When you borrow from First South, you become a stockholder/member in our agricultural cooperative and have the opportunity to share in the distribution of profits.
Unlike most businesses that return profits to their investors, First South returns profits to our customers. We do this through a program called Patronage Refunds.
How Patronage Refunds Work
The obligation to pay patronage is established by First South Farm Credit's bylaws and board resolutions. Our board of directors determines the overall amount of patronage and form of patronage based on First South's profits and capital needs.
As a regulated financial institution, First South must build and maintain adequate capital to ensure we have the financial strength to continue serving our market. Patronage refunds are made only if capital requirements are achieved.
Frequently Asked Questions About Patronage
Does patronage affect my borrowing costs?
Yes, in a very positive way!
Like other lenders, First South offers competitive rates and terms. When our board of directors elects to distribute a part of our profits to our members, the distribution is allocated based on the amount of interest the Association earned on their loans.
As a result, patronage effectively lowers each member's borrowing costs!
How does patronage benefit First South?
First South may deduct qualified patronage from its taxable income, making it a very tax effective way of providing value to our members.