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Patronage Program

Patronage Program, History of Patronage Refund, Commonly Asked Questions

The purpose of the Patronage Program is to provide each member with an opportunity to share in earnings while maintaining ERICKSON CREDIT UNION's strong equity position.

It is important in any business to have adequate capital, or ownership equity. ERICKSON CREDIT UNION has developed a strong capital position over the years and is committed to continued growth and a strong equity base in the future.

Members will become involved in this plan by having part of earnings allocated to a Patronage Refund. This pool of earnings gives members the opportunity to participate in the success of their Credit Union while providing an equity base for stronger operations.

The amount received by any member is based on patronage of Credit Union services, since it is the members' patronage that makes the earnings possible.

The Articles of Incorporation and by-laws provide the Board of Directors of ERICKSON CREDIT UNION with the authority, at their discretion, to distribute part of the Credit Union's annual net earnings to members based on their patronage with the Credit Union. Therefore, if the Board of Directors decide to distribute part of the net earnings of the Credit Union to the members, the amount of shares to be received by each member would depend on the amount that the Board decides to distribute and the amount of deposits or borrowing each member has with the ERICKSON CREDIT UNION.

History of Patronage Refund

Percentage Paid on Interest Earned & Interest Paid
Year Interest Earned Interest Paid Total Dollar Amount including Share Dividends
1994 4% 4% $38,874
1995 3.4% 3.4% $44,633
1996 3.0% 3.0% $36,444
1997 3.75% 3.75% $37,876
1998 8.55% 8.55% $91,944
1999 6.50% 6.50% $79,822
2000 6.62% 6.62% $ 97,600
2001 4.85% 4.85% $76,840
2002 3.77% 3.77% $56,675
2003 13.86% 4.58% $71,280
2004 17.84% 5.69% $93,615
2005 18.53% 5.44% $95,995
2006 31.33% 9.025% $190,120
2007 25.43% 8.46% $197,080
2010 18.84% 7.22 $113,410
2011 % % $

The sharing of the credit union profits with its members is one of the key benefits of membership in Erickson Credit Union.  In 2005, we commenced a partial redemption of patronage shares to cash for the general membership, in addition to paying out the full balance of patronage shares for members age 65 and over.  As of 2008, these payments returned $498,440 in cash to the members.

History of Non-Redeemable Patronage Shares Redeemed to Cash
    General Membership Age 65+ Total
2000 0% $0 $12,862 $12,862
2001 0% $0 $12,073 $12,073
2002 0% $0 $10,461 $10,461
2003 0% $0 $7,981 $7,981
2004 0% $0 $20,544 $20,544
2005 7.0% $36,433 $32,382 $68,815
2006 6.25% $33,871 $31,959 $65,830
2007 12.00% $73,980 $66,456 $140,436
2008 15.00% $102,713 $56,725 $159,438
2009 0% $0 $20,663 $180,101
2010 0% $0 $ 7,777 $187,878
2011 0% $0 $50,715 $238,593
2012 15% $89,985 $35,138 $363,716

The Patronage Program - Commonly Asked Questions

The following are commonly asked questions regarding the Patronage Program. Click to have each answered.

  1. What is an Erickson Credit Union share?
  2. What is a Common Share?
  3. What is the Common Share Subscription Plan?
  4. Is there a maximum dollar amount on my Common Share Account?
  5. Are there dividends paid on my Common Share Account?
  6. How do I redeem my Common Shares?
  7. What is a Non-Redeemable Patronage Shares?
  8. Is there a maximum dollar amount on my Non-Redeemable Patronage Shares Accounts?
  9. Can I purchase additional Non-Redeemable Patronage Shares?
  10. Are there dividends paid on my Non-Redeemable Patronage Shares Account?
  11. How do I redeem my Non-Redeemable Patronage Shares?
  12. Are Common and Non-Redeemable Patronage Shares covered by Deposit Insurance?
  13. What is the Patronage Refund?
  14. How is the Patronage Refund calculated?
  15. How is the Patronage Refund Paid?
  16. What are the Tax Consequences?
  17. Summary

 

  1. What is an Erickson Credit Union Share?
    Your shares represent your ownership in the Credit Union. Erickson Credit Union is owned 100% by our members and as such is responsible to our members' needs and our members share in our profits (see patronage refund below). Each member is entitled to one vote at membership meetings held to elect our board of directors and consider any special resolutions.
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  2. What is a Common Share?
    Your common share is the $5.00 share you purchase when you open your membership in addition to the shares you purchase through the common share subscription plan. The Credit Union will pay the initial $5.00 share for FAT CAT® and HEADSTART® Accounts.
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  3. What is the Common Share Subscription Plan?
    Each month $2.50 is transferred from your account to purchase additional Common shares to help build the equity of the Credit Union*. A strong equiy position allows the credit union to take advantage of future business apportunities to improve service to our members. Suspended Nov. 2008, currently under review.
    *Not applicable to FAT CAT®, HEADSTART®, Non-Profit, Trust, Insured Savings Accounts and Members over the age of 65.
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  4. Is there a maximum dollar amount on my Common Share Account?
    Yes, once your Common Share account reaches $200 the $2.50 monthly transfer stops and your account is capped. You can purchase up to the $200 cap in Common Shares at any time.
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  5. Are there dividends paid on my Common Share Account?
    Yes. Once each year the Board of Directors can declare a dividend on Common Shares. In the past this dividend has been based on the previous year's average 5-year term deposit rate and paid in March. The dividend is used to purchase additional Non-Redeemable Patronage Shares for the member if the dividend exceeds $0.99.
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  6. How do I redeem my Common Shares?
    Common Shares are redeemed when all accounts of a member are closed or when a member reaches age 65 all Common Shares other than the basic $5.00 share may be redeemed by the member, providing that at least $200 is left with the Credit Union in the form of either Common or Non-Redeemable Patronage Shares. Such redemption of shares would preclude the member in participating in future patronage allocations.
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  7. What is a Non-Redeemable Patronage Share?
    Your Non-Redeemable Patronage Share account accumulates from the following:
    1) Dividends paid on Common Shares.
    2) Patronage refund based on interest paid or interest earned.
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  8. Is there a maximum dollar amount on my Non-Redeemable Patronage Share Account?
    No, Non-Redeemable Patronage Shares accounts are unlimited.
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  9. Can I purchase additional Non-Redeemable Patronage Shares?
    No, Non-Redeemable Patronage Shares can only be earned as indicated above.
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  10. Are there dividends paid on my Non-Redeemable Patronage Share Account?
    No, the Non-Redeemable patronage Shares are not currently paid a dividend.
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  11. How do I redeem my Non-Redeemable Patronage Shares?
    The Board of Directors can approve a redemption annually in December on Non-Redeemable Patronage Shares in the following instances:
    1. Completed estate accounts.
    2. When a member closes their membership and has moved away from the area.
    3. After 5 years when a member closes their membership and has not moved from the area.
    4. Upon bankruptcy or to satisfy writs of seizure as required by law.
    5. Upon written requests from charities and other non-profit organizations. This would preclude participation in any further patronage allocations.
    6. If member is over age 65 and they leave a minimum of$200.00 in Common or Non-Redeemable Patronage Shares they can redeem the excess. This will preclude participation in any further patronage allocations.
    7. The Board of Directors may also annually declare a general percentage redemption of Non-Redeemable Patronage Shares depending on the overall equity position of the Credit Union.

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  12. Are Common and Non-Redeemable Patronage Shares covered by Deposit Insurance?
    No, all Credit Union deposits other than Common and Non-Redeemable Patronage Shares are 100% covered with deposit insurance by Credit Union Deposit Guarantee Corporation.
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  13. What is the Patronage Refund?
    As an owner of the Erickson Credit Union you are entitled to a share of the profits of the Credit Union. The Patronage Refund is how we pay you your share of the Credit Union's profits.
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  14. How is the Patronage Refund calculated?
    Each year the Board of Directors sets aside a portion of the Credit Union's profit to be distributed as a Patronage Refund. Each member's share of the Patronage Refund is based upon the interest earned on deposits (excluding registered plans) and interest paid on loans or mortgages. An example will help to clarify: 
    Example: Interest Earned
    In 2011 the Patronage Refund on interest earned was 13.50%.  Thus for every $100 in interest earned, a member would receive $13.50 in Patronage Refund.  If “Member A” had a $10,000 term deposit at 2.25% they would have earned $225 ($10,000 x 2.25%) in interest.  Their Patronage Refund would be $30.37 ($225 x 13.5%)  “Member A’s” total return on the term deposit including the Patronage Refund would be 2.55% [($225.00 + $30.37)/$10,000].  This equates to a bonus of 0.30% on their interest rate!
    Example: Interest Paid
    In 2011 the Patronage Refund on interest paid was 4.44%. Thus, for every $100 in interest paid, a member would receive $4.44 in patronage refund.  If “Member B” had a $100,000 mortgage at 3.5% in 2011, they would have paid approximately $3,500.00 ($100,000 x 3.5%) in interest.  Their Patronage Refund would be $154.00 ($3,500 x 4.44%).  ”Member B’s” net mortgage rate after the Patronage Refund would be 3.35% (($3,500 - $154.00)/$100,000).  This equates to a 0.15% saving on their mortgage rate!

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  15. How is the Patronage Refund Paid?
    As indicated above, your Patronage Refund is used to purchase additional Non-Redeemable Patronage Shares for your account.
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  16. What are the Tax Consequences?
    The dividend on Common Shares as well as the Patronage Refund on interest earned is taxable as interest income in the year received and will be included on your T5. The Patronage Refund on interest paid by a member should be netted out with the interest that is being claimed as an expense on your tax return. If you do not claim your loan interest as an expense on your tax return there are no tax consequences to the Patronage Refund on interest paid.
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  17. Summary
    Our Patronage Program was set up to earn our members money by returning a portion of the Erickson Credit Union's profit to our members while at the same time building the equity of the Credit Union to ensure financial strength and security. Should you have any questions on how our Patronage Program works do not hesitate to contact us.
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