DEARBORN, Mich.-DFCU Financial has squeezed inefficiencies from its operations to the point that it will be able to pay out the associated savings in the form of its largest CU patronage dividend ever.

CEO Mark Shobe said the $19-million DFCU expects to distribute to members in January will take the CU's total Special Patronage Dividend payout to more than $90 million over the last five years-the largest single year and overall total in credit union history, according to the CEO.

When Shobe first arrived at DFCU in 2000, it cost the CU 78.5 cents to produce a dollar of revenue. Today the cost is 50 cents. "Basically, that improvement in our efficiency generates about $20-million in annual incremental income, and pays for the yearly dividend."

To create ongoing efficiencies-and help drive ROA to 1.23% and bring capital to 12.75%-takes time, asserted Shobe. "It took us six years, and requires two things: You have to have a focused business strategy so you are not trying to be all things to all people. Then you have to benchmark your organization to achieve operational excellence so you can deliver products and services at a low cost."

Shobe emphasized the CU must have sustainable efficiency within its operations so that once the big dividend is paid, it becomes an annual event. Members have come to expect the dividend, with many basing their decisions on investing and borrowing with DFCU on receiving the year-end payout, Shobe said.

Members are paid 0.5% on all their loan, deposit, and credit card balances. The minimum dividend for eligible members is $50.

Growth at DFCU has doubled compared with Michigan CU averages, and deposits are up 54% since 2006, Shobe said.

"The dividend is virtually impossible for banks to do. They can't match this. We are getting more members from this and more share of wallet from our current members who are making us their primary financial institution."

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