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

Credit union boards are the decision makers when it comes to determining a total bonus dividend payout amount, and members typically receive rewards of various sizes based on their account balances or level of relationship with their credit union.

Shobe said awarding a bonus dividend payout can help convince members who have multiple banking relationships to bring more business to their CU.

“The value of paying a dividend is that it gets members to bring more of their financial needs to us,” Shobe said. “When we tell them that we pay a dividend, they don’t believe us at first. But then they see us pay it again and again, and they’ll start to factor it into their decisions to go with us for their financial needs.”

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

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

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

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

The $780 million Goldenwest Credit Union of Ogden, Utah announced its payment of a 4% APY bonus dividend on primary share accounts, secondary share accounts, Christmas Club share accounts and IRA share accounts for the month of December, which totals more than $575,000.

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

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

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

The following credit unions also made bonus dividend payout announcements for 2011.

Wright-Patt Credit Union of Fairborn, Ohio will pay a $5 million Special Patronage Dividend on Jan. 4 to more than 210,000 of its members. The $2 billion CU said the $5 million dividend is a $1 million increase from its payout last year and will bring its total dividend payout since 2008 to more than $16 million. Eligible members will receive anywhere from $15 for their use of an active debit card, online banking or mobile banking and e-statements, to a several hundred dollar dividend, depending on their level of relationship with the credit union.

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

Justice Federal Credit Union announced it would pay new and existing members a bonus dividend when they sign up for a new share certificate with a minimum term of 12 months and meet an 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 bonus dividend, and members who deposit at least $10,000 into a new share certificate account will earn a bonus dividend of $50. The CU noted that since it has set an internal limit on the number of deposits it 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 this year, the $400 million CU said. President/CEO Chris Rutledge emphasized that he views the bonus dividend as a means to stimulate the economy. “Any way you look at it, putting this $1 million bonus dividend back into the community will have a very positive effect on our members and the local economy,” he said.

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

MECU of Baltimore announced its second bonus dividend payout of 2011–a $1.14 million loan interest rebate, which members have already received, plus an expected bonus dividend on deposit 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 million to its members, which encompassed a loan interest rebate and bonus dividend on deposit accounts. The most recent loan interest rebate equaled 6% of the total interest members paid on their loans between June 25 and Nov. 30, 2011. Once the second half of the bonus dividend on deposit accounts is paid, MECU’s 2011 bonus dividend payouts will total more than $4 million.

Charter Oak Federal Credit Union distributed more than $270,000 in bonuses to members of its Gold Rewards Program, the $684 million, Groton, Conn.-based CU said. More than 2,700 members received a cash bonus of $100 as well as a free polo shirt. 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 CU based in Montgomery, Ala. said it split a $750,000 bonus dividend between 23,000 of its members, with one member alone receiving $3,100.

Western Division Federal Credit Union paid members an $800,000 patronage dividend on Dec. 7, the $123 million CU of Williamsville, N.Y., announced. Members who paid interest or received dividends in a sufficient amount to warrant a patronage dividend received approximately 12% of the interest paid on their loans 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 evenly between savers and borrowers and determined each individual dividend award based on the member’s dividends paid and interest earned.