Patronage Program

Yosemite Farm Credit, ACA is a cooperative, operating through its PCA and FLCA subsidiaries. As a cooperative, YFC is committed to delivering low rates while maintaining adequate capital for the long term.

Patronage Program

At YFC, our members are more than customers. They are stockholders with privileges who reap the benefits of YFC’s success through our Patronage Program. 

Every year (subject to board approval), we refund a portion of YFC’s earnings to stockholders, effectively reducing the cost of doing business with us. Along with our competitive rates, terms, service, and agricultural expertise, our Patronage Program provides an exclusive financial benefit. The more business our customers do with us, the more patronage benefits them.

Pursuant to YFC bylaws and an obligating resolution adopted by the YFC Board of Directors, a copy of which is available to YFC members upon request, YFC is required to distribute to eligible customers an annual patronage refund equal to the amount of earnings above what the Board of Directors determines is a necessary addition to YFC’s capital. This is after first making applications required by Association bylaws, and after providing for the transfer to unallocated surplus of the amount established by the Board for the reasonable and necessary reserves of the Association.

Under the Program, YFC will declare an annual patronage refund from the prior year’s earnings. It is anticipated that the refund will be in the form of a cash refund and/or a non-cash surplus allocation. The amount distributed from year to year in the form of a cash patronage refund will fluctuate depending on the level of earnings and YFC’s need to build capital for the future, including capitalizing future growth or cushioning against adversity. Patronage is a value-added benefit available year to year only when YFC’s earnings exceed capital needs. On an annual basis, the Board of Directors will review the Patronage Program and may make modifications to the Program consistent with YFC’s bylaws.

What Are Patronage Refunds?

While a corporation distributes earnings to stockholders through dividends declared on stock, a cooperative distributes earnings to eligible customers through patronage refunds based on the volume or value of business they do with the cooperative (not on the basis of stock ownership).

A patronage refund can be distributed in various ways, including the following:
  • Cash
  • Allocated surplus
  • Any combination of these items

Distributions Under Yosemite Farm Credit’s Patronage Program

Under YFC’s Patronage Program, it is anticipated that all patronage earnings will be distributed, subject to Board approval, in the form of cash and/or non-cash surplus allocations. The mix of cash and non-cash allocations will depend on YFC’s capital and earnings needs at the time of distribution in light of actual and projected loan growth and other factors, as determined by the Board.

Frequently Asked Questions

Those eligible to receive patronage refunds (“members”) are:

  •  Holders of voting stock and participation certificates that have a loan originated by YFC or its subsidiaries, with an outstanding balance during the year for which the patronage distribution is calculated.
  • Farm Credit lending institutions on loan participations purchased by YFC, provided the participation contract specifically provides for the payment of patronage.

Loans and other matters NOT eligible to receive patronage refunds include: 

  • Any loan or any other transaction that is in non-accrual status at the end of the year, unless such loan or other transaction is current at year-end.
  • Leases, unless the lease contract specifically provides for the payment of patronage. 
  • Fee-based services.
  • Secondary market activities.
  • Loan participations purchased by YFC, unless the participation contract specifically provides for payment of patronage.

The amount of patronage-sourced net earnings is calculated at the end of the fiscal year. After setting aside any necessary addition to surplus, and after making applications required by YFC bylaws, the Board will declare a patronage refund of the remaining net earnings. This distribution will be allocated among eligible members in proportion to the average daily principal outstanding on the member’s loan during the year for which the patronage distribution is calculated.

If the Board of Directors approves payment of a cash patronage refund, the refund is paid by check. However, in certain instances, the cash patronage may be applied against an outstanding loan balance. Non-cash allocations of patronage may also be made. However, YFC has no intent or plan to redeem these non-cash allocations and cannot honor requests from members to retire or distribute allocated surplus accounts.

YFC charges competitive rates on its loans. Cash patronage refunds benefit borrowers by reducing their cost of borrowing. Simply stated, cash patronage represents a refund of a portion of the interest you paid on your loan.
YFC provides superior customer service at competitive interest rates. YFC earnings are necessary to provide the financial strength to withstand downturns in the ag economy and capitalize growth. The ability to generate sufficient earnings also provides confidence to the investors who loan money to YFC. Earnings in excess of current needs can be returned in the form of a patronage refund. In the end, sufficient earnings and adequate capital help to lower YFC’s cost of money from investors, resulting in lower interest rates overall.
YFC is required to build and maintain capital to support loan growth and other credit services needed by customers. Non-cash patronage refunds issued in the form of allocations to surplus can be included as part of YFC’s capital. With a strong capital position, YFC can offer competitive interest rates and provide a dependable supply of credit over the long-term.

Patronage checks are paid based on the prior year’s earnings. These checks will be issued the following year subject to Board approval.

Generally, a cash patronage refund is taxable to the recipient. Consult your accountant or other tax advisor for tax advice and guidance about your specific situation.
Yes. In January of the year following your receipt of a cash patronage refund, YFC will send you an IRS Form 1099. This form will show the total of all cash patronage refunds issued to you during the previous year.
Cash refunds will vary, depending upon earnings and the overall financial goals of YFC. However, the more business you do with YFC, the larger your potential refund.
Please contact your Yosemite Farm Credit loan officer.