growth
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with the data that serves as the
backbone for the Filene report.
But there aren’t many credit
unions giving out patronage refunds, at least not consistently. Cole
said she filtered data to find credit
unions that have paid out every year
for five years and also met certain
other minimums. She came up with
exactly 27 institutions across the
country.
There are more that have distributed patronage refunds, Cole acknowledged that, because many institutions gave out dividends some
years but not the five consecutive
needed to make the Callahan list.
How do dividends work for the
credit unions that pay them? Tim
Mislansky, a senior vice president
at Wright-Patt Credit Union in Ohio,
with over $2 billion in assets and
more than 200,000 members, said
his institution is a true believer. “We
have paid out about $11 million
over the last three years. Members,”
he added, “are rewarded for their
usage of the credit union. The dividends we pay out are based on loan
balances, deposit balances, debit
card usage, a variety of factors.” The
more touch points a member has
with the credit union, the bigger
the dividend. Payouts ranged from
$10 to the several hundreds of dol-
lars and, said Mislansky, the pro-
gram has become a cornerstone of
Wright-Patt’s marketing.
“We actively poke fun at the banks
in our marketing. ‘When was the
last time your bank gave you money
back?’ We have gotten a very posi-
tive response from our members,
and our membership is growing 8%
to 10% per year.”
Some member reaction has been
negative, acknowledged Mislan-
sky. “I’d rather you hired more
tellers because the lines are too
long,” wrote one member. But the
grumbling, he said, is minuscule
compared to the affirmative re-
sponses. “We are reminding them
they are owners. It is their credit
union.” Besides, added Mislansky,
“A fundamental cooperative prin-
ciple is the return of excess assets
to members. Our capital position is
strong–we are at 12 to 13%. It’s the
members money so we are happy
to return it.”
Halfway across the country–on
the Canadian border at the north-
ern tip of Maine–Acadia Federal
Credit Union CEO David Desjar-
dins said that his institution ($94
million in assets and 8,600 mem-
bers) returned $350,000 in patron-
age dividends to members in 2010.
He said the business benefits are
profound. “People come up to us
and say thank you. This was money
they were not expecting. When we
can return a bonus to them, they
enjoy it. This is about the warm and
fuzzies. The credit union industry
as a whole has become much more
bank-like. This is a way to separate
ourselves from banks.”
Desjardins also noted, “Patron-
age dividends are very common
among Canadian credit unions.”
But not in Maine. He said he knew
of only one other Maine credit
union that has been paying them
out. He has come to feel strongly
about the practice. “As a co-op, our
members own us, and they should
benefit from the strength of the
business.”
Acadia also has a strong capital
position. “We are at 16.5% right
now,” said Desjardins, who noted
that Acadia, which did not make
the Callahan short list, gives out
dividends only in very good years.
Credit Union Times.
He said that Obama’s body lan-
guage “indicated that he wasn’t
aware of the issue. But Small Busi-
ness Administration Administrator
Karen Mills, who led the session,
nodded and indicated that she was
very familiar with it.”
Disterhoft said his credit union,
which has assets of $1.4 billion, has
done business lending for 20 years
but has been more aggressive dur-
ing the past decade.
On the same day, Rep. Erik
Paulsen (R-Minn.) toured Richfield/
Bloomington CU in Bloomington.
During that meeting, credit union
executives made the case for raising
the cap. Bloomington Mayor Gene
Winstead said that credit union
loans were key to the survival of the
city’s commercial downtown, according to a news release from the
Minnesota Credit Union Network.
Sen. Mark Udall (D-Col.) and
Rep. Ed Royce (R-Calif.) have both
introduced legislation that would
allow eligible credit unions to increase their small business lending
to 27.5% of total assets at a rate of
growth not to exceed 30% a year.
Udall’s bill has 20 co-sponsors
in the 100-member Senate and
have urged Cordray to be cognizant
of the impact of adding to the regulatory burden of small financial institutions. The CFPB, which began
operating on July 21, only has direct
supervisory authority over credit
unions with assets of $10 billion or
more, but all credit unions have to
comply with its regulations.
Ohio credit union officials, who
worked with Cordray when he was
the state’s attorney general and
treasurer, have praised him for understanding the mission of credit
unions.
It’s not clear if Cordray will get
the chance to run the bureau since
Republicans have vowed to block
the appointment of any nominee as
long as the current structure for the
agency is in place.
QTR
BALANCE
‘I told [President Obama] that we are near our cap and
just on Monday I had to turn a creditworthy electrical
supply company down for loan. I then talked about
what raising the cap would do to create jobs and
increase the flow of credit to many communities.’
Royce’s bill has 62 cosponsors in the
435-member House.
Credit unions must be well-capitalized, be at or above 80% of the
current cap, have five or more years
of member business lending experience and be able to demonstrate
sound underwriting and servicing. If
a credit union’s net worth ratio falls
below the well-capitalized requirement (currently 7%), it would have to
stop making new business loans.
The banking lobbies have vowed
to kill the legislation, but lobbyists
for CUNA and NAFCU think that at a
time of high unemployment lawmakers might be willing to pass measures
that, they say, would create jobs.
Immediately after Congress returns, lawmakers will consider the
nomination of Richard Cordray, who
President Obama picked to be director of the Consumer Financial Protection Bureau. The Senate Banking
Committee has scheduled a hearing
on Sept. 6 on Cordray.
CUNA and NAFCU haven’t taken
a position on the appointment but
The House passed such a mea-
sure, which creates a five-member
board to run the bureau, but Senate
Democrats have said they oppose it.
