Three-way Farm Credit merger gets preliminary approval
Prairie du Sac - A three-way merger – of 1st Farm Credit Services, AgStar Financial Services and Badgerland Financial, three of the Midwest’s largest farm credit businesses -- is moving forward this week after the planned merger got preliminary approval from the Farm Credit Administration. The merger, if it goes forward as expected, would create a Farm Credit entity with a lending portfolio in excess of $17 billion.
The blessing from Farm Credit administrators allows the organizations to move forward with the merger process. The next step for the three member-owned cooperative organizations is a stockholder vote on the proposed merger.
When news of the proposed merger broke last spring, financial information from the three businesses showed Badgerland’s loan portfolio totaling $3.8 billion; 1st Farm Credit with $5.2 billion; and AgStar with $7.5 billion in total loan portfolio. (Those were end of 2015 totals.) Estimates at that time were that the total loan volume was expected to be in excess of $17 billion by now.
AgStar Financial Services, ACA, is headquartered in Mankato, Minn., and employs more than 550 full-time team members. The financial cooperative serves 69 counties in Minnesota and northwest Wisconsin. According to its company materials, AgStar has expertise in the corn, soybean, swine, dairy and bio-energy industries and has developed successful programs in loans, leases, crop insurance, consulting and rural home mortgages.
As a value-added financial services cooperative, AgStar allocates patronage dividends to its 15,400 stockholders. The company is also committed to giving back to rural residents, organizations and communities through AgStar’s Fund for Rural America.
Badgerland Financial, a customer-owned financial cooperative, is headquartered in Prairie du Sac, Wis., providing credit, crop insurance, tax and accounting services to farmers, agribusinesses and rural residents. The company serves member-owners through offices in 33 southern Wisconsin counties.
The third Farm Credit institution in the proposed merger is 1st Farm Credit Services, which serves 42 counties in the northern half of Illinois. It has 16 local offices, offering agricultural loans, risk management products, crop insurance, loan and lease options, as well as agricultural real estate appraisals.
Officials with the three farm lenders said stockholders could expect to receive a disclosure packet with the specific information about the proposed merger soon and each organization plans to have informational meetings to answer questions sometime in March. In a statement all three cooperatives said they “remain committed to keeping members, clients and stockholders informed of the process leading up to, and following a stockholder vote.”
The merger proposal must be approved by each organization’s voting stockholders. For this purpose, each organization has called a special meeting of stockholders to be held in early April. If the stockholders of the three cooperatives vote in favor of the proposed merger, the planned effective date of the merger will be July 1, 2017.
Plans have already been made for the presumed positive vote from stockholders. Rod Hebrink, the President and CEO for AgStar Financial Services since 2014, has been named as the person who will lead the merged organization once stockholders give their approval. Before serving in that top spot, Hebrink served as AgStar’s Chief Financial Officer for nearly 30 years.
The headquarters for the merged organization will be in Sun Prairie, Wis. – a site chosen because it is “geographically fairly central” for the newly merged organization, when that happens. However, in its statement, the Farm Credit businesses said that “the proposed merged organization is committed to a decentralized operating structure” adding “that no local offices will close as a result of the merger.”
The Board of Directors for the proposed merged organization will be comprised of 14 member-elected directors and three outside appointed directors. If stockholders vote in favor of the merger, the new board “will have equitable representation of board members in approximate proportion to the number of stockholders from each of the three areas,” the statement said.
As with all Farm Credit merger requests, the agency’s preliminary approval is subject to certain conditions, which will be described in detail for stockholders in the disclosure materials, officials said.