Closure not imminent but growth needed to save branch
As Cornerstone Credit Union approaches the quarter pole of its fourth year post-merger, CEO Doug Jones says continued growth, not contraction, is the organization’s preferred path forward as it seeks to remain competitive for members.
That was the message Jones and chief operating officer Murray Yeadon shared with nearly 100 community members — most of them Cornerstone account holders — during a public meeting March 13 at the Vibank Senior Citizens Drop-In Centre.
“What we’re here to tell you and ask of you tonight … is that we want to improve this by growing the assets in the branches, not closing branches,” said Jones.
While Jones emphasized that no additional branches will close in 2024, he added that growth in the Vibank branch’s book of business since 2021 has not kept pace with the organizational average. Vibank — with approximately 2.6 per cent of Cornerstone’s members and overall business — has grown 9 per cent compared with 17 for Cornerstone as a whole in that time.
“You haven’t hit the average but the branch is growing,” said Jones. “I see that as a positive. We do need that number to escalate.”
Merger Results
The modern-day Cornerstone Credit Union was formed Jan. 1, 2021 from a three-way merger between the Plainsview, Horizon and legacy Cornerstone credit unions.
Jones touted better lending rates, enhanced customer service and increased community investment as among the benefits members have seen since then.
Eight communities, including Odessa and Glenavon, also saw their local branches close in the aftermath as the new Cornerstone eyed a more efficient overall operation.
Those closures left the credit union with 15 locations and, as Jones shared, a considerably more competitive overall entity.
Cornerstone, he said, was able to retain over 90 per cent of the members impacted by those branch closures, which helped raise the average amount of business at each remaining branch from under $70 million to approximately $133 million today.
It also helped reduce the institution’s efficiency ratio — how many cents are spent to generate each dollar in revenue — from over 80 to around 75.
The latter number is as critical a metric as any to Jones’ eye.
“We don’t need to be at 55. We put people before profits. We do not need to be as profitable as the banks. But we need a certain amount of profit to make the investments we need to sustain the credit union,” he said.
More specifically, Jones said something around 65 “would be a pretty good spot” for Cornerstone, particularly in the face of ever-increasing demands — and associated costs — for digital services.
Currently, around 59 per cent of Cornerstone’s 36,000 members conduct business through online or mobile banking, accounting for roughly 85 per cent of all transactions.
Jones added that he expects Cornerstone to record over 1 million e-transfers for the first time in 2024, which will remain free to members but also come at a cost to the credit union of 50 cents per transaction.
“We’re sharing that with you because you need to understand that we’ve got to figure out how to pay for these things so we’re always looking at how can we manage our costs as good as possible,” said Jones.
An eye to the future
In addition to further stabilizing the branches that remain, a more efficient organization could also strengthen Cornerstone’s position to either negotiate or reject a hypothetical future merger.
Jones shared that the number of credit unions in Canada since 2004 has shrunk from 623 to 194. Of those that remain, the top 10 in size manage almost half the assets in the national credit union system, while the bottom 94 manage about 4 per cent.
Cornerstone, he continued, manages around $2.5 billion in assets and ranks in the top 35 nationwide.
“We’re being as transparent as we can in that we anticipate lots of discussion around consolidation in the credit union system and that’s a big part of my job is to be able to make sure we’re not going to be surprised by something that might have been an opportunity for us,” said Jones.
“There’s no serious discussions happening now but the question comes up a lot, and you always want to be in a position of strength. You don’t want to be merging when you don’t have a choice because then you don’t always get the best say in what’s best for your member right?
“We just want to grow. If there’s an opportunity for new members please tell people that don’t deal with us to come deal with us. If there’s people that are already dealing with us and you know that you’ve got business elsewhere, we’re asking for the opportunity to earn it.”
