By Alex Rinfret--A decision to get into the Vancouver Island and Lower Mainland mortgage business is paying off for Northern Savings Credit Union, which reported a 34-percent increase in net earnings in 2004.
The financial results, discussed at the credit union's annual meeting in Queen Charlotte April 13, showed net earnings of $930,000 last year, up from $697,000 the year before.
Chief executive Mike Tarr said the credit union's new wholesale mortgage office in Victoria played a big part in this year's results. The credit union had budgeted a $200,000 loss for the brand new operation during its fledgling year, but instead the Victoria office generated a $200,000 profit, Mr. Tarr said.
"It's certainly proved to be very successful," he told the gathering of credit union members and employees at the visitor information centre. "The business continues to flourish, it continues to grow and be profitable."
He assured members that the Victoria operation is not a first step towards moving south. But its success is giving the credit union the "financial muscle" it needs to continue serving its northern customers during tough economic times here.
"We're not becoming a southern credit union, believe me," he said.
Other achievements during 2004 were getting a new computerized banking system up and running, turning the financial planning operation around from a $20,000 loss in 2003 to a $150,000 profit, and improving the website.
Mr. Tarr said he expects this year will be even better, and said Northern Savings has already seen a "phenomenal" first quarter, with March being perhaps the most successful month ever in the credit union's history.
Some of those earnings will be reinvested in Queen Charlotte this year, Mr. Tarr said. The credit union building will be expanded out towards the water, and have a second story added.
"The current branch office is simply too small, too cramped," he said, adding that he also expects business at the branch to grow.
"This branch does very well and has for several years now," he said. "There's a very good team here, strong management."
Northern Savings actually wanted to buy land in Queen Charlotte and construct a new building but nothing was available, he said.
Meanwhile, the city of Prince Rupert, already in financial difficulty, may have to cough up $1.5-million for Northern Savings. Mr. Tarr said the credit union loaned the money to NWBC Pulp and Timber, a loan which was guaranteed by the city. NWBC is the company that owns New Skeena, which bought the assets of Skeena Cellulose in 2002. New Skeena went into receivership in September.
Mr. Tarr said he is absolutely confident the money will be paid back because Prince Rupert is a municipality. Even if it goes bankrupt, which he said is unlikely, the provincial government would have to stand behind the guarantee.
"There's no question Prince Rupert has some tough sledding, no doubt about that," he added.