Patronage Dividends

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 $1,000.00, 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 are paid into their interest-bearing Funds-Held Account. The Funds-Held Account is typically applied to the loan balance, thus further reducing the cost of borrowing for customers.

Lone Star Ag Credit follows the fundamental cooperative principle of sharing its earnings with its customer-stockholders in the form of patronage when it does well. Thus, 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.

Ownership of voting stock may make you eligible to receive patronage refunds based on business done with the association or dividends based on the number of shares of voting stock or participation certificates you hold. This will take place when the association board, at its sole discretion and upon review of the association’s financial performance, declares a dividend or patronage distribution.