Bonus dividend payouts are a true differentiator for creditunions as they compete against banks, and in a year when big banksmade headlines for proposing unwanted fees, year-end member cashrewards carry even more weight for CUs looking to stand out in themarketplace.

This year, some credit unions made their biggest bonus dividendpayouts in history, and many completed their payouts early in orderto help stimulate local economies during the holiday shoppingseason.

The Dearborn, Mich.-based, $3 billion DFCU Financial, for example, is scheduled to pay its members$21 million in dividends on Jan. 4. DFCU Financial said it’s theonly credit union in the nation to have paid an average of $18million to $20 million in dividends each year for the past sixyears, for a total of more than $110 million.

DFCU Financial calculates payouts based on a member’srelationship level with the CU – eligible members receive a 0.5%dividend on their average loan and deposit balances, with eacheligible member receiving at least $50, the CU said.

Mark Shobe, president/CEO for DFCU Financial, explained bonusdividends as returns from a credit union’s residual capital, thecapital that remains after the institution has fulfilled itsregulatory capital requirements and business strategyimplementation expenses. “Rather than sitting on that residualcapital, we return it back to members,” he said.

Credit union boards are the decision makers when it comes todetermining a total bonus dividend payout amount, and memberstypically receive rewards of various sizes based on their accountbalances or level of relationship with their credit union.

Shobe said awarding a bonus dividend payout can help convincemembers who have multiple banking relationships to bring morebusiness to their CU.

“The value of paying a dividend is that it gets members to bringmore of their financial needs to us,” Shobe said. “When we tellthem that we pay a dividend, they don’t believe us at first. Butthen they see us pay it again and again, and they’ll start tofactor it into their decisions to go with us for their financialneeds.”

In Lancaster, S.C., the $1.6 billion Founders Federal CreditUnion distributed $10 million, the largest bonus dividend sum inthe CU’s history, to its savers and borrowers on Nov. 30. Founders FCU has paid a total of $30 million in bonus dividendsover the past 11 years, and in order to avoid making the rewardlook like an entitlement, the CU makes a payout every other year oronce every few years, President/CEO Bruce Brumfield said.

“Paying a bonus dividend every other year or once every fewyears helps us emphasize to our members that it’s somethingspecial,” Brumfield said.

Brumfield said this year’s large payout, which is due to thefact that 2011 has been a profitable year for the CU, helps makemembers and prospective members understand the credit uniondifference.

“We always try to give our members the best in products andservices, but by paying a bonus dividend, we can show them thatwhile banks return their profits to shareholders, we return them toour members,” Brumfield said.

The $780 million Goldenwest Credit Union of Ogden, Utahannounced its payment of a 4% APY bonus dividend on primary shareaccounts, secondary share accounts, Christmas Club share accountsand IRA share accounts for the month of December, which totals morethan $575,000.

Goldenwest CU has paid a bonus dividend for the past eight yearsfor a grand total of $4.5 million. The CU’s annual bonus APYdividend has fluctuated from a high of 7.2%, or $675,000, in 2008to this year’s low of 4%, the same bonus APY dividend percentagepaid by the CU in 2004, said incoming CEO Kerry Wahlen.

Wahlen said bonus dividend payouts have helped Goldenwest CUdistinguish itself from other financial institutions in the market,grow share savings deposits and increase member retention andreturn-to-member ratios.

“Right now, thousands of consumers are expressing theirfrustration with the practices of big banks across the country,”Wahlen said. “It’s the perfect time to share the credit unionphilosophy with our family and friends.”

The following credit unions also made bonusdividend payout announcements for 2011.

Wright-Patt Credit Union of Fairborn, Ohio willpay a $5 million Special Patronage Dividend on Jan. 4 to more than210,000 of its members. The $2 billion CU said the $5 milliondividend is a $1 million increase from its payout last year andwill bring its total dividend payout since 2008 to more than $16million. Eligible members will receive anywhere from $15 for theiruse of an active debit card, online banking or mobile banking ande-statements, to a several hundred dollar dividend, depending ontheir level of relationship with the credit union.

Scott Credit Union, a $774 million CU based inCollinsville, Ill., paid members a $1.1 million bonus dividend andloan rebate, bringing its total bonus dividend payout to more than$2.1 million over the past 10 years. Scott CU said this year activemembers received an additional 3% APR bonus dividend rebate ontheir deposits and a rebate of 3% of the interest they paid on anyloan or credit card in 2011.

Justice Federal Credit Union announced it wouldpay new and existing members a bonus dividend when they sign up fora new share certificate with a minimum term of 12 months and meetan initial deposit requirement. The $511 million, Chantilly,Va.-based CU said members who make an initial minimum deposit of$5,000 on a new share certificate will be paid a $25 bonusdividend, and members who deposit at least $10,000 into a new sharecertificate account will earn a bonus dividend of $50. The CU notedthat since it has set an internal limit on the number of depositsit will receive, the offer is limited.

Gulf Winds Federal Credit Union of Pensacola,Fla., paid a bonus dividend of more than $1 million to members thisyear, the $400 million CU said. President/CEO Chris Rutledgeemphasized that he views the bonus dividend as a means to stimulatethe economy. “Any way you look at it, putting this $1 million bonusdividend back into the community will have a very positive effecton our members and the local economy,” he said.

GCS Federal Credit Union paid a bonus dividendto members with share accounts in November, marking its first bonusdividend payout since 2008. The $296 million CU, which is based inGranite City, Ill., said it awarded share account holders with abonus dividend of .25% in addition to the current share rate,bringing the total year-to-date dollar amount of dividends paid tomore than $2.5 million.

MECU of Baltimore announced its second bonusdividend payout of 2011–a $1.14 million loan interest rebate, whichmembers have already received, plus an expected bonus dividend ondeposit accounts to be paid at the end of December. In June 2011,the $1.1 billion MECU paid a bonus dividend of more than $2 millionto its members, which encompassed a loan interest rebate and bonusdividend on deposit accounts. The most recent loan interest rebateequaled 6% of the total interest members paid on their loansbetween June 25 and Nov. 30, 2011. Once the second half of thebonus dividend on deposit accounts is paid, MECU’s 2011 bonusdividend payouts will total more than $4 million.

Charter Oak Federal Credit Union distributedmore than $270,000 in bonuses to members of its Gold RewardsProgram, the $684 million, Groton, Conn.-based CU said. More than2,700 members received a cash bonus of $100 as well as a free poloshirt. Since launching the Gold Rewards Program in September 2010,the CU said it has paid more than $530,000 in bonuses.

Guardian Credit Union, a $212.2 million CUbased in Montgomery, Ala. said it split a $750,000 bonus dividendbetween 23,000 of its members, with one member alone receiving$3,100.

Western Division Federal Credit Union paidmembers an $800,000 patronage dividend on Dec. 7, the $123 millionCU of Williamsville, N.Y., announced. Members who paid interest orreceived dividends in a sufficient amount to warrant a patronagedividend received approximately 12% of the interest paid on theirloans and 60% of the dividends earned on their savings in 2011,Western Division FCU said.

Citizens First Equity Credit Union paid members$7 million in dividends on Dec. 12, the $4.6 billion, Peoria,Ill.-based credit union said. The CU split the dividend evenlybetween savers and borrowers and determined each individualdividend award based on the member’s dividends paid and interestearned.