Stockholders of Northwest Farm Credit Services, the West's leading financial services cooperative serving many segments of the farming industry, are receiving a total of $54.8 million in patronage payouts.
The recipients include many farmers and ranchers, along with commercial fishermen, timber industry representatives and numerous cooperatives located mainly in Washington, Oregon, Idaho, Montana and Alaska – all states served by the Spokane, Wash.- based bank.
The FCS board targets annual cash patronage payments to eligible stockholders of 75 basis points on their average outstanding loan balance, explains Kevin Riel, Northwest FCS board chairman.
"Providing our customer-owners with consistent and reliable patronage each year lowers the net cost of borrowing money," he notes, "which is a fundamental benefit of our cooperative structure."
Since the patronage program was launched in 2000, $377 million in cash patronage has been paid to customers living in rural communities throughout the Pacific Northwest area, he says.
Northwest FCS provides about $11 billion in financing and related services to farmers, ranchers, agricubusinesses, commercial fishermen, timber producers, rural area homeowners, and crop insurance customers of the co-op in Montana, Idaho, Oregon, Washington and Alaska.
Northwest FCS is a part of the national Farm Credit System, a network of borrower-owned lending institutions that provide about $174 billion in loans to rural America.
Each year, the Northwest FCS board of directors approves a capital plan for the association based on projected asset levels, earnings, economic conditions, possible loan losses, and other contingencies. When target capital levels are met, the board typically approves the payment of a portion of net income to customers through the Northwest FCS Patronage Program.
Patronage refunds are allocated among stockholders based on their average daily loan balance. Most of the cash refunds are distributed in January for the previous calendar year.
Assuming the association meets its financial goals and other factors do not adversely impact the association, the board's objective is to annually declare patronage refunds of .75% of a customer's average daily loan balance.