The $300 million GFA Federal Credit Union of Gardner, Mass., is keeping its word to members of a merged credit union about a rebate following paid off loans.
GFA merged with Asnacomet FCU of Hubbarston, Mass., in 2005 and promised that its members would receive a dividend rebate once potential loan losses were recovered.
"We're happy to give this money back," said Tina M. Sbrega, GFA president/CEO commenting on a $4,000 dividend distributed to an estimated 150 members of the $300,000 Asnacomet.
Under merger terms, GFA established a reserve from the remaining Asnacomet capital to cover potential losses from Asnacomet-issued loans. The last of these loans was recently paid off with losses deemed minimal. "Therefore the remaining reserves will be distributed as agreed in the form of a special dividend," said a GFA statement.
The dividend is being paid on a pro-rated basis to those members who retained their membership with GFA. The individual dividend amounts were determined as a percentage of each member's deposits as compared to the total deposits of Asnacomet members, at the time of the merger.
Sbrega said the transaction in this circumstance "is not uncommon" but is a way of honoring a commitment.
GFA with eight branches has 19,600 members in central Massachusetts and southern New Hampshire.