Imagine getting a check in the mail from your bank for a few hundred dollars just because the bank had a really good business year. In this economy, must be dreaming right?
Well that dream came true for members of Financial Center Credit Union last month. The credit union’s board of directors gave $4.8 million in bonus dividends to its members in March.
The payout is one of the largest, if not the largest, by a regional financial institution to date. Although FCCU has given out bonus dividends in the past after having a good year financially, this is the first time it gave away all of its profits to award its members for their loyalty.
“We took 100 percent of our last year’s net earnings and gave it all back to our shareholders,” said President/CEO Michael P. Duffy. “It’s unheard of in credit union land. No one ever gives 100 percent.”
The average dividend to members with savings accounts or loans was $160. The amount depended on the number of years they had been with the credit union, the amount of interest paid on their loans, and the amount of savings deposited in their accounts.
The bonus dividend, or interest payment, to its members comes as Financial Center Credit Union prepares to celebrate its 60th anniversary since opening. The official anniversary of San Joaquin County’s largest credit union is in October. But the board of directors that oversees the financial cooperative decided to award its members with an early birthday gift.
“While some members look at FCCU as a place to bank, the fact is, they’re shareholders and ownership truly makes the difference,” Duffy said. “This Membership Loyalty Dividend is money that shareholders have earned through their ongoing loyalty and contributions to the financial cooperative.”
The nearly $5 million in bonus dividends comes after the credit union had a “banner year” financially, Duffy said. The dividend amount is not only potentially the most ever for a credit union or bank in the region, it is also a reflection of how financially healthy the credit union is as other financial institutions continue to slowly recover from the Great Recession.
The credit union prides itself on prudent financial decisions and has the track record to prove it. FCCU boasts a five-star BauerFinancial rating for safety and soundness for the past 18 years. Duffy noted the credit union’s philosophy of financial strength and fiscal soundness when asked how it was able to prosper through a tough economy while other financial institutions struggled.
Founded in 1954 by 11 San Joaquin County employees, FCCU has helped lay a financial foundation for its members over the past six decades by providing home and car loans, checking and savings accounts, and dividends or interest from savings deposits.
The credit union has $360 million in assets and serves 32,000 members through its branches in Stockton, Lodi, and Manteca. Its membership is made up of city and county employees, members of the local medical and bar associations, and their family members, and members of the Catholic Diocese of Stockton. The members are also shareholders of the nonprofit, financial cooperative, which is standard among credit unions.
“Our mission is to return true value to our members,” he said, “and in doing so we give credit to where credit is due.”
This isn’t the first time the credit union has given away a portion of its profits to reward its members for their loyalty. In recognition of its 50th anniversary since opening, FCCU provided members with a dividend that totaled $1.8 million, Duffy said.
But this was the first time that the credit union decided to give all of its profits to its members. After conducting some research, Duffy found that of the 8,000 credit unions in the U.S. only 11 were reported by the industry publication CU Times to have given away a portion of their profits in the last year.
“We have the financial strength and fiscal soundness to do it,” he said.