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Benefits of Membership

Member Discounts

Farm Credit of Central Florida is pleased to offer our customers additional benefits.  As a valued member, you are eligible to participate in multiple National Discount Programs offered exclusively to Farm Credit customers.

Sign into your AccountAccess (online banking) and go to the Resource Center to view the discounts available to our members and access the discount codes.

Patronage

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

As an agricultural credit cooperative, Farm Credit is owned by the member-borrowers who purchase stock/participation certificates in the cooperative. After each fiscal year, our Board of Directors may choose to retain the net income of the Association to strengthen our capital position or distribute some or all of the net income to members by declaring a dividend on stock or a patronage refund.

The distribution of profits to our members effectively reduces the cost of borrowing money. Our members own the bank, so it just makes sense that they will share in the profits.

Patronage FAQs

WHAT ARE THE BENEFITS OF BEING A FARM CREDIT MEMBER?

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

Most businesses return their profits to their owners, not their customers. When you borrow from Farm Credit, you become an owner of the business and are therefore entitled to share in the profits of the association.

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 a portion of, or all, of the net income to members by declaring a dividend on stock or declaring a patronage refund.

WHAT IS A PATRONAGE REFUND?

A patronage refund is a way of distributing the association's net income to its member-stockholders. A member'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 items. A patronage refund is a way to refund a portion of the interest you paid on your loan.

HOW DO PATRONAGE REFUNDS BENEFIT FARM CREDIT BORROWERS?

Patronage refunds benefit borrowers by reducing their cost of borrowing. Farm Credit charges competitive rates on its loans/rates comparable to those charged by other lenders for similar loans.

However, a major difference between Farm Credit and other lenders is that Farm Credit returns its profits to its borrowers. When you receive a patronage refund from Farm Credit, your effective cost of borrowing is reduced.

Since Farm Credit distributes refunds based on the amount of interest earned on each member's loan, the more business you do with Farm Credit, the larger your potential patronage refund.

HOW DO PATRONAGE REFUNDS BENEFIT YOUR FARM CREDIT ASSOCIATION?

Patronage refunds can help Farm Credit reduce its tax expense and maintain a strong capital position. This helps the entire membership because an association with a strong capital position is better able to offer competitive interest rates, ensure a constant supply of credit and provide for the retirement of member equity held in the form of allocated surplus.

Unlike other corporations where profits are taxed twice, when earned by the corporation and when distributed to owners as dividends, a cooperative's profits are taxed only once when they are distributed as a patronage refund.

Farm Credit is allowed a tax deduction for the amount of net income that it distributes in the form of a qualified patronage refund. Therefore, to effectively manage the association's tax expense and maintain a strong capital position, the Board of Directors may elect to distribute taxable earnings to members as a qualified patronage refund. A qualified patronage refund is one in which at least 20 percent is paid in cash and the remainder in either stock or qualified allocated surplus.

WHAT IS ALLOCATED SURPLUS?

Members, through the board, usually elect to leave a portion of the patronage refund in the cooperative to help keep its operation on a sound financial basis. The retained portion of each member's patronage refund is recorded on the books of the association, or allocated to each member's equity account. This retained patronage refund is called allocated surplus.

Qualified allocated surplus is a portion of the patronage refund retained for the purpose of providing for the capital needs of your cooperative. Farm Credit operates with a minimal stock requirement. This stock requirement is not adequate to maintain the levels of capital that are required to operate a safe and sound financial institution. Allocated surplus now provides that source of capital.

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 can vote to retire allocated surplus when it determines the association does not need it for capital.

HOW IS MY PATRONAGE REFUND ISSUED?

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.

When any portion of a patronage refund is paid in cash, your Board of Directors may elect to set a minimum check amount as a means of controlling expenses. Cash distributions below the minimum check amount are recorded in a special account called patronage payable. On notification of patronage refund, refunds placed in patronage payable appear under "Not Distributed."

Members may request a check for monies in their patronage payable accounts, request that these amounts be applied to their loans, or leave these distributions "on account" with the association.

WHY CAN'T I RECEIVE ALL OF THE PATRONAGE REFUND IN CASH AT ONE TIME?

Patronage refunds issued in the form of allocated surplus can only be retired, or paid to members, upon approval of the board. Under the bylaws, the association cannot honor requests from members to retire the individual allocated surplus accounts.

Each time a patronage distribution is issued, 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 or stock.

WILL I RECEIVE A TAX NOTIFICATION REGARDING MY PATRONAGE REFUND?

Yes. In January, Farm Credit will send you an IRS Form 1099. This form will show the total of all taxable patronage refunds issued to you during the previous year. The portion of the patronage refund paid in qualified allocated surplus will also be reported as taxable income.

WHAT IS THE BOTTOM LINE ON PATRONAGE REFUNDS?

The use of patronage refunds makes a significant reduction in your effective interest cost and saves you money. The next time you sit down and write a check to another lending institution, ask yourself a question: "How much of this interest payment will the bank be returning to me?" If your answer is "none," then maybe you should consider doing more of your business where you are a stockholder - Farm Credit. Remember, you own the bank, and you share in the profits.

Our Patronage Program in 90 Seconds

When you choose Farm Credit of Central Florida, you're not just a customer, you're an owner who shares in the cooperative's profits. Watch this 90-second video for a quick explainer of how the patronage program works. 

Cash Payments as a % of Interest Earned