Three farm credit groups discuss potential merger

Jan Shepel
Now Media Group


Three of the upper Midwest's largest Farm Credit associations — including Badgerland Financial — are in the early stages of merger talks, a move that could create a lending group with about $17 billion in its total lending portfolio.

Badgerland confirmed this week that its board of directors has begun 'cooperatively exploring a merger' with the boards of AgStar Financial Services, which serves 69 counties in Minnesota and northwest Wisconsin and with 1st Farm Credit, an association that serves the northern 42 counties of Illinois. Badgerland Financial serves 33 southern Wisconsin counties.

Financial information from the three groups shows Badgerland's loan portfolio totaling $3.8 billion at the end of 2015; 1st Farm Credit with $5.2 billion; and AgStar with $7.5 billion in total loan portfolio. With projections for the coming year, the total loan volume is expected to be around $17 billion.

All the associations share the 'same values and commitment to rural communities and agriculture,' the three said in a statement. All are part of the Farm Credit System, which celebrates 100 years of service to agriculture this year.

The statement, signed by the CEOs of the three Farm Credit associations, said that at this stage their organizations are 'early in the process of evaluating this potential collaboration with the guidance and assistance of staff and industry experts.'

Once this research phase is complete, all three boards of directors will decide whether to move forward, they explained. If a merger is deemed appropriate, stockholders will receive further communications and have the opportunity to vote on the proposal. Each of the Farm Credit groups is organized as a cooperative, owned by their member-borrowers.

The CEOs said their Farm Credit organizations are 'committed to the success of agriculture, rural communities and most importantly, their member-owners. We promise to deliver to our customers the insights and expert guidance they have come to expect, count on and deserve from their financial services provider.'

As part of their role as trusted advisor to their member-owners, the three associations 'continually look for ways to better serve our members and return value to our stockholders.'

They believe this is a business objective that matches those of the borrowers the associations serve, they said. 'While our members look for ways to improve yields and decrease input costs, we evaluate how we can continue to evolve to offer them the very best products, services and return for their investment,' the statement continued.

The potential for a merger of the three groups was identified as an opportunity that has the potential to help the organizations grow into the future, they said.

'It should come as no surprise that many of our discussions revolve around fulfilling our mission of serving agriculture and rural America,' the statement added. 'For 100 years, Farm Credit has supported rural communities and agriculture with reliable, consistent credit and financial services and we're just as committed to that mission today and in the future.'

The Federal Farm Loan Act of 1916 created the Farm Credit System, a network of credit cooperatives instituted to be a reliable source of funding for farmers and ranchers.

Through the process of the potential merger, said the CEOs, 'our three associations remain committed to making sure our members have what they need to be successful, not only today but in the years ahead.'

Rod Hebrink, is CEO of AgStar Financial Services; Diane Cole, is CEO of Badgerland Financial; and Gary Ash, is CEO of 1st Farm Credit Services.

AgStar Financial Services, ACA, headquartered in Mankato, MN, employs more than 550 full-time team members. The company is part of the national Farm Credit System 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, headquartered in Prairie du Sac, WI, is a customer-owned financial cooperative and is one of the region's leading providers of credit, crop insurance, tax and accounting services to farmers, agribusinesses and rural residents.

The association called 1st Farm Credit Services serves 42 counties in the northern half of Illinois, through 16 local offices, with agricultural loans, risk management products and various services such as crop insurance, loan and lease options, as well as agricultural real estate appraisals.