LONE STAR AG CREDIT ANNUAL MEETING NOTICE APRIL 14, To the owners of stock and participation certificates in Lone Star, ACA:

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1 LONE STAR AG CREDIT ANNUAL MEETING NOTICE APRIL 14, 2014 To the owners of stock and participation certificates in Lone Star, ACA: The Annual Stockholder s Meeting of Lone Star, ACA will be held April 30, 2014, at 10:00 am in the Association s Headquarters office at 1612 Summit Avenue, Suite 300, Fort Worth, Texas The purpose of the meeting is to consider the following: Adoption of the minutes of the 2013 Annual Meeting Report of Corporate and Financial Operations for 2013 Report of the Nominating Committee, including a determination of the candidates for 4 director positions to be elected for a three year term; and a determination of the candidates for election to the 2015 Nominating Committee The opportunity for any nominations from the floor for each of the director positions whose terms are expiring, and for any of the Nominating Committee positions This will be the first Annual Meeting since the merger of Lone Star, ACA and Texas Land Bank, ACA, in January. Accordingly, your participation in selecting directors and Nominating Committee members is important to our continuing success. The plan of merger, approved by stockholders in October 2013, addressed and began the implementation of a Board reduction plan. This year s voting on director candidates implements that process, by reducing the Board over a three year period to ten (10) stockholder elected directors, and three (3) Board appointed directors. No elections of stockholder elected directors or Nominating Committee members will be held at this meeting. All candidates for the four (4) director positions and for the Nominating Committee positions, including any candidates nominated from the floor at this meeting will be voted on by mail ballot, to be mailed to the stockholders in early May. The Board and management have scheduled stockholder appreciation dinners in your area to keep you informed of current Association events and progress. You will be receiving invitations to these meetings, and we hope that you will take the opportunity to attend a meeting in your area and visit with other members, employees, and directors. The following information is included as a part of the Annual Meeting Information Statement to comply with regulations implemented by the Farm Credit Administration. Audited financial statements for the Association for the year ended December 31, 2013, were mailed to all stockholders at the end of March. As of April 10, 2014, there were 5,339 eligible voting stockholders in the Association. An updated voters list will be prepared as of April 30, 2014, to reflect any deletions or additions. Any matter brought to a vote at the Annual Meeting will be decided by a simple majority vote. Page 1 of 6

2 If a tie vote results between any two candidates, and the candidates agree, the tie may be broken by a coin flip. Current Director Information Name age Region term & years of type of agriculture Expiration service engaged in Richard Gaona 55 Region I Farmer and stockman Bobby Mathiews 66 Region I Farmer and stockman David Stubblefield 62 Region I Farmer and stockman Tony Ballinger 40 Region II Cattle, hay, small grains Larry Stewart 64 Region II Beef cattle David Harris 54 Region III Cow-calf operation Bert Pruett 61 Region III Farmer, cattle operator Tom Johnson 62 Region IV Cow-calf operation Wallace E Kraft 69 Region IV Rancher Harlin Brown 66 Region V Farmer and rancher Linda C. Floerke 53 Region VI Livestock, crops, and agri-business Steven Watson 52 Region VI Livestock, crops, and agri-business Gary R. Murphy 65 Region VII Crops, beef cattle, and agri-business John R. Sawyer 55 Region VII Crops, and agribusiness Paul H. Young 60 Region VII Livestock, crops, and poultry James Hooser, Jr. 50 Region VIII Crops and livestock Burt Richards 71 Region VIII Beef cattle and feedyard David Conrad 59 Board director CPA Don Crawford 65 Board director Rancher, CPA Chad Lee 41 Board director Cow- calf, agricultural law The stockholder-elected directors represent regions in the Association territory, with counties and voting strength in each region as follows: Region I: Borden, Fisher, Mitchell, Nolan, Scurry, Taylor, Kent, Throckmorton, Shackelford, Young, and Stephens Counties- 305 voting Stockholders Region II: Eastland, Erath, Palo Pinto, Parker, Hood, and Somervell Counties-371 voting Stockholders Region III: Johnson, Tarrant, Denton, and Wise Counties voting Stockholders Region IV: Cooke, Grayson, Fannin, and Lamar Counties -416 voting Stockholders Region V: Delta, Red River, Titus, Camp, Morris, Bowie, and Cass Counties voting Stockholders Region VI: Bosque, Hamilton, Coryell, Lampasas, and Burnet Counties- 345 voting Stockholders Region VII: Hill, McLennan, Falls, Bell, Williamson, and Milam Counties-1,050 voting Stockholders Region VIII: Dallas, Ellis, Navarro, Freestone, and Limestone Counties-756 voting Stockholders Page 2 of 6

3 All directors attended more than 75% of the total number of board meetings during the fiscal year There were no directors who resigned or declined to stand for re-election during 2013 because of a policy disagreement with the Board. The following directors serve on the Compensation Committee: John R. Sawyer, Chairman, David Stubblefield, Vice-Chairman, Richard Gaona, James Hooser, Jr., Tom Johnson, Burt Richards, Larry Stewart, and Steven Watson. Directors serving on the Audit Committee are Don Crawford, Chairman, David Conrad, Vice-Chairman, Linda C. Floerke, David Harris, Gary R. Murphy, Bert Pruett, and Paul H. Young. Mr. Crawford and Mr. Conrad have the qualifications and experience necessary to serve as a financial expert, as defined in FCA regulations, and have been designated as such by the Board. Officers and directors are eligible for loans under the same terms and conditions available to any person. Loans outstanding with the nominees listed herein were made in the ordinary course of business, were made on the same terms, including interest rates, amortization schedule and collateral, as those prevailing at the time for comparable transactions with other persons, and do not involve more than the normal risk of collection. The nominees have no occurrence that would require disclosure under FCA regulations. The Nominating Committee members for the 2014 election cycle were named in the merger agreement and are Bill Rasor, Aaron Perkins, Horace Williams, Brad Stuart, Joe Bean, Norman Divin, Dean Mikeska, and Terry Westerfeld. The Association s Nominating Committee met February 26, Upon a determination that the following were willing to serve, the Committee nominated the following stockholders to be included on the ballot for the respective director elections: Region II- [one position] Tony Ballinger Larry Stewart Region III- [one position] Mike Micallef Bert Pruett Region VII- [two positions] Gary R. Murphy John R. Sawyer Paul H. Young Please see the biographical information for each candidate. Additionally, you may view a short video of the candidates on the Association s website after the annual meeting at Region II representation, as discussed in the Board Reduction Plan, reduces two previous directorships from Region II into one position. The Nominating Committee nominated two existing directors for that position. Region VII representation in the Board Reduction Plan reduces from three positions to two positions. Accordingly, the Nominating Committee in a review of all potential candidates, nominated three existing directors for the two (2) eligible positions. With regard to the Region VII positions only, all candidates for the two (2) positions will be listed on the ballot without identification of the positions to be filled. The two candidates receiving the largest number of votes shall be declared elected. Each voting stockholder may cast one vote for each of the two positions to be filled. Page 3 of 6

4 The Nominating Committee positions for service in the 2015 election cycle will also be included on the ballot, for each position, for a 1 year term. Six (6) committee positions, and six (6) alternate positions will be filled. The nominees are: Region Committee candidate Committee alternate I Brad Stuart Bill Shanklin Horace Williams Jerry Stapp IV Max Ballard Eric Akins Bill Rasor Jay Michael Norman VI David Hopson Chris Bottlinger Neil Walter David Anderson Nominations for the open director positions and each of the Nominating Committee positions will be accepted from the floor at the Annual Meeting. Any voting stockholder may make a nomination, and no second is required. Nominees must either reside in, or conduct their agricultural operations in the appropriate region. The designation of regions is for establishing eligibility for nominations only. All eligible voting stockholders may vote for directors and Nominating Committee members. Floor nominees must accept the nomination and provide required disclosures, in writing, within five (5) days after the Annual Meeting. No person may be a nominee for any of the open positions who does not provide the disclosures as required. The elections for the open director positions and the Nominating Committee positions will be held by mail-in balloting. The ballots will be sent to eligible voting stockholders, not more than 15 business days following the Annual Meeting. Thank you for your consideration, and watch your mail for the ballots in early May: Troy Bussmeir Tom Johnson M Lissa Kiel Chief Executive Officer Chairman, Board of Directors Chief Financial Officer Page 4 of 6

5 Disclosure Information of Nominees Region II Tony Ballinger, age 40, was elected to the board in Mr. Ballinger is a graduate of Tarleton State University with a master s degree in animal science. He is a beef cattle specialist for ADM Alliance Nutrition, a producer of livestock feed ingredients. He currently serves as president of the Texas Red Angus Association. He lives in Morgan Mill and is on the Board of Trustees of the Morgan Mill ISD. Mr. Ballinger maintains a commercial and purebred cow-calf operation, hay production, small grains, as well as a horse breeding program. Larry Stewart, age 64, lives between Granbury and Lipan in Hood County. Mr. Stewart was elected to the board in 1984 and currently serves on the Compensation Committee. Mr. Stewart s primary operation is beef cattle and he also produces in hay. Mr. Stewart also serves as a director on the F.N.B. Granbury Bank Board. He also serves as a director on the Hood County Acton Cemetery Board and Cancer Care Board. Region III Mike Micallef, age 39, was born and resides in Fort Worth, Texas. After graduating from TCU, Mike spent two years with Tsunami Partners, a hedge fund where he managed various equity investments. Since June 2005 he has been president of his family s non-manufacturing companies which currently include Reata Restaurants, Sierra La Rana and CF Ranch. In 2008 Mike sold his family s aircraft management business, Flight Service to Executive Air Share. Mike also spent two years in Chicago as president of K&M Plastics, a plastics blow molding company mainly serving the water treatment and industrial equipment industries. K&M was a turnaround situation and was sold to Pentair in Bert Pruett, age 61, was elected to the board in 1984 and currently serves on the Audit Committee. Mr. Pruett lives in Slidell in northwest Denton County. Mr. Pruett serves as treasurer of the Greenwood- Slidell Volunteer Fire Department. Mr. Pruett is president of the Denton-Wise County Farmers Union. Mr. Pruett is chairman of the deacons of the First Baptist Church. He is a self-employed grain farmer who maintains an operation of cattle, wheat, milo, corn and hay. Region VII Gary R. Murphy, age 65. Mr. Murphy resides in Hubbard, Texas. He is a farmer and rancher and owns 5,535 acres of land and leases 2,959 acres on which he grows cotton, corn, milo and wheat, and has cattle. Mr. Murphy is also president of J.P.M. Inc. a diverse agricultural business that includes a farm store, feed sales, grain storage, fertilizer sales and application, equipment rentals, and grain merchandising. In addition, he is president of Central Texas Cotton & Grain, a cotton ginning operation. He is also a director on the board of First Bank and Trust in Dawson, Texas, and the Texas Wheat Producers Board, and he serves on the U.S. Wheat Board and Hubbard Community Affairs Board. He currently serves as a member of the Association Audit Committee. Page 5 of 6

6 John R. Sawyer, age 55, was elected to the board in He resides near Hillsboro, Texas, and serves as Chairman of the Association s Compensation Committee. He is a farmer and rancher, and operates Sawyer Farms Partnership, farming approximately 3,500 acres. He owns 1,005 acres and leases another 2,495 acres. He has been a full-time farmer since In addition, John is a partner in Apex Grain Company, LLC, located in Hillsboro, and has ownership interest in Sawyer Land, Sawyer Property Management GP, and Blackland Farm Service Company. Mr. Sawyer is a deacon at First Baptist Church of Hillsboro. He also serves as a trustee of Hillsboro ISD, and he is chairman of the Hill County Blackland Soil and Water Conservation District. Mr. Sawyer graduated from Texas A&M University with a Bachelor of Science in Agronomy and a Master s Degree in Ag Economics. Paul H. Young, age 60. Mr. Young resides in the Lott, Texas, area. He is self-employed as a partner/owner/operator of M.E. Young and Sons Partnership, operating in Coryell, Hamilton, Falls, Milam and Robertson Counties. His agricultural operation consists of approximately 8,000 acres of owned land and 14,000 acres of leased land. His farm/ranch operation consists of corn, milo, wheat, oats, soybeans, hay, cows, stockers, ewes, goats, and broiler chickens. In addition, he has ownership interests in PJY Holdings, PJY Enterprises, PJJT Investments and Young Trucking. He presently serves on the board of Citizens State Bank, the Coryell County Commission Company and the Falls County Row Crop Committee. He is a member of the Association Audit Committee. Page 6 of 6