Five Credit Unions Distribute $76M in Dividends

Five more credit unions from Montana to Michigan have announced $75.9 million in special dividends for 2018 worth an average of $150 for each of their half million members.

The rebates represent 0.78% of their $9.8 billion in average assets for the 12 months ending Sept. 30, compared with returns on average assets of 1.13% for the 12 months.

The five are: 

Dow Chemical Employees’ Credit Union, Midland, Mich. ($1.7 billion, 68,047 members) paid members $20 million Jan. 1 as Member Giveback dividends, or about $294 per member. The amount represents 1.19% of average assets, compared with ROA of 0.53% for the 12 months ending Sept. 30.

DFCU Financial Credit Union, Dearborn, Mich. ($4.8 billion, 230,090 members) paid members $29.3 million in January as Cash Back dividends, or about $127 per member. The amount represents and 0.62% of average assets, compared with 1.17% ROA for the 12 months.

Whitefish Credit Union, Whitefish, Mont. ($1.5 billion, 57,078 members) paid members $20.2 million Dec. 31 as semiannual special dividends, or about $353 per member. The amount represents 1.36% of average assets, compared with 0.69% ROA for the 12 months.

Arizona Federal Credit Union, Phoenix ($1.7 billion, 127,888 members) paid members $6 million Dec. 31 as Plus Payouts, or about $47 per member. The amount represents 0.36% of average assets, compared with 2.04% ROA for the 12 months.

Fort Community Credit Union, Fort Atkinson, Wis. ($254.8 million, 21,875 members) paid members $400,000 Dec. 31 as loyalty cash dividends, or about $18 per member. The amount represents 0.16% of average assets, compared with 1.05% ROA for the 12 months.

So far this season, 30 credit unions have announced $246.4 million in special dividends, or about $52 for each of their 4.8 million members. The amount represents 0.37% of their $66.5 billion in average assets, compared with 1.10% ROA for the 12 months.

Like most credit unions, Dow Chemical Employees’ (DCECU) bases its special dividend on its position relative to a target net worth. The NCUA defines a well-capitalized credit union as one having a net worth-to-assets ratio of at least 7%. Dow Chemical Employees’ had a net worth of $185.6 million as of Sept. 30, up 6.8% from a year earlier and a net worth ratio of 10.82%, up 22 basis points from a year earlier.

“DCECU strives to maintain a healthy capital level,” the credit union’s website says. “Anything over that level is considered excess income and is generally given back to eligible members in the form of a Member Giveback.”

“We are one of only a handful of credit unions in the nation to routinely give back a portion of its earnings to members,” the website says.

The payout by Dow Chemical Employees’ CU (DCECU) was its 39th; however, it is signaling to members that future payouts will be smaller. 

For example, its loan interest rebates from 2000 to 2010 ranged from 12.5% to 15% of the total interest paid by members on rebate-eligible loans—a range the credit union considers to be its long-term normal. The subsequent economic recovery increased its surpluses, which caused its interest rebates to rise sharply. They peaked at 75% from 2015 through 2016, and have dropped each year since, reaching 50% in 2019.

“The jump to higher rebate percentages from 2012 through 2017 was done in an effort to return money to members as we reduced excess capital — a “rainy-day fund” — that we had built up in response to The Great Recession of 2007 to 2009. Now, we expect that rebates will start to return to more normal levels,” the credit union says.