Finance CEO expects 2009, however, to be even more challenging for the credit unions

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Brett Bundale
Telegraph-Journal

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The biggest Acadian financial institution in Atlantic Canada posted profits of $21 million for 2008 after absorbing losses of nearly $10 million from asset-backed commercial papers.

Enlarge Photo

Camille Theriault

The Mouvement des caisses populaires acadiennes also revealed during its annual congress in Caraquet Friday a slight increase in its assets of $130 million - or only five per cent compared to 2007 - reaching a total of $2.8 billion worldwide. Its subsidiary Acadia Life had profits of $3.4 million in 2008, a $3.2 million drop compared to the record performances in 2007.

President and CEO Camille Thériault said the 2008 financial results were positive considering the global financial crisis.

"It's been a very difficult year for the majority of financial institutions so our co-operative has done well," he said. "Obviously our earnings of $21 million are not as good as the $36 million we posted last year but 2007 was an exceptional year. It was our best year ever."

However, Thériault said the general insurance business of the caisses populaires has been hurt this year by unfair business practices.

The financial institution's lawyers have sent a letter to the New Brunswick Insurance Brokers Association - as well as some private companies in the provinces - requesting a change in "disloyal" business practices within 30 days.

"Otherwise we'll bring this to the Competition Bureau of Canada," Thériault said.

Although the overall financial results for 2008 were good given the downturn, the CEO expects 2009 to be even more challenging for the credit unions.

Thériault said that the caisses populaires gave out three per cent fewer personal loans because of the economic crisis in 2008 but that commercial lending has been fairly good.

"For every quarter point that the governor of the Bank of Canada brings down its lending rate it has a direct effect on our bottom line," he said. "Right now we can't get much lower, which is good for members but is not necessarily good for business."

The caisses populaires acadiennes were affected by the struggling forestry industry and may be further hurt if the lobster industry has a bad year, Thériault said.

"We will continue our planned merger of several credit reunions and look for other ways to keep our bottom line strong," he said.

Robert Penny, the superintendant of credit unions, said he is pleased the caisses populaires acadiennes have managed to be profitable in a tough economic time.

"Just to give you an idea of the financial climate, TD Bank Financial Group went from being the 15th largest commercial bank to the 5th - not because they grew but because others shrank,' he said.

"They certainly continue to meet all their legislative requirements," he added. "They meet or exceed any of the necessary ratios so from our point of view they are doing well."

Penny said he would continue to monitor the financial institution for requirements around liquidity.

As for the losses suffered by the Caisses populaires due to investments in Asset Backed Commercial Paper, he said the office of the superintendant approves investment policies.

"So we were always aware of what they were invested in," he said. "From August 2007 when the crisis in commercial paper hit - from that point forward we continued to keep an eye on liquidity and they have been at or in excess of legislated minimum."

David Murrell, a professor of economics at the University of New Brunswick, said because the credit union operates largely in the north where the downturn struck the forestry industry harder than in other regions, the results are as good as could be expected.

"But still I would say the write-down from the Asset Backed Commercial Paper has hurt them quite badly," he said. "It took quite a bite out of their profits."

Founded in 1946, the Mouvement des caisses populaires acadiennes has of 29 banking centres and 86 service points in New Brunswick. The organization has more than 1,200 employees and 350 elected representatives.