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Patronage: Sharing Our Earnings with our Customers

Lone Star Ag Credit is a customer-owned lending cooperative. That means our borrowers are also owners who have the opportunity to share in our earnings. We believe in giving back to the valued stockholders who make our success possible.

How does patronage work? Part of our mission and tradition is the paying of a patronage dividend. Every year, Lone Star Ag Credit's board of directors reviews the Association's financial health and determines our ability to pay a cash dividend to eligible stockholders through our patronage program – typically in the spring. Other remaining earnings are retained as capital to keep our Association strong for the future.

This year's record patronage distribution. We are extremely pleased that in the spring of 2019, Lone Star Ag Credit will pay an all cash patronage distribution on 2018 earnings equivalent to 150 basis points on average. This distribution reduces the effective interest rate paid by each borrower in 2018 by an average of 1.5 percentage points. This robust distribution of $20.3 million is a great indication of Lone Star's financial health and our commitment to our stockholders – and is the largest patronage distribution in Lone Star's history.

With this distribution, Lone Star Ag Credit will have returned $122 million to our borrowers since 2000!

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Importantly, if the Association does not generate positive Patronage Earnings for the year, there can be no patronage distribution. Also, even with positive Patronage Earnings, there may be instances when, in light of the Association's financial condition, a patronage distribution may not be made without the consent of the Association's funding bank or its regulator.