What's the Stock All About, Pt. 1

Barn under a cloudy sky

Written By: Leah Chester-Davis, Bruce Arrington

Membership has its privileges. When you become a customer member of Carolina Farm Credit, you own membership stock and that confers a lot of benefits, says Bruce Arrington, loan officer in the Asheville Branch.

The patronage dividend is a major benefit. You actually share in the cooperative’s profits. How, exactly, does that work? The stock purchase requirement is 2% of the loan amount and is capped at $1,000 so even if you borrow a million dollars, the stock purchase or membership fee will be no more than $1,000.

With that membership stock, you are considered a customer member and are part of the cash dividend program. “Because we are a cooperative, we are able to take our earnings and return them to our members,” says Arrington. “We have a long history of paying  patronage dividends. While we can’t guarantee future levels of dividends, we are proud to have paid refunds for 31 consecutive years. Carolina Farm Credit has declared refunds totaling $494.9 million since 1988. A percentage cash dividend means that our members receive back a stated percentage of the interest that they paid on their loan the previous year. Their refunds lower the effective interest rate of our members by as much as 1%. 

As an example, let’s say you paid $10,000 in interest on your loan at a rate of 6%. If you get  15 percent back through the patronage program, you would save $1,500. That effectively lowers your interest rate to 5.10% and reduces your cost of borrowing.

As an example, let’s say you paid $10,000 in interest on your loan at a rate of 6%. If you get  15 percent back through the patronage program, you would save $1,500. That effectively lowers your interest rate to 5.10% and reduces your cost of borrowing.

A Voice in Deciding Our Leadership

Another benefit to owning membership stock is that you get a voice in the organization. Every customer member has the opportunity to vote for the board of directors, and even potentially become a member of the board of directors. Anytime new members are being considered, information goes out to customer members in a number of ways such as e-mails, mailings, and posts to the website and social media.

The benefits of customers being members and having a voice ties the entire organization together, says Arrington. It ties employees, members, our board of directors, our management, and our senior management team. “We all get to share in the success of the cooperative. It is a personal kind of relationship that we have.”

In part 2, Loan Office Bruce Arrington shares other benefits to becoming a stockholder member of Carolina Farm Credit.