Patronage Program:
Questions and Answers
What is the Patronage Program?
Patronage is a sharing of our cooperative’s profits with
eligible member-owners. Our patronage program consists of a
100-percent cash patronage pay-out to each eligible memberowner based on the interest he or she paid. It reduces our memberowners’ costs of borrowing from Badgerland Financial.
Why does Badgerland Financial offer a Patronage Program?
Patronage is one of the benefits of doing business with a memberowned financial services cooperative. It is because of our memberowners that we are financially strong, and through patronage they
share in the profits they helped to create.
The 2015-2016 Badgerland Financial Board of Directors holds a check
for $13.5 million–the amount of cash patronage our cooperative
gave back to patronage-eligible member-borrowers for 2015.
Is patronage distributed every year?
Each year our Board of Directors is required to analyze business
results and determine whether patronage will be paid for the year
and if so, the amount of patronage to be paid. Badgerland Financial
has distributed patronage in every year since 2004, surpassing the
$100 million mark in 2015 for total patronage distributed.
How is a customer’s patronage pay-out determined?
Patronage pay-outs are based on the amount of net interest income
earned on each eligible member-owner’s loan during the year.
Is there a certain dollar amount of patronage that needs to be
earned to receive a check?
Yes. An eligible member-owner must earn a minimum of $20 of
patronage to receive a check. Amounts less than $20 are retained
by Badgerland Financial as retained earnings.
When are patronage checks distributed?
Patronage checks are typically distributed in April of each year.
Who is eligible for the Patronage Program?
Who is the payee on the patronage check?
All member loans that are capitalized by stock are eligible for a
patronage pay-out unless any of the following apply:
• the loan is in non-accrual at the end of the year
The patronage check payee is the person whose taxpayer
identification number appears on any IRS reporting associated
with the account.
• t he loan has been partially or fully charged-off at any
point
Do leases qualify for patronage?
• t he loan is a participation loan that has been purchased
from another lender, unless the loan agreement
specifies that the loan will be eligible for patronage
• t he loan is considered a capital markets loan, unless
the loan agreement specifies that the loan will be
eligible for patronage
• t he loan has been priced under our Country Living Loan
Program
• t he loan has been originated under our Trade Credit
Loan program
No. Patronage is not paid on leases.
Is the patronage pay-out taxable?
Yes. The patronage distribution is taxable and eligible memberowners should generally include the patronage payment in their
taxable income. We encourage you to consult with your tax advisor
about your specific situation. Non-corporate members will receive
an IRS Form 1099-PATR for the qualified cash patronage paid each
year. IRS regulations do not require distribution of 1099-PATR
forms for corporations.
• the loan is a sales contract
©2016 Badgerland Financial, ACA. NMLS ID 458065.