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 2023, 2024 and 2025 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.
- 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.
*Partial-year eligibility is based on servicing action date.