Saskatchewan's largest credit union, Conexus, closing nearly 25% of its branches | General financial discussion | Discussion forum

Saskatchewan's largest credit union by both assets and members, Conexus Credit Union, which is also Canada's 6th largest credit union by assets, had seven small, rural communities realing with the announced closure of 9 credit union branches that would see seven 7 towns/communities lose their last financial institution in town. Conexus is also to close 2, presumably under-used, branches in its city of domicile, Regina, but as they have 5 or so remaining branches in Regina, this is much less of an issue.

I checked the 7 towns on Google Street View, which took all of a minute or two each to roam up and down Main Street and, 6 out of 7 cases, their "commercial area" of town consisted of a handful (or less) businesses running along either Main Street or the main provincial highway through town. In all cases, they had a pub or bar, some had a diner, some had a former diner that appeared to be boarded up, and all had either a town hall, community centre, or a grain elevator (or a former grain elevator).

In the article, it notes that in the preceding 12 months to December 31, 2018, 11,000 members visited at least one of the 9 branches slated for closure at least 3 times in the calendar year. Of those, 2,250 of those members are considered to be regular members of those branches, which works out to about 250 members per branch (2,250 divided by 9). It's likely less than that since the two Regina branches may have 400-600 members each. Generally, you need at least 500-1,000 customers per branch to have any chance of being profitable. Taking those transaction numbers, 11,000 members divided by 3 times gets you about 3,666 unique members visiting a branch. That's 407 members per branch visiting that branch at least once in a given year (again, likely lower in the rural communities). Multiply that by 3 and you get 1,222 visits per branch (including the multiple visits per member). Divide that by 365 and you get, on average, 3-5 visits per day. Even if they're down to 2-3 staff members per branch (38 staff are affected by the move, all of whom Conexus expects to offer them continuing jobs in a new municipality/trade area, should they wish to take it, of course) and you factor in $80,000 for a branch manager, $35,000 for a full-time teller, and $45,000 for a full-time account manager, that adds up to $160,000 per branch in staffing costs, not including pension, benefits, and vacation entitlements. You've got occupancy costs, which could be easy $30-60,000 per year (higher in Regina) so that, all told, this does add up to $2-3 million per year in added costs to the credit union.

Still, Conexus had only 39 branches at December 31, 2019, and this will drop them to 30 - that's nearly 25% of their branch network and is one of the concerns against merging with a larger credit union. Can you be assured your branch will still exist in 10, 20, or 30 years from the time the merger is consummated?

On the reverse, though, Conexus' CEO notes 95-96% of all transactions are done through online, telephone, mobile banking, and ATM channels (i.e., not branch channels) and that fully 22,000 or so of their ~128,000 members are domiciled to a branch without a physical branch (presumably, from prior branch consolidations). While I feel for the fact that many of these towns have only dial-up Internet access and are cash only seasonal businesses, ultimately, these businesses may be forced into offering at least debit card purchases (i.e., cashless) and will have to bear those added costs because it doesn't seem to be sustainable. Conexus gave it a valiant effort in continuing as long as they did and it should be pointed out they are by no means alone - Affinity Credit Union closed a dozen or so rural branches several years ago, most of which were the last financial institution in town and is down from ~70 branches to 56.

Cheers,
Doug