Pub. 13 2018-2019 Issue 2

NEBRASKA BANKERS ASSOCIATION 23 FCS Blocks Banks fromRebuild America Coalition In a rather petty move, the Farm Credit Council, the trade association for FCS banks and associations, has blocked banks and bank trade associations from joining and participating in the activities of the Rebuild Rural Coalition, which was orga- nized last year. This action parallel’s the FCA ignoring the role that commercial banks and other rural lenders play in financing American agriculture, as noted in the previous article. According to the Coalition’s website, the “Coalition is comprised of more than 200 organizations fromacross the country focused on rural communities, U.S. agricultural producers, rural businesses, and rural families.” The website states that the coalition “is dedicated to advocating for investment in rural America's infrastructure and understands that rural America's infrastructure needs are fundamentally different.” Bankers living and working in rural America know as well as any rural resident or business owner how important sound, modern infrastructure is to the economic and social health of rural America. Not surprisingly, then, America’s commercial banks are a major source of credit for financing rural infra- structure, including loans to private owners of infrastructure, such as investor-owned utilities, as well as purchasing state and local government bonds that finance public infrastructure. The Coalition’s laudable objectives would be advanced more effec- tively if a principal source of infrastructure financing for rural America — America’s banking industry — had been invited to join with the Coalition’s other partners in advocating for rural America’s infrastructure needs. CoBank Extends Credit to Two Investor-Owned Utilities Perhaps because of sharp questioning from members of the House and Senate Ag Committees, CoBank appears to have scaled back its lending to large investor-owned utilities, such as AT&T and Verizon. That said, there have been two instances in recent months where CoBank did extend credit to investor- owned utilities. Last November 2, CoBank led a “consortium of banks” which provided “a new $92 million, five-year credit facility” for Otelco, Inc., “a publicly traded telecommunications holding company based in Oneonta, Alabama” that owns small, independent telephone companies in several states. At December 31, 2017, Otelco had total assets of $115 million and a miniscule net worth of $1.5million. Interestingly, CoBank effectively acted as Otelco’s investment banker in this transaction. On May 7 of this year, Artesian Wastewater Management, a subsidiary of Artesian Resources Corporation, entered into “an interest rate lock agreement” with CoBank for a $12 mil- lion first mortgage bond. At March 31, 2018, Artesian, which is NASDAQ-listed, had total assets of $497 million and stock- holders’ equity of $148 million. Neither of these financings are huge deals, compared to some other private-sector financings Farm Credit Watch — continued on page 24