(Edmonton, Alberta) – Servus Credit Union took a budgeted reduction in second-quarter income as it invested in owning its credit card book, digital banking enhancements, and two mergers with Calgary credit unions. The allocation to Profit Share® was also boosted 14.5% with changes to the program to help members improve their financial fitness.
"We fully expected to see a year-over-year reduction in earnings this quarter," says Garth Warner, President and CEO of Servus Credit Union." Acquiring the credit card book in particular was a significant cost, but we expect long-term revenues to bear out with this investment. It will also give us more insights and products to help shape member financial fitness."
Income before patronage allocation (member Profit Share®) and income taxes was $37.1 million, which is 6.9% lower than Q2 FY2017. This was due to a 16.1% increase in operating expenses, a result of investments that are already starting to pay off. Margin increased by 11.8% over Q2 FY2017, due to revenues from the credit card book plus increases in rate, and growth in the loan book.
During the second quarter, Servus completed an amalgamation with Inglewood Credit Union, welcoming approximately 900 new members to Servus and a new branch in a desirable Calgary neighbourhood. Servus also completed the preparations for the amalgamation with Canada Safeway Employees Credit Union (Calgary) Credit Union, resulting in another 3,500 new members in June.
Other key figures included (compared to Q2 FY2017):
- Total assets increased to $15.9 billion, up 6.1%
- Member loans were $13.9 billion, up 5.0%
- Deposits increased to $12.5 billion, up 2.6%
- Retained earnings increased $60.0 million up 8.0%
- Provision for credit losses for the six months ended April 30, 2018, increased by $1.9 million