Five Credit Unions Pay $62.6 Million to Members

Five credit unions paid members $62.6 million in November and December as special dividends, or an average of $81 for each of the 771,513 members.

The credit unions, which had $12.8 billion in assets as of Sept. 30, made payments that would have cut 51 basis points from their return on average assets of 0.88% for the 12 months ending Sept. 30.

One of five — Ascend Federal Credit Union of Tullahoma,Tenn. — has discovered that special dividends get their members’ attention, providing a powerful educational moment to underscore the significance of the cooperative structure of their credit union.

“They certainly haven’t experienced it with a bank,” EVP Matt Jernigan said.

EVP Matt Jernigan said long-term members have come to expect the year-end boost to their savings, but it’s sometimes a jolt to new members.

“They’ll occasionally call the call center, thinking a mistake has been made. That’s always a pleasant explanation to give the members,” he said.

Ascend ($2.5 billion in assets, 204,404 members), located midway between Nashville and Chattanooga, paid its members $8.7 million on Dec. 1 in bonus dividends and loan interest refunds. Since 2004, Ascend’s board has voted to pay $85 million in special dividends, including $5 million last year.

Jernigan said the board determines about mid-year whether to pay a dividend and its size based on the credit union’s progress toward its capital target. Ascend’s goal is a net worth ratio of 14% to 15%, and it was at 16.3% on June 30 and 16.6% on Sept. 30.

Ascend is able to generate that extra net worth by maintaining cost efficiencies that are about 1 to 2 percentage points below its peers, Jernigan said.

The $8.7 million payment this year comes out to an average of $42.56 per member, but Jernigan said the typical payment is $75 to $100 with exclusions and dormant accounts. The cost equals 35 bps of its ROA of 1.14% for the 12 months ending Sept. 30.

The other four credit unions announcing special dividends were:

• Citizens Equity First Credit Union, Peoria, Ill. ($6.2 billion in assets, 345,894 members) paid members $50 million on Dec. 2 as an extraordinary dividend. The amount represents about $144.55 per member and 83 bps of its ROA of 0.59% for the 12 months ending Sept. 30.
• Summit Credit Union, Cottage Grove, Wis. ($3.6 billion, 193,855 members) paid members $2.4 million in November as a patronage dividend it calls a Cash Boomerang. The amount represents about $12.38 per member and 7 bps of its 12-month ROA.
• Olean Area Federal Credit Union, Olean, N.Y. ($300.4 million, 18,968 members) paid members $1 million on Nov. 7 as a special member dividend. The amount represents about $52.72 per member and 34 bps of its 12-month ROA.
• Western Division Federal Credit Union, Williamsville, N.Y. ($142.1 million, 8,392 members) paid members $500,000 in late November as a Special Patronage Dividend. The amount represents about $59.58 per member and 35 bps of its 12-month ROA.

Previously, Golden 1 Credit Union, Sacramento, Calif. ($12.9 billion, 1 million members) announced it paid members $20 million on Nov. 19 as a giveback, or about $19.13 per member and 16 bps of its 12-month ROA.