Questions & Answers

 

 

Why are these credit unions exploring the possibility of a merger?
Both credit unions were actively reviewing options to position themselves for a stronger future. The right partnership must:
  • 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.
With the completion of the business case and due diligence review, both Crosstown Civic and Access have concluded that the proposed partnership is in the best interests of their members, employees, and communities. As a result, both credit union boards have recently signed an Amalgamation Agreement and are inviting the respective memberships to vote on the merger proposal on March 19th. With this merger, we believe the future is promising for our members, employees, and communities to enjoy a strong, sustainable credit union committed to the financial well-being of individuals; a credit union that is rooted in cooperative principles, and is passionate about supporting the communities in which we all live, work, and play.
Why are mergers critical to the future success of Manitoba Credit Unions?

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.

Manitoba Credit Unions

What will be the name of the new credit union?
In choosing a name, both credit unions considered several options, including choosing one of the two existing names or creating a new name. After much discussion, both boards identified the strength of the Access name and its applicability to the missions of both organizations. Both credit unions believe in providing opportunities for all members to achieve their financial goals by delivering accessible services that best meet those needs. The plan is to develop a refreshed brand with the Access name, a brand that reflects both credit unions, demonstrating the beginning of a new organization while respecting the legacies of our pasts. Access is a relatively new name, having originated in 2009 with the merger of four credit unions in Southern Manitoba. The name is appealing to the greater population and one that many can associate with. Members will have access to financial products and services as well as financial literacy tools and expert advice. Employees will have access to fulfilling careers, education opportunities, and comprehensive training and development programs.
Will the new credit union pay patronage to the members?
Both credit unions agreed that the new credit union will focus on maximizing the ability to pay patronage to members as part of the cooperative values and belief that members should share in our profits. We believe the new credit union will be able to offer an enhanced patronage program with the objective of paying bonuses in cash to members.
Will branches close and head office relocate?
One of the many favourable things about this merger is the absence of geographic overlap in the combined branch network. No branches will close as a result of this proposed merger. Crosstown Civic hosts nine branches in Winnipeg and Access has seventeen branches in southern Manitoba. The new entity will also maintain the two current corporate offices of the legacy credit unions: one located in Winnipeg and one located between Winkler and Morden. Organizations today can work from many locations with the help of technology. This will allow staff to work at various locations without the need to relocate.
Who will lead the new organization?
As is the case in mergers, the senior-level structure forms part of the overall discussions and plans. We are very fortunate to have two very strong leaders. Mona Forsen, the CEO of Crosstown Civic, had previously informed her Board of her intentions to retire in 2020. Larry Davey, current President and CEO of Access Credit Union, has accepted the role of President and CEO for the new organization. Larry has over 30 years of experience in the financial services industry with 25 of those years in the credit union system.
What are the financial projections for the new credit union?
The Board of Directors role is to represent the members and, on behalf of the members, they have conducted extensive due diligence leading up to the business case for the proposed merger and have thoroughly reviewed and discussed with management the business case results, which included the financial projections. The business case, dated February 11, 2020, has also been shared and reviewed by our provincial regulators: Deposit Guarantee Corporation of Manitoba and Financial Institutions Regulation Branch of the Province of Manitoba.

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 Manitoba Credit Unions

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.
What will be the new board composition?
As a true partnership, the board of the new credit union will consist of ten board members (five (5) from Access, five (5) from Crosstown Civic). Each board will determine which of their existing directors will move forward to the new board. Non-selected board members will retire from their respective roles prior to the effective date of the new entity. The two boards also agreed that each credit union will have representation at the leadership levels. As such, the Board Chair and Vice Chair for the new organization will be Ingrid Loewen (Board Chair, CCCU), and Curt Letkeman, (Board Chair, Access), respectively.
Are there costs for this proposed merger?
There will be some merger and integration costs, most of which will be one-time costs that will include application to the competition bureau, legal, and systems integration. Because our two credit unions are on many similar systems, such as our core banking system and loan origination system, there will be less cost to integrate the systems. The implementation will also be easier for staff as they are familiar with the systems and there will be less disruption to members. These costs will be short term and the new combined credit union will experience large savings over the years that results in positive financial benefit to reinvest in our members, employees, and the community. Some examples of savings include:
  • 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.
Why is electronic voting the only means to vote?
Given the importance of this decision for our credit union, the boards wanted to provide a method that would increase member engagement for the vote. By providing electronic voting from 8:30 a.m. CST to 8:30 p.m. CST on March 19th, more members will be able to be part of the decision. Any members who are uncomfortable with voting electronically will be able to get assistance from employees either at a branch throughout the day on March 19th or at the Special Meeting of Members the evening of March 19th.
Will anything change for AcceleRate Financial?
AcceleRate Financial is currently a division of Crosstown Civic Credit Union, offering virtual deposit products and services since 2010. Both organizations recognize the strength of the AcceleRate Financial brand and structure and are committed to keeping AcceleRate Financial in place while providing additional resources to continue its current success. The new entity will have the capacity to make further investments to benefit our current and future AcceleRate members. Both boards quickly agreed that the new credit union will maintain the AcceleRate Financial name. Similar to the Access name, the brand for AcceleRate Financial will be refreshed to demonstrate the beginning of a new organization.