Do you have questions about patronage refunds? Get answers to the most commonly asked questions on this page.
If you want to know the details about any allocated surplus on your account, like the amount or year it was issued, you can contact your local branch office. Also, in January of each year, customers receive member’s equity statements that detail the amounts.
You may also want to sign up for AccountAccess. AccountAccess is an Internet-based method for you to view not just the detail of your equity with the Association, but also principal and interest balances and payment due dates.
Patronage refunds help AgSouth Farm Credit manage its tax expense and maintain a strong capital position. A strong capital position helps all customers because it enables the Association to offer competitive interest rates while ensuring a constant supply of available credit.
Patronage refunds benefit customers by reducing their costs of borrowing. The more business a member does with AgSouth Farm Credit, the larger the member's potential patronage refund.
Unlike corporations, where profits are taxed twice — once when earned by the corporation, and again when distributed to owners as dividends — a cooperative’s profits are taxed only once, when they are distributed as a patronage refund.
The cash portion of your patronage refund may be issued to you by check or recorded on the Association’s books in a special account called patronage payable. The board sets a minimum check amount as a way of controlling expenses. Cash distributions below the minimum are set up in the patronage payable account.
Members may request the monies in their patronage payable account in the form of a check, have the funds applied to their loans or leave these amounts on account with the Association.
A patronage refund is one of the great benefits of doing business with a cooperative. As customers and stockholders, members share in the Association’s profits. A customer’s refund is based on the proportion of interest earned on his or her loan to the total interest earned by the Association. A patronage refund may be paid in cash, allocated surplus, stock or any combination of these methods.
The AgSouth Board of Directors, which is elected by the stockholders of the Association, usually opts to hold a portion of the patronage refund in the cooperative to help keep its operation on a sound financial basis. The retained portion of each customer’s patronage refund is recorded on the books of the Association in each customer’s individual equity account. This retained patronage refund is called allocated surplus.
AgSouth Farm Credit’s goal is to operate efficiently and maintain a strong permanent capital base. It is the board’s responsibility to continually monitor the financial position of the Association. The board then determines if and when to retire allocated surplus, and the oldest series of allocated surplus must be retired first.
The patronage refund history chart reflects a 17-year history of allocated surplus revolvements. During those 17 years, over $221.3 million has been revolved or retired in cash. Remember, however, that all revolvements are determined by the Board of Directors and are based upon the Board’s assessment of the financial performance and future capital needs of the Association.
The patronage refund program is one of the great benefits of doing business with AgSouth Farm Credit, as it reduces a member's overall cost of borrowing. The next time you sit down to write a check to another lending institution, ask yourself, “How much of this interest payment will this bank be returning to me?” If your answer is, “None,” then you should consider doing more of your business where you are a stockholder, like you are with AgSouth Farm Credit. Remember, when you own the bank, you share in the profits.
Patronage refunds issued in the form of allocated surplus can only be retired or paid to members upon approval of the Board. Under the Association bylaws, the Association cannot honor requests from members to retire the individual allocated surplus accounts, and no retirements may occur sooner than five years after the initial issue date.
Each time a patronage refund is issued, AgSouth Farm Credit will notify eligible members of their patronage refunds. The notification will include a breakdown of the amount paid in cash (by check or patronage payable entry) and the amount paid in allocated surplus.
If your question isn't answered by the FAQ, or you want more information, contact us and we'll be happy to help.
Member-borrower David Wilson (left) and Regional Vice President Karen Baxley (right)
“AgSouth has been a part of my life for 25+ years, starting with my first stock trailer in 1984 to my third set of breeder houses in 2010. Unlike other bankers, Karen always shows interest and knowledge of my farm and family’s well-being. Last but not least, I love getting those patronage checks in the spring!” — David Wilson
Regional Vice President Ricky Cochran (right) delivers a patronage check to member-borrower former Atlanta Braves pitcher Pat Jarvis (left).
"Being a former professional baseball player, I know the importance of teamwork. The team at AgSouth works together to get me the financing I need." —Pat Jarvis