Cash-Back Dividends

Frontier Farm Credit will return a portion of our 2025 net income earned from eligible customers through the 2025 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.

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 2025 patronage distribution will be based on his or her eligible average loan volume with Frontier Farm Credit during 2025. 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 2026 for cash-back dividends paid in 2025. IRS regulations do not require distribution of 1099-PATR forms for corporations.

Retained earnings not distributed in cash-back dividends help Frontier Farm Credit build the necessary capital to fund future growth and to develop new products and services that help you, our customer-owner, succeed.

The cash-back dividend check payee will be the “payor of record” (primary customer) in our loan accounting system as of December 31, 2025. This is the same person whose taxpayer identification number appears on any IRS reporting associated with the customer’s account.

Frontier Farm Credit is dedicated to providing industry expertise, quality customer service and competitive rates. In order to attract investors for Farm Credit System funding, Frontier Farm Credit must demonstrate the ability to generate strong earnings. The program allows Frontier Farm Credit's Board to determine the amount of the cash-back dividend distribution after financial results for the year are known.

Our Board currently intends to distribute cash-back dividends each year. Barring any unforeseen events or significant change in economic conditions, the Board and our current financial plans target a 100 basis point cash-back dividend for the years 2025, 2026 and 2027 for both the general pool and the purchased participation pool. Cash-back dividends for the sold participation pool are dependent upon the total amount of patronage dividends received from all lenders that purchase a portion of an eligible loan.

Who is eligible for cash-back dividends?
Generally, customers whose loans are capitalized by stock are eligible for cash-back dividends. These loans include operating and agriculture real estate loans, as well as some consumer-purpose loans secured with real estate (see excluded products).

If a customer has paid off a loan, he/she is eligible for patronage for the period the loan was outstanding, provided it was capitalized at the time of payoff and no exclusions to eligibility apply.

Who is ineligible for cash-back dividends?

• Non-accrual loans past due as of December 31.
• Forbearance or restructured loan agreements that include patronage waivers.
• Charge-offs (net), partial or full. All the customer’s loans are ineligible for seven years from the date of most recent charge-off, unless fully recovered, including any loans originated subsequent to the charge-offs.
• Bankruptcy, voluntary or involuntary. All the customer’s loans are ineligible for seven years from the date of discharge or similar proceeding and concluding on December 31st of that seventh year.
• Sales contract (Contract for Deed) resulting from a restructured loan.
• Accelerated loans as of December 31. One accelerated loan makes all the customer's loans ineligible.
• A loan participation or multi-lender syndicated loan unless the contract with the borrower specifically provides for the payment of patronage.
• A sold loan participation where the contract with the purchasing institution specifically designates the loan as a non-patronage loan.
• A loan made expressly on a non-patronage basis.
• Cash-back dividends of less than $50.

Excluded products

• Crop insurance, as required by regulations prohibiting the distribution of insurance income directly to customers who generate it.
• Leasing, as required by the lease agreement with our lease processor, Farm Credit Leasing.
• AgDirect equipment financing made after April 11, 2010.
• Young and Beginning Development Fund loans.
• Paycheck Protection Program (PPP) loans made through the U.S. Small Business Administration.
• Consumer-purpose loans secured by real estate:
  • Closed on or after January 1, 2018.
  • With a completed loan servicing action on or after January 1, 2018, for the following*:
    • All interest rate conversions
    • Maturity/Extension of Terms greater than 3 months
    • Payment Extensions or Deferments
    • An additional advance closed on or after April 15, 2018.