Patronage payments are a cornerstone of the cooperative business model, and can significantly reduce the cost of borrowing for our member-borrowers. As part of the nation-wide Farm Credit System, Mississippi Land Bank is cooperatively-owned, meaning we are owned by our member-borrowers and that they, in turn, share in our financial success when the Association performs well. Since 1996, Mississippi Land Bank has been able to share its financial success with our stockholders through our patronage program. We have returned $61 million to our customers over the past 26 years. Patronage distributions are dependent upon the financial health of the Association, which is measured by various metrics such as Net Income, Return on Assets, and Capital Adequacy.
At the end of 2022, the Board of Directors approved our highest patronage distribution ever of $7.5 million to stockholders to be paid in 2023. That means a decrease in our customers’ effective interest rate for 2022 by approximately 83 basis points (or 0.83%).
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It is the board and management’s priority to maintain a consistent patronage payout each year. Quality of earnings based on sound credit philosophy continues to be the primary driver of our ability to meet this priority. The graph below shows Mississippi Land Bank’s most recent history of patronage distributions. Since 1996, the Association has returned $61 million to our customers. All distributions are paid in cash.
OUR borrowerS GET REWARDED