We've come through on our promises

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

It is hard to believe that 1999 is the fifth year of operations for Yankee Farm Credit. When we asked you to support the “Yankee Concept” in 1994, we made some important promises about what you could expect as members: Operating costs would be reduced. Improved profits would be shared with members through patronage. And purchased stock would be reduced from 5 percent to 2 percent over six years. As we start year five, it seems like a good time to see how we are doing.

"But we are not declaring victory — yet."

Financial highlights: 1995 to 1998

• Outstanding loans have increased from $199.5 million on December 31, 1994 to $221.1 million on December 31, 1998 — a 2.6 percent increase per year since January 1, 1995.

• Operating expenses for the former Champlain Valley/Connecticut Valley associations were $4.03 million in 1994. Yankee operating expenses in 1998 were $3.98 million — $50,000 less than they were five years ago!

• More loan volume and flat operating expenses have dramatically improved the association’s key efficiency measurement — the cost of delivering $100 of loan volume — from $1.55 to $1.14.

• Net income has steadily increased from $3.01 million in 1995 to $3.58 million in 1998.

• At its January 28, 1999 meeting, the board declared a patronage dividend of $2.24 million for 1998, with 50 percent payable in cash. This brings the total patronage for Yankee’s first four years to $8.46 million, with cash distributions of $4.23 million.

• We retired stock early this year (December 11 instead of our usual January 1) to avoid a collision with our conversion to a new loan accounting system. Stock retired this time was $1.05 million. Since Yankee’s inception, $4.81 million in cash has been paid to members as stock has been reduced from 5 percent to 3 percent.

While the above list shows that we’ve done what we said we would, it’s still a little early to declare victory. We aren’t down to the minimum stock level yet, nor have we begun to cash out your allocated retained earnings. But soon, we will be where we said we would be — at minimum stock by September 2001 and allocated retain earnings for cash beginning September 2002.

Now that we’ve built a track record, our focus will be to keep Yankee moving forward. It’s important that you tell us what else you expect from Yankee — today for your business and tomorrow for your kids. What are we not doing that we should be doing? What do we need to do better? And what products and services can we provide that will be critical to your business in three years? This is your cooperative. Working together we can make it the best.

This letter appeared in the Winter 1999 issue of Financial Partner (F.P.) magazine, Yankee Farm Credit's customer publication. Click here if you would like to start receiving F.P. magazine in the mail.

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