Spectra Credit Union is looking to expand its horizons via a strategic merger and/or partnerships.
Spectra, one of the major financial service centres in southeast Saskatchewan, feels it needs to broaden its base to provide members with a province-wide service.
With that in mind, Spectra's board of directors with president Wayne Amos, passed a motion unanimously during a Feb. 2 meeting to seek a merger partner or co-operative partnership opportunities.
Tim Schroh, chief executive officer for Spectra, said after the meeting that “one thing that's important is being able to partner with those that give us provincial reach.”
“While Spectra is financially strong, the board recognizes the market pressures to stay competitive in an increasingly sophisticated and regulated industry,” said Amos. “The board is showing leadership and vision by looking for credit union partners while we are in a position of strength and large enough relative to our prospective partners to influence and ensure that our member employees and representation requirements are addressed.”
Spectra is the sixth largest credit union in Saskatchewan, based on assets with $700 million, while Conexus, based in Regina, is the largest with $3.4 billion in managed assets followed by Affinity Credit Union in the Saskatoon region with $2.7 billion.
“We're in the best corner of the best province in the country right now in financial terms and we have a lot of members coming here and we have a lot of members, including students who are heading to other centres and we want to provide them all with the best rates and fees possible,” said Schroh.
Any merger or partnership will evolve as a friendly amalgamation since that is the scope of the credit unions, said Schroh. They are not in the business of unfriendly takeovers like other industries and financial institutions. “We just can't be. We have an open structure and in the end, the membership makes the determination. Administration and the board can only explore and recommend.”
Schroh added that any proposed merger would allow Spectra members to take advantage of growth in southeast Saskatchewan by tapping into capital, expertise, technology and capacity of a provincially- based credit union.
The board will be conducting careful due diligence as it pursues this process, he said, which means that any proposed merger or partnership probably won't be on the table for member discussion until at least the spring of 2013.
Mergers are not new either, Schroh said. Spectra, with its 10 branches, has grown in good part through mergers without losing its localized presence.
“When I started 24 years ago, there were 240 credit unions in Saskatchewan. Now there are about 60, but the number of locations for credit unions, probably hasn't shrunk much at all,” Schroh added.
Out of the 10-branch reach of Spectra, only two were credit unions that Spectra (formerly the Estevan Credit Union) opened themselves. All the others were mergers. There is also Spectra Financial Services and a technology branch that serves the communities.
“Right now, we are not in any negotiations or discussions. The board has just decided that this would be a good strategic move to go exploring,” said Schroh. “That means they will be open to invite prospective partners without losing local value or community persona. It's more about adding value and service. So no partner has been selected, the board is simply seeking the right to pursue one. So maybe by the spring annual general meeting in 2013 they might be ready for the membership to vote,” Schroh said.
“Right now, this involves the board thinking strategically, considering a potential partner opportunity. That would be followed by a business analysis and plan, then an education process before there is any proposed vote. I don't believe the board is anxious to rush into this, but at the same time, it won't take four or five years either. They should know what can happen within a year or two.”
Schroh said the board simply felt that Spectra was now of the size and strength to take advantage of the potential.
“The local credit union started with practically nothing in 1950. It became known as Spectra CU in 2004. From 1950 to 2006, it grew from zero to $400 million in assets. From 2006 to 2011, it's grown from $400 million to $700 million. That's exciting for those of us in the financial world. Now we just have to meet member demands and those demands are taking on a provincial scope,” Schroh said in conclusion.
Amos and the board members said that members and investment shareholders will be kept abreast as developments occur with any final proposal coming to the membership and shareholders for their respective votes.
Spectra currently has 160 employees within its 10 branches with a headquarters office in Estevan that underwent a significant expansion in 2009 to accommodate growth. Spectra boasts of a membership in excess of 20,000.