One of the perks 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 typically determine the amount of the dividend based on how much deposits and loans a member has with the credit union.
In the years after the financial crisis, 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.
In December 2012 I reported on five credit unions that had bonus dividend payouts for 2012. I was only able to confirm 2013 bonus dividend payouts for three of these five 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 2013 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. In 2012 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 2013 bonus dividend. Thanks to DA member Shorebreak for posting on some of these in the forum.
- DFCU Financial in Michigan reported a "Special Patronage Dividend" of more than $23 million for 2013. That’s $2 million more than the previous year. With 214,519 members, that comes out to $107 per member. According to the credit union, "Qualified members receive a one-half percent (0.50%) dividend on their average yearly loan and deposit balances. Many members who have a primary financial relationship with DFCU Financial can often earn a full month's mortgage loan payment."
- Guardian Credit Union in Alabama reported interest rebates and dividend bonuses totaling more than $785,000 (down from $800,000 last year). With 35,338 members, that comes out to $22 per member. However, not all members received the bonus. According to the credit union " it distributed $785,000 this month in dividends and interest rebates to more than 20,000 members, including one individual who received more than $2,900."
- Eastman Credit Union in Tennessee reported a $6 million "Extraordinary Dividend" (up from $5 million last year). This is the 17th year of the dividend. With 141,541 members, that comes out to an average of $42 per member. According to the credit union, the dividend is based on "[t]he amount of business that each member does with ECU. … It’s not uncommon for a family utilizing ECU as their primary financial institution to receive a few hundred dollars in Extraordinary Dividends,"
- Citizens Equity First Credit Union (CEFCU) in Illinois reported an "extraordinary dividend" of $12 million. With 297,359 members, that comes out to an average of $40 per member. According to the credit union, ‘[t]his dividend was based on members' savings and loan activity during 2013, with $6 million going to borrowers and $6 million going to savers. The amount each member received was determined by dividends earned and interest paid during the first 11 months of the year."
- Partner Colorado Credit Union reported a dividend of $600,000 (down from $700,000 last year). According to the credit union, this was "shared among its 25,000 members". The credit union has 29,797 members so the average payout was $20 per member.
- Founders Federal Credit Union reported a "Loyalty Dividend" of $5.7 million. According to the credit union, "[a]pproximately 86,000 of Founders’ 195,600 members received the dividends based on interest paid on loans or earned on deposits." That comes out to an average payout of $29 per member.
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. Share certificate rates at DFCU Financial, Partner Colorado Credit Union and Founders FCU are not competitive. On the other hand, Guardian Credit Union and Eastman Credit Union have some decent rates.
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.