The Board of Directors has approved a patronage refund for 2010 of $3,659,000, payable 100% in cash. The 2010 patronage refund is 1.00% of average member loan volume and 52% of net income.
In comparison, the 2009 patronage refund was $2,573,000. There are two reasons the size of the patronage refund increased by more than $1 million from 2009 to 2010. First, we increased the patronage refund rate from 0.80% in 2009 to 1.00% in 2010. Second, in 2009 and previous years we paid patronage refunds only on member loan volume held by the Association. Beginning in 2010 we are generally paying patronage refunds on all member loan volume originated by the Association. We made this change as part of our response to new accounting rules (FAS 166) that became effective in 2010.
Payment of the patronage refund is contingent upon satisfactory completion of the 2010 audit and the Association's receipt of its 2010 patronage refund from CoBank. Both conditions are expected to be satisfied in March, and payment of the 2010 patronage refund is tentatively scheduled for March 25, 2011.
Payment will be made via ACH for customers who were signed up for electronic funds transfer as of December 31, 2010. The plan for ACH customers is to mail the statement on Wednesday, March 23 and initiate the ACH transaction on Thursday, March 24. Most ACH customers should receive the funds in their bank account on Friday, March 25.
