Patronage That Pays
Cooperative Returns Program
We're a cooperative, meaning our borrowers are also owners and share in our profits. A portion of profits are returned through our cooperative returns program, with benefits that include:
- A return of your share of the earnings
- Reduction of your borrowing cost
- Allocated equities recorded in your name for future disbursement consideration
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* Calculations based on as if the loan was made January 1, 2022.
The Association has consistently made capital distributions in each of the last several years. However, past distributions should not be construed as potential future distributions. Each year, the Association's board of directors will make a decision regarding capital distributions after evaluating the Association's total capital and overall financial condition.
Information provided above is for informational purposes only. Actual patronage dividends may vary.
How does it work?
Capital Farm Credit’s board of directors annually reviews the financial health of the cooperative and decides how profits are returned — whether as cash or as allocated equity.
A portion is distributed to eligible borrowers as cash in the spring. The remainder is reinvested back into the cooperative in what we call allocated equities accounts. As conditions allow, our board of directors will elect to return a portion of these accounts each year, usually in the fall.
A portion is distributed to eligible borrowers as cash in the spring. The remainder is reinvested back into the cooperative in what we call allocated equities accounts. As conditions allow, our board of directors will elect to return a portion of these accounts each year, usually in the fall.
How much can you receive?
Your share of the cooperative return is based on your contributions to the earnings of the association. Since 2006, Capital Farm Credit's combined cash returned and allocated equities for members, through our cooperative returns program, is more than $2.7 billion.
What are cooperative returns?
A cooperative return is a return of a cooperative’s earnings back to patrons like you who use the cooperative’s services. All members who have a loan relationship in good standing with Capital Farm Credit are eligible for a cooperative return.
What determines how much a borrower can receive?
Our board of directors makes an annual decision regarding our cooperative returns program based on a number of factors, including financial performance of the association. A borrower’s share of the return is determined by the total earnings generated by the association, and is allocated based upon the interest accrued on his or her loan. Each individual borrower’s cooperative returns amount will depend on that borrower’s interest rate and loan volume. Simply put, the return is based on the amount of business the borrower does with Capital Farm Credit.
How do cooperative returns benefit customers?
The cooperative return results in a return of a portion of interest the member paid, which ultimately lowers the effective rate and reduces their borrowing cost. Capital Farm Credit charges a market interest rate on loans, but our customers get money back through our cooperative return program, which reduces their cost of financing.
How do cooperative returns benefit the cooperative?
Earnings that are not returned to members are reinvested in the cooperative to capitalize the association. In addition, unlike most corporate earnings, Capital Farm Credit’s earnings distributed as qualified non-qualified equities are taxed only once — to the member when they are distributed in the form of a cash payment.
Is the cooperative returns program sustainable?
Capital Farm Credit runs long-term financial projections and plans accordingly to ensure our philosophy is sustainable. Continuing our patronage philosophy is important to us and we manage our business with this in mind. We’ve paid cash and allocated non-qualified equities since 2006.
What sets Capital Farm Credit's cooperative returns program apart?
We’re one of few Farm Credit Associations that allocates nearly all of our earnings to members. Since 2006, the total cooperative return represents roughly 95% of the earnings during this period. Regulations prevent allocating 100 percent of earnings, but by and large, we distribute almost all of our member-sourced income in cooperative returns.
Based on our solid financial results in 2023, our board of directors approved a record $243.5 million in cooperative returns to our members. We distributed $118.8 million in cash this spring and have set aside an additional $124.7 million in allocated equities for our members until it is eligible for disbursement.
Cooperatives are formed by their members to offer services that benefit or enhance their operations. As an extension of their operation, Capital Farm Credit puts the resources our members give us — their capital, which is their member stock, plus the interest they pay on their loans — to use for their benefit. We return some of that capital in a cash distribution each year, and allocate some as non-qualified equities to retain for a period of time to capitalize the association. As a healthy cooperative grows, it generates new capital and is able to retire older capital from previous years.
Capital Farm Credit allocates (or puts a name on) its earnings, and they are called non-qualified allocated equities. By allocating these earnings, when a borrower pays off his or her loan, those allocated earnings rightfully belong to that member, and we will make every effort to pay it out to them in the future.
Not every cooperative allocates its earnings. If earnings aren’t allocated, then a cooperative can use that capital, and never rightfully return it to the patron who contributed to those earnings. We believe customers shouldn’t have to capitalize the association after they cease to be members. That’s why we retire allocated equities as we are able, and distribute to members in cash.
Based on our solid financial results in 2023, our board of directors approved a record $243.5 million in cooperative returns to our members. We distributed $118.8 million in cash this spring and have set aside an additional $124.7 million in allocated equities for our members until it is eligible for disbursement.
Cooperatives are formed by their members to offer services that benefit or enhance their operations. As an extension of their operation, Capital Farm Credit puts the resources our members give us — their capital, which is their member stock, plus the interest they pay on their loans — to use for their benefit. We return some of that capital in a cash distribution each year, and allocate some as non-qualified equities to retain for a period of time to capitalize the association. As a healthy cooperative grows, it generates new capital and is able to retire older capital from previous years.
Capital Farm Credit allocates (or puts a name on) its earnings, and they are called non-qualified allocated equities. By allocating these earnings, when a borrower pays off his or her loan, those allocated earnings rightfully belong to that member, and we will make every effort to pay it out to them in the future.
Not every cooperative allocates its earnings. If earnings aren’t allocated, then a cooperative can use that capital, and never rightfully return it to the patron who contributed to those earnings. We believe customers shouldn’t have to capitalize the association after they cease to be members. That’s why we retire allocated equities as we are able, and distribute to members in cash.