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Frequently Asked Questions

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Lone Star Ag Credit — officially chartered as Lone Star, ACA — is an Agricultural Credit Association offering long-term rural real estate loans and short- and intermediate-term agricultural operating loans. Established in 1917, Lone Star Ag Credit is a cooperative (often referred to simply as an association) that is owned by its borrowers. It is part of the Farm Credit System, the largest single source of rural financing in the United States.

We make loans to purchase rural real estate, refinance existing mortgages and other debts, construct and repair homes and other buildings, make property improvements, construct or improve agribusiness facilities, purchase machinery and equipment, purchase livestock, provide operating funds and any other needs where financing is appropriate.

Yes, we make loans for the purchase, construction and improvement of homes located in rural areas. We also finance rural homesites upon which a house will be built in the future.

Any person or legal entity who is involved or plans to become involved in agriculture or in the ownership of agricultural or rural property is eligible to apply for a loan. Loan approval and terms are subject to the creditworthiness of the applicant.

The Federal Land Bank Association (FLCA) subsidiary provides loans for farm and ranch real estate, recreational property, timberland, agribusiness firms and rural homes. The Production Credit Association (PCA) subsidiary specializes in loans for livestock and equipment purchases, farm and ranch operating expenses, and all types of agribusiness needs.

All loans require some level of equity, which is the difference between the collateral and the loan amount. The type and value of collateral, financial strength and repayment ability of the applicant will determine the total amount that can be borrowed. Applicants for real estate purchase loans should plan to invest at least 20% of the purchase price. Loan applicants that plan to secure their loans with livestock, equipment or other types of chattel property should also plan to have similar initial investments.

Long-term loans must be secured by a first lien mortgage on real estate, generally on the farm, ranch or agribusiness facility that is financed by the loan. Operating and production loans are generally secured by inventory such as crops or livestock, equipment, receivables and other assets involved with the operation being financed.

Lone Star Ag Credit does not accept deposits in the traditional sense of savings accounts and certificates of deposit. However, we do offer an interest-bearing “Funds-Held Account” for our borrowers. Interest earned is applied to the interest due on the next loan installment. Borrowers can use the money in the Funds-Held Account to pay loan installments or withdraw it for other purposes.

An Agricultural Credit Association, or ACA, is a financial service provider specializing in loans on farms, ranches, timberland, recreational property, agribusinesses, rural homes, agricultural equipment, livestock and agricultural operating capital. ACA’s are cooperatively owned and locally operated.

Lone Star Ag Credit is a cooperative. Therefore, everyone who obtains a loan through the Lone Star Ag Credit becomes an owner of the association through the purchase of stock equal to 2 percent of their loan amount or $1,000, whichever is less. Funds for the stock can be included in the loan. Ownership of this stock gives you the right to participate in the business affairs of the association, including election of the board of directors.

Traditionally, borrowers receive patronage refunds and/or dividends, which further reduces the cost of borrowing for our customers.

A patronage refund is a distribution of the association’s earnings — minus net expenses and necessary reserves — made to the cooperative’s stockholders. The board of directors determines annually if the association will pay a patronage refund and the total amount of that refund.

Lone Star Ag Credit is directed by a board of directors elected by the stockholders of the association. The directors employ professional personnel to manage the operations of the association and oversee the association’s fiscal responsibility through an audit committee. The association operates under policies and procedures adopted by the board of directors and management team.

Lone Star Ag Credit is affiliated with the Farm Credit Bank of Texas, located in Austin, Texas, and is part of the nationwide Farm Credit System. The Farm Credit Bank receives its funding for loans primarily from the sale of Farm Credit System securities to investors in the nation’s money markets.

Voting stock is stock required to be purchased as a condition to receiving a loan. Stock ownership provides the right to vote on all matters that stockholders have the right to decide under the Farm Credit Act, Farm Credit Administration regulations or your association’s bylaws. Voting stock can be purchased only by farmers, ranchers/producers, harvesters of aquatic products, and other rural property owners. Following cooperative principles, each member normally has only one vote regardless of the number of shares owned. The par value of each share is $5.00, which is also the purchase price. The $5.00 per share par value of your association stock or the $5.00 face value of your participation certificates does not change, but the book value could increase or decrease depending on the financial condition of your association. Any retirement, however, will be at the lower cost of par value or book value.

A holder of voting stock is entitled to nominate and vote in the election of directors to the association’s board of directors. They are also entitled to vote to select members of the Nominating Committee, to make motions and second motions at the annual stockholders’ meeting, to vote on measures brought before the meeting, and to vote on certain other matters relating to corporate governance. In addition, a voting stockholder is generally eligible to serve as a director or as a member of the Nominating Committee.

Lone Star Ag Credit makes rural home loans and certain farm-related business loans. These borrowers are not eligible to hold voting stock but must instead purchase participation certificates as a condition of receiving a loan. Owners of participation certificates do not have voting rights except when stockholders authorize the issuance of preferred stock and are not eligible to serve on the association’s board of directors. In all other respects, stock and participation certificates have the same rights and restrictions.

The minimum level of stock purchase requirements is determined from time to time by the association board of directors within a range set forth in the association’s capitalization bylaws, which are subject to the approval of stockholders. Currently, the association stock requirement is 2 percent of the gross loan amount or $1,000, whichever is less.


The money needed to buy the required amount of voting stock or participation certificates can be included in your loan request. If your loan request includes stock, the promissory note that you sign will include the amount necessary to purchase the required stock or participation certificates. In that case, you will also pay interest on the stock portion of your loan. The total amount of your loan, including stock or participation certificates, must be repaid in full. The association then issues a receipt for stock and participation certificates at the time they are issued. Ownership of the stock or participation certificates is recorded on the books of the association.

The association has a first lien on your stock or certificates as additional collateral for your loan(s). In the event of a default on the loan(s), all or part of the stock may be applied to the loan(s), or under certain circumstances, may be otherwise disposed of when approved by the association.

Yes. Your ownership of stock or participation certificates is an investment that allows you to share in the association’s earnings through patronage refunds and/or dividends. But it is also subject to certain risks that could result in a partial or complete loss of the investment. It is not a compensating balance. The ultimate value of the stock is dependent on the future financial performance and condition of the association over time. Therefore, you cannot assume that stock will be redeemed on demand or upon a certain date or upon the happening of any event, such as repayment of the loan (as could be the case if the investment were considered a compensating balance). You are responsible for the full amount of your loan including the amount borrowed to pay for your stock or certificates, regardless of their book value.

Provided that the capital strength of your association permits it, and unless used by you to capitalize other indebtedness, your stock may (at the board’s sole discretion) be retired and the proceeds repaid to you upon final payment of the indebtedness or at such future date as the board may determine that the association’s financial strength permits.