Yankee's new, improved patronage and capital plans

by Dean W. Moreau, president and CEO, Yankee Farm Credit

When we asked for your vote to form Yankee approximately six years ago, we made a simple promise to you. Operating efficiencies and new ways of doing business will produce higher profits for Yankee Farm Credit. We will share these profits with you through a patronage program and retiring your purchased stock.

By now, you should have your sixth stock retirement check. To date, we reduced stock from 5 percent to 2 percent, with a maximum investment of $20,000. Total cash paid to members is about $7 million. We will have one more stock retirement in September 2001, when we will reduce stock requirement to the federal regulatory minimum of 2 percent, and with a maximum investment of $1,000.

In addition, five years of Yankee operations yielded more than $5 million of member cash patronage payments and established a like amount of member allocated surplus. You can expect the board to declare patronage for 2000 at Yankee’s new, improved patronage and capital plans “Your vote is all we need to get you a better deal.” roughly 1 percent of average members’ loan balances, and payable, as it has been, at 50 percent in cash and 50 percent in allocated surplus.

I’m reciting this history to illustrate a point. When we ask you to vote for a proposal and we make promises, you can count on us to do what we said we would do.

With that said, I’m asking you for another “yes” vote. We recently sent you a shareholder disclosure package asking you to vote to restructure Yankee into an ACA holding company with two subsidiaries, a PCA (Production Credit Association) and an FLCA (Federal Land Credit Association).

While the proposal to turn one association into three is administratively complex for us, the benefits for you, the membership, are simple. And significant:

• You will see no change in our daily operations. Same loan officers. Same offices. Same staff. Same loan documents.
• We will save tax dollars, which we will pass on to you through more cash patronage and reduced member investment.

How we will pass savings on to you

• In 2002, Yankee’s patronage program will be 100 percent cash at roughly 1 percent of average members’ loan balances.
• We expect to receive a significant tax refund on some past business, which we will use to revolve out allocated surplus from 2002 to 2008.
• We will create no additional allocated surplus after 2001.

The bottom line

The new Yankee will pay 100 percent cash patronage and have regulatory minimum stock. Plus member allocated surplus will be heading toward zero. That all adds up to one thing: More cash in your pocket.

Your vote is all we need to get you a better deal.

This letter appeared in the Fall 2000 issue of Financial Partner (F.P.) magazine, Yankee Farm Credit's customer publication. Click here if you would like to start receiving FP magazine in the mail.

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