Our Approach to Interest Rates

Our Approach to Interest Rates

Written by: Becky Thibert Chief Finance Officer

At AgCountry, our interest rate philosophy is simple – we charge only what we need to remain financially strong as your cooperative.

Because our variable rate cost is closely aligned with the federal funds rate and 90-day Treasury bill rates, we typically increase or decrease our variable rate following an announcement by the Federal Reserve, aka “the Fed.” At times, AgCountry has been able to absorb an increase in the fed funds rate without increasing customer rates. Other times, including earlier this year, we have passed increases along to variable-rate customers.

The Fed is predicted to increase the federal funds rate in both June and July. We will not pass along a variable rate increase on July 1. Our merger technology conversion is scheduled on that date, and a successful technology conversion takes precedence over a rate increase. Any increases that are based on Fed movements will be postponed to August 1.

The funds we lend to customers are a combination of our $2.4 billion in equity and funds we borrow from AgriBank, our funding bank. AgriBank works with the Farm Credit Funding Corporation to issue high-quality debt securities (bonds, discount notes, etc.) to investors. Unlike some of our competitors, we don’t have checking or savings deposit funds available to lend to customers. Instead, we do have a very efficient, effective Treasury department at AgriBank to keep our cost of funds competitive so we can continue to meet your financing needs.