New Zealand’s first credit union founded out of a parish in Hamilton for Catholic families, is holding its own 70 years later, reports senior writer Mary Anne Gill.
First Credit Union chief executive Simon Scott.
When Simon Scott joined the board at First Credit Union in Hamilton 19 years ago, there were 45 credit unions in New Zealand.
Now there are three.
Yet there are still people who wander into the Collingwood Street head office and call it the St Mary’s Credit Union 32 years after it changed its name to Credit Union Hamilton and then in 2007 to First Credit Union.
A lot has changed since it was founded in 1955 but the credit union’s reason for being has not – it is still owned by its members, offers low cost loans and top rates on savings.
And that’s something Scott – now the credit union’s chief executive and director – says is its significant difference to the trading banks.
“We are the original peer-to-peer lender. We’ve never lost sight of the fact that what we’re here for is good deposit and good lending rates, especially personal loans and we don’t charge loan fees.”
Its name aptly describes what it is – New Zealand’s first credit union.
It was St Mary’s parishioner Tom Mitchell who, according to Gordon McLauchlan’s history of credit unions in New Zealand, was responsible for its creation.
“Catholic with a developed sense of community and like many of his generation, suspicious and resentful of what he regarded as a concentration of financial power in the hands of too few people,” is how McLaughlan described him.
Mitchell was inspired by American Jesuit priest Marion Ganey who founded credit unions in the US, Central America, Fiji, Tonga and Samoa and the credit union, set up for St Mary’s parishioners, was born.
First Credit Union Hamilton Staff at the Hamilton Christmas Parade last year, from left: Melissa Hay, Asleigh Spence, Tracey Sami, Annie Hutchings, Niki Wilson, Hana Han, Meggan Shokkos, Zoe Hay, Ronita Kumar, Amity Sinclair, Taj Eltringham, Simon Scott, Hugo Scott.
The difference between banks and credit unions is how they operate. Banks are for-profit, aiming to maximise profits for its shareholders. Credit unions are not-for-profit, distributing all profit back to its members through better rates and low fees. Each member, regardless of how much money they have in the credit union, is entitled to a vote on how the credit union is run. At banks, it is the shareholders who do that.
Scott, 56, became CEO in 2017 after a lengthy career in employment law and 11 years on the board, all bar three as chair.
He is the youngest of eight children born to Cyril and Faye Scott who had a pharmacy in Dinsdale and went to school at St Columba’s in Frankton, Marist Brothers Intermediate in Hamilton East and St John’s College.
After qualifying with a law degree from Waikato University, Scott in 1999 started his own firm – now Bogers Scott Shortland – and stayed there until the credit union board asked him if he would consider becoming chief executive.
His wife Leanna wondered how he would cope.
“Oh my God, you’ll never survive being told what to do by a board,” she said, but he has and thrives on it.
“We’ve got a really good board and I’m loving it.”
The father of three has been busy in that time. First Credit Union has – according to its June 2024 annual return – 60,788 members, 5300 brought in from others it merged with, $412 million worth of members’ shares and assets of about $500 million.
“We’re big for a credit union and tiny for a trading bank,” he says.
Always traditionally strong in the Waikato and Bay of Plenty, in recent times they have picked up other credit unions in Auckland and now have a strong footprint in Penrose where it took over the Fisher and Paykel Credit Union and at the Glenbrook Steel Mill after acquiring Steelsands Credit Union.
Simon Scott at right during the Pukekohe official branch opening with from left: Andrew Bayly, Lauren Morley (Pukekohe Branch Manager), Credit Union chair Judith Taane, Sila Pelesikoti and Angie Cunningham.
First Credit Union recently opened a branch in Pukekohe and in the last two years has diversified into social housing, funding 63 developments mostly in Hamilton, worth nearly $30 million.
One of the cornerstones to the credit union’s success has been its involvement firstly in St Mary’s Parish and then throughout Hamilton and primary schools.
But school banking ended last year, a victim of the times.
“Banking cash and all that sort of stuff just wasn’t working anymore because parents don’t have cash to give children,” says Scott.
They are working on a technological equivalent and looking to expand.
“New Zealand is a bit of an outlier to the rest of the world in that we never had really, really strong industrial credit unions like firefighters credit unions which are really strong.”
Also notably missing are teachers’ credit unions – again strong globally and one of the biggest in Australia – but never took off here primarily because of the Public Service Investment Society (PSIS).
It was set up in 1928 and is now the Co-operative Bank.
First Credit Union is not immune to banking scams but is next cab off the rank with the new confirmation of payee technology which will protect customers from payment mistakes and scams.
Growth is on the agenda although unlike banks it can only get its capital from retained earnings, which means more members.
So how with that scenario does the credit union manage to outdo the trading banks with low personal lending and high deposit rates? It does not do business banking.
“It’s all going back to that member benefit. What’s the point in being a member of the golf club if you turn up at the bar and you get charged twice as much for a drink than down the road at a pub. There’s got to be benefits of belonging.
“We are able to take more of a chance on some borrowers and we’ve helped people into first homes that have been turned down by the banks and I can’t remember the last time, on that basis, we were let down.”
Scott says it is because of the relationship between the credit union and members who are borrowing to buy cars, for holidays, pay for funerals or on tertiary fees.
There were “green shoots” at the end of last year which suggests a lift in confidence and he’s expecting mortgage rates will continue to drop.
With that sort of confidence, the economy will bounce back, he says, but with a rider.
“The government’s got to get a handle on costs. Try and get the spending down. Get inflation, right, right, right down. Get the interest rates down so businesses say ‘we will borrow some money and try and do something’.”
Simon Scott