BECOMING A FEDERAL CREDIT UNION

First West’s Board and Management believes that members’ interests will be best served if the credit union moves under federal regulatory oversight and continues to responsibly grow across the country — strengthening the foundation that supports each of the credit union’s local brands. After several years of analysis, careful thought and planning, we determined it is important that First West build on its strong foundation by expanding its horizons beyond provincial borders.

Our long history of responsible growth achieved through an intentional focus on being a community-based co-operative has enabled the credit union to remain resilient through difficult times. Creating options for long-term viability and sustainability of any organization is critical, which is why we’re setting ourselves up for future growth opportunities and choice. We want to keep a good thing growing by becoming a federally regulated credit union.

Currently, First West Credit Union is a provincial credit union. Provincial credit unions are organized and governed by provincial statutes and regulated by the B.C. Financial Services Authority (BCFSA). Federal credit unions are governed by the Bank Act and applicable regulations and guidelines. As well, they are regulated by the Office of the Superintendent of Financial Institutions (OSFI). The Financial Consumer Agency of Canada (FCAC) will oversee First West’s compliance with federal financial consumer protection legislation. First West will also become a member of the Canada Deposit Insurance Corporation (CDIC) for all eligible deposits.

Becoming federally regulated will enable our credit union to grow and remain relevant today and for future generations. It will also further protect members’ interests through stringent regulatory oversight while removing the constraints of provincial barriers. Gaining access to markets beyond B.C. means that when opportunity arises for the credit union or our members, we will be well positioned for success.

The board of directors and I often ask ourselves:

How can First West draw on its cooperative values and ensure it is resilient and relevant in times of change uncertainty and disruption?

One of the board’s most important functions is to look at how we position the credit union for success – how we create a strong financial institution to serve members’ needs now and in the future. We look to the horizon, guiding our business as we anticipate the needs of our members and prospective members.

First West’s board of directors has explored several scenarios related to the credit union’s long-term strategic direction, including becoming a federally regulated credit union. After extensive research, due diligence and important conversations with members and employees, we decided that applying to become a federal credit union so that we are no longer constrained by provincial barriers is in the best interests of our members, employees and the credit union.

Members voted YES to keep a good thing growing

The member vote results are in: 26,235 votes were cast on our special resolution to authorize First West to apply to become a federal credit union and 25,908 votes were cast on our special resolution to adopt the new Bylaws. Of the members who voted, 84.2% voted in favour of us applying to become a federal credit union and 84.1% voted in favour of us adopting the new Bylaws. Here are the final outcomes:

• The special resolution to apply to become a federal credit union received 84.2% votes in favour from our members who hold Class A Membership Equity Shares and 83.5% votes in favour from our members who hold Class B Equity Shares.
• The special resolution to adopt the new Bylaws received 84.2% votes in favour from our members who hold Class A Membership Equity Shares and 83.1% votes in favour from our members who hold Class B Equity Shares.

I’m encouraged by the fact that many members took time to learn about this opportunity, to carefully consider the issues and then vote—this speaks volumes about the strength of our cooperative and the power of member democracy. It also reflects the care and attention that went into ensuring this future-forming vote was carried out in a transparent, accessible, and engaging way. I’m grateful too for our dedicated employees who helped inform and engage members during the voting period.

The conversations we’ve had with members underscore the importance of our federal journey. Our members want and need us to be there for them should life or business take them outside of B.C. and they appreciate the steps we’re taking to protect and preserve our credit union in a time of disruption and change.

During the vote period, we heard members make clear the importance of focusing on our local communities as we pursue becoming federally regulated. This care is core to who we are and remains unchanged. So, in celebration of members voting YES on our special resolutions, it’s a privilege to share that we’ve decided to increase the member vote charitable giving amount significantly to a total contribution of $250,000 going to 13 charitable organizations. Next week, we’ll share the donation amounts and the charitable organizations receiving this much needed funding. This is something we feel is extra important right now because of the challenges our communities are feeling.

Affirming the democratic principles First West was founded on

I want to thank members who made the time to cast an informed vote, no matter which way they voted. Your vote affirms the democratic principles that are essential to our credit union as a values-based organization. Our members’ approval for First West to apply to become a federal credit union is an important milestone, but nothing will change overnight. With the strong member mandate to proceed, our next step is to submit a formal application to the provincial regulator, the BC Financial Services Authority, and to the federal regulator, The Office of the Superintendent of Financial Institutions, in the coming weeks. Following that, we anticipate transition to federal regulation by 2024. We’ll keep you informed of our progress along the way.

I hope you share in our pride that we are well positioned for a stronger and more sustainable future—for our members, employees and communities.

Sincerely,

Shawn Neumann
Board Chair, First West Credit Union

For more than a decade, First West has demonstrated that our multi-brand business model can be successful at working local while also leveraging the strength of our collective size. Together Island Savings, Envision Financial, Valley First and Enderby & District Financial have been able to provide more value for members than they could have on their own. Since coming together as First West, we have been able to:

• Eliminate or reduce every-day banking fees through best-in-class products
• Introduce leading online and mobile banking technologies
• Safely serve members through our Member Advice Centre
• Lead in our communities when they needed us most

We do not intend at this time to grow across Canada by building new branches in communities outside of B.C. However, new branches in other provinces may be added to First West’s branch network through any successful merger with other like-minded credit unions.

Federal credit unions receive some of the highest levels of prudential oversight afforded to financial institutions in Canada through bodies such as OSFI, the Financial Consumer Agency of Canada (FCAC) and the Canada Deposit Insurance Corporation (CDIC). Stringent regulatory requirements protect our members’ interests and help us continually strengthen and improve our practices.

Since First West must currently operate in a single-province market, there is a risk to the credit union and its members if the province faces a significant economic downturn. By serving members and growing First West thoughtfully across Canada, we have greater opportunity to withstand regional economic dips or recessions.

If First West becomes a federal credit union, there will be changes in how eligible deposits are insured. Currently, eligible deposits held with First West are insured to the full amount through the Credit Union Deposit Insurance Corporation (CUDIC).

Provinces can review and change deposit insurance coverage and as a result, the coverage through CUDIC has changed several times over the years. For example, the change to unlimited deposit insurance was made by the B.C. government during the 2008 recession as part of a plan to protect British Columbians’ deposits during a time of economic uncertainty. Across Canada, the deposit insurance coverage ranges from province to province.

As a federal credit union, eligible deposits will be insured through the Canada Deposit Insurance Corporation (CDIC), meaning CUDIC coverage will no longer apply, including to those deposits not eligible for CDIC coverage. CDIC is a federal crown corporation – established by the government of Canada – that provides deposit insurance coverage for its members. CDIC is well-funded and has the authority to borrow additional funds from the federal government, if necessary, with Parliamentary approval. If First West becomes a federal credit union, it will become a member of CDIC and First West’s members will have the same deposit insurance coverage as other CDIC member institutions, such as Canada’s major banks. Since its creation in 1967, no insured depositor has lost a single dollar under CDIC protection.

As of April 30, 2021, less than 3.5% of First West’s members would be affected by the change from CUDIC to CDIC. For more than 96% of First West’s members, the $100,000 for each of the above CDIC categories would be sufficient and would fall within CDIC’s coverage limits.

If First West becomes a federal credit union, there will be a 180-day transition period during which CDIC will provide the same coverage as CUDIC on “pre-existing” deposits that are eligible under CDIC’s deposit insurance coverage. “Pre-existing” deposits are deposits held by First West on the continuation date. With the exception of eligible pre-existing term deposits, the transition period will start on the day First West becomes a federal credit union and end after 180 days. Eligible pre-existing term deposits (e.g. GICs) will be fully insured until they mature or are redeemed.

First West has a long history of responsible, sustainable growth spanning more than 75 years. Using a variety of safeguards and processes, such as comprehensive risk management systems, we are better suited to protect member deposits and ensure liquidity. If First West becomes a federal credit union, it will need to comply with federal liquidity and capital adequacy guidelines. This will only enhance First West’s ability to remain a secure and financially strong credit union and First West will continue to protect its members’ deposits.

If you have questions regarding deposit insurance, visit:

• Credit Union Deposit Insurance Corporation: cudicbc.ca
• Canada Deposit Insurance Corporation: cdic.ca

For full details about the changes in deposit insurance, see the Notice Pursuant to the Disclosure on Continuance Regulations.