A quartet of saskatchewan credit unions have merged to form the sixth-largest member-owned financial institution in Canada. The new entity will be better able to invest in costly technology and tackle competitors such as the Big Five banks, the credit unions say.

Regina-based Conexus Credit Union has joined forces with Prince Albert Credit Union, Moosomin Credit Union and Heartland Credit Union to create a $2.9-billion behemoth with more than 120,000 members and 48 branches in the province.

The new entity will retain the Conexus name, says Barb McGrath, manager of communications and public relations. Conexus, which is Latin for “joining together,” was already the largest credit union in the province before the merger, bringing $2 billion in assets and 80,000 members to the deal.

“All four went into it as strong credit unions, and each was financially solid on its own,” she says, noting the deal is enabling the merged entity to improve service to members. “We can offer more competitive products and services. In some communities, we didn’t have an investment advisor. Now we are able to have one available in all our regions.”

One of the great advantages credit unions have over banks is their ability to have local decisions made by local people, an element McGrath says resonates with many people in “Canada’s breadbasket.”

“I don’t think somebody sitting at a desk in Toronto understands what life is like in Saskatchewan — that a community with less than 50,000 people can be a vibrant community,” she says.

The Moosomin board pursued the merger because it preferred to make proactive rather than reactive decisions, says Larry Miskiman, former CEO of Moosomin and now Conexus’ vice president of regional services.

“We’ve been visiting the merger issue for the past 10 years through our annual planning sessions,” he says. “We see technology changing constantly and costing more. You have to keep up to speed on that. If you’re not moving forward, you’re moving backward.”

As well, not only do credit unions have to take on the Big Five banks, but, Miskiman adds, a host of other competitors are vying for a bigger share of consumers’ wallets, including President’s Choice Financial, Investors Syndicate Ltd., ING Direct and Sears Bank.

He says the stability and diversity of the combined Conexus book puts the overall business on more solid footing than before.

“In Moosomin, we are in a rural setting in southeast Saskatchewan, dealing mainly with the agricultural sector. The way the agricultural economy has been over the past few years, there are higher risks associated with being able to support it,” he says.

Prince Albert Credit Union was looking at a couple of other merger candidates when the Conexus opportunity presented itself, says Kevin Paproski, former acting CEO of PACU and now regional vice president of Conexus.

PACU had slightly less than $400 million in assets and 22,000 members at nine branches when the merger was finalized.

“We were doing quite well financially and paying back money to our members,” he says. “In the big scheme of things, we were doing a lot of things that cost a lot of money. We weren’t big enough to do that over the long term.”

Paproski says the cost of new technology can be prohibitive for smaller players. PACU was researching customer relationship management software, an initiative that would have set it back $500,000-$1 million, he adds.

“Our bottom line was pretty darn good last year; we had $3 million net,” he says. “But if you take on a new project, you take away from your bottom line and you haven’t put the equity away that you wanted to.”

Paproski adds that the merged Conexus stands out from the competition because it has subagencies in both insurance and real estate. It owns Century 21 realty offices in Regina, Saskatoon, Moose Jaw, Prince Albert and Martensville.

“We felt it was a very good way of increasing our delivery strategy, making it more of a one-stop shop,” he says. “If you are going to provide mortgage financing, why not provide members with a good service and have good, qualified agents helping them find the houses they want?”

Keith Nixon, vice president of democratic support with Credit Union Central of Saskatchewan, says the Conexus merger is a continuation of a growing trend over the past five to seven years.

@page_break@“It really comes down to the credit unions making choices they feel are in the best interests of the members they’re serving. It’s a feeling that we can offer more together than we can individually,” he says, noting he expects to see more credit unions merge in the short term.

Saskatchewan has among the highest penetration of credit unions in the country — 88 credit unions with assets of more than $9.4 billion and 330 branches serving more than 525,000 members. In 158 communities, a credit union is the only financial institution providing service.