One of the advantages of credit unions is that any profits credit unions make are paid back to their members. If a credit union has a good year and its reserves and capital are in excess of what is necessary, it will often make a special end-of-year payout (dividend) to its members. A credit union will usually determine the amount of the dividend based on how much deposits and loans a member has with the credit union. Some have a more complication determination of how to distribute the payouts. I found one credit union this year that factored in banking activities such as an active debit card.
In today's environment, these payouts have been rare. Just like banks, credit unions' profits have been hurt by loan losses, weak loan demand and low investment returns. Another cost to credit unions has been the assessments from the NCUA to pay for the corporate credit union bailout.
In January I reported on four credit unions that had bonus dividend payouts for 2010. I was only able to confirm 2011 bonus dividend payouts for one of these four credit unions. I learned of other credit union bonus dividends in this Dec 2nd CUNA article and in this Dec 9th CUNA article (Hat tip to the reader for sending the links of these).
In that January post, several readers reported that Northwest FCU paid a 2010 dividend bonus. I was not able to find any information on a payout for 2011. If you have news on a 2011 payout from Northwest FCU, please leave a comment. Also, if you know of any credit union not mentioned below that's giving out a 2011 bonus dividend, please leave a comment.
Most bonus dividends are small, but if a member has a large savings and/or loan balance, bonuses can be significant. One credit union reported a bonus dividend to one member of $3,100. What's the largest dividend bonus that you have ever received from a credit union? Did you have a large savings or loan balance?
Below are a few credit unions that have reported 2011 bonus dividends:
- DFCU Financial reported a $21 million "Special Patronage Dividend" (up from $19 million last year). With 214,000 members, that comes out to $98 per member. According to the credit union, "Qualifying members receive a one-half percent (0.5%) dividend on their average loan and deposit balances, with each eligible member receiving at least $50. This includes all savings accounts and loan balances."
- Gulf Winds Credit Union reported a "bonus dividend pool" of over $1 million. With 46,000 members, that comes out to $22 per member. The credit union doesn't give many details of how the payout will work in its announcement.
- Wright-Patt Credit Union reported a "Special Patronage Dividend" of over $5 million. With 210,000 members, that comes out to $24 per member. According to the credit union "The Special Patronage Dividend is calculated on the members’ use of the credit union’s products and services." The credit union has several details about how the dividends are calculated in this page.
- Guardian Credit Union in Alabama reported interest rebates and dividend bonuses totaling over $750,000. With 23,000 members receiving the bonus, the average payout will be $33. According to the credit union one member will receive $3,100.
Do the credit unions that pay annual dividends have the best deposit rates? Being profitable is a good sign that they're making loans which means they need deposits. DFCU Financial's share certificate rates are not at all competitive. Gulf Winds Credit Union is a little more competitive with its CD rates. Also, it offers a competitive reward checking account. Wright-Patt Credit Union offers the most competitive CD rates out of the above credit unions. Its rates are not the highest, but they're above average.