Providing superior member value is the reason Logix exists. Value comes in many forms, and as another successful year comes to a close, I’d like to detail some of the plans in place to deliver superior member value in 2018.
Unlike recent years, a portion of this value will not come in the form of a special member dividend, and that change warrants explanation.
In each of the last five years, Logix has paid this special dividend to members, with payment amounts varying based on account balances maintained by each qualifying member. The total amount returned to members was more than $23 million. While we were proud to give back in this way, we feel investing capital in other areas will ultimately improve member satisfaction to a greater degree in 2018 and beyond.
Logix maintains a capital (net worth) level that ranks among the highest of all U.S. financial institutions. When we first decided to use this capital to pay a “Loyalty Dividend,” senior management engaged in robust debate about whether a special dividend was the best use of those funds, and in the best long-term interests of our members.
Some argued we ought to instead improve our everyday product value by increasing deposit rates and decreasing loan rates. Others argued we should instead make greater investments in systems that make it easier for members to do business with us, while others felt we should simply continue to operate with a very high level of capital, as increased security against unforeseen future financial hazards.
Ultimately, we chose to pay a Loyalty Dividend (later to be renamed “Relationship Dividend”) because it seemed to represent the most obvious way we could return value to members. However, as times change and our members’ needs in terms of online services, branch availability, information security, digital account access, and rate sensitivity change along with them, so too must our decisions as they pertain to returning value.
Based on this understanding, we have outlined opportunities to provide excellent value to members, and to do so in a way that encourages members to increase their relationship and to refer others to us.
- Security: At a minimum, and as always, the first priority is the safety and security of member funds held at Logix. The FBI reports that attempts at financial fraud are at all-time highs, and the information security tools and personnel required to protect our members must increase to match.
As an aside, our investment here will never be as valuable as alert members who keep a sharp eye out for indications of fraud and use strong passwords for all online activities. Our ability to partner with members to fight fraud is directly related to our ability to expend capital on other member programs.
- Relationship: While surveys conducted by Raddon Financial show we are leaders in “member giveback,” a category which compares us to other financial institutions in how much value we directly return to members, we believe that we will achieve a stronger leadership position by improving the rates and fees for members of our Relationship Rewards program. We will revise this program to ensure that members who contribute the most to our success enjoy best-in-market value and benefits. We may, for example, increase the earning rate of Card Rewards points for members who qualify for certain Relationship Rewards levels, and add a discount on our already-low vehicle loan rates.
- Rewards: Whether your Logix card has a robot or a plane, or just a Logix logo, we want you to feel it’s the best card in your wallet. I believe that improvements to our rates, fees, and rewards program will make each swipe of your card more rewarding.
- Service: Member expectations in terms of service look different now than ever before, with members reporting that the ease of doing business with us online and on mobile devices is nearly as important as the in-person experience at a branch or over the phone. We will increase our branch presence in 2018 by adding locations in Tarzana and Santa Clarita, and also deliver a new world class mobile app, all while continuing to invest heavily in our employees to ensure we hire and train staff willing and able to offer an excellent service experience to members
We evaluate the option of a dividend annually. This year, we believe these investments comprise the best possible use of any surplus capital that Logix may enjoy, and we hope you’ll find the long-term benefits of a stronger credit union preferable to a dividend payment.