Wednesday, December 23, 2015

Credit Union 'investigating merger'

The Board of Kilcullen Credit Union is investigating the possibility of a merger, writes Brian Byrne.

The Chairman, Martin Burke, told the 45th AGM of the Credit Union last evening that it is becoming increasingly difficult for credit unions of a smaller asset size to deal with rising costs, falling investment income, enhanced governance requirements and increased regulatory levies.

He asked those members present at the AGM for permission to proceed with this merger by Board Resolution should the discussions and due diligence show that such a merger would be in the best interest of members.

He also said that the future of the Credit Union is in youth, and to attract youth it needs to offer services to compete with other banking organisations, such as banking online, debit cards, and ATM facilities.

On a query from the floor as to which other credit union was a merger being considered with, Martin Burke said they were not able to say that at the moment, as a confidentiality agreement had been signed.

There was some concern expressed that acceptance of the Report of the Board of Directors effectively gave the Board the permission to undertake a merger, without further reference to the members. After some discussion, it was agreed that a special meeting would be called if the matter reached a proposed merger stage.

Elaine White, Secretary, and the Manager, Pat Stafford, both emphasised that the Board at all times worked to the benefit of the membership. Pat Stafford said the Central Bank could actually direct a merger of a CU, and the Board felt the way they were going was a better option.

A question from the floor asked why the regulatory reserve in Ireland was 10pc when across the EU it is 2pc? Charlie Carri of the auditors John P Greely & Company said it was Government policy in Ireland that it should be 10pc.

Charlie Carri went through the Financial Report, noting the positive that the Loan Book of the CU had increased, while investment income had decreased due to historically low interest rates.

He said that the large drop in provision for bad debts had helped to keep costs down. The Credit Control Committee reported a recovery of €63,990 In bad debts during the year. Meantime, eight loans totalling €27,823 were transferred to a Bad Debt Register.

The gap between the 'carrying value' of the CU premises and the open market value is in a negative situation, and in the light of a possible merger it had been recommended that an impairment charge be made on the financial report in terms of this, which resulted in a decrease shown of €276,000 between income and expenditure. He said this was a prudent decision.

Also, because of a significant inflow of funds, the statutory reserve had been increased, contributing to a decrease in undistributed funds at the end of the year. He said it would take some time for the growth in the Loan Book to show a significant improvement in income. Total assets have increased by €1.4m overall. Kilcullen Credit Union still has a strong Balance Sheet, and it's healthy, he concluded.

The Credit Union granted a total of 453 loans during the year, totalling €1,501,936, according to the report of the Credit Committee.

During the year, the Board took a decision to drop the Death Benefit Insurance. Pat Stafford told the meeting it was costing the equivalent of more than €1,200 per member and it was felt that the money could be used in a better way elsewhere.

A minute's silence was observed in memory of the recent untimely death of Sheila Schwer, a friend and colleague of the members and management of Kilcullen Credit Union.

The Board proposed to reduce the number of Directors to nine from the current 11, and this was agreed. Both Arthur Duffy of the Board of the Directors and Roisin Talbot of the Board Oversight Committee have retired, and note was made of the long and appreciated service of both to Kilcullen Credit Union. To fill the vacancy left by the death of Sheila Schwer, former Director Vivienne Byrne had been coopted to the Board on 10/11/15 until the AGM.

Terry Lawler was re-elected to the Board, Maeve Duffy was elected to the Board Oversight Committee, and John P Greely & Company were reelected as Auditors.