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Email this7:36 am
November 18, 2017
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Yesterday, Vancouver City Savings Credit Union announced massive layoffs. Just a couple of months ago they announced new fees, particularly a hefty $2.50 per mailed statement.
VanCity is huge and considered the crown jewel of the Credit Union movement in Canada. Are they threatened? I hold shares in them accumulated over 30 years, and they are NOT insured. They've been good earners. Should I panic and cash them in? Maybe it's already too late? Once a run gets started, it's only the first to flee that get out unscathed.
That's sad but true. When confidence is lost, the furniture is next to go.
Anyone know more than I?
RetirEd
7:59 am
August 4, 2010
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I'll let Peter move this as desired, but hefty layoffs have been common in industries like tech as well where they feel they are "wrong-sized" due to covid/inflation/market whatevers. Vancity won't be collapsing over this, whatever pain it may cause for employees and operations.
https://www.cbc.ca/news/canada/british-columbia/vancity-layoff-1.7234793
7:40 pm
October 21, 2013
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I have never held CU shares, and would not. If I want uninsured, I'll look elsewhere.
That said, after 30 years, you could still be ahead. Some people on this forum like to brag that their dividends from corporations have more than paid for their stocks.
I don't think that a 7% layoff of staff foretells the end of the world necessarily, and probably not at all. Banks have big layoffs from time to time, and the only people who seem to care abut it are the employees themselves and their families. It is often applauded as "efficient" and prudent.
I wouldn't sell the shares unless a close reading of annual reports etc tells you this is a much bigger problem.
8:40 am
October 27, 2013
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https://annualreport.vancity.com/_doc/Vancity-2023-annual-report.pdf tells one all they need to know. Per page 11, VanCity had a small financial loss last year partly due to a significant squeeze in interest income and they expect 2024 to be similar.
They have to be seen to cut more costs out of the system...as they should. Their shareholders (membership) should demand that. It is also perverse that they have as many as circa 60 branches in the Lower Mainland and the Island.
9:06 am
November 3, 2022
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I hold over $3,000 in Class D shares at VanCity. They have sat there for many years, and grown modestly with annual dividends, until now.
But now that there will be no dividend for 2024, and probably not for 2025 based on how long it will take them to clean up their balance sheet, I will look into redeeming them.
It does seem like this credit union has a lot of problems.
10:48 am
October 27, 2013
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Their NIM got squeezed because too many depositors switched to longer term deposits over HISA accounts, plus lending volume is down to compound the problem. That sort of thing will always be an issue (risk) for a regional financial institution, over a national one.
In this case, it looks like VanCity relied too much on liquid deposits, i.e. not enough 'liability matching' or 'term matching' depending on how one wishes to describe it. Perhaps time for some decision/policy makers in that organization to be shown the door. They will sort it out in time, i.e. not going to go under, but it will take time. Home Trust/Oaken almost died due to similar issues (relying too much on liquid deposits) and they never fully recovered (got bought out instead).
Personally, I tend to stay away from these sorts of institutions, deposit insurance notwithstanding.
11:30 am
December 12, 2009
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It's not just as simple as reading their financial statements and net interest margin. They've made questionable investments over the years, as I understand it, particularly within their Vancity Community Investment Bank subsidiary, which have caused financial losses. I would also point out they are in violation of their Collective Agreement to have a jointly trusteed pension plan, and that matter is also before the courts.
In short, I stand in solidarity with my fellow BCGEU colleagues at Vancity.
Cheers,
Doug
12:21 pm
August 4, 2010
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Doug said
In short, I stand in solidarity with my fellow BCGEU colleagues at Vancity.
But did you dream you saw Joe Hill last night... 🙂
11:34 pm
November 18, 2017
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Yes, I'd studied the annual report and had my doubts. Where did the word of no dividends for 2024 originate? I haven't seen it, just the CBC piece that made me post this. I'll also have to ask if that means no interest payments - since the interest rate on their shares has remained high. I'll have to check on that. Or is this just a conclusion some people are making after hearing the news?
The decision to unload shares is complicated by the inability to buy back except under special offers or interest accumulation. I've done well with my shares from a few credit unions so far, but then I'm old now and don't look kindly on out-waiting temporary shifts.
It's certainly true that VanCity has made mistakes, but it's been a financial powerhouse. I live in Vancouver and I don't think I'll be left without any branches in the near future. I don't like affinity programs in general - I'd rather make money and channel my charitable/ideological input myself rather than into someone else's "grab bags." I participated in a focus group (not with VanCity) once about selection of "ethical" investments and was impressed with the diversity of participant opinions on what was "ethical" - particularly how none of them wanted to avoid nuclear power investments!
RetirEd
7:30 am
October 27, 2013
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In the Annual Report link https://annualreport.vancity.com/_doc/Vancity-2023-annual-report.pdf on page 6, Message from CEO, I quote this passage
That said, I can understand why people looking at our 2023 bottom-line results might find my excitement odd. After all, we’re ending last year
with operating earnings of just $1.1 million, and an after-tax net loss of $1.3 million. And because our Shared Success allocations to members and
communities depend on our profits, there will be no Shared Success dividends disbursed to members this year. This comes after a record Shared Success allocation over the last two years.
The full story is actually in that Message
10:55 am
October 21, 2013
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All FIs make mistakes; VanCity is not alone. Just look, for instance, at recent shenanigans at TD, and what it is costing them. There are undoubtedly more mistakes being made in various FIs right now, but we don't know about them.
that said, it sounds like it's a good time for RetirEd to review his portfolio, long and short goals and risk tolerance. Maybe a different mix would be preferable now.
6:55 am
September 11, 2013
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Personally in general I stay away from credit unions. Based on their small market share they seem to have an inordinate number of issues compared to the big banks, as I've learned reading this site over the years. But I get why some folks like them.
8:06 am
November 18, 2017
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Bill: VanCity is pretty huge, small only compared to the big banks.
Yes, I've noted in the past that VanCity seems to screw slightly more than most, but always cleans up without a fight. I'm under 5% of assets with them, though. Enough to hurt if it all goes sideways, still. I do constant reviews of my assets through the year, which is why I come here often.
AltaRed: Thanks for pointing that out. I'd read it as only applying to their organizational handouts. At least I'll still have their JumpStart bonus from earlier this year!
RetirEd
9:31 am
November 3, 2022
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It took a couple of attempts, but I succeeded in getting a form to redeem my Class B shares and transfer the funds to my chequing account.
First, I was sent a form that showed a redemption value of 10 times my share holding! I wonder what would have happened if I'd signed and returned that form?
12:05 pm
November 18, 2017
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NEWS: VanCity INVESTMENT SHARES STILL PAYING GOOD INTEREST!
When I called VanCity to set up one of those promotional 3-month 5% JumpStart accounts, I learned a few important things:
1. Though VanCity did NOT pay any dividends on Class B (membership) shares for 2023 and probably won't for 2024, the Class E (investment) shares DID continue to earn interest and will continue to do so, paid annually at quarterly rates:
5.17% for 2024Q1
5.51% for 2024Q2
5.51% for 2024Q3
It's only the "shared success" bonus on those rates that is not being paid.
That's enough for me to keep my TFSA Class E (investment) shares there at least until the end-of-year maneuver time. Remember, these shares are NOT insured in ANY way. I don't have a large amount in them (low 5 figures), but they have rewarded me handsomely for over a decade.
2. There is now a waitlist of one to three quarters to withdraw Class E (investment) shares. (BlueShore has always warned that investment share withdrawals are at the discretion of the BlueShore Board of Directors, but this seems to be something new for VanCity.) It remains to be seen whether I'll be able withdraw the Class E (investment) shares in time for the end-of-year maneuver time.
3. Their TFSA withdrawal fee is now up to $100. Another good reason to wait until year-end.
4. Withdrawn share funds do not qualify as "new money."
RAIL BARON: Did you face any delay other than getting the forms when pulling your Class B (membership) shares? I didn't ask that, thinking I'd keep that small sum invested.
RetirEd
1:02 pm
November 3, 2022
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I redeemed my Class B shares in June. It took persistence, but this was due to incompetence more than anything else. Turns out that we held over $6,000 in these shares through shared success dividends in our joint accounts being reinvested over past years, but the shares were split into two separate holdings for Mrs. Rail Baron and me when VanCity did an upgrade to their relationship management software and insisted on splitting our shares to individual ownership, even though everything else we hold at VanCity is in joint accounts.
Anyway, after multiple phone calls, electronic forms being sent back and forth, corrected, and a couple of dropped balls, the funds were transferred to our joint chequing account, where I promptly e-debited them to a better investment. The whole process took around seven days.
2:33 am
November 18, 2017
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Thanks, Rail Baron. A VanCity CSR promised to get back to me about the current redemption wait.
You mention Class D shares - I'm not familiar with them. Are they interest-earning? How do they differ from Class B (membership) shares?
Another note: VanCity's "new money" provision is very different from most other financial institutions. For one thing, there's some sort of 30-day rule allowing cash that left VanCity in the 30 days preceding a promotion's inception to return and qualify for the JumpStart promotion. This may really benefit some people, and is certainly less client-hostile than many others.
VanCity seems to be leaving a lot of discretion to their CSRs about interpreting their New Money rules. It SEEMS (from discussion with two of them) that whether the cash comes from a defined source such as pay or pension cheques can allow it to qualify for the promotion even when there has been a withdrawal from the JumpStart promotional account. It's withdrawals from other VanCity assets that they try to keep out of the promo.
I bought the promo. Going to be worth a decent hunk for me.
RetirEd
8:47 pm
November 3, 2022
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Class D shares were earned from our keeping sizable balances in VanCity Investment Management, the CU's wealth management division.
They used to award shares based on a % of assets under management. Since the AUM were large, those shares rolled in over time.
But about five or more years ago, they ended this award of these shares for VCIM account holders. The shares we had accrued were treated the same as Class B for the shared success dividend, but now I have redeemed everything except the $5 required amount.
7:35 am
November 18, 2017
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Thanks for the explanation, Rail Baron. I guess that meant no dividends for you now.
RetirEd
4:56 pm
November 18, 2017
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I apologize for the dribs-and-drabs information about this, but VanCity staff aren't all up to speed on the details of share accounts.
There is NO delay cashing out Class B (membership) shares. A teller confirmed, as she handed me blank redemption forms, that I could have the cash any time. Exactly as when I last redeemed some in 2001; I walked in, asked, and was granted the cash in another account of my choosing on the spot.
The delay in accessing Class E (investment) shares depends on what proportion of the Class E (investment) shares are awaiting redemption, to protect VanCity capital. As such, there's no definite redemption forecast - but there are only four quarterly redemption dates per year, one conveniently near year-end.
If one does request Class E (investment) redemption now, one can decline to redeem and leave the cash in Class E shares within 2 days of redemption. (Which would be on a predictable date.)
As my Class E (investment) shares are tax-free and earning about 5% interest, I'd want to time the withdrawal near a year-end to avoid the $100 TFSA transfer fee and instead do the year-end out-and-in thing. I could redeem into another TFSA account and wait for year-end. But that's not my best bet right now.
As my Class B (membership) shares are not tax-free and not earning anything until Shared Success Dividends resume, I could turn to them in the new year if I end up short for my 2025 $7k TFSA contribution allowance. No point doing that now - they wouldn't qualify as New Money for the JumpStart promotion and other VanCity deposit rates aren't attractive now.
Whew. Cash-flow crunch avoided. This all started when the higher interest rates (and therefore income) cut my benefits!
RetirEd
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