I picked up my patronage check at Member Appreciation day. My neighbor, who also borrows from you, said his check was for a different amount. How is this calculated, and is it something I can actually count on each year?
Rick Krueger, Executive Vice President, Chief Financial Officer
If your patronage check was for the same amount as your neighbor, it would have surprised me. The reason for the difference is you each have a unique
relationship with FCS Financial and that check amount is a direct reflection of that. This could fluctuate from year to year based on how much business you do with us. Perhaps you purchased an additional 40 acres in one year or utilized your operating line to purchase more livestock the next. That said, outstanding loan amounts are only one factor. The bottom line is that the amount you receive back in patronage each year is directly correlated to the level at which you contribute to the earnings of the cooperative, otherwise known as our bottom line. We run through a very detailed calculation after each year-end to compare your contributions to other member-owners to determine your relative share of the overall patronage payout. This is based on the previous year’s activity only, so when you show up on Member Appreciation Day each year, that check represents business done the prior year.
Our Board of Directors, who represent you, takes a great deal of care in making this decision each year.
We look at this decision relative to the interest rate you pay on your loans or basis points (100 basis points – 1.00%). For 2025 business, on average, we paid back approximately 65 bps in patronage. That is a number that will fluctuate overall from year to year, but also one that fluctuates from member to member based on unique business for that year. Patronage is a key component of our cooperative model. It must be approved by the Board each year based on our results and expectations. Patronage is not a guarantee, but it is something your Board actively plans to have as an active element of this cooperative well into the future.
