Farm Credit of North Florida

Patronage Refunds

One of the most important financial benefits of being a Farm Credit of North Florida member-borrower is having the opportunity to share in the Association's profits.

At the end of each fiscal year, Farm Credit determines its total income and expenses. Income remaining after all expenses are deducted (the net income) can then be distributed in accordance with the Association's bylaws.

The board of directors can elect to retain all of the net income to strengthen the Association's capital position, or distribute some, or all, of the net income to members by declaring a dividend on stock or declaring a patronage refund.

How Does Patronage Distribution Work?

You borrowed $100.000.00 on January 1, 2005 with an interest rate of 7.0%, to mature one year later, with interest due of $7000. Assume that patronage is paid at a rate of 30% of interest accrued on the loan, and that 30% of your patronage was paid in cash on March 1, 2006. If the Board of Directors approved payment of the remaining 70% in surplus allocated on February 1, 2013, your effective interest rate would have been reduced to 5.95%.

Payment of Patronage refund and surplus allocated are subject to annual Board of Director approval. Actual effective rate may vary according to individual fees, stock purchases and your income tax rates. Since 1988, patronage distribution has ranged from 6.83% to 48.35% of interest accrued during the year. North Florida pays a patronage refund every year.