Farm Credit Services Loan Value Increases 14 Percent

Farm Credit Services of Western Arkansas recently began distributing $5.1 million in patronage refund checks to its members for 2007. Patronage checks function like profit-sharing returns or dividends. County-by-county numbers were not available.

The firm distributed about $5 million to its members last year and about $4.6 million for calendar 2005.

Since 1997, the first year FCS began its patronage refunds, the firm has paid back about $41.3 million to its members.

FCS is the largest of three farmer-owned financial cooperatives in Arkansas. It serves the state’s 41 counties west of Little Rock from Texarkana to Missouri.

FCS has branches in Fayetteville, Bentonville and Siloam Springs.

Ken Knies is the regional vice president of FCS and offices in Fayetteville. He said that in Benton and Washington counties, FCS’s total loan value was $190.5 million, up 14 percent from $167 million in 2006.

Knies wasn’t able to say how many loans were granted in 2006 or 2007, but estimated there were fewer loans made for higher values than in years past.

A trend he’s seen in the last few years is with people moving from town to small or part-time farms in rural Benton and Washington counties. The loan portfolio has had “steady growth on new and existing homes,” he said, not just pasture and cropland.

Knies said the FCS booth that was set up at the Home Builders Association show from Feb. 29 through March 2 had an impressive number of visitors. For him this was an indicator of interest in part-time farming operations from average people who desire to be out of town.

Knies was pleased with FCS’s year-over-year portfolio increase, especially given the increased competition for lending services in Northwest Arkansas.

“Competition is fierce,” he said. “There’s a lot.”

Officials at Rogers-based Pinnacle Bank had said they would pursue the agricultural lending market when the bank opened in August 2004. Since, the bank has had problems with delinquent or nonperforming loans. As of Dec. 31, Pinnacle Bank had only $42,000 in farm loans, down from $50,000 at the end of 2006.

Signature Bank of Arkansas, another new competitor, lowered its farm loan portfolio from $3.96 million at the end of 2006 to $1.74 at the end of 2007.

Legacy National Bank of Springdale, however, increased its farm loans to $3.18 million at the end of 2007, up from a mere $100,000 a year earlier.

Parkway Bank of Rogers was fairly flat ending 2007 with $228,000 in farm loans, down from $232,000.

Little Rock-based Metropolitan National Bank had no farm loans on its books for either year, but Bank of the Ozarks loaned $22.4 million to farmers in 2007, up slightly from 2006.

Arvest Bank, which acquired multiple rural offices in Oklahoma and Kansas in the last couple of years, saw its portfolio of farm loans jump to $77.3 million, up 12.8 percent from $68.5 million at the end of 2006.