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 the last few years these payouts haven't been common. 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.
Last December I reported on four credit unions that had bonus dividend payouts for 2011. I was only able to confirm 2012 bonus dividend payouts for two of these four credit unions.
Some credit unions may have not yet reported the year-end bonus dividend. Also, some credit unions are late in publicly posting the news. If your credit union has announced a 2012 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 $3,300. 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 I have been able to confirm a 2012 bonus dividend:
- NavyArmy Community Credit Union in Texas sent letters to its members this month announcing a 12% bonus dividend. The amount equates to 2012 dividends paid to date (excluding Liberty Checking dividends), multiplied by 12%. Thanks to DA member pearlbrown for mentioning this news in the forum. With its high deposit rates (like a 3% 30mo CD), it's surprising to see this bonus.
- DFCU Financial in Michigan reported a $21 million "Special Patronage Dividend" (same amount as last year). This is the seventh consecutive year of the dividend. 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."
- Guardian Credit Union in Alabama reported interest rebates and dividend bonuses totaling over $800,00 (up from $750,000 last year). With 23,000 members receiving the bonus, the average payout will be $35. According to the credit union one member received more than $3,300.
- Eastman Credit Union in Tennessee reported a $5 million "Extraordinary Dividend" (up from $4 million in 2010). This is the 16th year of the dividend. With 138,000 members, that comes out to an average of $36 per member. According to the credit union, "the dividend is based on the amount of business each member does with the credit union."
- Acipco Federal Credit Union in Alabama reported $1.7 million "bonus dividend and interest rebate" for its 7,300 members. That comes to an average of $232 per member. According to the credit union, "the 2012 interest rate/bonus dividend is distributed to members based on interest earned and dividends received between Jan. 1 and Sept. 30, 2012."
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. On the other hand, NavyArmy Community Credit Union has some of the highest deposit rates in the country including a 3% 30-month CD.
Will we see more credit unions paying out annual bonus dividends? With an improving economy and rising loan demand, I would think we should see more payouts. However, credit unions are spending more these days on things like advertising. So it may never again be as popular as it used to be.