Frontier Farm Credit will return a portion of our 2022 net income earned from eligible customers through the 2022 patronage program. The Board of Directors intends to target a cash-back dividend of 100 basis points for the general pool and purchased participation pool, barring unforeseen events and significant change in economic conditions.

The 2022 patronage program provides for distribution of patronage-sourced earnings from three separate pools: a general pool that applies to the majority of our customer-owners; a second pool that applies to eligible participation loans and syndication interests purchased by FCSAmerica; and a new third pool that applies to that portion of eligible participation loans sold by FCSAmerica to other Farm Credit System institutions.

In prior years, the sold portion of eligible participation loans was excluded from FCSAmerica’s patronage program. In those cases, FCSAmerica would simply forward patronage payments received from participating lenders to the applicable borrower on a per loan, per borrower basis. Beginning in 2022, the sold portion of eligible loans will be included in the patronage program which allows FCSAmerica to establish a standard payout for this pool based on patronage received from all participating lenders.

Distributions will continue to be calculated based on eligible average loan volume during 2022.

Cash-back dividends are a component of Frontier Farm Credit’s customer value proposition and are one of the unique benefits of doing business with a customer-owned financial cooperative. Cash-back dividends are a way to reduce the cost of borrowing from Frontier Farm Credit by sharing in the cooperative’s profits.

In each pool, the amount of a customer’s 2022 patronage distribution will be based on his or her eligible average loan volume with Frontier Farm Credit during 2022. Generally, the more a customer borrows from us, the more he or she will benefit, financially, from the program. Because your eligible average loan volume and the amount of approved patronage can change each year, your cash-back dividend likely will change from one year to the next.

Yes. Eligible customers generally should include the cash-back dividend in their taxable income in the year that it was received. We encourage customers to consult with a tax advisor about their specific situation. Non-corporate customers will receive an IRS Form 1099-PATR early in 2023 for cash-back dividends paid in 2022. IRS regulations do not require distribution of 1099-PATR forms for corporations.