Survival of the

gge st

: an The: backlash over big bank mergers has helped boost -

Credit union membership. But the local financial co-ops
know their own day of reckoning is coming. And a northwest
Credit union is at the forefront of a radical solution.

- By JEFF NAGEL
: NORTHERN SAVINGS
Credit Union is among. a
w «group of 10 Canadian credit
“unions hoping to merge to-
“gether to form something
“called a National Community
Bank,
: The proposal would see the
‘group — which also includes
VanCity Savings, the country’s
largest credit union — band to-
gether and essentially. seck a
bank charter from the federal
goverment.
. The result would be a national

bank with about $12 bdillion in’

assets — slill small by bank
standards — which would hope-
fully grow further as other credit
unions join up.

While some local autonomy
‘would be sacrificed, a great deal
would be preserved, and the
member credit unions would
have what they sce as their best
‘shot at survival.

“What's more important? Is it
your independence or is it your
ability to serve your members??’
asks Mike Tar, president and CEO
‘of Northern Savings. ‘I think those
things are going to more and more
be in conflict.’

“This is about attempting to find
partners who we can work with
who have the same values that we
have that are interested in maintain-
ing a cooperative ownership struc-
ture and amalgamating with those
‘partners,”’ explains Tarr,

The bottom line, Tarr says, is that
credit unions must get bigger,
amalgamate or otherwise work to-
gether if they are to compete in a
world where customers increasing-
ly demand expensive telephone and
Internet banking services.

The same fear of the future that
drove the country’s biggest banks
to pair up in attempts to merge Jast
year means even more dire chal-
lenges for Canada’s hundreds of
small credit unions.

The root of the problem is that
the old way of doing business by
making the bulk of money on the
Spread between deposit rates and
loan rates is over,

New and tougher competition has
pushed those spreads very close to-
gether.

Banks reacted faster than credit
unions, and dove years ago into
other higher-margin - financial
businesses, like selling insurance,
securities and financial planning
services.

Now the credit unions are playing
catchup and sce the writing on the
wall if they fail,

CREDIT
UNIONS
GROWING

g@ Northern Savings Credit
Unfon holds $219 million In
assets. While not large by
nationai standards, It Is far
and away the largest credit
unlon of the 14 In northern
B.C, now.

m@ Northern Savings Is
Prince Rupert-based and
was born out of the merger
of two credit untons there.
m@ While Northern Savings
is bigger overall, the older

»| Terrace and District Credit

Union is still the larger
player In the Terrace
market. It has $43 million In
assets and membership of
4,600 compared to Northern
Savings’ $33 million and
2,500 members In Terrace,
@ Both credit unlons are
reporting growth of about 5
per cent a year.

&@ Annual General Meetings
are coming up for both In-
stitutions. Terrace and Dis-

: trict meets here March 30.

Northern Savings members
here meet April 12.

NORTHERN SAVINGS Credit Union member service rep Avery
Archibald counts bills at the credit union's Terrace branch.

At the same lime ihere’s a need
for tremendous investments. of
Money in the new technology to
Keep up with customer demand.
That involves everything from
automated teller machines to tele-
phone banking to Internet banking
services.

Those huge investments — some
banks are prepared to spend a bil-
lion dollars a year on new financial

merce,””

“What is the role of credit unions
if people start paying for a lot with
electronic cash?” he’ asked.
“Everybedy’s looking at the en-
vironment and saying we have to

do something.’”

That’s what drove Prince Rupert-
based Northern Savings three ycars
ago to first try to amalgamate with

“The banks are maybe the least of our problems.
We look at companies like Microsoft that are
poised to become leading service providers in

electronic commerce.”

technology —- simply can’t be
bome by small credit unions serv-
ing a relatively tiny number of
members,

“The banks are maybe the least
of our problems,” Tarr said, ‘"We
look at companies like Microsoft

that are poised to become leading ©

service providers in electronic com-

Terrace and District Credit Union
and, when those talks failed, to es-
tablish a branch here.

While those amalgamation talks
haven’t resumed, Tarr says there
have been preliminary discussions
with other credit unions further: to
the cast along Hwy16.

And the same backdrop is behind

the National Community Bank idea
and other options for credit union
survival,

Surrey Metro Savings members
last week voted to reject the con-
troversial proposed sale of their
credit union to Canada Trust,

And other credit ynions not part
of the National Community Bank
Proposal are exploring a more em-
bryonic national initiative of the
Credit Union Central of Canada.
That woukl hopefully see credit
unions work together more closely
while maintaining a high degree of
autonomy,

Going in the direction of a bank
charter is risky, Tarr admits, He
says most members don’Leven like
the word ‘bank’,

‘*We have been forced up to this
point into using the term bank,'” he
said, adding that’sthe best mechan-
ism for the credit unions to join 10-
gether.

APR challenge

The irony of il all is that credit
unions — which used anger over
big bank merger'plans to persuade
many cuslomers to switch — now
also face a huge public relations
challenge as they’re driven by the
same forces to get bigger,

“On one hand we need to build
scale but if we do it aggressively
the public is going to say you're
nothing different from what the
banks are doing,” Tarr said, “We
have to build scale but continue te
be locally grounded.’”

“Even though we’re going to be
a national bank, the Jocal divisions
of the bank will have significant lo-
cal autonomy,” he added. “If-we
just become another bank, there’s
no point in doing this.”

Tarr said they hope to get word
from the federal government by
late April or early May on whether
Ottawa will entertain creation of
necessary legislation to allow the
new type of customized bank
charter requested.

Credit unions from BC,
Manitoba, Ontario and Nova Scotia
are in on the proposal, and make up
25 to 30 per cent of total credit
union assets nation-wide.

“The key to this is whether we
can reasonably quickly — say over
the next three to five years — at-
tract other credit unions into the
group so we become much stronger
in terms of national organization,’’
he added.

“The alternative is to throw in
the towel, But if we wanl to stay in
the business, then we have to Gnd
ways to magnify our financial
strength.”’

“Tf we can make this work this
will be a significant contribution to
the country,” he added,

Local, personal focus remains
older credit union’s strategy

THE OLDEST and largest credit
union in Terrace has no plans to
merge or become part of ‘an am-
bitious national community bank
proposal,

“I wouida’t want to put it in
stone that 10 years down the road
we're still going to be the one-
branch Terrace and District Credit
Union,’” says general manager
Valerie Gauvin.

“Tf there’s a need ta merge or be-
come part of the national bank

' proposal, we'll definitely be open

to it, Bul right now we're not plan-
ning on anything,’

She said credit unions every-
where are continuing to monitor the
pressures on them to cut costs and
enhance services. :

Two years ago, she said, all the
credit unions actoss northern B.C.
inet and contemplated a big merger.

“Because of the size of us all
we'd just be a larger credit union
with the same problems,’’ she said,

“Tt's always going to be a consid-
eration. If it proves that two credit
unions can: merge. together and
serve their members better that’s
what they’ re e going to do.”

So far, however, Terrace and Dis-
trict Credit Union has continued to
record growth of about five. per
cent a year and is anything but on
the ropes.

That’s duc in part to its diver-
sification. lt owns Paragon insur-
ance and -rents oul much. of its
building; Gauvin noted.

“We've kind of decided: at this
point we're healthy and we want to
continue to just focus on Terrace-as
our main TOSOUrce and: the area ‘we

service,’

’ That means an eniphasis on good
local, responsive, personal service
rather than on large technology in-
vestments needed to pursue things
like Internet and tclephane banking
to keep pace with the banks.

“We can’t ‘be-all, things to all
people,’ Gauvin says, ‘We service
a particular market of people who
want to have personal service.’’ .

“We'll never be able to compete
head to head wilh the banks.’

However, the credit union is sup-
porting the. national. initiative: of
credit union centrals around the
country, | ~

That. would see’ the provincial

support bodies merge into a more
efficient natlonal entity better able
to support the small individual
credit unions,

And Gauvin says they have found
anally rather than an adversary in
upstart Northern Savings Credit
Union, which set up shop here
three years ago.

Gauvin said an initially cool wel-
come [or the newcomer has turned

‘into a “‘really good relationship”

that sees the two credit unions work

-logether to share and control costs

on various items.
“We're tapping into their
resources,’’- ‘she said. ‘‘We’re

working together on a Jot of things
— backroom functions, technol-
ogy, accounting and reporting.”

While some people might think a
recession is when credit unions

- face tough times, Gauvin says the

opposite is sometimes true.

“Banks. are starting to. turn
people down for toans just because
they live in Terrace,” she said.

“In. this kind of environment we
actually start growing — we'll give
someore a loan when the banks
wouldn’t. ”

The Terrace Standard, Wednesday, March 24, 19799 - AS

CORRESPONDENCE FOR THE TERRACE STANDARD

The Mail Bag

Good and evil don’t mix

Dear Sir:

In a recent letter 10 the editor, a Mr. Robert Mer-
cereau Wriles at great length to support the view first
advanced in a Terrace Standard Halloween column that
the Catholic Church was wrong to condemn and sup-
press wilchcraft.

Witchcraft is defined by ‘‘The Concise Catholic Dic-
tionary”’ as ‘‘..the power of doing unnatural things by
the aid of the evil spirits; trafficking with the devil or
evil spirits; the casting of spells, curses; incantations to
the devil, etc.”’ vt

It is inconceivable to anyone of goodwill that tile evil
of sorcery should be promoted in the mass media and
in taxpayer-funded schools, women’s centers, CBC,
ete,

Peshaps a few naive and gultible peaple are as ig-
norant of the power of the forces of evil as-I once was.
Nearly three decades ago, when I was fallen-away
Catholic, I lived with a native Indian family in a remote
village in the interior of Alaska.

They looked upon me with pity bordering on con-
tempt when I scoffed at their stories of the destrictive-
ness of evil spirits.

That family’s oral history tradition went back to pre-
contact times. [ invite local natives to relate their
storics of how pagan witchcraft has afflicted them and
their families,

My letler to the editor on the subject was headlined:
“The modern Catholic Church isn’t the true one of
old,’” Mr. Mercereau apparently did not team in
elementary school that the headline usually sum-
marizes what is to follow.

Yam emphatically not a supporter of John Paul II or
the Vatican-2 church, whose bishops and pricsts have
led the cowardly and the gullible out of the true faith
into the darkness of heresy just as had been done in.
Europe following. the Protestant Reformation.

The greatest sin of the modemist heretics of the

“New Church’? is to fail to repeat the warnings of
God. Put in words that a child could understand, God
says, ‘“My way or the highway-to hell.”

Beginning with Adam and Eve, all rebellions against’
God deny that truth is importaat. These rebels insist
that good and evil can coexist in harmony because
somehow they know belter than God,

At one time all Catholic children were taught a very
big word describing God. It was immutable, which
means unchanging.

From the very beginning, God condemned sorcery, It
is again condemned in the last book of the New Testa-
meat, Apocalypse 22.

In a list of those excluded from heaven, we find sor-
cerers, adulterers, murderers and whosoever loveth and
maketh a lic. God welcomes all sinners who would
repent, be baptized and enter the True Faith. He cannot
abide a liar and He does not change his mind!

Tom Brophy, Terrace, B.C,

More airport queries

Dear Sir:

I would hike to ask a few questions about the airport
which is referred to as the Terrace-Kitimal Airport by
David Hull, city councillor:

1) What docs the term Terrace-Kilimat really mean.

How far will Kitimat be involved as far as taxes are:

concerned,

2) Mr. Hull uses figures such as $1,000 for newspa-:

per ads, etc. I am inclined io be a little skeptical about
hidden costs, ] believe we are venturing into uncharted
waters. Why did Canadian Airlines discontinue use of
the large aircraft,

3) How many possible jobs might there be at the air-
port. Who will be in charge of hiring and firing.
Without hard and fast rules regarding employment ]
cavision nepotism running rampant,

4) We must take a real hard. Jook at an airport
firefighting unit, We just cannot take care of it by
saying the Thornhill and Terrace fire halls can handle
it,

5) Finally, for now, I want to ask the airport society
to make certain that it solicits questions from the gener-
al public, unlike the impression conveyed by Mr. Hull
in The Terrace Standard of March 3.

Mr. Hull states the area will be under the governance
of the City of Terrace. What does that really mean. The
general public, for example, does not own the hospital
but is governed by a hospital board which is comprised
of local residents. The board is in fact a legal entity
which means it can be sued.

Let us find out whal our position would be if the air-
port existed under a society or something by another

name,
Andy Nabess, Terrace, B.C.

Break down barriers

Dear Sir:

1 found Davinder Olak’s letter to the editor (‘‘Repent
Or Else,’’ Feb. 24, 1999) to be judgmental and wonder
how this kind of attitude helps make the world a better
place to live in.

To believe in biblical standards is fine but how many
times has the bible been edited to satisfy the writers’
views? Churches need to give up the monopoly on
spirituality as there arc many non-Christian groups out
to improve the local and global situation. To speak of
souls going to Hell is little more than intimidation talk
to keep people in linc.

Condemnation does litlle to uplift the human spirit to
the next level. Instead of just repenting, prayer and

fasting, let’s break down barriers between people. Then —

open up the communication lines and join hands to
make the northwest and the world better to live in. It
takes less effort than expected.

To lighten wp a bit and finding practical ways of

giving a person a hand up bas more long term benefits —

than citing scripture.
Ron Murdock, Prince Rupert, B.C,
(recetved via email)

About letters

THE TERRACE Standard welcomes letters to the
editor, Our deadline is noon Fridays: noon Thursdays
on a long weekend. You can write us at 3210 Clinton
St, Terrace, B.C. V8G 5R2, Our fax number is 250-
638-8432 or you cart email us at
standard@kermode.net

Letters must be signed and must have a 2 phone auin-
ber. ; oo

er