Credit Union and Cooperative Patronage Refunds - Filene ...
Credit Union and Cooperative Patronage Refunds - Filene ...
Credit Union and Cooperative Patronage Refunds - Filene ...
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Dow Chemical Employees’ <strong>Credit</strong><br />
<strong>Union</strong><br />
Dow Chemical Employees’ <strong>Credit</strong> <strong>Union</strong> is located in Midl<strong>and</strong>,<br />
Michigan. As of December 31, 2010, Dow Chemical had just over<br />
55,000 members (95% of potential members), 124 full-time employees,<br />
total assets of $1.35B, <strong>and</strong> total loan volume of $482.0M. Membership<br />
grew by 1.03% in 2010. Dennis Hanson is Dow Chemical’s<br />
chief executive officer.<br />
Dow Chemical is one of the 27 credit unions in Callahan’s database<br />
that paid a patronage refund in each of the last five years. Dow<br />
Chemical is in the top 10 of those 27 credit unions on a number<br />
of measures: second in total assets, fifth in total loans, ninth for its<br />
2009 ROA, fifth in member relationships, <strong>and</strong> seventh for 2009 real<br />
estate loan penetration.<br />
Dow Chemical has missed paying a cash patronage refund only once<br />
in the last 50 years. Its average annual cash patronage refund over<br />
the last three years was $3,807,972, <strong>and</strong> its earnings (including the<br />
refund) averaged $11,559,969 during that time. So over the past<br />
three years, Dow Chemical has paid an average of 32.94% of its<br />
earnings in cash on a patronage basis to members, ranking it 11th<br />
out of the 27 credit unions for size of refund in relationship to Dow<br />
Chemical’s earnings.<br />
Dow Chemical’s patronage refund (loan interest refund) amounts<br />
to 15% of interest paid on loans. The patronage refund is not set at<br />
15%, but it consistently works out to approximately 15% of interest<br />
paid.<br />
In addition to the patronage refund, Dow Chemical also pays<br />
bonuses on its share deposits <strong>and</strong> debit cards. These bonuses have<br />
averaged $3.5M annually. Dow Chemical has paid a bonus on share<br />
deposits for 7 consecutive years <strong>and</strong> 10 of the last 15 years. This<br />
bonus averages 15% of share deposits as well. Including share deposit<br />
<strong>and</strong> debit card bonuses, Dow Chemical distributes 63% of its earnings<br />
with cash each year.<br />
Like CoVantage, Dow Chemical’s patronage refund is consistent<br />
with its overall philosophy that it is a financial co-op whose earnings<br />
belong to its members. Dennis Hanson is the fourth CEO of Dow<br />
Chemical. Dennis told us that if the authors replaced him tomorrow,<br />
his board of directors would absolutely require <strong>and</strong> expect us, as new<br />
management, to toe the line on patronage refunds. After 50 years,<br />
the payment of a patronage refund is a cultural imperative that is<br />
nearly impossible to change.<br />
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