The following letter is being mailed to members with the next monthly billing statement:
October 10, 2008
Dear Member,
The Federal Reserve (Fed), in conjunction with other global financial institutions and governments, recently responded to continued weak economic data and unsettled market conditions by lowering interest rates. The Fed cut the federal funds rate from 2.00% to 1.50% on October 8, 2008. The commercial bank prime rate decreased from 5.00% to 4.50%.
Yankee’s practice in recent years has generally been to change its variable interest rates to members on the 1st of the month following changes in the commercial bank prime rate. This time Yankee will not be reducing member variable rates.
This decision is due to current conditions in the financial markets. Nearly every sector of the credit markets has seen increasing costs and volatility in recent months, and these conditions have adversely affected Yankee’s earnings. Until market conditions settle down, we believe it is prudent to maintain member variable rates at present levels.
We recognize that many of the industries Yankee serves are also struggling with lower earnings and higher input costs. We believe that current interest rates offered by Yankee are still competitive in today’s tough financial markets. Yankee remains committed to returning excess profits to our members in the form of a patronage dividend, and we expect to pay a 2008 patronage dividend to members around March 31, 2009.
Yankee remains financially strong, as does the overall Farm Credit System. Rest assured that we continue to have funds available to meet your credit needs. We are dedicated to agriculture and the members we serve and we will continue to do our best to keep your cooperative sound and on solid financial footing.
If you would like more information on how current conditions in the financial markets are affecting Yankee and the overall Farm Credit System, you can visit Yankee’s blog at www.yankeeaca.blogspot.com. There are two postings dated September 30, 2008, titled Financial Markets, Part 1 & Part 2. We will post updates as warranted.
Thank you for your business and allowing us to serve you.
Sincerely,
George S. Putnam
President and CEO
