In British Columbia, What Housing Slump, Recession?
SURREY, British Columbia -- While U.S. credit unions keep a wary eye on the economy and fret about slumping housing markets, the folks at Coast Capital Savings Credit Union enjoy a more positive frame of mind.
Coast Capital, with $9.9 billion in assets, ranks as Canada's second largest credit union. Its open bond charter offers membership to anyone in the province of British Columbia, where the outlook is upbeat.
Coast Capital President/CEO Lloyd Craig cited some factors contributing to that bullish perspective.
"In the last few years we've been blessed with a very good economy," he said. "B.C. has had good government for a number of years, and even though the forest industry is going through hard times, we've been able to expand the mining industry significantly in the province."
"We have a world-class port and a large high-tech community here in greater Vancouver. We will host the Winter Olympics in 2010, so we have a tremendous amount of money being spent not only on Olympic infrastructure but on expanding rapid transit and the road to Whistler. The housing market has been extremely busy."
Overall, he indicated, the good times are expected to continue for another two or three years.
If all that sounds as though Coast Capital faces no challenges, Craig quickly corrected that idea.
"The most difficult area as we look ahead in 2008 and 2009 is probably funding," he said. "Housing prices in Vancouver Island and greater Vancouver are extremely high, which means the retail savings rate in British Columbia is low. Deposits are hard to come by. If you look at our balance sheet you'll see retail deposits and business deposits, and you'll also see money raised through what we call deposit agents--for the most part, financial planners in communities where we don't have a branch."
"We're hoping, actually, we will able to trade our provincial jurisdiction for federal jurisdiction. That would open us up to raising deposits from throughout Canada. We've been working on it for two years, and we believe the recommendation to proceed or not will be made to the federal government at the end of the first quarter."
At a time when Wall Street seems to applaud companies that adopt a lean-and-mean attitude, Craig doesn't see a split between the credit union's standing for seven years now as one of Canada's 50 Best Managed Companies according to Deloitte and Touche, and simultaneously being called one of Canada's 50 Best Employers--an honor bestowed by employee benefits specialist Hewitt Associates.
Being a well-managed company, Craig said, "gets back to being an organization that has articulated its values, has a strategic plan that is well-executed in a competitive marketplace, and has all the attributes of being disciplined, organized and thoughtful -- not just from the aspect of the balance sheet and income statement, but from the perspective of our other stakeholders.
"That means managing our people correctly and doing a good job for the consumer. It's also means doing a good job for our communities."
He noted the award as a good place to work is determined by what employees say on a questionnaire provided by researchers, and by a review of the benefits and compensation package.
He added that what the credit union refers to as Coast University offers training not only in skills such as dealing with members and handling loans, but also leadership and the credit union's business model.
In addition, Coast Capital has evidently become deft at getting extra impact from money spent. One example is marketing. Mergers with Richmond Pacific Coast Savings Credit Union in 2000 and Surrey Metro Savings Credit Union in 2002 provided the critical mass for the CU to begin advertising on television.
Just after the merger Coast Capital went on television to introduce the brand and roll out some value propositions, such as Canada's first free checking account. The spin-off giving that marketing investment extra bang came from indirectly alerting potential employees to possible new job opportunities. Potential candidates will at least have heard of the credit union due to its television ads.
That was considered especially important since the area's strong economy means employers must make themselves known in order to compete for candidates.
But there's little or no struggle convincing members to use technology to handle their financial affairs.
"The Canadian consumer loves banking technology," Craig said. "I've seen figures that show we do more debit transactions in Canada than America does -- and I'm not talking per capita, I'm talking absolute figures." That's especially impressive considering the population of Canada is approximately 31 million compared to 301 million in the U.S.
""Ninety percent of our transactional business is done over the Internet or at our [call] center. We have 90 ATMs, and in British Columbia you can use any credit union's ATM without charge."
When a member does want to sit down with someone to talk about a financial issue, that member will soon be able to head for one of 51 branches. The latest trend is smaller, consumer friendly branches that can be built for approximately $1.1 million.
New ideas don't seem to bother Craig. In fact, he wishes credit unions in general were more open to innovation. "The credit union system doesn't seem to welcome change very well. There seem to be a lot of people who enjoy the status quo. Sometimes I find that quite frustrating," he stated.
Craig understands the British Columbia consumer. He grew up in the province, and after graduating from Washington State University he worked for a Canadian bank for 15 years before joining Coast Capital as president/CEO in 1986. When the credit union merged in 2002 he had to compete again for the job, and kept it.
In the winter you're likely to find him skiing at Whistler, which is gearing up for the 2010 Olympics. In the summer he may be playing tennis, hiking, relaxing at the beach, or riding his bike.
Looking back on his credit union career, Craig noted, "We were always a voice for the necessity to merge in order to create scale, which in turn creates efficiency, which in turn makes you more competitive for the consumer. I'm very pleased we were able to merge three companies into one, proving it is possible to create scale and scale does work for you."