Community partnering with Fundy-Albert to launch feasibility study and present viable business plan to FCNB
When Patrick Kemp heard that Nackawic-Millville’s last bank would close its doors permanently, the Fundy-Albert resident knew from experience the potential economic damage it could deliver to the York County town.
Seven years ago, small communities like Alma, on the shores of the Bay of Fundy, lost its last bank, Kemp told a crowd of more than 60 Nackawic residents attending an information session at the Nackawic Lions Club on May 29.
With residents and business owners now facing up to a 40-minute drive to a bank, he said the rural communities took an economic hit.
Kemp explained that his community had lost a grocery store, gas pumps, and other businesses.
“We started to see a field of vacant debilitating buildings,” he told the crowd on hand to study the option of forming a credit union to provide banking services to Nackawic-Millville residents.
Kemp explained that the Fundy-Albert community lacked the population and financial support to open a profitable credit union independently. He doesn’t believe that’s the case in Nackawic-Millville.
Kemp believes the York County community can support a credit union in its own community and eventually support a branch in Albert County.
In February, Kemp approached the Nackawic-Millville council with a proposal to launch a feasibility study to establish a credit union. Mayor Tim Fox, Deputy Mayor Greg MacFarlane, who chairs the Destination Nackawic Economic Development Corporation, and the rest of the council welcomed the idea and committed to supporting Kemp’s efforts.
MacFarlane introduced Kemp at the May 29 meeting, explaining the need to support the credit union plan by signing a commitment to become members of an established credit union. With Nackawic’s Scotiabank set to close its doors on June 7, he explained, gaining approval for a credit union as quickly as possible is vital.
“We need to get boots on the ground,” MacFarlane said. “The more people we get signed up, the better chance to get the credit union.”
Kemp provided an honest assessment of the uphill battle to gain approval from the Financial and Consumer Services Commission of New Brunswick (FCNB) to establish a credit union. He admitted the bar will be high, but as someone familiar with the Nackawic area, he believes it’s attainable if the community gets behind the effort.
Kemp explained he worked at the Nackawic Scotiabank between 1997 and 2000. He knows the bank did well, especially after the town’s only other bank closed its branch. When the CIBC closed, the Scotiabank’s business quadrupled, he said.
Kemp launched the feasibility study with the help of two students in the UNB business administration master’s program. Together, they are building a business plan for a new credit union, including broad support among area residents and business owners to become members.
In addition to providing details about how a credit union works, Kemp and his team distributed forms for those in attendance to fill out and distribute to friends and family not in attendance.
MacFarlane said residents could submit the forms online or pick them up and drop them off at the Nackawic-Millville town hall. At the June 3 council meeting, CAO Kathryn Clark said several residents are dropping off completed forms for town staff to submit.
At the public meeting, Kemp explained how a credit union works, noting it will provide most of the services a bank offers, including handling deposits, loans, mortgages, investments and a series of other bank services.
He estimated that a successful credit union would require at least 1,000 members, including at least 10 founding shareholders with at least $50,000 deposits. Kemp noted that credit union members have a direct say in the business model.
While credit unions are provincially regulated through the FCNB, members also fall under the federally mandated banking act to protect their financial interests, including deposit insurance.
Even with a successful business model, Kemp said a new credit union is expected to lose money for the first three years. Like banks, he said, the credit union will eventually make money on loans and other services.
During the June 3 council meeting, MacFarlane expressed fears the FCNB may be predisposed to deny the credit union application.
“It was clear to Patrick when he talked to them that the commission felt that we probably wouldn’t be accepted,” he said.
He called it “unjustified and unwarranted” for an organization to predetermine the community was not big enough to support a credit union without any study. MacFarlane hopes the feasibility study proves the FCNB board wrong.
MacFarlane, who chaired the council meeting in Mayor Fox’s absence, urged council members and the entire community to fight for the credit union.
“Because, if we don’t land this credit union, we’re not going to have a financial institution in the community and that is not going to be a good thing for the community and economic development,” he said.
MacFarlane, owner of Ryan’s Pharmacy in Nackawic, said he had already committed to moving his business and personal banking to the credit union.
MacFarlane said he and the mayor plan to contact the FCNB board and commissioners to stress the credit union’s importance to Nackawic-Millville’s economic future.
Kemp said his team hopes to have his business plan ready for the FCNB by the end of June.
MacFarlane said he contacted Scotiabank to delay the branch’s June 7 closure, but bank officials refused his request.
If the FCNB approves the business plan, Kemp said the credit union hopes to open a branch in the vacant Scotiabank location in the Nackawic Mall.
