With a vote on its future just around the corner, Spectra Credit Union held an information night for its members Monday.
Spectra's board of directors is recommending to members that they vote to form a partnership by arrangement with Affinity Credit Union headquartered in Saskatoon and Advantage Credit Union of Melfort. The partnership would create a massive operation, with 76 branch locations throughout the province and almost 1,000 employees.
The purpose of Monday's meeting was to give members all of the pertinent information on the arrangement and to explain to them why it is in the best interests of members and Spectra itself.
Spectra board of directors chairman Wayne Amos and CEO Tim Schroh handled the bulk of the presentation. Mark Lane, CEO of Affinity and Scott Flegel, chairman of the Affinity board among others, joined them. The meeting was held in Estevan and broadcast to Spectra's various locations throughout the southeast.
Amos and Schroh began with some of the history behind the partnership and why Spectra began looking for a partner in the first place.
Schroh noted that Spectra's board had been discussing the potential of seeking a partner as far back as 2009, but there was not a compelling reason to escalate those discussions. Things began to change though in 2011 when Spectra's asset growth began to "ramp up."
"It's a testament of our own success," Schroh said. "A lot of people will go 'isn't growth a great thing?' Growth is a great thing as long as you are capitalizing it properly."
Schroh noted that Spectra has averaged about 10 per cent asset growth over the past five years as well as solid loan growth. However, their profits were not growing at the same rate as their assets. He said the reason that it is important is the amount of capital dictates how much they are allowed to loan out to customers. With a number of commercial clients requiring large sums of money, Spectra was placed in a position where they would have to start sharing with other credit unions, something they did not want to do.
Schroh also touched on the timing of the partnership, noting that the board felt when they did decide to take the step they needed to be in a position of strength.
"As we discussed that at the board table, what does a position of strength really mean, it means let's manage that capital appropriately and pursue a partner while our capital addition to the partnership is still strong," Schroh said.
Amos focused on some of the guiding principles the board used when searching for a partner and why Affinity was the right fit. He said the board had a number of issues that were not negotiable when entering into the partnership or "hills to die on" as he described them.
Among the hills to die were loss of jobs, a reduction or decline in customer service, legacy commitments such as Spectra Place and local governance. Amos said Affinity's structure is appealing as they have a number of district councils. If the partnership moves ahead, Spectra would have its own district council and also four seats on the Affinity board for the first three years and three from there on.
"The existing Spectra board would become the Spectra district council," he said.
Schroh touched on some of the potential benefits. He said partnering with Affinity would essentially open up the province to Spectra, but the chance to have a presence in Regina and Saskatoon was critical. With a larger overall operation, they would have more money to lend. He said there would also be an expanded suite of products available to members.
Spectra members will have their opportunity to vote April 8 at the annual general meeting and membership vote, which will be held at their Estevan location and again broadcast to the various branches.
If the members vote to proceed with the partnership, a new entity, which would go by the corporate title of Affinity Credit Union 2013 would be formed on July 1.
