As a Central Texas Farm Credit borrower, you are a member of a cooperative and entitled to share in its financial success. Every year, Central Texas Farm Credit returns profits to customers — the owners — as patronage dividends, significantly reducing total borrowing costs.
At each year end, our board of directors evaluates how much of our net income should be retained to strengthen our capital position. Whatever is not needed for capital is distributed to our customers by declaring a cash patronage dividend.
Cash patronage distributions reduce your effective interest cost and save you money. If you’re borrowing from a lender that doesn’t return a portion of its profits to you, consider doing more of your business with Central Texas Farm Credit — where you are the stockholder. Remember, you own the company and you share in the earnings.
For more information on our patronage program, contact your nearest branch or call your loan officer.
Questions & Answers About Our Patronage Program
A patronage dividend is a way of allocating Central Texas Farm Credit’s income to its member-stockholders. Patronage is based on the proportion of:
- The amount of profit your loan(s) made for the association
- The total profit generated by all of Central Texas Farm Credit’s loans
The more business you do with Central Texas Farm Credit, the larger your potential patronage dividend.
Your cash patronage distribution reduces the cost of doing business with Central Texas Farm Credit — the cash dividend lowers your effective interest rate.
Cash distributions vary, depending upon earnings and the overall financial goals of the organization. The $6.5 million in cash payments made in 2019 from 2018 earnings effectively reduced our average borrower’s interest rate by 1.50 percent.
Central Texas Farm Credit’s objective is to provide “superior service at competitive rates.” Bond investors (where the money we lend comes from) need to know that we have the ability to generate earnings. To that end, Central Texas Farm Credit builds capital and loss reserves to withstand the down cycles of the ag economy. Because of our financial strength and stability, we are able to borrow at very low interest rates, which we pass on to our customers.
If the board of directors approves payment of a cash patronage dividend from a particular year’s earnings, 100 percent of the patronage dividend is paid to you by check, typically in March of the following year.
Yes. In January of the year following your receipt of a cash patronage distribution, Central Texas Farm Credit will send you IRS Form 1099, showing the total of all patronage distributions issued to you during the previous year.
No. Because Central Texas Farm Credit operates very efficiently as a member-owned cooperative, we are able to offer very competitive interest rates and a patronage dividend.