Credit union boss warns of economic consequences

  • Apr. 12, 2006 10:00 a.m.

By Alex Rinfret-The loss of the Queen of the North will have a “potential major impact” on the north coast this summer, Northern Savings Credit Union chief executive Mike Tarr said at the credit union’s annual meeting in Queen Charlotte April 5.
Right now, one of the worst aspects is the uncertainty about the ferry schedule, he said, and BC Ferries should remedy that as soon as possible.
“It’s not so much you need a ship showing up next week – you need to know what’s going to happen,” he said, so that tourists will stop cancelling their reservations and be able to make firm plans.
Uncertainty can create the idea in tourists’ minds that getting to the north coast is just too much hassle, he said.
In any case, it looks like there won’t be as many visitors here, with the consequent loss of income.
“We’re in danger of losing a major part of the season and there’s a lot of businesses on the Charlottes that can’t afford that,” he said. “We are anticipating there will be poor financial results this year for many of our members.”
Mr. Tarr said the credit union helped its members get through the Prince Rupert mill closure and he had no doubt there would be help extended in this case.
Meanwhile, the credit union reported one of its strongest years ever, fueled by its foray into the very hot mortgage market in southern BC.
Financial income rose 18-percent to $16.4-million in 2005, from $13.9-million the year before. After expenses were accounted for, the credit union ended up with net earnings (or profit) of almost $2.6-million, more than double the $930,000 in net earnings it reported in 2004.
Mr. Tarr said growth was flat locally, and the astounding results were almost entirely due to the “mortgage and investment group” established in Victoria two years ago. The office doesn’t give mortgages to home buyers – it buys mortgages from mortgage brokers, packages them into blocks worth between $10-million and $20-million and then sells them into the real estate investment trust market. Banks do this kind of thing, he said, but Northern Savings is the first credit union to get into it.
“In a way, we kind of invented this business,” Mr. Tarr said. “So far, it’s worked well. In fact, it’s worked so well that there are now five or six other credit unions interested.”
The increased competition will make the business less attractive and could cool growth this year, he said.
The credit union is also engaged in a merger with the Terrace and District Credit Union, which has about 4,000 members and $50-million in assets. They will be voting on the merger in early June, and if they approve it, the deal will close July 1.
In Queen Charlotte, Mr. Tarr said the new credit union premises should be ready late this year or early next year. This project was supposed to be complete by now and Mr. Tarr took some pointed questions about it from an audience member.