This new year, customers of Farm Credit Services of Mid-America will be receiving a pleasant surprise — their interest rates will be going down. Effective Feb. 1, 2011, Farm Credit’s Board of Directors and management have approved rolling back interest rates on all existing loans by .35% creating an annual savings to customers of $43 million. Also beginning Feb. 1, interest rates on all new loans will be adjusted down by .35%.
“This is a special and unique action that we are able to take because of the fundamental strength of our cooperative,” said Paul Bruce, Senior Vice President of Finance and Chief Financial Officer. “We are able to pass along this savings because of some extraordinary earnings events and because our cooperative has performed well financially over the last several years. These rate adjustments will provide additional flexibility for our customers to withstand market volatility. This is something we’re pleased to do, and this is the right time to do it.”
FCS Board Chair Ed Yanos of Cambridge City, Indiana, added that the idea behind the decision to lower the interest rates was to focus on the member-customers.
“We did a rate reduction about 10 years ago where we were able to save every member on their existing loan and we’re doing it again today. It gives our customers a real incentive to be a part of this association and that’s something that the board is very proud of,” Yanos said.
The interest rate reductions on existing loans will take place automatically, and no action by customer-members is required to receive the new benefit.
Bruce explained that during 2009 and 2010, Farm Credit Services of Mid-America had experienced a combination of slower growth and strong earnings, which increased the association’s capital position. This stronger capital position allowed the association to roll back interest rates.
“This rate rollback and the future adjustment of interest rates is just one more tangible benefit in a long line of actions by Farm Credit over the last 25 years to provide lower interest rates to farmers and rural America, and build a cooperative with capital strength,” Bruce said. “It’s also an indicator of our commitment to both current and future members.”
In early February, Farm Credit Services will mail new rate notices to all customers.