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.
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.
Even in today's environment, there have been a few credit unions that have announced dividend payouts for 2010. I've found four of them and listed them below with the amount of the dividends and details from the credit unions about how they determined the amounts of the payments. Do you know of other credit unions that have paid special dividends for 2010?
- Dfcu Financial reported a $19 million "Special Patronage Dividend". With 85K members, that comes out to $224 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."
- Eastman Credit Union reported a $4 million "Extraordinary Dividend". With 111K members, that comes out to $36 per member. According to the credit union, "ECU borrowers and savers are both rewarded. The more business you do with ECU, the larger the dividend you could receive."
- Hanscom Credit Union reported a $730,000 "Loyalty Dividend." With 44K members, that comes out to $17 per member. According to the credit union, "The award total represents a 2.5 percent bonus on dividends earned and consumer loan finance charges paid over the year."
- FAA Credit Union reported a $300,000 "end-of-year rebate." With 45K members, that comes out to about $7 per member. According to the credit union, "All members who paid interest or earned dividends during the year will be rewarded with a two-percent rebate and/or bonus."
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. Three of the above four do have competitive deposit rates. I've long reported on Eastman's top CD rates. FAA Credit Union has been offering great rates on its reward checking account for over two years. I haven't reported much on Hanscom FCU, but I noticed they currently do have several competitive deposit rates.