Release date: 3/31/2017
Central Kentucky Ag Credit will pay $3.1 million in patronage distribution to member-borrowers of the Association in April. The patronage is a dividend paid to local farmers who are active member-borrowers of the agricultural cooperative.
According to Jim Caldwell, President and Chief Executive Officer of Ag Credit, the multi-million dollar distribution to members is the largest in Association history.
“Patronage is the way cooperative organizations reward member-borrowers for a successful business year,” said Caldwell. Continuing, he explained that “patronage” in the cooperative can be compared to “dividends” that are paid by corporations. Since Ag Credit members who borrow from the association are also owners of the cooperative, they receive the money when it is authorized by the Ag Credit Board of Directors.
Alvin Lyons, Chairman of the Ag Credit Board of Directors, confirmed that Ag Credit has paid patronage to members for the past 20 years. “Throughout those two decades the Association has paid $24 million in patronage to its members,” said Mr. Lyons.
Lyons said the Board of Directors carefully analyzes all financial data each year before making a decision regarding patronage distribution. In-depth analysis of Ag Credit operations from the 2016 business year showed that Ag Credit had a banner year for earnings; loan volume increased; and borrower quality was high.
Both Caldwell and Lyons pointed out that Ag Credit must also have excellent financial reserves to meet future loan needs of existing and new borrowers. Further explanation and financial data is available in the Ag Credit Annual Report, which was distributed to all members late last year.
Ag Credit has been able to declare millions in patronage amid an agricultural environment that has been uncertain.
Jim Caldwell credits the quality Ag Credit borrowers, combined with the financial skills of Ag Credit loan officers, as major contributors to the financial health of Ag Credit. “Lending activity clearly shows that our loan officers and farmers have worked together to achieve financial stability and progress,” said Caldwell.
Marcus Barnett, Ag Credit’s Vice President and Chief Financial Officer said the accomplishment has occurred amid a tight cattle market, along with uncertain weather conditions and fluctuating crop prices.
Mr. Barnett said the current patronage distribution is important to farmers since it essentially reduces the cost of borrowing and puts money directly into members’ pockets.
*Central Kentucky Ag Credit serves 17-counties in the Bluegrass Region. The Association is a true financial cooperative that is owned by members who use financial services of the cooperative. Ag Credit has provided lending services throughout central Kentucky for 82 years, and the Association is part of the nationwide Farm Credit System.
*Ag Credit has seven (7) full-service offices located in Lebanon, Frankfort, Danville, Lexington, Paris, Richmond and Stanford.
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