Evidence of meeting #7 for Special Committee on Cooperatives in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was credit.
A video is available from Parliament.
2:55 p.m.
Conservative
The Chair Conservative Blake Richards
Sorry, your time has expired.
Is there a yes or no response to that?
2:55 p.m.
Vice-President, Alberta Federation of Rural Electrification Associations (AFREA)
I didn't quite catch that.
2:55 p.m.
NDP
Malcolm Allen NDP Welland, ON
Yes or no, if I consume more than I generate, do I get on automatically?
2:55 p.m.
Vice-President, Alberta Federation of Rural Electrification Associations (AFREA)
You will be billed for the difference that you're consuming. That's all.
2:55 p.m.
Conservative
The Chair Conservative Blake Richards
Close enough to a yes or no. All right, thank you.
We'll move now to Ms. Rempel, for the next five minutes.
2:55 p.m.
Conservative
Michelle Rempel Conservative Calgary Centre-North, AB
Thank you, Mr. Chair.
Thank you again to our witnesses for being with us in Ottawa on a very lovely summer Friday afternoon while the Olympic opening ceremonies are taking place.
Mr. Marshall, you spoke a bit about Budget 2010 and the new regulations we put forward for chartereds and credit unions. What is the anticipated impact on your client base? How will it positively impact your business?
2:55 p.m.
President and Chief Executive Officer, Mountain View Credit Union Limited
For Mountain View Credit Union specifically, it's not something we're considering at this time. We serve members in a soon-to-be 12 communities in central Alberta, and we have a lot on our plate just for the next four or five years. Becoming a chartered under the federal regulations is something we're not contemplating at this time.
2:55 p.m.
Conservative
Michelle Rempel Conservative Calgary Centre-North, AB
With regard to these regulations, for other members you might have or other credit unions you might interact with, what has been the word on the street?
2:55 p.m.
President and Chief Executive Officer, Mountain View Credit Union Limited
I haven't heard a lot, other than one particular credit union in B.C. I think for the one service credit union in Alberta that possibly would entertain this, one of the things they cherish quite significantly is the 100% deposit guarantee by the provincial government for any depositor in the credit union. If they were to move into the federal jurisdiction, their deposits would be under CDIC, which has a maximum of $100,000 per instrument or plan. So that's something that they are struggling with, I think, in that regard.
2:55 p.m.
Conservative
Michelle Rempel Conservative Calgary Centre-North, AB
You also spoke about your asset base and your profitability. I think one of the commonalities that we've heard from the various financial-based credit unions that have appeared before this committee is the strength of assets, the strength of growth, in light of some of the economic challenges we've seen globally.
Would you say for the most part, or characterize the following statement as correct, that your growth has really occurred without federal intervention?
2:55 p.m.
President and Chief Executive Officer, Mountain View Credit Union Limited
I'd say that on a system-wide basis. But as a specific credit union in central Alberta, where we're in 12 rural communities, we're not experiencing growth right now. The unfortunate part of that is that we serve five communities that have no institution in town, and we're finding it more and more difficult to justify our existence in those communities because they're earning below the average rate of return that we need to sustain our organization over the long term. Our competition in those areas isn't the chartered banks or other credit unions; it's the three crown corporations we're facing. That's the unfortunate part. If crown corporations would complement, as opposed to compete, with us I think the long-term benefit for our rural constituents would be a lot better.
3 p.m.
Conservative
Michelle Rempel Conservative Calgary Centre-North, AB
You noted in your presentation that your assets grew in 2012. Is that correct?
3 p.m.
President and Chief Executive Officer, Mountain View Credit Union Limited
They grew in 2012, but only in deposits, not in loans, and loans are our most productive asset. In fact, our loan portfolio has been diminishing.
3 p.m.
Conservative
Michelle Rempel Conservative Calgary Centre-North, AB
You stated in your presentation that your income for Q1 of 2012 is $33 million. Is that about average for your cooperative?
3 p.m.
President and Chief Executive Officer, Mountain View Credit Union Limited
That's on a system-wide or provincial basis. It's not ours, I wish it were ours.
3 p.m.
Conservative
Michelle Rempel Conservative Calgary Centre-North, AB
Okay. So you might say that $4 million is something of significance, then.
3 p.m.
President and Chief Executive Officer, Mountain View Credit Union Limited
Yes, it is very significant.
3 p.m.
Conservative
Michelle Rempel Conservative Calgary Centre-North, AB
That’s excellent.
You talk about loans being a key part of your business. When you're looking at your underwriting, or the process by which you're making an assessment of the risk associated with a loan and whether or not it's a viable business opportunity for you, would you characterize the governance structure of a business as a key determinant in that assessment? Specifically, do you give preference to those organized in a cooperative fashion?
3 p.m.
President and Chief Executive Officer, Mountain View Credit Union Limited
Yes, we would give preference to that. Again, we understand the model, we understand the direction, we understand that it's member owned and that there is some continuity on a long-term basis versus a single owner business where the governance is one person basically, or a family in that regard.
No, there is consideration in that aspect. Again, one of the most fundamental things we look at, though, in assessing credit is if they have the ability to repay the obligation. We have to take that approach because it's our members' deposits that we're turning around and investing in these companies or cooperatives. That's probably one of the most critical criteria, the ability to repay the loan in the time.
3 p.m.
Conservative
3 p.m.
Conservative
The Chair Conservative Blake Richards
Yes, never look.
Anyway, we will now move to your friend, Mr. Payne.
You have the floor for the next five minutes.
3 p.m.
Conservative
LaVar Payne Conservative Medicine Hat, AB
Thank you, Chair.
I thank the witnesses for coming. It's important that we hear your testimony, and certainly we've heard a lot of really positive testimony, as my colleagues have said here today.
I do have a number of questions.
First of all, Mr. Marshall, just to let you know, I happen to be a member of Servus Credit Union, and I was quite delighted with its expansion. I see that they have almost 60% of the Alberta market. Do you see further expansion of, say, the Servus Credit Union or other credit unions merging with some of the smaller ones to become bigger and stronger?
3 p.m.
President and Chief Executive Officer, Mountain View Credit Union Limited
That's a great question. Yes, I do see that in time for some credit unions. There are probably one or two a year that may occur in Alberta, typically small credit unions that one or two people are employed in, or that are open 12 hours a week—that type of thing.
I know there was one credit union that experienced some difficulties and merged with Servus. So certainly those will continue. I'm not sure at what rate.
The other interesting aspect, though, that we've worked on with the three credit unions that are similar in size to us—we're $500 million, and Servus is $11 billion—is that rather than merging we have set up a subsidiary funded by all three of us. We're starting to run all of our back office aspects through that. It's a collaborative initiative as opposed to a merger in that regard.
3 p.m.
Conservative
LaVar Payne Conservative Medicine Hat, AB
My other question is whether you co-share loans with other credit unions or other financial institutions.