December 13, 2020 | By: Matt Kesser |Patronage
A defining feature of Texas Farm Credit and our cooperative structure is our patronage program. This program is displayed in various details in many of our marketing communications. However, I would like to focus on what a new member can expect once you have received a new loan which enrolls you into our program.
First and foremost, patronage is paid each year based upon our earnings from the previous year and must be approved by our Board of Directors. Fortunately, for our members, Texas Farm Credit has paid out patronage for over 20 years straight.
So let’s talk from the member’s perspective, as if you are receiving your first loan today and our Board has approved a patronage payout. There are two forms of patronage declared and paid. Your first patronage check, we refer to as cash patronage, would typically be received by spring of the following year. Our goal is to return as much cash patronage as practical which is typically the larger distribution of the two.
The second form of patronage is called an allocated equity. This is declared at the same time as the cash patronage but is typically paid at a future date in whole. This future date is generally 7 years from declaration.
So, let’s fast forward into the future when the allocated equity would be paid. In this scenario, and each successive year, you would receive two patronage checks. The first being the cash patronage payment distributed in spring and the second would be the allocated equity payment which is typically distributed in the latter part of the year, around December.
These two payments are a huge benefit to our members. We like to describe this benefit as effectively lowering your borrowing costs or in other words, your interest rate. This patronage, along with, our service and dedication to rural Texas, truly separates us from other lending institutions.
So we encourage everyone to seek out a current member of ours and ask how rewarding this program has been for them. Then, please consider us for your financing needs. In addition, please check out the various programs we have from insurance to home mortgage. These all contribute to the success and earnings of the association which in turn could strengthen the patronage to our members.
Thank you for taking the time to listen more about our patronage program and we look forward to working with you.