The Lone Star Ag Credit Board of Directors recently approved the payment of $11.95 million in cash to the rural lending cooperative’s borrowers through its patronage program. Eligible customers will receive their dividends in April.
As a customer-owned cooperative, Lone Star Ag Credit provides its members with financing at competitive rates, and also returns its surplus earnings to them after it has met its needs for a strong capital base. Borrowers become stockholders and part-owners in the business, which gives them the opportunity to share in its financial success.
This is Lone Star Ag Credit’s first patronage dividend since it merged with Texas Land Bank on Jan. 1. By returning a portion of the interest that borrowers at both associations paid in 2013, the distribution effectively lowers the rate on their loans by 1 percentage point.
“Heading into our merger, both associations’ boards shared a common goal of running financially sound cooperatives that have the capacity to return strong dividends to their stockholders, thereby reducing their borrowing costs,” said Troy Bussmeir, Lone Star Ag Credit chief executive officer. “With this year’s cash patronage dividend payment, our directors were able to perform on that deeply rooted belief in returning value to stockholders of the merged entity.”
In 2013, Lone Star Ag Credit and Texas Land Bank together reported $1.3 billion in total loan volume and $308 million in capital, making the combined cooperative one of the largest Agricultural Credit Associations in Texas. This year’s $11.95 million patronage dividend is an increase over the dividends that the associations paid separately last spring, and represents 39 percent of the merged association’s $30.7 million in 2013 net income.