August 24, 2018
Farm Credit Services of America is changing its patronage program to share more of its earnings with eligible customer-owners.
At its August meeting, the FCSAmerica Board of Directors approved targeting a cash-back dividend equal to 0.90% of a customer’s eligible average daily loan balance, the highest payout since the patronage program’s inception in 2004. The enhancement will be effective for the 2018 fiscal year, and eligible customers should see the higher cash dividend payout in their March 2019 patronage distributions.
“We assess the cooperative’s financial strength each year to ensure adequate capital levels,” said Jennifer Zessin, FCSAmerica board chair. “Once those are met, the board typically approves payment of a portion of net income back to our stockholders. Barring an unforeseen event or significant change in the environment, the outlook for our cooperative positions us to provide more certainty around our patronage intentions going forward. We think it is important that our customer-owners know they can count on their cooperative in these challenging times for agriculture.”
FCSAmerica has returned $1.5 billion since 2004 to its customer-owners in a four-state area. “It’s one of the most tangible benefits of our cooperative business model,” Zessin said. “Those dividends flow to rural communities all across our service area.”
“We’ve spent years building the association’s financial strength and operating efficiencies,” said Craig Kinnison, chief financial officer at FCSAmerica. “Our capital base has never been stronger, and the ability to stress test our loan portfolio under a variety of scenarios gives us confidence to target a higher level of patronage for our current planning cycle.”
The FCSAmerica board annually approves a capital plan for the association based on projected asset levels, earnings, economic conditions, possible loan losses and other contingencies. The board’s patronage payout assumes the association meets its financial goals and other factors do not adversely impact the cooperative.
Source: Farm Credit Services of America
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