PEORIA, Ill.-Despite absorbing a large California credit union failure in 2009, CEFCU, the state's second-largest CU, announced it will be paying members a $7-million dividend this year, up from last year's $6 million.
A strong performance by the $4.2-billion CEFCU, including a $10-million boost in net income this year over last and record loan volume, contributed to the payout. But CEO Mark Spenny also credited a turnaround in its business at Valley Credit Union, the $247-million CU acquired at the start of 2009 after it was placed into conservatorship by NCUA. Members of Valley CU, which operates as a division of CEFCU, will receive the payout, as well.
"We have seen some turnaround in the Valley business," Spenny told Credit Union Journal. "We are seeing growth (10% on deposits) there for first time in a couple years. The performance of Valley's loan portfolio is in line with what we projected, maybe slightly better than expectations."
Spenny emphasized that the performance of the Valley business is not a result of bad assets dumped to NCUA. "We acquired all of Valley Credit Union," Spenny said. "We did pay a discount relative to book value, but there was no assistance provided to us by NCUA. To characterize Valley's performance as a result of NCUA keeping certain assets of theirs would be incorrect."
Valley will remain a division of CEFCU until it migrates from its Symitar system over to CEFCU's proprietary data processing system. Valley locations still carry the CU's original logo, but it is noted that they are a division of CEFCU.
Spenny added that CEFCU does not return a dividend every year. "What's letting us do it when so many other things are going on in the financial industry is that our capital situation is very strong," added Spenny, who noted that even after a $5.1 million charge for the corporate credit union bailout the CU's capital ration ended the year at over 10%. A 2.2% net operating expense ratio also contributed.
Since 2000, CEFCU, formerly known as Citizens Equity First CU, has returned $40 million in extraordinary dividends to its 265,000 members throughout central Illinois. "It's a tribute to our members and how they have handled their finances and the amount of business they do with us," concluded Spenny.
