Coast Capital Savings Federal Credit Union 2019 AGM | Coast Capital Savings | Discussion forum

First, Coast Capital Savings Federal Credit Union held its inaugural AGM in 2019 yesterday as a federal credit union, which it also webcast and which the webcast can be viewed in archival format from this website (if you are not a member, just select either "Contact Centre" or pick a random branch so you can view the AGM).

Sadly, I was all set to join in and ask my question(s) on when Coast would bring in Me-to-Me Transfers (a.k.a. bank-to-bank transfers) and make Interac e-Transfers free & unlimited, but missed the AGM. Nevertheless, it seemed like it was a fairly active AGM, which I've now viewed.

For the most part, the formal business part of the meeting was fairly boring, with mostly platitudes and other generic statements on the credit union's re-thinking their corporate strategy and the like. Among some of the financial highlights, which were in its 2018 annual report, Coast welcomed 17,000 net new members, bringing them to 572,000, which new CEO (who was previously one of the founders and CEO of Qtrade before originally selling it to Desjardins and which has now since merged with Credential and is owned, in the majority, by Desjardins and, in the minority, by the credit union centrals in Canada and CUMIS Group/The Cooperators) Calvin MacInnes stated was the "largest federal credit union in Canada". He did admit there were only two federal credit unions in Canada currently, but was a bit misleading. It shows they're singularly focused on being the biggest as they kept touting that they're the biggest credit union in Canada by members and were "narrowing the gap" between it and Vancity in terms of assets (they failed to mention that, if you include Desjardins, Vancity would be #2 in assets and Coast #3 in assets). They originated 9,000 new mortgages and gave back $3.7 million in Help Extras. (Help Extras are Coast's cash back program for new mortgages whereby Coast members get at least $1,000 in cash back to invest in myriad ways.)

One of the most riveting parts of the AGM was the Auditors' Report. A member, who spoke in quite broken English, raised the point that, to his knowledge, KPMG LLP had been the credit union's auditing firm for more than seven years and cited that it is prudent, common even, for companies to switch auditing firms after seven years in keeping with good governance practices so that the auditing firm doesn't get too cozy with the Board and senior management team. The member wanted to know for how long that KPMG has been the firm's continuous auditor. The new Board Chair thanked the member for the question and he and the CEO answered the question by saying only that the Board puts out a competitive process every three years. The CEO added that KPMG has been the firm's auditor since 2003, to which the CFO clarified from the back of the room that it's been since 2001. He tried to justify it by saying that they do switch KPMG partners "every few years" within KPMG's Vancouver area offices, but that's the extent of the switch.

In the Members' Open Forum, which was surprisingly active albeit with no webcast questions, the first question came from a member named Jeff Holm (spelling?) who asked about Coast being potentially offside with OSFI Regulations and Bank Act provisions with Coast Capital Savings Insurance Services, Ltd., still operating out of many Lower Mainland and Vancouver Island area branches despite having been sold to Desjardins a number of years ago. The Board Chair deferred the question to the CEO, who deferred to Lisa Skakun, Coast's General Counsel and appointed Parliamentarian for the AGM, who did indeed confirm that Coast originally sold Coast Capital Savings Insurance Services, Ltd., to Western Financial Group more than five years ago, and that WFG was in turn acquired by Desjardins and Desjardins has recently sold WFG (including CCIS) to Wawanesa. She said that OSFI has given them a transition period to physically segregate the insurance offices from their branches (presumably, by installing separate entrance(s), alarm systems, and physical walls) and, now that they're a federal credit union, CCIS will also be renamed legally and rebranded, presumably, as Western Financial Group or as some other name. She expected that to be complete by the end of 2019.

Another member, Raj, asked three questions, in sequence:
(1) Coast's apparently outdated ATMs that do not allow him to select specific bill denominations (i.e., $10);
(2) Coast not issuing "bonds" directly to members; and,
(3) The perceived energy inefficiency of its new Help HQ building on King George Blvd. whereby computer monitors and lights can be seen "on" at all hours of the day, even when Coast is not operating.

To question # 1, the CEO answered somewhat vaguely, only stating that they are "looking at" replacing and upgrading their ATMs, but that it's "not high" on their priority list. Somewhat interestingly, and perhaps disturbingly, he added that they're looking at how quickly Canada is moving to being a cashless society and whether they want to even dispense cash from their ATMs or even their branches over the long-term. Raj followed up that question by stating that Coast has "long queues" in their branches and that by adding bill selection to ATMs, they could reduce their queues, to which the CEO took his point and said it's something they're looking at.

On question # 2, the Board Chair thanked Raj for his interest in investing in Coast, and that the Board does regularly review its capital funding needs and that this is something they are looking at, whether as preferred shares or bonds.

On question # 3, Calvin answered vaguely, stating only that the building is LEED certified but he'd look into the after-hours electricity usage. He did add, somewhat humourously, that if Raj sees lights on at 5 am, it's likely him and the Finance department as he is often there at that hour. 😉

Another younger member, Neil, remarked on how pleased is generally with his switch a number of years ago to Coast Capital Savings, but that he wanted to know when Coast would bring in envelope-free ATMs for depositing cash and the like and cited an example of an envelope-free ATM National Bank had installed in the Vancouver area and what a good experience it was, to which the CEO mostly reiterated earlier comments. He also asked about some problems with his Coast Capital Savings Desjardins credit card and wondered if Coast might in-source their credit card offering. The CEO did acknowledge his point and said he figured that Coast's credit cards would be the #1 complaint/feedback point he hears from members. He also added, somewhat surprisingly, that Coast is actually in the middle of an investigative and competitive process to look at other credit card issuers (potentially, Collabria, which is part-owned by Desjardins, or CUETS Financial, which is owned by TD Canada Trust, though didn't name any parties). He said Desjardins is aware of this competitive process and that they may switch. No timeline for a decision, but indicated something could be announced later this year. Also, no indication as to whether they'd buy out existing Coast credit card accounts from Desjardins, or start anew and let Desjardins rebrand those legacy cards as straight Desjardins Visa cards.

Neil's third question was on Coast's T&C that state he should hold on to his cheques deposited by mobile app for 90 days. He said he loved the service, but added none of the other banks recommend holding onto cheques for that long. The CEO demurred to the Chief Risk Officer, Bruce Schouten, who'd previously served as Interim President & CEO, who added that this was just Coast's recommendation for how long the members should hold onto the physical cheque in the unlikely event of a problem, not how long Coast holds cheques.

Another member asked how come Coast doesn't have a profit sharing program like Vancity, and remarked "how cheap" it was for Coast to only provide cookies at their AGM. She said it would've been nice for Coast to offer something more, whether refreshments and appetizers or, perhaps, a meal, considering it was supper time. The Board Chair took the profit sharing question and said that many credit unions follow this model, but that Coast, in keeping with its creed and vision, wants to follow the tack of instead returning money to its members' communities in the form of charitable donations and contributions (7% of budgeted pre-tax earnings). The CFO, Helen Blackburn, who previously led Central 1 Credit Union as its President & CEO, added to that they also consider offering "no fee and low fee (bank) accounts" to be part of their commitment to returning value to members.

Another unnamed member, who had the assistance of Coast's Chief Member and People Experience Officer as he was hearing and speech impaired, asked a question about offering jobs for people with hearing and speech impairments. The CEO turned the question to the Chief Member and People Experience Officer, who answered rather disappointingly on them striking a Diversity & Inclusion Committee.

Another question from Jeff Holm, who may be former Interior Savings Credit Union board member Jeff Holm, wanting assurances from Coast, having followed Coast's federal incorporation closely, that Coast will not demutualize and convert member shares to common shares in an initial public offering. The Board Chair took the question, thanked Mr. Holm for challenging the Board on this, but added, unequivocally, that Coast indeed has no plans to convert to a for-profit corporation with share capital (i.e., publicly-traded bank). He did add, somewhat interestingly, though that it's an issue that comes up regularly at board meetings, which surprised me in that (a) I didn't expect him to be so candid and (b) that it actually comes up - multiple times, and assured Mr. Holm that it's always a "short conversation" and is readily dismissed.

Finally, the member who was dissatisfied with the cookies at the AGM said she was extremely disappointed that the results for the 4 x $1,000 term deposits for casting a ballot in the Board of Directors election would not be announced at the AGM. She said many members travelled great distances to attend this meeting in person, so it sounds like that was their sole reason for attending. General Counsel Lisa Skakun took the question and answered it generally stating that because they are a federal credit union now, they opted to go that route. Not sure I buy that, personally, since members would have voted in advance online and by mail and, of those voting in person at the meeting, they already had those results, too.

Speaking of Board of Directors Election, in case you're interested, voter turnout was approximately 16,500 ballots (down significantly from last year). Assuming there are at least 500,000 members 18 years of age or older or business members, that equates to a voter turnout of 3.3%. It would be less than that if my estimates are too liberal. So, not surprisingly, the recommended Board candidates and incumbents were all re-elected. 🙁

Edit: Peter, there seems to be an error in the file upload. "2019-05-17 08_13_45-CCS_2019_AGM_Director_Election_Results.png: Error 108 - Could not create user folder". CHMOD issue, possibly when you did the server backup/maintenance over the weekend?

Cheers,
Doug