Meridian Credit Union, the biggest financial services co–operative in Ontario and the third-largest in Canada, has its sights set on rapid growth, aiming to double the size of both its business and its membership, as well as increase its branch and commercial business centre network by 50% by 2011.

Sean Jackson, president and CEO of the St. Catharines, Ont.-based financial institution, says Meridian intends to reach those targets by deepening its roots with existing members, building out its business with small and medium-sized enterprises, placing more emphasis on its financial advisory services and looking for merger opportunities.

“Our focus is on driving additional value for our members, providing exceptional service to them and continuing to grow at an unprecedented level,” Jackson says.

Meridian, which has 220,000 members, 43 branches and eight commercial business centres in south-central Ontario, was created in April 2005 with the merger of HEPCOE Credit Union and Niagara Credit Union. Meridian has $4.6 billion in assets under administration, 1,000 employees and two head offices: in St. Catharines and Toronto.

Jackson says the credit union enjoyed a “tremendous, phenomenal” year in 2006, posting growth of 13.1% in “total relationships” — the aggregate size of its deposit, loan and mutual fund businesses — and 2.5% in total membership. Meridian posted earnings before dividends, incentives and taxes of $19.3 million in the fiscal year ended Dec. 31, 2006, compared with $16.2 million in 2005.

The integration of the two original credit unions was largely finalized last year, with all branches integrating on a common banking technology platform last summer. Jackson, who was CEO of Niagara for 12 years, says a particular focus was placed on cultural integration, making sure employees and members of both merging credit unions were assured that the values, principles and histories of the respective credit unions would be honoured.

“There was no rationalization of branches, and no reduction in branch, commercial or call centre staff,” Jackson says. “Our members are seeing the same employees they were accustomed to seeing before the merger.”

Meridian focuses on building strong relationships with its member-owners by offering a high level of customer service and getting involved in local communities. “Where the banks look to centralize as much decision-making as possible, we look to decentralize,” Jackson says. “We look to be local wherever we operate and truly empower our staff to take more initiatives, to respond more quickly to meet members’ expectations.”

Like most co-operatives, Meridian has a well-developed corporate social responsibility and community involvement program. It donates 4% of pretax earnings to charitable causes in the communities in which it operates. Jackson says local businesses notice Meridian’s involvement in local causes, and that pays dividends in terms of building relationships and driving new business.

As well, Meridian’s success has been noticed by the wider credit union industry in Ontario.

“Meridian has excelled at reaching into the community, at reaching small business,” says Howard Bogach, president and CEO of Credit Union Central of Ontario. “I will give Sean Jackson tremendous credit. What he has really done is develop a strong team. Meridian is a fabulous role model for a lot of our other credit unions.”

Jackson sees a great opportunity for Meridian to continue to tap the SME market. Meridian, he says, has had a compound average annual growth rate of about 20% over the past five years in this market.

Meridian employs a total of 110 financial advisors at its branches: 10 certified financial planners and 100 licensed mutual fund representatives. Jackson says the wealth-management line of business is not yet a huge one for Meridian, but it has great potential, posting a 23% growth rate in 2006. “It’s an area to which we are dedicating resources and attention,” he says, adding that Meridian intends to hire more advisors. It does not offer full brokerage service and has no plans to do so, he adds.

Meridian advisors offer clients mutual funds through an arrangement with Vancouver-based Credential Asset Management Inc., which is owned by the Canadian credit union system. Credential has created a list of approved individual funds, funds of funds and wrap accounts for Meridian customers that include products from AGF Funds Inc., AIM Funds Management Inc., CI Financial Inc., Fidelity Investments Canada Ltd., Frank-lin Templeton In-vestments Corp. and Mackenzie Financial Corp., all of Toronto, as well as Ethical Funds Co. of Vancouver.

@page_break@Meridian advisors can also offer clients group creditor insurance and coverage, as well as group term life insurance, through Burlington, Ont.-based CUMIS Group.

Meridian styles its advisors as “coaches” and pitches their services to all members. “Everyone is tripping over themselves to serve the high end of the market,” Jackson says. “We do have some very affluent members, but our target is the average consumer, the ordinary person.”

Meridian has made only modest efforts to expand its branch network over the past two years, concentrating its resources on integrating the two “legacy” credit unions. In 2005, Meridian opened two branches. Last year, it relocated one branch and added another. Today, the credit union is working on a new branch strategy that will enable it to reach its 2011 growth targets.

Jackson says Meridian is looking for merger opportunities and is continuing to develop prospects. But, he adds, although it has the financial capability and know-how to complete another merger, that isn’t vital to its goal of doubling its business by 2011. That, he says, can be done by organic growth.

One market Meridian has not entered in a significant way is the Greater Toronto Area, although it is not for a lack of trying. Meridian has four branches in Toronto suburbs, as well as a virtual telephone-only “branch,” TeleOntario, for Ontarians in remote locations.

Jackson says the community-intensive approach that has served Meridian well outside Toronto doesn’t seem to be gaining traction in Canada’s biggest city.

“Toronto is a huge market that is well served by many financial institutions. There is no lack of financial services within the GTA,” Jackson says. “We’re still taking our time to devise a strategy to penetrate the Toronto market. [For now,] we will focus on encircling Toronto.”

Jackson says management functions are split between St. Catharines, the former head office location of Niagara, and Toronto, the former head office location of HEPCOE. Senior executives have offices at both places, meetings are held in alternating locations and the company also makes use of video conferencing. Meridian told its employees and members at the time of the merger in 2005 that its plan was to keep two head offices for at least five years.

“For the foreseeable future, we expect to remain in two locations,” Jackson says.

Meridian is looking at the possibility of offering small, short-term consumer loans to members, although, Jackson says, it doesn’t have any initiatives underway. Alterna Savings, a Toronto-based credit union, has indicated its interest in offering these loans, hoping to provide consumers with an alternative to the payday-loan outfits.

“We have good relations with Alterna. We want to learn from its experience,” Jackson says of Alterna’s desire to enter the consumer loan business. “I’m interested because it’s a good fit with our commitment to corporate social responsibility, and it has the potential to leverage our competency in credit-granting.”

But whatever initiative Meridian undertakes, it will stay true to its principle of placing the emphasis on relationships.

“We’re not attempting to differentiate ourselves on product inno-vation or pricing, although we need to be competitive on both,” Jackson says. “Our strategy is our people knowing our members better than the competition knows its clients, and meeting those needs consistently and with better service.” IE