Chemainus and District Credit Union

Date of Incorporation: March 15, 1948
Membership: 5645
Activity: Financial services
Area Served: Primarily Chemainus and area, yet includes members from all over the province
Assets: $74 million

Background

In the 1940s it was very difficult for average people to borrow money from chartered banks. In the Chemainus area local people had difficulty securing mortgages, as up until the early 1980s the banks would not provide mortgages for properties that were not on the city sewage and water lines, which included many properties in the area.

“The bank would only give you money if you could prove you didn’t need it.” (Mary Ann Green, Administration Manager, CDCU)

A group of people recognised the need for access to credit, and decided to set up a credit union to meet this need.

Setting up the Credit Union

There were 27 original chartered members, the last of whom passed away this year. The majority of the members were workers at the local mill. Their aim was to provide life insured shares and loans for the mill employees. They had less than 100 dollars, all from the membership shares of the founding members, when they first set up.

Vision, Purpose and Goals

The primary goal of the Chemainus and District Credit Union (CDCU) was to lend to people who the banks would turn down. Originally the Credit Union had a true co-operative spirit: people who deposited money knew that it would be used to assist other members in purchasing homes.

The credit union’s new vision is more in line with being an alternative to the banks; being profitable is now its primary objective.

Services Offered

The majority of early loans were for mortgages, but money was also lent for purchasing vehicles. The credit union still offers member dividends. They also still have some of the old life insurance shares (through the grandfather clause), but stopped taking these in 1990. They scaled this insured shares programme back in 1995; the board decided that those with $1000 or more of these insured shares would continue their life insurance coverage; those with less lost their insurance coverage through the shares.

The market now determines most rates, as the Credit Union keeps their rates in line with what the banks offer. Competitive pressures are intense, and the credit union has to compete with the rates, instead of relying solely on better service to keep customers.

Given the demographics of the area, where a large percentage of the population is close to or currently in retirement, new money from local residents is not easy to come by. To overcome slow growth, the Chemainus and District Credit Union started carrying out deposit gathering in 1997. The CDCU has been branching out to get deposits through insurance companies and other brokerage agreements to fund loans for clients such as car dealerships and mortgage brokers. The volume provided by brokerage agencies allows the credit union to offer more aggressive pricing.

This strategy has brought in a significant amount of business for the Credit Union. 1999 was an important year for the CDCU, with deposit growths of 52% (mostly through brokerage money), and 45% increases in loans. This has level out, but the credit union is still seeing a growth rate of 4.48%, with asset growth at 5.49% , loans growth at 4.88% and deposits growth at 3.88%.

Organisational Structure

The CDCU has a board of 9 directors, with one voted as the president. The election takes place at the Annual General Meeting. The Credit Union holds a dinner and dance at the AGM, usually attracting close to 100 members each year. People even begin asking about the AGM tickets before the date is announced. The AGM used to be held in the local legion, and the ladies’ auxiliary would come to help meet quorum. Now the credit union never has a problem meeting its quorum of 50.

The staff at the CDCU includes the general manger, the operations manager, the administration manager, the office supervisor, the loans manager, the loans officers and loans clerk, and members service representatives, with a total of 13 full time and 4 part time employees. The office supervisor carries out in-house training as much as possible, and all members service representatives go through one on one training for a two to three week period when they are hired.

Most of the employees have been working at the Credit Union for 12-15 years, and some for as many as 25 or 30. Pleasant working conditions mean staff turnover rates are low. The Credit Union staff unionised in 1996 as part of the Office and Technical Employees Union (OTEU).

Community Services

The CDCU has an organisation account, with lower or no service charges available for local organisations. They also provide $3000 each year for scholarships for youth in the local area. They also administer two different scholarship funds from community organisations.

The credit union participates in local community events, such as the annual Chemainus days parade. They also make donations upon request to local youth organisations such as sports teams and boys and girls clubs. Many of the staff members are involved in the Chamber of Commerce.

Looking to the Future

The CDCU feels that for a relatively small credit union in a similar community with the same demographic spread, their strategies for growth have proven very successful.The CDCU hopes to develop a website in order to advertise the credit union and its products, as well as they fact that they can offer services anywhere, not only in the Chemainus area.

The CDCU remains grounded in the local community, and recognises the importance of meeting the service needs of local people. At the same time, in order to stay profitable in the fiercely competitive financial sector, branching out to serve clients beyond the local area has been crucial to secure the sustainability and growth of the credit union.

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-operative (credit union) 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.

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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