should be inexpensive, not be a prerequisite for loan approval and not time consuming. 3. FSA needs to realize that even the "young farmers" that are applying for a guaranteed loan have far more experience available to them than it would appear on the surface. In today's real world, that young farmer has got someone (usually a father, father-in-law, brother, etc.) to help him in management decisions. It is the presence of that experienced person that has allowed this young farmer to even have a chance to be involved in farming. We feel these "young guys" should not have to have any more educational requirements than the other more "experienced" farmers. 4. We feel that a common sense approach to any additional loans that a farmer may take out needs to be implemented. As it stands now, a simple Farm Plan transaction to buy a small implement can put us out of compliance unless we run down to the bank and get approval. The regulations governing this area need to be relaxed somewhat to allow us to carry on daily business without additional FSA induced paperwork. If FSA monitoring in this area is absolutely essential, then at least raise the limits on what must have approval to the point that additional paperwork is kept to a minimum. 5. We would like to comment on any help concerning the re-enrollment of High Plains CRP ground that might be forthcoming. We understand that most of the emphasis in the new CRP is on wetlands. We are looking at some major problems with wind erosion in our area if some of the CRP land has to be put back into production. This land was idled for a leason years ago and we feel most of it should be left in glass. 6. We would like to say that our local FSA representative, Craig Simpson, has been a real help to all of us. Craig has done his utmost to process our applications in a timely manner. Craig is NOT the problem, the problem lies in the regulatory restraints that FSA Bureaucrats above him have placed on the system. Good men like Craig are desperately needed in today's agribusiness lending environment. He has our utmost respect and admiration. 7. We feel that in today's agricultural environment and in the era of the New Farm Bill, the FSA Guaranteed Loan program is going to be essential. It can be improved and we hope that some of our comments will be useful. The farming environment in which we find ourselves is risky, at best, due to many factors beyond our control, but some of the factors concerning Agricultural lending can be improved and we hope you can help us in these areas. 1997 AGRICULTURAL CREDIT AVAILABILITY HOUSE AGRICULTURE SUBCOMMITTEE ON Mr. Chairman and Members of the Committee: Thank you for taking time from your busy schedule to come to West Texas, one of if not the best agricultural producing regions of this great nation. My name is Mike Wright, Sr. Vice-President of the agricultural lending division of American Bank of Commerce of Wolfforth, Lubbock and Austin, a $200,000,000 + locally owned bank with an agricultural loan portfolio of just over 30% of the total borrowings. I was born and raised on a Lubbock County cotton farm, farmed for 8 years and have been involved with ag lending since March of 1982. Agriculture is my background and my lifeblood. Agriculture is the main economic factor of Lubbock Texas and the surrounding 67 county area. This area produces 20% of the cotton produced in the U.S. and is a major player in the world export market. I tell you this to show you just how important agriculture is to this region and this nation. This area is also very vulnerable to weather related problems. All cotton producers in the U.S. are subjected to price fluctuations and insect problems and some also have other types of weather problems. But the High Plains of West Texas can go from 70 degrees to 25 degrees in a matter of a few minutes, it can snow at 9:00 in the morning and the sand can be blowing by 4:00 that afternoon. You can have a 2 bale/acre crop August the 1st and be totally wiped out in a matter of a few minutes by a sudden hail storm. Hopefully this provides you with some idea of why the USDA (FSA) lending programs are so important to our area. American Bank of Commerce is an FSA Certified Guarantee Lender. As of February 13, 1997 we had outstanding loans under the 90-10 guarantee program of $10,291,559 and have several loans pending which will increase this total. This represents almost 1/5 of the total ag loan portfolio of ABC Bank. As you can see, the certified lender program is very important to us as well as our customers. It allows us to help a producer who has suffered a loss due to weather and other factors and give him time to overcome the problem.. Even though it is still a paper burden to service the guaranteed loans, we are still willing to try to help our customer. We have one loan officer dedicated to the FSA paperwork and will be training a loan assistant in some of the reporting procedures. We have also had problems in some counties in getting a response in the time allowed by the certified lender program. It is amazing in the 15 years I have been involved with ag lending, that no one county has the same rules and regulations to follow yet the bank or lender is held fast to certain perceived rules. In most cases, the loan officer that is assigned to the guaranteed loans, knows the regulations better than the county FSA employees. Our frustration is that when we work so hard to do what is required, then the FSA lenders feel they can do what ever they want and when they want to. There are several counties that we have no problems with and it is a pleasure to work with them. You ask for suggestions for improvement. We understand that FSA is working under government guidelines and we know government has no common sense, and there are banks and other lending institutions that take advantage of the guaranteed program, but don't take it out on the banks that are doing it right. Turn the guaranteed lending program over to the bankers, the people who are trained and know how to loan money. Monitor the loans and loan losses and any bank who abuses the program would be limited or out of the program for a specific time period. Under the certified lender program, FSA is certifying that the lender is capable, willing, and has the resources to lend money under the guarantee basis. The certified lender is certifying that they have abided by the rules and regulations. The FSA staff is to do a 90 day review after the loan is closed to check if the lender did the proper documentation. Let us do our job the way we know how to do it. And please guide the FSA to do their job and do it in an efficient manner. Why would anyone pull their loan officers out of the offices for a week for training during the middle of the loan season? Why would anyone detail a loan officer to South Texas to work housing loans during the middle of the loan season? Why would anyone detail a loan officer from East Texas to West Texas to work loans they have no idea about? Our crops start going in the ground in late April, early May and people cannot wait that long for money to begin working the land. The suppliers and dealers are extending credit based on FSA making or approving a loan. If the decision is not made until June or July, guess who else is hurt. The FSA 90-10 guaranteed program is a good program and can help producers who "stump their toe" to get back on their feet while allowing banks and other lenders the opportunity to help their customers. As I close, let me express my sincere appreciation to the committee for allowing me to show you how important it is that we have a infrastructure of USDA loan programs, Farm Credit system, and commercial banks to meet the future needs of agricultural producers. My family is dependent on it as well as yours. As you leave today, be sure to take the next to last page of my testimony with you and put it somewhere you will see it everyday and remember the words: In 1896 William Jennings Bryan said it best, "Burn down your cities and leave our farms, and your cities will spring up again as if by magic, but destroy our farms and the grass will grow in the streets of every city in the country." As long as the North American farmer can supply our food at a price that allows us to spend the greatest part of our income for our cars and TVs and recreational items, our high standard of living can continue. But, when our farmers can no longer produce our low-cost food, or when they have no economic incentive or ability to produce this food-truly, again, "the grass will grow in the streets of every city in the country." FOBANK First National Bank of Spearman TESTIMONY OF DON TOWNSEN PRESIDENT AND CEO FIRST NATIONAL BANK, SPEARMAN, TX ΤΟ THE SUBCOMMITTEE ON FORESTRY, RESOURCE CONSERVATION AND RESEARCH U.S. HOUSE OF REPRESENTATIVES CHAIRMAN THE HONORABLE LARRY COMBEST LUBBOCK, TX FEBRUARY 21, 1997 Thank you for the opportunity to address this subcommittee on a subject that is very important to me as an agricultural banker and to the farmers and ranchers of the northern panhandle of Texas. Spearman is in Hansford County, 90 miles north of Amarillo. I helped start a new bank there in 1985 but I have been a direct lender to agricultural producers in the Northern Texas Panhandle and the Oklahoma Panhandle since early 1974. My county is consistently one of the top 3 wheat and corn producing counties in Texas and a majority of my bank's loans are direct to ag producers. Since 1974 I have been actively involved in FmHA loan programs especially in subordinations and guarantees. The last few years only in guarantees because of FmHA's push to get out of the subordinations and direct loans. for the last three years my bank has had an average of $1,355,351 in guaranteed loan portfolio. Since last June I have dropped that portfolio down from $1,461,185 to a year end portfolio of $981, 150 and at this time I plan to drop it much further in the next year. In fact I do not plan to book anymore FmHA loans or renewals in my bank unless drastic changes are made in FmHA. I closed what I expect will be my last FmHA loan on Feb 3rd only because my customer had spent so much time and money on the loan that I was compelled to finish what we had started. Our application date on the loan was Feb 6th 1996. So it took us one year to get approval and close the loans. In the Northern Panhandle (north of the Canadian River) we have a bankers association called the North Panhandle Bankers Association. All of the Northern Panhandle banks and some Oklahoma Panhandle banks are members. I am a past president of the association. T'o prepare for this testimony I contacted all of the presidents of the member banks to get their experience and problems in dealing with FmHA on guaranteed loans. Many of the banks will no longer handle guaranteed loans. Those that do expressed to me by letter telephone conversation the problems they have in doing business with FmHA. I have brought with me letters from the bankers as well as letters from some farmers to back up much of my testimony. or P. O. Box 337, Spearman, Texas 79081, Phone: (806) 659-5544 |