Capital Farm Credit’s cash patronage and allocated equities program is one of the greatest benefits of doing business with our cooperative, because it means that a portion of all of our net earnings are returned to our customers as part-owners of the cooperative.Typically, customers receive a portion of the patronage as a cash dividend. An additional portion of our earnings will be allocated to customers to be payable at a future date. Periodically, at the discretion of the member-elected board of directors, customers will receive cash distributions of this allocated equity.

Facts About Our Allocated Equities Program

• 100 percent of Capital Farm Credit’s net profits belong to our borrowers. The member-elected board of directors has approved an allocated equities program in which all of Capital’s net earnings will be distributed to our members over time.
• Each customer’s name is on a portion of our earnings. The amount of a customer’s allocated equity is deter-mined by the amount of business the borrower does with Capital Farm Credit.
• The board of directors votes annually on how much allocated equity to retire, which determines how much customers will receive in cash each year. The cooperative can use allocated equity as capital to fund future growth until the board of directors votes to distribute a portion of the equity in cash to customers.
• You do not pay taxes on the allocated equity until you receive a cash portion. Capital Farm Credit’s allocated equities program is a nonqualified disbursement. That means that customers will owe taxes only on the cash distribution each year, not on the allocated portion.
• Allocated equity remains in the customer’s name until it is paid out in cash. Allocated equities will remain at the association until the board decides to distribute them. Then they will be refunded to the owner as they were allocated. Even after a customer has paid off a loan and is no longer an active borrower, that customer will still eventually receive a payout of allocated equity.
• You will be able to keep track of your equity. Every year, Capital Farm Credit will provide each customer with a financial statement noting the value of his or her allocated equity.
• Capital Farm Credit has a history of returning earnings. Since 1997, Capital Farm Credit has returned over $125 million in capital distributions to our member-borrowers. Now, with the allocated equities program, that amount will continue to increase.