Farm Credit Illinois Patronage Program
Together we celebrate a legacy of disciplined management from generations of farm family members, allowing cash patronage to become the newest way FCI creates cooperative value.
FCI’s inaugural $20 million cash patronage distribution will be paid to more than 7,900 borrower-members the week of June 17-21, 2019.
Member Economic Participation
In true cooperative spirit and demonstrating Member Economic Participation – a guiding principle of all cooperative businesses – patronage will be distributed equitably based on the business value each member contributes to the cooperative.
Rest assured, cash patronage won’t replace anything members already expect from FCI. Patronage is a new way FCI creates cooperative value for our members and the marketplace, while remaining committed to providing low upfront interest rate pricing, a strong capital position for the future, and initiatives supporting members and their local communities.
Frequently Asked Questions
How is patronage calculated?
Members will be paid proportionally based on their contributions relative to the cumulative net interest margins of all patronage-eligible loans.
Factors impacting each loan’s unique net interest margin contribution include the loan type and terms as well as the market conditions at loan closing.
When and how will patronage checks be delivered?
Checks will be dated June 17 and arrive the week of June 17-21 – either in the mail or hand-delivered. Every primary borrower whose loans contributed to FCI earnings will receive a patronage check.
How does Funds Held impact my patronage payment?
To remain equitable for all members, calculations for members with Funds Held balances also incorporate the net interest margin of Funds Held interest credited to members and the monthly variable interest credit FCI earns from its funding bank – AgriBank – on those same Funds Held account balances.
How does paying patronage benefit Farm Credit Illinois?
This inaugural cash patronage is a tribute to generations of farm family cooperative members. Through both prosperous and challenging times, FCI grew responsibly and maintained quality service while capitalizing for the future.
Together, we celebrate the legacy of disciplined management from borrower-members and cooperative managers alike, which allows patronage payments to become the newest way FCI creates cooperative value.
Will interest rates go up to pay patronage?
No. FCI remains committed to keeping interest rates low upfront. FCI is ranked in the bottom 5% throughout the System for interest rate spreads – and our strategy is to maintain this tight-spread System ranking.
Will I receive patronage every year?
Each December, the Board of Directors will project year-end financials, anticipate the business climate for the coming year, and decide how much – or whether – patronage is paid.
Members can expect a patronage declaration as long as FCI can continue delivering low upfront interest rates and managing the Association’s capital conservatively and responsibly even with the distribution.
Is my patronage payment taxable income?
Because every FCI patronage check will be at least $50, every individual and business who receives a patronage check in June 2019 will also receive a corresponding IRS Form 1099-PATR in January 2020. Consult a tax professional with any tax-related questions.
Why doesn’t Farm Credit Illinois distribute all of its earnings as patronage?
Capital not distributed as patronage is retained to ensure the cooperative can remain financially stable and in a strong capital position while delivering low upfront interest rates, capitalizing for current and future growth, supporting member and marketplace initiatives, and carrying out its mission of Helping Farm Families Succeed.
Who will be the payee on the patronage check?
One check will be issued per primary borrower and an itemized listing of each affiliated loan’s patronage amount will be provided. Both business entities and individuals will receive patronage checks.
Why begin paying patronage now?
FCI’s Board of Directors has been considering patronage for a number of years, but first wanted to ensure the Association would remain financially stable and in a position to achieve business priorities, even when distributing patronage.
The Board is confident FCI can now add cash patronage to the member-borrower experience while still providing low interest rates, a strong capital position for the future, and initiatives supporting members and their local communities.
What factors impact a patronage distribution from year-to-year? What would it mean if patronage is not declared one year?
Payments are mostly counter-cyclical to the farm economy, as detailed in the chart below. If the Board doesn’t pay patronage, it means FCI is conservatively ensuring it can continue accomplishing its core purpose of Helping Farm Families Succeed today and tomorrow.