When Texas AgFinance does well financially, you benefit. That's the basic philosophy behind the patronage program and also a basic financial reason for doing business with the Farm Credit lending cooperative. Every borrower also is a stockholder of the cooperative and receives a part of the earnings. The more you borrow, the bigger your share of earnings.
Texas AgFinance's commitment to sharing our earnings with you comes from our cooperative structure. No other type of lender offers you such an advantage.
Every year, the board of directors decides how much of our earnings need to be maintained as capital to fund our growth. Then, the board is able to return the remainder as a patronage to you. A portion of this is delivered in cash to you, but it can also be reflected in allocated equity. You do not have to enroll in this program. It is an automatic benefit of doing business with us.
In addition to a cash patronage program, Texas AgFinance can allocate the remainder of our earnings to our borrowers as allocated equity. In other words, part of our earnings can be earmarked in your name to be returned to you later. This allows us to use the capital to fund our growth and, at the same time, to keep all of our earnings allocated to our borrowers. As Texas AgFinance retires the allocated equity over time, you receive that portion in cash.
The most important benefit of our patronage program is that it lowers your effective interest rate. You not only receive a competitive rate up front, but you also receive a patronage dividend in years when Texas AgFinance does well.
A good part of our success has come from word-of-mouth referrals from customers like you. These referrals are invaluable to growing the association and maintaining a highly successful business operation. More new business will generate more earnings. More earnings will result in more patronage to you. It's a win-win situation.
