Founders Drops Annual Bonus for Year-Round Rewards
The credit union's $5 million special dividend for 2019 is its last.
Founders Federal Credit Union, Lancaster, S.C. ($2.6 billion, 223,495 members) paid members $5 million Dec. 1 as Loyalty Bonuses. From now on, they will be able to receive bonuses through its new Loyalty Select program, a special high-yield savings account where rewards are deposited.
Founders’ last Loyalty Bonus represents about $22 per member and 20 basis points of its 1.24% returns on $2.5 billion in average assets for the 12 months ending Sept. 30.
The combined $10 million in special dividends from Founders and three other credit unions represent an average of $16 for each of their 639,923 members and 14 bps of their returns of 1.06% on $7 billion in average assets for the 12 months ending Sept. 30. The others are:
Educators Credit Union, Racine, Wis. ($2.1 billion, 196,501 members) paid members $3.4 million in December as Member Loyalty payments. The amount represents about $17 per member and 16 bps of its ROA of 1.12% for the 12 months ending Sept. 30.
SAFE Federal Credit Union, Sumter, S.C. ($1.1 billion, 127,342 members) paid members $1.2 million Dec. 31 as bonus dividends and interest rebates. The payment from SAFE, formed for Shaw Air Force base employees, represents about $9 per member and 11 bps of its ROA of 1.07% for the 12 months ending Sept. 30.
Hanscom Federal Credit Union at the Hanscom Air Force Base about 20 miles northwest of Boston ($1.5 billion, 92,585 members) will pay members $437,000 on Jan. 31 as Loyalty Dividends. The amount represents about $5 per member and 3 bps of its ROA of 0.62% for the 12 months ending Sept. 30.
So far this season, 22 credit unions with $55.7 billion in assets have announced $162.8 million in special dividends for their 4 million members. The amount represents about $40 per member and 30 bps of their 12-month ROA of 1.10%.
However, Founders decided in 2019 that it would shift from an annual bonus to a year-round one to encourage more member engagement, said Nicki Nash, Founders’ chief marketing officer.
Founders started rolling out some parts of the program last summer, and received “great feedback from our members,” Nash said.
“Social media and everything is about keeping in touch constantly, keeping up to date constantly,” Nash said. “We feel this product is a way to keep up with our members throughout the year, and not just once a year.”
The annual bonus program benefited fewer members, in part because it provided no bonus if they didn’t reach the minimum threshold of a $25 rebate under the formula.
Members who received an annual Loyalty Bonus automatically had a Loyalty Select account established for them. Those who didn’t can request one. The account currently has a 5.38% annual percentage yield.
Member engagement is enhanced by allowing them three main ways to add to their Loyalty Select accounts:
- Signing up for Founders’ Edge Up program in which every debit card purchase is rounded up to the next whole dollar, and the change is deposited into the Loyalty Select account
- Signing up for its Dividend Amp program to have dividends from eligible interest-bearing accounts automatically deposited to Loyalty Select
- Signing up for its Cash In program to have rewards points from a Founders credit card deposited to the Loyalty Select account.
The program does not apply to term loans, except in certain promotions. For example, Founders might provide a cash-back bonus for a limited time for taking out an auto loan with money being deposited to the Loyalty Select account.
“We’re rewarding them for using core products and services—sort of the everyday products, like the debit card and credit card—rather than rewarding them for their interest and dividends one time a year,” she said. “We find it to be a lot more engaging, and we’re able to reward them all throughout the year.”