DCECU strives to maintain a healthy capital (net worth) level. Anything over that level is considered excess income and generally is given back to eligible members in the form of a Member Giveback. Typically included in the Member Giveback are our Loan Interest Rebate, Member Saver Reward and Visa® Debit Card Rebate.
Although this credit union benefit is not guaranteed, the Member Giveback typically is given out annually on January 1. Since 1955, DCECU has given back a share of our earnings to members in all but one year (1979).
There are many factors, including – but not limited to – interest rate levels, yield curve, balance sheet mix and risk, capital (net worth), the current and future economic environment, and regulatory changes.
No, but Loan Interest Rebates have been paid in 62 of the last 63 years.
If the rate at which members choose rebate-eligible loans exceeds the rate at which Member Giveback dollars are paid out, the Giveback percentage naturally decreases. The percentage also would likely decrease as interest rates rise.
In response to The Great Recession, we built up excess capital – or, in other words, a “rainy-day fund.” After the economy stabilized, we began returning the excess capital to members through higher rebate percentages from 2012 through 2017. The excess capital has almost been depleted, so rebates are starting to return to more normal levels. And while rebates are returning to normal levels, the total dollar amount of the Member Giveback continues to rise. For 2018, we expect to give back a record-high total of more than $18 million.
Assuming the same trends continue in terms of incremental increases in available Member Giveback dollars and high levels of rebate-eligible loans, we would expect the Loan Interest Rebate percentage to move back down toward the long-term historical range, although likely at the higher end of that range. Interest rate levels also will be an influencing factor.
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