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CU bonuses sign of strength in troubled times
MADISON, Wis. (1/23/09)--Credit unions are consistently providing members with year-end patronage dividends, with some even offering bonuses to members struggling through the economy. The dividends indicate that credit unions are operating in today's economic turmoil from a position of strength. Dallas-based American Airlines FCU announced a record bonus dividend was paid on Dec. 31 to its membership. "While other financial institutions are tightening their belts, American Airlines FCU is able to offer a bonus because we made sound lending decisions, operated efficiently and remain financially secure, strong and solid," said Angie Owens, president/CEO of the $4.8 billion asset credit union in Lonestar Globe (January). "As a result we can give back this unprecedented bonus dividend to our members based on their active participation in the credit union," Owens said. The credit union based the bonus dividend upon dividends earned on qualifying share accounts and/or interest paid on applicable loans in 2008. The savings portion was paid at an annual rate of 3%. Applicable loan interest was also calculated at a 3% annual rate. This year, the most loyal and active members received an additional $80 bonus if they maintained three or more products among these categories: savings, checking account, certificate, auto loan, credit card, other loan, mortgage/home equity loan and financial services, said the credit union. In Hunt Valley, Md., the $68.3 million asset Atlantic Financial FCU paid a bonus dividend for 2008, based on how much the member has used the credit union, according to the Maryland and District of Columbia Credit Union Association's FOCUS Newsletter (Jan. 20). The bonus is calculated as a one-time additional dividend equal to 5% of all dividends earned during 2008 on all savings products, and a one-time 5% return on all interest on loan products during 2008. "During these difficult times in the financial markets this bonus is representative of the hard work and dedication of our management and associate team " at the credit union, said Chairman Joseph Droney in the article. CU Community CU, Springfield, Mo., gave its 5,600 members a bonus dividend totaling as much as an additional 50 basis points (0.50%) on their fourth-quarter 2008 savings account earnings. The dividends were directly deposited into each member's account on Dec. 31. "Contrary to so many businesses in the current economy, we were fortunate to have a good year financially," said Judy Hadsall, president (The Missouri difference Jan. 9). "We are very proud of our financial results and want to share that success with each of our members because they are our owners. This is a tough time for everyone; we want to do everything we can to help." Bay Winds FCU, a $96.9 million asset credit union in Charlevoix, Mich., announced it paid a bonus dividend in excess of $212,00 Dec. 31 to its members--the second bonus dividend offered in three years (Charlevoix Courier Jan. 13). "Members are more than just customers, they are our lifeblood," said Bay Winds President/CEO David Leusink. Response from members to the bonus dividend has been "very positive, given the state of our economy. There is financial strength in numbers; this dividend underscores that principal," he added. Green Bay, Wis.-based PCM Employees CU returned $395,707 to its members in year-end bonuses and rebates--roughly 5% of all loan interest paid in 2008 and a 50% bonus on the interest earned on various programs (Green Bay Press-Gazette Jan. 18). PCM has 7,400 members and $119 million in assets. Dean Wollin, PCM president, noted that after establishing a 13% capital reserve, the credit union had money left over. "We feel when we maintain that reserve level, we have long-term sustainability. When we go over 13%, we are going to give it back," Wollin told the newspaper. He said the profitable year was aided by a greater-than-expected net interest margin and fewer loan losses than expected. Other recent announcements of dividends included DFCU CU, Dearborn, Mich., which paid $17 million in yearly dividends for 2008 ( Jan. 7); and GPO FCU, New Hartford, N.Y., which paid members a 3% dividend bonus on dividends earned on their accounts in 2008 (The Oneida Daily Dispatch Jan. 19).
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