What is a patronage refund?

A patronage refund is a way of distributing the association's net income to its member-stockholders. A member's refund is based on the proportion of interest earned on his or her loan to the total interest earned by the association. A patronage refund may be paid in cash, allocated surplus, stock, or any combination of these items. A patronage refund is a way to refund a portion of the interest you paid on your loan.