BC’s third-largest credit union reports sharp drop in profit
Posted April 8, 2013 9:11 pm.
This article is more than 5 years old.
VANCOUVER (NEWS1130) – Federal moves to limit the total amount of mortgages insured by the government has affected the bottom line of First West Credit Union.
BC’s third-largest credit union, operator of the Envision and Valley First brands, says its profit sank by more than $7 million last year to $26.6 million.
Some of it was due to one-time gains a year earlier, but Chief Financial Officer Tom Webster also says they couldn’t take as many mortgages and package them into money-making securities. “So we couldn’t get CMHC insurance because CMHC has capped how much they’re giving out, so would couldn’t do as much securitization as we traditionally do.”
Webster says about $2.5 million was not made because First West couldn’t get federal backing for home mortgages it bundled into securities and sold..
“CMHC has only so much portfolio that they will allocate for insurance, so the opportunities to securitize for financial institutions has been reduced.”
That was responsible for about a third of First West’s profit shrinkage.
First West says its membership grew three per cent to 171,000.
