Northern Savings Credit Union holds AGM in Prince Rupert

Northern Savings Credit Union held its annual general meeting at the Crest Hotel in Prince Rupert this past week.

Northern Savings Credit Union had its Annual General Meeting in Prince Rupert last week to give its members an update on how the credit union has been doing over over the past year and what its planning to do this fiscal year.

The meeting began by highlighting the efforts of the employees at the main branch in Prince Rupert who came into the office at night after a cold snap caused a pipe to burst in the building. These actions prevented the destruction of valuable assets such as computers from being destroyed by the water, which would have cost thousands and interrupted the credit union’s operations.

Northern Savings executives were also touting their community investment initiatives where the credit union provides grant money to worthy initiatives around northern BC.

“Our board of directors has developed a vision that really speaks to building strong, resilient and sustainable northwest BC communities,” says the credit union’s vice-president of marketing, Janet Mirau.

To illustrate the effects of these community investments they had representatives from two different organizations who received money from the credit union speak and give the members an update on what the money was used for and their plans going forward.

Marco Kessler from Prince Rupert Marine Rescue came to give a presentation about their new rescue boat that the credit union donated $5,000 towards. Shaun Stevenson from My Mountain Co-op came to give members a rundown on how well their first year of operating  the Shames Mountain ski hill went. The credit union was one of the major contributors to the effort to buy the floundering ski hill.

Northern Saving’s acting CEO, Bill Nicholls, gave a run-down of the credit union’s financial situation. The credit union is doing well despite the tough times it finds itself in, that said  the economic situation is having an effect.

“One of the things a lot of you savers out there are not happy with, and all you borrowers are very happy with are the very low interest rates. This has had a very significant impact on the credit union – as well as other financial institutions,” says Nicholls.

The reason for this is that interest rates for people’s bank accounts are about as low as they can be while the interest rates on loans continue to fall. The result is there is less space between what the credit union must pay out to its members and how much money its making off loans.

“This is something that will continue for the next couple of years as the world continues to scratch its way out of credit and debt crisis all over the world,” explains Nicholls.

Another big impact to the credit union this past year has been the implementation of new accounting standards throughout Canada called the International Financial Reporting Standards. This changes the rules for how financial statements are drawn-up.

“This has been a good thing because it brings more clarity to what your actual financial performance for the organization is. In prior years we had a lot of volatility to our reporting of the bottom line,” says Nicholls.

In anticipation of these new standards, the credit union grew its  cash assets by 14 per cent to $863-million in 2010, in 2011 those assets shrunk by 0.6 per cent to $858-million

“During 2011, once we reached a certain level that we were wanting to achieve, we maintained it at about 850-million,” says Nicholls.

The credit union’s  income for 2011 increased by about $570,000 from the previous year to about $3.6-million, the jump is largely explained by the switch to the new accounting standards.

“We generally make about $3-million a year. That sounds like a lot of money, but when you have a $850-million organization, it’s okay – not great. But its a solid place to have our earnings at,” says Nicholls.

The credit unions liquidity is also very high at the moment.  Regulations require that the credit union keep 8 per cent of its cash assets and capital on hand in order to pay its bills, such as interest on savings accounts.

At the moment, the credit union is retaining 24.7 percent of their total cash assets. The credit union expects to decrease this number by putting that money out in the form of loans and other investments which will make the credit union money.

The credit union is also kept 18.4 per cent of their capital (retained earnings and equity shares) liquid as well. The reason for keeping more capital on hand than needed is because the credit union is expecting new financial laws to be put in place requiring financial institutions to have more capital on hand anyway – more fallout of the financial crisis.

“Our credit union has always had strong capital, we’ve always had enough socked away for a rainy day . . in this case we have 36-million socked away,”explains Nicholls.

Going into the future, Northern Savings is expecting new economic developments across the Northwest go forward, but are still preparing for continuing economic troubles.

“What with Haida Gwaii and the forestry industry picking up, Rio Tinto, Northwest Transmission lines and of course the port; it just goes on and on. It’s a very exciting time . . . but we are still cognizant of the fact that we are still in tough economic times now. When you walk down Third Avenue, there are still a lot of empty store fronts.”

 

 

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