LADYSMITH & DISTRICT CREDIT UNION
History of the Organization
Ladysmith and District Credit Union (“LDCU”) was founded on May 18, 1944, with charter 116 and a common bond of residents of Ladysmith, B.C. north to the Nanaimo River and south to Newcastle district boundary. LDCU has a proud role in the history of Credit Unions as it was the first Credit Union in North America to use the international trademark of Credit Unions (hands and globe) in its signage. The Credit Union has never undergone a name change nor has it merged with any other Credit Union; however, it is now an open bond Credit Union allowing anyone to become a member. The Credit Union has three main departments: Member Services, Financial Services, Support Services, and an Insurance Services subsidiary. LDCU has 6,380 members, 34 employees, and over $118 million in assets.
Credit Unions versus Banks
Credit Union Central of British Columbia (“Central 1”), the trade association and central bank for B.C.’s forty-six Credit Unions describes Credit Unions as:
“Co-operative financial organizations and are similar to banks in their physical appearance, services and operations. There are, however, major differences. Credit Unions are owned by their members (customers). Any member has the opportunity to participate in the development of operating policies by serving as a Credit Union director or as a member of a Credit Union committee.
Each Credit Union is autonomous, operated by management appointed by its Board of Directors. The directors are elected by Credit Union members.
A key principle in the operation of a Credit Union is that each member, regardless of financial involvement, is entitled to an equal say in electing directors. This operative principle ensures that Credit Unions remain accountable to their members.”
Although banks and Credit Unions offer similar products and services, Credit Unions and banks differ in several important aspects. Credit Unions are provincially regulated whereas banks are federally regulated. As a result, Credit Unions across Canada are restricted in their operations to the province in which they are located and are therefore regulated within that province. Financial institutions that operate across provincial boundaries (i.e. TD Canada Trust, Bank of Montreal, etc.) fall under federal jurisdiction and, therefore, operate under federal regulations. Should a Credit Union wish to operate outside its provincial boundaries, it must receive approval from the federal regulators to become established as a “bank.”
As noted by Central 1, Credit Unions are financial cooperatives and, as cooperatives, are democratically owned and operated by their members based on one member, one vote. Credit Unions reinvest their profits in the Credit Union, and share them with members and the communities in which the Credit Union operates. For banks, owners and customers are not the same. Bank profits accrue to the shareholders and are not redistributed to bank customers. Credit Unions also provide a higher level of deposit protection to members than banks. Credit Union deposits have unlimited insurance per separate deposit whereas banks insure only a maximum of $100,000 per depositor per institution.
History of Credit Unions in British Columbia
Credit Unions have existed in Canada since the early 1900s when the first caisses populaires opened in Quebec to meet the financial institution needs of citizens that did not have access to banks due to their lack of wealth. Credit Unions subsequently spread to the Western Canadian provinces, where they developed primarily in response to difficulties faced by farmers in obtaining financing during the Great Depression when banks had little interest in dealing with individuals that had minimal savings or lending needs. Credit Unions were largely community based and would provide loans to individuals based on their character and reputation within the community.
B.C.’s first Credit Union, Common Good Credit Union, opened its doors in Burnaby in 1936 as an alternative to chartered banks. The Credit Union movement grew in B.C. as groups of individuals with a common bond such as community, church, industry, cultural heritage, and union affiliation came together to develop their own financial co-operatives. These common bonds became the basis for membership. While common bond Credit Unions continue to exist today (i.e. Sharon’s Credit Union, Kalsa Credit Union, Operating Engineers Credit Union), the majority of B.C. Credit Unions have developed more inclusive membership models wherein anyone in B.C. may join almost any Credit Union.
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