Patronage: Sharing Our Earnings with our Customer-Owners
This year’s robust patronage dividend distribution.
We are extremely pleased that Lone Star Ag Credit was able to distribute $22 million in patronage dividends on 2020 earnings, equivalent to 150 basis points on average. The all-cash distribution effectively reduces the interest rate paid by each eligible customer-owner in 2020 by an average of 1.5 percentage points.
This record patronage is a great indication of Lone Star’s continued financial health and commitment to our stockholders and was paid out in two distributions. In October 2020, we advanced a portion of our expected 2020 patronage distribution to support our owners during the difficult COVID-19 times. A second patronage payment on 2020 net income was approved for distribution in March 2021.
With this $22 million distribution, Lone Star Ag Credit will have returned $163.5 million to our customer-owners since 2000!
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 customer-owners through our patronage program – typically in the spring. Other remaining earnings are retained as capital to keep our Association strong for the future.