Credit unions often differentiate themselves from banks by offering year-end bonus dividends to members. A number of credit unions are finding ways to operate more efficiently so that members can enjoy their portion of excess earnings this year. However, such efforts are sometimes offset by the nation's economic woes. Midland, Mich.-based Dow Chemical Employees' Credit Union returned $9 million in year-end rebates and rewards to members who used the credit union to borrow or save money in 2008. In January, Dennis Hanson, president/CEO of the $1 billion credit union, said, "We work hard to manage our operations efficiently so that we can thank our members with these rebate and reward programs at the end of the year." When asked for examples, Hanson said that DCECU keeps overhead costs low-it has no branches, just a single office location and a fleet of 22 ATMs in the mid-Michigan area. "It works well for us," Hanson said. Additionally, the credit union has a staff of 140 employees, which is comparatively lean for its asset size, Hanson explained. Will DCECU be able to give back to members again at the end of this year? "It's our plan," Hanson said. The credit union budgeted its year-end rebate and reward programs for 2009 before the fallout from the corporate credit union conservatorships occurred, but Hanson said he expects the credit union will still distribute between $5 million and $8.5 million to members at year-end. On the other hand, Las Vegas-based Clark County Credit Union is not expecting to offer a bonus dividend at the end of this year. This news comes in marked contrast to CCCU's January announcement of a $2.9 million dividend for 2008, the ninth year in a row it had distributed such a dividend. Operational efficiencies contributed to the dividend, according to Roy Holmstrom, chief financial officer/chief information officer for the credit union. By producing credit union notices (non-sufficient funds, late notices, certificate maturities, etc.) in-house with a print-to-mail system, CCCU has been able to reduce operating costs of contracting with a third-party company by more than 70%, Holmstrom said. He noted that although the in-house notice program required a large up-front capital investment, it has paid for itself in a short amount of time. The credit union has also standardized the types of printers used throughout the organization, reducing the number to only two or three kinds of machines. Doing so has enabled CCCU to reduce service costs and purchase toner in volume, creating a savings of several thousands of dollars a year, Holmstrom said. Additionally, the credit union's marketing department recently began producing its on-hold messages in-house, saving $1,000 this year after the initial equipment and software purchase. In the future, the expense will be reduced to less than $100 per year, Holmstrom said. Finally, he mentioned that after running the numbers, he had determined that the credit union would save between $4,000 and $7,000 each year in power if all non-essential computers were turned off at night and over the weekends. As a result, CCCU has developed a way to use its network to shut down each computer at 8 p.m. every night and is already seeing a reduction in energy bills, Holmstrom said. Despite efficiencies, the credit union has still taken a hit as members face job losses, pay cuts and increased expenses, Holmstrom said. CCCU reported a loss of $14.2 million in the first quarter-its first quarterly net loss since 1986, he said. The loss is attributable to two items: $5.5 million of CCCU membership shares lost to WesCorp, and an additional $13 million was set aside for possible future loan losses, part of which was due to new regulatory requirements, Holmstrom said. These events negated what would have been $4 million in income for the first quarter. As a result, CCCU does not anticipate being able to return a bonus dividend in January, Holmstrom said. Wayne Tew, president/CEO of the credit union, explained, "While we remain well-capitalized at 8%, we are working to return to our previous level of 10%. While we are in this process, we will continue to do what is best for our member-owners, which is to ensure a strong, safe place for them to do business." Denise Ligammare, a business development manager for Williamsville, N.Y.-based Western Division Federal Credit Union, said the credit union will do its best to pay a bonus dividend this year, but doing so will be made difficult by problems with the corporate credit unions and the economy. The credit union is currently on track to offer a dividend, but she isn't sure whether it will reach the $1 million level of the past two years. Mendon, N.Y.-based Pittsford Federal Credit Union has distributed a dividend for the past five years. In a January press release, Bill Martin, general manager of the $281 million credit union, explained, "The special member dividend is the result of a surplus in the credit union's operating budget due to such factors as managed growth, technological advances and an outstanding effort by all our remarkably dedicated employees." Senior Manager Brian Scudder elaborated upon Martin's statement. Although Pittsford is among the largest credit unions in Rochester, it only has two branches-fewer than some area credit unions half its size-allowing Pittsford to maker smaller employee and facility expenditures, Scudder said. The credit union also invested in technological infrastructure that allows it to deliver service remotely, Scudder said. For example, rather than waiting in a phone queue or driving to a branch, a member can e-mail the credit union with a question or find information on its Web site. Scudder continued, "Anything that can be automated, we automate. Rather than paying someone to sit there and push a button all day, we're going to put that person to work doing something more meaningful." Scudder added that Pittsford makes a point of hiring team members whose personality fits in with the credit union's environment, and then training them with specific skills for member service. The credit union has had zero employee turnover for a year and a half, which is "almost unheard of in banking," Scudder said. By selecting new employees with care, the credit union saves money on training and hiring-money that then can be used "for a rainy day or giving back to members," Scudder said. In January, Pittsford distributed a special member dividend of $500,000. As for January 2010, Scudder said it's too early to tell: the credit union's board of directors won't determine the dividend until the fourth quarter of this year. –[email protected]