- Provide benefits to our current and future members;
- Allow for further innovation and growth; and
- Help achieve continued strength and sustainability for the future of our credit union.
The Credit Union environment has changed significantly over the past number of years. We anticipate that our members’ technology expectations will continue to grow and remain as diverse as the multi-generations we serve. With these increasing costs associated with technology, regulation, higher tax burdens, and an increasing requirement for specialized talents, credit unions that can’t meet these challenges are finding it difficult to maintain a competitive place in the market.
Over the last 5 years, the number of credit unions in Manitoba has decreased from 38 to 23. In fact, there were 65 credit unions in Manitoba in the year 2000. This decreasing trend in total number of credit unions continues both in Manitoba and across Canada. Credit unions have been merging to remain relevant and strong for the future.
As part of the due diligence and business case, detailed financial analysis and modeling was completed. The financial five year projections validated that the proposed merger will create a strong financial foundation for future growth and position the new credit union for more success than either credit union could achieve independently.
In the table below, we have provided some high level results from the five year financial projections for the balance sheet and income statement of the new proposed credit union.
Please note that the financial projections reflect management’s best estimate of the future performance of the business of the new credit union. The financial projections are made up of various assumptions and factors that are based on best currently available estimates and good faith judgments of the management of Crosstown Civic and Access Credit Unions as to the future financial performance of the new credit union. Because projections are based on many assumptions and factors and it is difficult to accurately predict the future, the actual financial results and performance may differ from the forecasted financial results shared below.
The financial projections anticipate that the new credit union would grow to $7.3 billion in total assets and would achieve approximately $48 million of Gross Operating Profit (GOP) by the end of Year 5, GOP being defined as income from operations before provision for loan losses, patronage and income taxes. The GOP is anticipated to increase annually as a result of the benefits and strength from the overall scale of the new organization, including but not limited to greater achieved revenues and continued realized costs efficiencies.
High Level Financial Forecasts
Cautionary statements relating to forward looking information:
The financial projections constitute “forward-looking statements” which are based upon current assumptions of future events which may not prove to be accurate. Such “forward-looking statements” reflect management’s current views with respect to certain future events and financial performance and include any statement that does not directly relate to any historical or current fact. Words such as “anticipate,” “estimate,” “forecast,” “projection” and similar expressions which indicate future events and trends may identify “forward-looking statements.”
Given the longer term nature of these projections, they are subject to greater uncertainty, including potential material impacts if the assumptions are not realized. Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from those projected or implied in the “forward-looking statements” and from historical trends. The foregoing projections are based on information available as of the date of the business case and reliance on the foregoing financial projections is subject to the assumptions and risks determined as part of the due diligence.
Factors that could cause actual results to differ materially from those projected or implied in any “forward-looking statement” and from historical trends include, but are not limited to economic conditions, changes in regulation, government actions, actions by our competitors, and other risks inherent to the industry in which we operate.
- Future fixed costs per legacy credit union will be paid once by the new credit union resulting in immediate savings (e.g., implementation costs for technologies);
- Reduced costs with volume discounts due to the size and scale of the new credit union;
- Maximizing the talent from both organizations and reducing the need for each credit union to invest separately in the required specialized skill sets; and
- Eliminating redundant services and duplicated processes resulting in more savings and efficiencies.