Dividends Give FCS Reason to Crow

Ken Knies does a Cupid impersonation each February. But, instead of a bow and arrow, he’s using a checkbook and pen to make customers fall in love.

The Fayetteville branch manager for Farm Credit Services of Western Arkansas, Knies has spent the last two weeks handing out patronage refund checks to his Washington County customers. For FCS’ 41-county service area in the western portion of the state, those checks total $3.9 million divided among more than 6,000 customers.

More than 1,000 local customers in Benton and Washington counties received the checks, which function like profit-sharing returns. Local disbursement figures were not available.

“We’re a customer-owned cooperative,” Knies said. “All of our customers own stock or patronage certificates. We initiated the patronage refund program five years ago, and we deliver them on site as another value-added service from Farm Credit.

“It’s a lot of fun to get to visit with our farmers and their families and take care of business at their kitchen table.”

Russellville-based FCS, founded in 1917, is the largest of three farmer-owned financial cooperatives in Arkansas. Its total portfolio reached $525 million in 2002, a 19 percent increase over $440 million just two years earlier.

Locally in 2002, the Fayetteville branch ($52.5 million) and Bentonville branch ($50 million) made for a two-county total of $102.5 million. (See chart.) That’s a 24 percent increase just since 2000’s tally.

Knies said the shift in Northwest Arkansas from an agrarian community to a consumer-oriented area has raised property values and contributed to FCS’ loan growth. Sixty to 65 percent of the lender’s local portfolio is still related to poultry, but that’s 10 percent less than it was in 2001.

Taking up the slack has been a core focus by FCS on mortgage loans.

According to the U.S. Bureau of the Census, the two-county area grew 48 percent from 210,908 in 1990 to 311,259 in 2000. And growth projections call for a two-county population of 391,488 by 2005, a 26-percent jump.

To keep up with urbanization, FCS has focused on the part-time farm family that works in town but keeps up a home and several acres because the people enjoy owning land.

With interest rates in the 5-7 percent range, FCS is competitive with most traditional lenders, and its diverse product line — including everything from insurance to credit and leasing programs — gives it one-stop shop appeal. Combine that with FCS’ expertise in livestock and farm-equipment loans, and the lender is poised to be a real player in the market.

“Traditional farm loans are still the bread and butter part of our real estate business, but there’s a lot more interaction between rural communities out in the county and the cities than there was just 25-30 years ago,” Knies said. “So rural home loans will continue to represent a significant part of our growth going forward.”

Other area FCS branches are in Siloam Springs, Lincoln and Huntsville.