MIDLAND, Mich. — If financial institutions' phone numbers were on every consumers' speed dial, then Dow Chemical Employees Credit Union would claim the top spot with most of its members.
But the number that really matters, notes CEO Dennis Hanson, is one most members don't ever know: its operating expenses. Its ability to run a lean operation, combined with strong member service, very competitive savings and loan rates, and a year-end dividend paid to savers and borrowers that it has missed paying just once in the past 55 years, have all contributed to the $1.2-billion DCECU's success.
"Members tend to view us as their primary financial," Hanson said, adding it has been the credit union's "mission" for the last eight years to be in that No. 1 position. "Our average account balance is more than $18,000."
DCECU's savings benefits also landed the credit union among the leaders in the Return of the Saver category in recent Callahan's rankings. The credit union attracts deposits by paying rates in the upper quartile of the local market, according to Hanson. At press time Dow paid 1.56% APY for a six-month CD, 2.02% APY for a one-year, and 2.78% APY for three years. Loan rates are not bumped up to accommodate for savings, with a 30-year fixed rate mortgage at 5.125% APR.
"Our operating expenses to average assets is probably around 160 basis points," cited Hanson. A 40% penetration in home banking helps that number. But maybe more so, Hanson said, efficiencies result from the credit union's focus on staffing. "We are very lean," he explained. "People are cross-trained well, and we do not have a high proportion of folks in back-office positions. We have 140 total employees, well below our peer group average for out asset size."
A tenured staff leads to greater operational efficiency, especially when it comes to the management team, Hanson contends. "We have had a great deal of continuity within management," he said. That leadership continuity goes a long way toward ensuring the credit union remains focused on its goals over an extended period of time, and also cuts down on training costs, he said.
While DCECU is "not overly competitive with salaries," Hanson shared, it's able to retain top talent throughout the organization "because our people feel good about our mission and are aligned to our purpose of helping members."
That does not happen by accident, Hanson advised. "We try to keep employees abreast of all that's going on within the credit union. We hold regular lunch and learns, and we try to be as open and transparent as possible."
The recent NCUA corporate assessment did not create an exception to that policy. "We had to deliver bad news as well," Hanson said. "But we have been up front about that, holding four meetings on the adjustments we are making. Our people feel confident and engaged."
Even with the economy and the NCUA corporate assessment, Dow hopes to pay at least a 10% interest rebate and member saver reward at the close of 2009.
"We expect to be profitable this year," Hanson said. "Our latest projections indicate we will end the year with about the same net worth as last year-11.3%."
