Existing Farm Credit West stockholders now have the option to make a longer-term investment through the Association’s Preferred Stock Program. A fully detailed Disclosure Statement (PDF opens in new window) is also available for viewing that thoroughly describes Preferred Stock (the “Stock”). In addition, Farm Credit West is still offering a more than competitive return for shorter-term cash held in the Future Payment Fund.

How to Subscribe

Any existing stockholder of any class of Capital Stock may purchase shares of the Stock. To do so, the stockholder simply completes a Farm Credit West Subscription Agreement, together with a check made payable to “Farm Credit West, ACA” in the amount of the purchase price of the shares subscribed. In lieu of a check, the purchaser may direct Farm Credit West to apply any of purchaser’s funds in Farm Credit West’s possession toward the purchase of Stock. Each initial subscription must be for a minimum of 5,000 shares ($5,000). No subscription to a single investor shall exceed 2,500,000 shares ($2,500,000). Subscription Agreements for the purchase of Class H Preferred Stock can be submitted at any time during a month; Farm Credit West will consider subscriptions requests the first working day of the following month.

Payment of Dividends

Dividends will be declared in the order accrued (i.e., oldest first), and will be payable upon declaration by the Farm Credit West Board. Dividends will be paid on the effective date of the declaration to holders of shares of Stock during the period specified by the declaration.

Dividend Rate

The Dividend Rate is a per annum rate that may change each calendar month. For any particular month, the Dividend Rate equals the one-month London Interbank Offered Rate (“LIBOR Rate”) as published in the Wall Street Journal on the third business day immediately preceding the beginning of the month, plus a “Spread” determined by the Farm Credit West Board of up to 200 basis points (2%). The maximum Dividend Rate is 8%. If the LIBOR Rate becomes unavailable, the Board will substitute a comparable index rate and provide written notification of the change to all holders of the Stock.

Automatic Reinvestment of Dividends

As agreed to under the Subscription Agreement, any dividend paid on the Stock will be applied to the purchase of additional shares of the Stock at par value for the account of the holder of Stock. Accordingly, holders of Stock will not receive any cash distributions in respect of their Stock until it is retired by redemption. Instead, any dividend paid on the Stock will result in an increase in the number of shares held by each holder.

Retirement

The Stock has no fixed maturity, term or retirement date. A holder of Stock may request retirement at any time during a month; Farm Credit West will consider retirement requests the first working day of the following month. Shares of the Stock may be retired only at the discretion of Farm Credit West’s Board provided certain regulatory requirements are met. Farm Credit West presently meets minimum capital standards and knows of no reason why it will not meet applicable standards at any future time. All shares approved for retirement will be retired at an amount equal to the share’s par value, plus accrued but unpaid dividends.

Transferability

Stock is transferable only to another holder of Stock, and then only after the transferor provides written notice to Farm Credit West. Shares of the Stock will be issued only in book entry form, and any transaction affecting the Stock will be reflected in the holder’s account transaction summary as maintained by Farm Credit West.

Tax Consequences

Any dividends paid by Farm Credit West in respect of the Stock will be includable in the Federal taxable income of the holder of such Stock and subject to tax the same as other ordinary dividend income. This tax treatment applies even through dividends will be reinvested in additional shares of Stock. A dividend paid on a share of Stock should qualify as qualified dividend income if the share is held for more than 60 consecutive days. Upon a retirement of Stock, the holder will recognize taxable gain or loss equal to the difference between the amount realized by the holder and the holder’s adjusted tax basis in the shares redeemed. However, to the extent an amount is received in respect of accrued but unpaid dividends on the shares of Stock surrendered in the retirement, such amount will be taxable as ordinary dividend income.

The Association will comply with applicable dividend reporting requirements under Federal income tax laws. Each holder of Stock is urged to consult its own tax advisor as to specific tax consequences of holding the Stock, including tax return reporting requirements and the applicability and effect of Federal, state, local, and other applicable tax laws.

Additional Information

A purchase of the Stock is an “at risk” contribution to the capital of Farm Credit West. It is not a deposit or compensating balance. Neither the return of the purchaser’s investment, in whole or in part, nor the receipt of any dividends thereon is guaranteed by the Association or any affiliate thereof, any federal or state government or agency or any third party.

Subscribe today

Contact the Farm Credit West office nearest you for additional information on the Preferred Stock Program. Your loan officer can assist you in completing the Preferred Stock Subscription Agreement.

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