The trend toward consolidation among Manitoba credit unions continues, as four institutions in the south-central part of the province have agreed to merge, forming a regional power.

In October, Winkler, Man.-based Heartland Credit Union, Morden-based Agassiz Credit Union, Altona-based Altona Credit Union and Carman-based Dufferin Credit Union announced their intention to seek their members’ approval for the creation of a yet to be named entity. The new credit union would have combined assets under administration of $1.1 billion on its balance sheet, making it the fourth-largest credit union in the province.

The wave of amalgamations in Manitoba, particularly over the past year, was the major catalyst for the four credit unions coming together to discuss a merger. “We thought: ‘Gee, everybody is getting married here; we had better not be left out on this’,” says Barry Lundin, CEO of Altona.

Once the four credit unions got together to discuss a merger, they found that forming a larger, regional credit union would result in a number of key benefits, says Agassiz CEO Doug Jones: “By coming together, we’re able to establish some economies of scale that will secure our ability to provide our members with a local option that’s competitive.”

The quartet, however, has made a 10-year commitment not to close any of their 11 combined branches, eliminate staff or reduce salaries.

The four credit unions say that the merger is being done from a position of collective strength rather than in response to any of the four facing financial trouble. “All four credit unions are very strong right now,” Lundin says. “We’re all doing very well, making money and giving money back to the members. It’s not that any of us has to merge because anybody is in trouble. We’re all going into this merger in a strong position.”

According to the four credit unions, the merger will allow them to develop and provide their members with a wider array of products and services. In addition, it will give members the convenience of being able to bank throughout the larger region.

The four credit unions are taking steps, Jones says, to reassure those members and employees who are concerned about losing local identity or local decision-making power because of the merger.

The combined entity will be structured more or less as a partnership of equals, with Heartland, Agassiz and Altona each getting three seats on the board of directors of the combined credit union, and Dufferin, the smallest of the four, getting two seats. Heartland has approximately $500 million in AUA, Altona and Agassiz each have around $250 million in AUA and Dufferin has slightly more than $100 million in AUA.

The combined credit union will have a new name, not one of the existing credit union names, Jones says, and a neutral site will be chosen for the future head office.

The credit unions’ members, as well as their more than 200 employees, have been supportive of the decision, Jones says: “They are interested in us being a good, strong competitor against the banks and some of the virtual competitors that are in the marketplace. They are excited about partnering with their neighbour credit unions, versus competing against each other.”

Throughout the province, credit unions have been busy linking up to create regional entities. These mergers are seen as a way to address the need to stay competitive while still retaining local identity and autonomy.

In October, five southwestern Manitoba credit unions merged to form SunRise Credit Union with more than $425 million in AUA. Earlier this year, the Buffalo and Assiniboine credit unions merged, as did Alliance and Belgian.

Heartland, Agassiz, Altona and Dufferin are aiming to have an amalgamation agreement in place by mid- to late November and to present it to members for approval in early December. If all goes according to plan, the four credit unions will formally merge on July 1, 2009. IE