DEARBORN, Mich. - As DFCU Financial officials were preparing for the latest round in a suit against the credit union over its ill-fated conversion, CU officials announced they would issue one of the largest dividends in credit union history-$17.5 million.
Longtime CU members Margaret Blohm and Raymond Ward, both of Dearborn, and Richard Sly of Northville, are asking the state court to force DFCU Financial to honor its own bylaws and hold a special meeting at which a board recall would be put to vote. The two sides were scheduled to meet before Judge Cynthia D. Stephens in Wayne County 3rd Circuit Court, Detroit, last Friday.
In the meantime, DFCU officials said the $1.8-billion financial institution has had so much success in recent years under the new leadership, that it has been able to save millions of dollars annually.
"It's because of this cost savings and the loyalty of our 160,000 members that we are now able to issue this special patronage dividend," said Dr. Robert Chapman, board chairman of DFCU Financial.
Chapman was appointed chairman two months ago after the mysterious resignation of Harold Lowman, the main target of the members' suit for his role in the failed conversion.
Each qualifying member will receive a minimum of $50, or a 0.5% dividend on their 2006 average loan and savings balances. The money will be deposited into members' accounts the week of Jan. 8.
"As holiday bills roll in and the frenzy of tax season begins, we hope this dividend is a welcome surprise," Chapman said. "In fact, while there is no guarantee, it's the intent of the DFCU Financial Board to continue issuing periodic dividends to members so long as the credit union sustains the level of strong financial performance achieved over the past six years. We've worked hard to establish an efficient credit union that is able to give back to its members."
But DFCU Owners United, the members group that fought off the CU's attempt to convert to a bank, were stunned by the move, with one member suggesting the credit union had more than good holiday cheer at heart.
"It's like they're trying to buy back the loyalty of the members," one of the dissidents told The Credit Union Journal, noting the timing of the CU's announcement-just days before the scheduled court hearing and weeks before members are scheduled to vote whether to retain some of the board members.
It's been more than 20 years since the last dividend was issued by DFCU Financial.
The $17.5-million payout is by far the largest ever paid by a credit union, dwarfing the previous high of $12 million paid by Clark County CU, in Las Vegas, last January, and the $10-million special dividend that Arizona FCU was expected to announce late last week.
