BALTIMORE, Md. — Like other federally insured CUs, MECU here posted a loss as a result of the corporate stabilization charges. But unlike some others, it still plans to pay its members bonus dividend.
"While some area financial institutions have struggled during the past year, MECU has remained well capitalized and ready to help our members with their financial needs in 2009," said CEO Bert Hash.
Unlike the typical once-yearly dividend paid by many credit unions, MECU pays its dividends twice a year at midyear and yearend. The total that was recently distributed was $2.1 million, with another $2.1 million planned in December.
"At the end of the year, if we have sufficient capital, there is a certain amount we are able to return to the member," Hash said. "We pay in June and December, based on the previous year's earnings. We set aside $4.2 million last year — $2.1 and $2.1. It's already on reserve for that purpose, but it's not guaranteed. The unforeseen can happen, but our plan right now is to pay it out."
Bonus Comes at a Price
Last year's December cash bonus to members didn't come without a price to the $956-million credit union. "We had already set the money aside when we heard about the assessment," Hash said, referring to the corporate stabilization charges. "We actually took a loss in 2008, based on the recommendation from NCUA and the external auditors. We booked [the bonus] before we learned of the assessment. We had a slight loss in 2008 of approximately $2 million."
But for 2009, members can still expect to receive both of their cash bonuses, Hash said. "For the first six months of this year, we are running ahead of budget," Hash said, noting a 1.38% return on assets at the end of May. "We're running slightly ahead of budget. And based on the first six months, and the projection of the next six months, we forecast we will be able to do the second bonus. And then we can continue the tradition we've been doing for the past 28 years."
Hash noted that this year's bonus has been comparable to the bonuses in years past. He owes that to the CU's success in lending.
"One of things we have done well in is we have a pretty diversified loan portfolio," he said. "Our delinquencies did go up a little but not like other places did. We didn't have that problem-knock on wood. When you compare that of June 2009 to June 2008, our loan portfolio is identical. Our net spread is identical. It didn't move."
MECU has also held firm with its employee benefits, Hash noted, and employees received pay raises this year.
Pricing Remains Competitive
Pricing also remains very competitive, Hash said. "Our benefits have also remained the same, and we've hired people this year," Hash said. "Don't get me wrong. We're not immune to what's happening. We know there are still challenges. But right now we are doing well. Though these six months we've been doing very well, this is still one of the toughest years. We're only slightly above budget."
For the month of June, MECU had a net worth ratio of 11.93%. "We're still well capitalized, and well over 11%," Hash said. "We are trying to get the capital back to our members and this is the way we do it. It's a simple process - if we do well, we share with our members."
The CU is also still advertising its continued success, and member bonuses.
"Last year we had a bigger push than this year in advertising, but we continue to market it," he said. "We talk about it when people call in. We try to market it as much as possible."
