Patronage: Sharing Our Earnings with our Customers
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 robust patronage distribution.
We are extremely pleased that in the spring of 2020, Lone Star Ag Credit paid an all cash patronage distribution on 2019 earnings equivalent to 150 basis points on average. This distribution reduces the effective interest rate paid by each borrower in 2019 by an average of 1.5 percentage points. This strong distribution of $19.5 million is a great indication of Lone Star’s continued financial health and commitment to our stockholders.
We’re also very happy to advance a portion of our expected 2020 patronage distribution to eligible stockholders this fall. It’s our way of supporting our owners during difficult COVID-19 times. This latest cash patronage distribution totals approximately $7 million and is an advance payment of patronage from our 2020 estimated net earnings.
With this distribution, Lone Star Ag Credit will have returned $148.5 million to our customer-owners since 2000!