Founders Federal Credit Union will return $10 million to its members in the form of a bonus dividend, the Lancaster, S.C.-based institution said Thursday.

Unlike banks, credit unions are tax-exempt and owned by their members. While not uncommon, such returns have been scarce in recent years as the financial industry as a whole has struggled.

"We're in a financial position we can afford to do this," Founders CEO Bruce Brumfield said. "Our members need this money right now more than we do."

Half of the total will go to depositors, based on the amount of interest they've accrued. The other $5 million will go to borrowers based on the amount of interest they've paid.

The bonus dividends will be calculated as of Oct. 31 and deposited in accounts Nov. 30. While amounts will vary, the average member who has both a deposit account and a loan will receive about $100, Brumfield said.

The credit union has offices in seven S.C. counties and in Mecklenburg. In the largest group of credit unions, Founders has about $1.6 billion in assets and nearly 200,000 members.

The dividend is possible because of positive financial results. Brumfield said the credit union is scheduled to earn $6 million more than it budgeted. Its board decided to take an additional $4 million out of reserves to give back to members.

Founders' performance was driven by a decline in charge-offs on bad loans as well as a companywide efficiency initiative that touched on everything from marketing to landscaping.

As a thank-you to employees for that effort, Brumfield said, all full-time employees will be given a bonus of $1,300; part-time employees will receive $650.

Even with the bonus dividend and bonuses, Brumfield said the credit union maintains capital ratios well above minimums.

"We still have plenty of excess capital to protect us from future downfalls in the economy or rainy days," he said, adding that there's also enough to keep from charging fees for products like debit cards. "If you're a member of Founders, you write a bad check or if you want to do a wire transfer, you really don't see many fees."

The credit union has returned $30 million in bonus dividends in the past 11 years, though this is the largest single distribution to date. It gave $6 million in both 2008 and 2006, $4 million in 2003, and $2 million in 2001 and 2000.

This year's dividend comes after a year in which the Credit Union National Association, or CUNA, reported no bonus dividends.

There were, however, $9.7 million in interest rebates between June 2010 and June 2011. Interest rebates are similar but involve returning a portion of the money paid in interest on a loan.

Credit unions have a variety of options with undivided earnings. They can use the money to offer better rates, to build more branches, to reduce fees. Bonus dividends are a way to reward all members based on their loyalty.

"A number of credit unions choose to do that because their boards are reluctant to just sit on piles of cash," said Patrick Keefe, CUNA spokesman. "There's no doubt that it's pretty good member relations."

While there is regular debate about what credit unions should do with those earnings, dividends aren't generally a controversial method, said Jeffry Pilcher, publisher of The Financial Brand.

"Usually it's the flip-flop," he said. "Say a credit union builds a $20 million facility. People will say, 'Shouldn't they build a $5 million facility and give the $15 million back to their members?' "

Founders' dividend comes at the end of a positive month for credit unions in general. As the Occupy Wall Street protests have gained momentum and the social-media-driven Bank Transfer Day urged people to leave big banks, credit unions gained more than 700,000 members, according to CUNA data.