emphasize enough the importance of this merger—it’s important for members that there is still a financial institution, for staff, that they still have jobs. We have a guarantee for a minimum of two years right now,” Mr. Liske said in his parting speech. “We have to rely on that legacy that’s in front of us.”
For more information about the merger, contact Mr. Liske at 705-869-3001 ext. 5.