Northern Savings Credit Union

Date of Incorporation: March 21, 1940 (Prince Rupert Fishermen's Credit Union)

Membership: 16, 287

Area Served: North Coast - Prince Rupert, Terrace and Queen Charlottes Islands

Activity: financial co-operative

Assets: $231 million

Background

Residents of British Columbia's rugged North Coast are no strangers to co-operation. In 1931, a group of Prince Rupert salmon trollers incorporated the Prince Rupert Fishermen's Co-operative Association. Four years later, fishers on the northern Queen Charlotte Islands followed suit, creating the North Island Trollers' Co-operative Association. Co-op members were tired of dealing with large companies that charged high prices for equipment and gave low prices for fish. The fishing co-operatives sold members' fish collectively to the highest bidder. In a few years, both co-operatives were successful businesses, helping their members weather the Great Depression.

Although the fishing co-operatives developed consumer divisions to provide supplies and groceries to fishermen, they initially failed to form credit unions to finance their co-operative ventures. Vic Hill - fisher, co-op member, and author of Tides of Change - claims early co-operators viewed "credit" as a "poison to the growth of co-ops."¹ Borrowed money had to be repaid with interest, bankrupting many co-operative endeavours. Banks were imposing and unfriendly institutions. The average British Columbian rarely used their services, turning to family and friends in times of financial need. Fear of debt prevented many co-op members from seeing the benefits of credit unionism.

History

However, the fishers eventually heard about the positive effects of credit unionism in many east coast fishing communities. By 1937, they were encouraging the provincial government to pass the Credit Union Act, and pushing for the establishment of a co-operative education programme similar to that at Saint Francis Xavier University in Nova Scotia. With the help of a grant from the federal Department of Fisheries, the University of British Columbia began holding study clubs in coastal fishing villages in the fall of 1939. The following spring, North Coast citizens (fishers and non-fishers) formed four credit unions. The closed bonded Prince Rupert Fishermen's Credit Union served co-op fishers. On the Queen Charlotte Islands, New Masset Credit Union, Q.C.I. Central Credit Union and Skidegate Inlet Credit Union adopted community bonds. After the Second World War, local pulp mill workers formed the Celco City Credit Union, and war veterans created the Royal Canadian Legion Credit Union. Another community organisation, Kaien Consumers' Credit Union, incorporated in 1945 to serve Prince Rupert citizens.

Many of the early credit unionists were co-op fishers, aware of the benefits of co-operative enterprise. Cooperative banking, however, was confusing for many new credit union members, and they continued to rely on the guidance of the UBC Extension Department. The region was also blessed with an enthusiastic leader, George Viereck. As a fisher, he attended the university study clubs and become an avid promoter of cooperative business. After serving as president of Prince Rupert Fishermen's Credit Union from 1944 to 1947, he was hired as its full-time manager. Under his administration, the credit union became the largest in British Columbia. In 1956, he also became the manager of Kaien Consumers' Credit Union, and headed both organisations until his retirement in 1980. Known affectionately to members as "Uncle George," Viereck served as the director of the BC Credit Union League, Credit Union Central of BC, the Credit Union National Association and Credit Union Central of Canada. After supporting co-operative ventures for over forty years, he was inducted into the Credit Union Hall of Fame in 1997.²

The credit unions grew steadily under the enthusiastic care of founding members. Local communities on the Queen Charlotte Islands benefited as members invested in each other's homes and businesses. In Prince Rupert, the fisher's credit union helped co-op members buy boats and equipment and, in the 1950s, began financing the co-op's operations entirely. Kaien Consumers'Credit Union helped non-fishing residents with savings and loans. Each credit union invested heavily in its community, funding community halls and hospitals. In Prince Rupert, the credit unions financed the Co-op Centre, which housed the city's consumer cooperatives and credit unions.

In the 1960s, the number of credit unions in British Columbia decreased, although membership continued to rise.³ Credit unions began to merge to meet an increased demand for loans, mortgages and other services. In Prince Rupert, Celco City Credit Union and Royal Canadian Legion Credit Union merged with Kaien Consumers' Credit Union in the late 1950s. In 1968, all three Queen Charlotte Island organisations voted to join Kaien Consumers' Credit Union as well.

In the 1980s, economic downturn in the commercial fishing industry affected the Prince Rupert Fishermen's Credit Union. The organisation borrowed heavily in the 1970s to finance the expansion of the co-op's fishing fleet, and struggled to repay its loans. In 1987, Kaien Consumers' Credit Union purchased the credit union's assets with government assistance. The amalgamated credit union continued to serve the fishing c-op and its members, but decreased its commercial fishing investments.

Throughout the 1990s, the credit union expanded its commercial lending portfolio and improved member services, changing from a "standard savings and loans credit union" to a "much more full-service institution... more directly competitive with the banks."⁴ To help fund new member services, the credit union opened a branch in Terrace, 150 kilometres east of Prince Rupert. This meant Kaien Consumers' Credit Union would compete with the local Terrace and District Credit Union. While credit union competition is common in southern British Columbia, many northern communities have only one credit union, and regard credit union competition as contrary to the co-operative spirit. By focusing on commercial business, however, the Prince Rupert organisation has avoided taking members away from Terrace and District Credit Union.

Shortly before opening the Terrace branch, directors decided to change the credit union's name. Kaien Consumers' was named after Kaien Island, on which Prince Rupert is located. The new name - Northern Savings' Credit Union - reflects the regional nature of the organisation.⁵

Vision, Purpose and Goals

Although much has changed since the 1940s, Northern Savings continues to embody the ideals of Prince Rupert's original credit unions: mutual aid, self-help and community development. Northern Savings is dedicated to "providing solutions for our members' financial needs" by delivering "a wide array of financial products and services... in a manner that exceeds expectations."⁶ It remains connected to its scattered membership through focus groups, which allow members to speak to directors, contributing to the future direction of their organisation.⁷

Directors measure the credit union's success both financially and in terms of member satisfaction (Tarr, 2002). While financial gains are a "reality" of business, the credit union stresses the importance of each member as "a stake holder, an owner, a partner and the reason for our existence."⁸

Organisational Structure

The credit union operates under the leadership of a ten member Board of Directors, elected by all credit union members. Directors serve three-year terms. All branch communities are represented on the board: seven directors come from Prince Rupert, one from Terrace, one from Masset and one from Queen Charlotte City. Members can be elected to the board when positions become available in their community. CEO Michael Tarr says finding new directors can be difficult, as the position is unpaid and carries significant liability. New directors must also complete a training program, which many find onerous (2002). In the past, directors sat on credit committees and, in general, played "a much more intimate role in the governance of the credit union." Today, "because of concerns about liability and risk... the job has become policy making" (Tarr, 2002).

Many Northern Savings staff members are long-time residents of the North Coast. On rare occasions, the organisation has recruited outsiders to fulfill specific positions. Many staff members begin working at the credit union during high school, while others are recruited from chartered banks in the area, or have worked for credit unions in other regions.

Membership continues to increase, topping 16,000 in 2001. The credit union does little advertising to attract new members, but benefits from the promotional efforts of BC Central Credit Union. Most new members learn about the financial co-operative through word of mouth, or are attracted by the credit union's reputation as a "force for good" in the community (Tarr, 2002).

Through annual general meetings, members can participate in the running of their organisation. Meetings are held in each community, and are generally well attended. While in the past these meetings were social occasions - a time for dinner, music and dancing - recently they have become much more business-oriented. "I don't think we're anything close to being as social an organisation as we used to be," Tarr says, "[and] it's not just us...the whole community has changed in some respects" (Tarr, 2002).

While new directors are trained in co-operative principles, Tarr admits member and staff education in cooperative history and philosophy at Northern Savings is weak - something that needs to change. With roots in some of the province's first credit unions, Northern Savings needs to refocus on training in co-operative background. Under George Viereck's management, "member and staff education were just an inherent past of this organisation...and yet the old generation, the old pioneers, they die out" (Tarr, 2002). Although many members may not be able to list the seven Rochdale Principles of co-operation, they understand the important role the credit union plays in their community.

Community Commitment

Both financially and socially, Northern Savings is dedicated to investing in its four communities. In the 1970s the credit union financed the creation of Northern Co-op, a federated consumer co-operative located in the basement of the credit union building, and continued to fund the organisation until its bankruptcy in 1990. It also supported the ailing Prince Rupert Fishermen's Co-operative Association until its sale in 1994. Recently, Northern Savings has joined with Prince Rupert city council to invest up to $20 million in the purchase of the local pulp mill. Formerly a government operation, the mill affects approximately 10,000 jobs on the North Coast. Recognising the crucial role of the mill in the area's economic survival, Northern Savings directors stepped in to find a new owner (Tarr, 2002).

Socially, Northern Savings consistently invests in its communities, funding sports teams and scholarships, local museums and community halls. In 2001, over $40,000 was donated to volunteer and charity organisations in Masset, Queen Charlotte City, Terrace and Prince Rupert.⁹ Many credit union members and staff are also active volunteers. While recognising the benefit of the organisation's philanthropic activities, Tarr believes the credit union needs to examine its spending. "If you want to make a difference you have to focus and say 'let's put some real money behind something that we think has some long-term value for the community" (Tarr, 2002). While maintaining previous community commitments, Northern Savings hopes to begin investing in social and health development in the North Coast area.

Looking Ahead

Today, Northern Savings'16,287 members can chose from a wide array of chequing and savings accounts, mortgages and loans. They have access to Mutual Fund Investment Specialists and insurance brokers. They can use NorthLink to access their accounts by telephone, or log on to MemberDirect, through the credit union's website, to bank online.¹⁰ In 2001, assets topped $230 million.¹¹

To date, Northern Savings has avoided merging with other credit unions, but Tarr believes consolidation is inevitable. Northern Savings is a member of the Credit Union Technical and Administration Service Company (CUTASC). This organisation, comprised of Evergreen Savings, Terrace and District Credit Union, Northern Savings and Williams Lake Credit Union, is developing a shared banking system, essentially merging their "back office" operations. If the banking system is successful, Tarr foresees a more complete merger of the four credit unions. "We're going to have to get bigger so that we can have a presence in the larger marketplace," Tarr asserts, but he also concedes that becoming a larger organisation will not solve all the credit union's problems (Tarr, 2002).

As a former chairperson of BC Central Credit Union and a current member of the committee examining the merger of provincial credit unions in British Columbia and Ontario, Tarr believes financial co-operatives must grow while maintaining a community focus. Community credit unions need the support of provincial or national organisations that provide stability, liquidity, and insurance, reducing credit unions'costs and improving efficiency. In the future, Tarr feels the credit union movement must "find a way of marrying the localness of credit unions, which is their genius, with a national scope" (Tarr, 2002). If the CUTASC credit unions merge, the new organisation will serve 70,000 members from Vancouver Island in the west, to Terrace in the north, to Williams Lake, in the province's Cariboo region.

In the meantime, Northern Savings is coping with a struggling resource industry that is forcing people to leave the area to find work.¹² The credit union is managing costs and reducing staff through attrition.¹³ Still, member service remains the top priority, and Northern Savings continues to serve its North Coast communities despite poor economic conditions. After 60 years, it remains a financial co-operative dedicated to service and community development.

Endnotes

¹ A.V. Hill, Tides of Change (Prince Rupert: Prince Rupert Fishermen's Co-operative Association, 1967), 63.
² Credit Union Central of Canada. "Credit Union Central Hall of Fame," http://www. cucentral.ca/Public/insidecdn/awards/halloffame/content/viereck.htm? (August 6, 2002).
³ Ian MacPherson, Co-operation, Conflict and Consensus (Vancouver: B.C. Central Credit Union, 1995), 135.
⁴ Michael Tarr: CEO, Northern Savings Credit Union, June 2002 (interview by author).
⁵ Northern Savings, Annual Report 2001, inside cover.
⁶ Northern Savings, Annual Report 2001, 1.
⁷ "Products and Services," Northern Savings website: www.northsave.com/prodandserv.html, (August 8, 2002).
⁸ Northern Savings, Annual Report 2001, 16.

⁹ "Products and Services," Northern Savings website: www.northsave.com/prodandserv.html, (August 8, 2002).
¹⁰ Northern Savings, Annual Report 2001, 4.
¹¹ Northern Savings, Annual Report 2001, 1.
¹² Northern Savings, Annual Report 2001, 17.

Case Study Information

Researchers: Katie Rollwagen and Julia Smith

Date of research: 2002

Author: Katie Rollwagen

Date of writing: 2002

Editing: BCICS editorial team

Supervision: Kathleen Gabelmann, BCICS Research Co-ordinator

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