Members of the Heritage Credit Union in the Slocan Valley say they understand why the financial institution needs to merge with another credit union, but they’re skeptical it will be good for the service they receive.
About a dozen locals met at the Slocan Park Community Hall last month to hear a presentation on the proposed merger from Heritage’s chief executive and board members.
“I don’t want any member to vote out of fear,” Heritage Interim CEO Doug Eveneshen told the audience. “I want us to look at this as that we are going to be more sustainable, more viable.”
Members of the Heritage Credit Union – which has branches in Slocan Park, Castlegar and Greenwood – are being asked to vote for a merger with the East Kootenay Community Credit Union. The members’ meeting was held Nov. 24 to answer questions about the proposed merger, which has been in the works for about a year.
During the presentation, members heard that banking system regulation was growing more complex, technology costs are increasing, and customers – especially younger families – wanted more access to services like online banking. Heritage had to grow to survive, he said.
“Over 90 per cent of our members have another financial-services relationship,” the CEO said. “And the reason they do is because we haven’t got you covered well enough. So there are things we have to do better to be more relevant to our membership.
“We’re only keeping up. We hope with our combination with East Kootenay … we can be proactive and take advantage of the future, rather than be reactive,” he added. “It will help us reduce costs, we can keep pace with change, or try to keep up – arguably we are losing that battle.”
Strength through synergy
Heritage and EKC had been part of another merger attempt about five years ago, when six Kootenay credit unions sought to join forces. But it turned out to be too expensive, complex, and was not supported by regulators. Last year, the community-owned banking institutions gave up on that effort. But Eveneshen says this time it’s different, with just the two credit unions proposing to work together.
“The regulators have approved this,” he said. “In that [previous] merger, the regulator never provided consent for it to happen … they were never comfortable with the application they were presented. But they have approved this … they concur this is a good thing.”
Eveneshen said there are a lot of similarities that make the merger enticing for the two groups. They are about the same size – Heritage has three branches, EKC has four. EKC is larger in most other ways – with 47 employees, compared to 32 at Heritage; $456 million in assets, compared to $258 million; and $370 million in loans out, while Heritage has loaned half that.
But both sides have strengths they bring to the other, Eveneshen said.
“We don’t believe there is a better fit than with East Kootenay,” he told the audience. “When we started these discussions with East Kootenay … it was important it was as equitable as it could possibly be, it was sharing resources. If we felt at any point this was a ‘takeover’, that we wouldn’t be able to maintain the legacy we’ve built as a credit union, we wouldn’t be here today.”
EKC also has an online call centre for member support, and would be able to afford more financial instruments and services to members, he added. A merger would also provide more career opportunities for staff, and offer more money for community projects.
The meeting also heard that the elected board of the credit union was endorsing the plan.
“Your board of directors is working hard; we have really examined this merger carefully and come out of it with a lot of due diligence, making sure it is all ready to go…,” said board chair Joleen Kinakin. “As your elected board of directors, we recommend this be acceptable to you. But we are also here for you to make your own decision. And that’s the beauty of being a member of the credit union. You get a vote on it.”
Members of the East Kootenay credit union have already voted in favour of the organizational and financial steps needed to make the deal move forward, as well as approving a new name for the combined entity—StellerVista Credit Union. Now it’s up to Heritage’s 7,043 members to approve the deal.
The dozen voting members attending the meeting listened carefully to the presentation, and asked many questions. They wondered if there would be layoffs, transfers or closing of branches under the deal. They were told there would not be – and if anything, the credit unions are short-staffed and need more workers.
They asked about board representation – and heard that Heritage members would have five seats on the larger combined board.
After the meeting, members said they heard a lot of information they needed to process.
“I’m skeptical, you’re always skeptical,” said Jeff Sheloff, who’s been a Heritage Credit Union member for 46 years. “The main concern is people who live in this community who want this service, where you can walk in or pick up the phone and talk to someone you know. But times are changing in banking. This gives me something to think about.”
Another member said she grew concerned after receiving a guide explaining the merger from Heritage, but had many questions answered at the meeting.
“I have better feelings going out of this meeting than I did coming in,” said Rita Moir. “I want to trust our board, our locally elected people and people who work at the credit union. They have done really hard work.
“I’m going to talk to a few more people who are part of this process, and one person who is opposed to it … but at some point you have to trust people have done their due diligence and have our interests at heart and are not stupid. I’ll take that into consideration.”
Consequences of ‘no’
And if members reject the proposal? Eveneshen said the credit union would soldier on as it does now, but might end up not being able to provide all the services that are soon to be available with regulatory changes coming to the Canadian banking industry.
“We’re going to have challenges. We’re not going to be able to do some things for members. We’re not going to be able to protect ourselves as well as we can for products and services. We’ll probably be more vulnerable to loss of membership than we would otherwise.
“If the membership vote no, we’re going to do our very best to deliver the very best in member services going forward.”
The members vote on the merger Dec. 4 to 8, with both online and in-branch voting available. If the vote is yes, the takeover would become official on Jan. 1, 2023. Heritage would be dissolved and its assets and liabilities wrapped into the new StellerVista organization.