When you borrow with us, you become an owner and member of the cooperative. That means a share of our profits go right back to you. 

How Patronage Refunds Work

As an agricultural credit cooperative, River Valley AgCredit is owned by the member-borrowers who purchase stock, or 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. Patronage refunds significantly reduce your effective interest cost and save you money. 

Patronage refunds effectively reduce the cost of borrowing money.

You Own the Bank, You Share in the Profits 

Before you consider writing 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.

Calculate your Refund

Frequently asked questions

What's a cooperative? 

A cooperative is an organization owned by and operated for the benefit of those using its services - the members. These member-borrowers control the company by electing a board of directors from among the membership.

How do patronage refunds benefit AgCredit borrowers?

Patronage refunds benefit borrowers by reducing their cost of borrowing. AgCredit charges competitive rates on its loans/rates comparable to those charged by other lenders for similar loans. However, a major difference between AgCredit and other lenders is that AgCredit returns its profits to its borrowers. 

How does AgCredit distribute refunds? 

We distribute refunds based on the amount of interest earned on each member's loan. That means the more business you do with AgCredit, the larger your potential patronage refund.

How do patronage refunds benefit your AgCredit association?

Patronage refunds can help AgCredit 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.

How do patronage refunds reduce AgCredit's tax expenses? 

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.

AgCredit 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.

What's 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.

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.

How will I be notified about patronage distributions? 

Each time a patronage distribution is issued, AgCredit 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 also receive a tax notification regarding my patronage refund?

Yes. In January, AgCredit 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.