Wichita, KS - U.S. AgBank (AgBank), headquartered in Wichita, Kansas, announced that it opposes the acquisition of the Omaha, Nebraska, based Farm Credit Services of America (FCS of America) by Rabobank. FCS of America was chartered to provide credit to farmers and ranchers in Nebraska, Iowa, South Dakota and Wyoming and previously announced plans to accept an offer of purchase from Rabobank, a foreign lender headquartered in Utrecht, the Netherlands.
AgBank does support the Association's stated objective of enhancing stockholder value, but does not support the method chosen to accomplish it. AgBank believes that stockholder value can be considerably enhanced through FCS of America continuing as a part of the Farm Credit System. Stockholder enhancement could occur through the FCS of America Board of Directors' approval of an ongoing patronage program which returns earnings to stockholders, thus reducing the borrowing costs for farmers and ranchers in the four states. Many other Associations around the country utilize patronage programs. Also, AgBank is aware that AgStar Financial Services (AgStar), a System Association headquartered in Mankato, Minnesota, has made FCS of America an offer of merger.
Merger with another Farm Credit institution could allow the stockholders of FCS of America to receive value for their ownership and remain as part of the farmer and rancher owned cooperative Farm Credit System. Alternatively, AgBank believes FCS of America is currently well positioned to develop a strong ongoing patronage program under its current organizational structure. The AgBank Board believes these alternatives could more than offset any financial benefits of a Rabobank transaction, particularly when considering that the exit fee that would be associated with FCS of America's leaving the System has been estimated to be approximately $800 million. The actual exit fee would ultimately be determined by the Farm Credit Administration as part of the termination process.
In a recent letter to the FCS of America Board Chairman Paul Folkerts, the AgBank Board encouraged the FCS of America Board of Directors to consider these other options as alternative strategies to enhance stockholder value while remaining a part of the System. In the letter, the AgBank Board also communicated its belief that FCS of America should ensure that its stockholders are presented all options and allowed to evaluate them before any final decision is reached.
Congress provided for the creation of the Farm Credit System to ensure that farmers and ranchers have access to a permanent, reliable source of credit in good times and bad. In a period of significant bank consolidations, the Farm Credit System has continued to serve as rural America's customer-owned financial partner because of its sole focus on agricultural and rural lending. AgBank believes that preserving FCS of America as a System institution owned and governed by its farmer and rancher members and dedicated solely to its agricultural lending mission is certainly worth retaining for the benefit of the current and future generations of farmers and ranchers in the four states. This will be particularly important when economic conditions are less favorable.
AgBank is a $15.6 billion Farm Credit Bank which provides loan funds and other services to 30 affiliated Farm Credit Associations in the states of Arizona, California, Colorado, Hawaii, Kansas, Nevada, New Mexico, Oklahoma, Utah and Idaho. These Associations offer a wide range of loan products and financial services to approximately 40,000 farmers, ranchers, agribusinesses and rural homeowners.Aberdeen American News
