Nechako Valley Credit Union

Date of Incorporation: 1950

Membership: 6700

Area Served: Vanderhoof and Fort St James

Activity: Financial Services

Assets: $70 million

Background¹

In the years following World War II the Chartered Banks returned to very tight lending policies, which made it difficult if not impossible for the average individual to borrow money.  Led by Mr. Jack James, a number of local residents who understood the fundamentals of banking and indirect financing came to the conclusion that the area's surplus deposit monies were being lent to borrowers in other areas of the province, and, more disturbingly, outside the province. To this group of residents, who were trying to develop their community and forge a living, this was an outrageous injustice. They decided to do something about it. The result was the Nechako Valley Credit Union, which was incorporated in the Province of British Columbia on April 18^th, 1950 as an open bond community credit union under Charter #215.

Forming the Credit Union²

In those early years the credit union was basically a savings and loan "club," which occupied a small office space in the old co-operative building on Stewart Street. Mr. Jac Schroeder was instrumental in the initial development stages of the credit union in the 1950s. During this time the entire excess liquidity was held in a tin cash box and some early day members recall times when the Credit Committee would approve loans but ask the member in question to wait until enough other borrowers made their payments into the cash box to fund the loan. Interest rates in the early days were always the same - 1.00% per month.

In 1956 the credit union moved into a building occupying the now-empty lot next door to the Reid Hotel on Burrard Avenue in Vanderhoof. In 1961 this property was sold and the credit union found itself without premises and without cash. After much deliberation the credit union borrowed $6,500 from Credit Union Central and purchased an old Pentecostal Church from the Glad Tidings Tabernacle. Although there have been 4 phases of construction, the credit union still owns and occupies this property at the corner of Church Avenue and Columbia Street.

In 1987, the credit union took a technological leap and converted the majority of its manual ledger systems to a Platon Computer Banking System. Continuous, accelerated changes in computer technology have revolutionised the Financial Services industry, particularly in the area of service delivery, and just 8 years after the original conversion to computers, the credit union found its system was obsolete. It underwent a second conversion from the "Old" Platon System to a more integrated banking system administered by Cue DataWest Ltd.

In 1988, Nechako Valley Credit Union joined a number of like-minded credit unions in Northern British Columbia to create the subsidiary Northline Financial Services Agency Ltd. The initial focus of the company is to offer financial planning services to the members and non-members of the shareholder credit unions. For regulatory and tax planning reasons, a wholly owned subsidiary of Nechako Valley Credit Union called Nechako Valley Financial Services Incorporated was created and is the stakeholder in Northline Financial Services Agency Ltd. Future business opportunities for the company may include other financial services.

For the first 45 years of operation the NVCU did not do business lending. They started branching out into this area in the mid 1990s. This kind of lending involves a high degree of risk, because larger write-offs tend to occur in this sector, but it has proved worthwhile in that it creates a stronger community presence for the credit union.

In 1999, the credit union took a major step by expanding into Fort St James, which is located 40 miles north of Vanderhoof, and is also served by the Royal Bank of Canada and the Canadian Imperial Bank of Commerce. Nechako Valley Credit Union has the most modern building, with two fully automated bank machines, including a drive-up machine. The credit union plans to gain market shares through aggressive pricing, management stability, community focus, and superior service delivery.

Since the days of the "Savings & Lending Club" the credit union has come a long way, offering a variety of deposit and lending facilities, which are complemented by both old and new methods of delivery. Profitability and growth have been steady, and due to sound financial management and healthy financial margins, the credit union has been able to maintain adequate capital. In 2001, the Credit Union adopted the Corporate Balanced Scorecard to measure its success.

Vision, Purpose and Goals³

The three geese on the Nechako Valley Credit Union's logo are symbolic of the stakeholders: the members, the staff and the communities. To meet needs of these stakeholders, the guiding principles of credit union include:

• Providing the highest quality financial services and advice to their members;
• Providing a rewarding, challenging and pleasant work environment for their staff;
• Continually supporting the local communities.

Other goals of the credit union include providing personalised service to individuals, small businesses, and organizations. The credit union is committed to taking the risks necessary to build the business, and to manage any failures that they may face. It aims to be profitable, in order to allow for growth and improvement.

Organisational Structure

The Credit union has a seven-member board, which is elected at large; there is no requirement for proportional representation from the two communities. The elections have previously been held at the Annual General Meeting, but this will be changed to in-branch voting in 2002, which will allow for greater participation in the elections. The AGM usually attracts close to 50 people. Ken Dickson, the general manager of the credit union, feels that this is indicative of membership satisfaction with the credit union.

For their 50^th anniversary Annual General meeting the credit union brought in a local doctor, Dr. Brown, who made a slide presentation of his trip to Mount Everest. This generated substantial community interest, and the hall was packed for the event.

Nechako Valley Credit Union carries out employee training through the training department of Credit Union Central, BC, as well as through the Credit Union Institute of Canada's certificate programme, at Dalhousie University in Halifax. The credit union pays for their staff to go through this programme, which is carried out online, and through real-time tutorials. Some of the staff attend training sessions at CUC-BC, or they will occasionally bring instructors in to teach courses. Much of the training is now conducted through an in-house, computer-based training system.

Most of the staff are from the community, and have been working at the credit union for an average of 6 years, with some senior staff having worked there for as many as 25 years. The staff are always aware of what is going on in the business and in the community. The members of the credit union recognise the staff members and in turn are recognised by the staff, who know most members by name. The credit union seeks input from the members primarily through surveys, and through the frontline staff, who keep track of the issues of concern that members share with them.

Commitment to the Communities

The credit union is very active in the communities where it operates, and is committed to seeing that these communities have a healthy economy.

The NVCU has shares in Touchwood, a co-operative in Vanderhoof, and in the Vanderhoof Consumers' Co­operative. The credit union has close to 300 organisational accounts from the community, which they provide at a low cost, or free of any service charges.

The credit union participates in and provides funding for many community events and activities. During the Community Days, the credit union raises funds for various local organisations. They take part in the 4H auction, organised by the local 4H club, which provides an opportunity for youth to participating in agricultural endeavours. The credit union buys the meat at the auction and sells it through the Co-op grocery store.

The credit union also provides funding to a variety of local community organisations, including the 4H Club, kids' ball teams, soccer camps, a cash reward for honour roll students at the local high school, and anything else it feels is worthwhile. The credit union recently gave a $20,000 donation for a community outdoor facility, and an additional $20 000 to assist in lighting a community walking path. It also sponsors the Chamber of Commerce Business Excellence Awards.

The NVCU is closely integrated with the local economy, which is heavily reliant on the forestry industry. Some board members are senior managers at one of the mills, so the credit union is always keenly aware of what is happening in the industry. Two mills in town are the main employers, so if those go down, everyone feels the effects. In the late 1980s, when the local mills were going through tough times, the credit union reduced the interest rates on the mortgages and other loans of all of the people who were who were laid off due to the downturn.

"We have to live in the community, and live with the ups and downs in the forestry industry.We go up and down with the local economy and can respond quickly; the other banks in the area cannot." (Ken Dickson, General Manager, Nechako Valley Credit Union.

Looking Forward

The Nechako Valley Credit Union is experiencing one of its best years ever, having almost doubled its volume of business over the last five years. Ken Dickson attributes this to an increased consciousness about what a credit union is. The NVCU has also done a lot of marketing, and has offered certain membership rebates, such as refunds on some mortgage interest payments.

The primary reason that the Nechako Valley Credit Union has been able to fare so well is due to its close relationship with the community. Its commitment to local organisations and its efforts to respond to the changing needs of the community has given it a market advantage over the banks. This commitment to the community has in turn enhanced the community's commitment to the credit union.

Endnotes

¹ Content for this section from the Nechako Valley Credit Union, History and Inception, 2001.

² Content for this section from the Nechako Valley Credit Union, History and Inception, 2001.

³ Content for this section from the Nechako Valley Credit Union, Mission Statement and Vision, 2001.

Case Study Information

This case study was developed for a report entitled Situating Co-operatives in British Columbia - 2000-2001, which was prepared for the Province of B.C. (Ministry of Community Development, Co-operatives and Volunteers) by the British Columbia Institute for Co-operative Studies, University of Victoria.  To obtain the information for the case study BCICS and the co-op entered into a partnership agreement. BCICS is grateful to the co-op members for their contributions and time. The case study is published with the approval of the co-operative. Further information regarding this study includes the following:

Researcher: Lloy Wylie

Date of research: 2001

Author:  Lloy Wylie

Date of writing: 2001

Editing: BCICS editorial group

Supervision: Kathleen Gabelmann, BCICS Research Co-ordinator

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