Pub. 8 2013-2014 Issue 1

www.nebankers.org 24 Extraordinary Service for Extraordinary Members. If AgDirect were an FCS association, it would have ranked at the end of 2012 as the 15th largest association based on outstanding loans; yet, because AgDirect files no call reports, its performance cannot be assessed. At the end of 2012, only nine associations, including four outside the AgriBank district, were generating loans through the AgDirect program. As more associations join AgDirect, this “shadow” association will grow even larger within the FCS. One can reasonably wonder how well the FCA understands, examines, and monitors AgDirect’s financial performance and its compliance with the lending restric- tions Congress has imposed on the FCS. FCS Association Accepts Uninsured Deposits A banker recently brought a very disturbing situation to my attention: 1st Farm Credit Services, headquartered in Normal, Ill., is engaged in a very abnormal practice, accept- ing what effectively are uninsured deposits in its cash man- agement program. Worse, 1st FCS (www.1stFarmCredit. com) does not disclose that fact to its member/borrow- ers. Other FCS associations run similar “cash management” programs. Essentially, at those times when a member/ borrower maintains a debit balance under a revolving line of credit at 1st FCS (in effect 1st FCS owes money to the member), 1st FCS invests those funds in a “member invest- ment bond” issued by AgriBank, which is the funding bank for 1st FCS. As AgriBank’s 2012 annual report states, these bonds “are an unsecured obligation of AgriBank and are not insured or guaranteed by any other entity.” However, on the 1st FCS webpage describing its Farm Cash Management (FCM) & Funds Held program, absolutely no mention is made that “funds held” represent an unsecured, uninsured, unguaranteed obligation of AgriBank. The FCA has at least a moral obligation to insist that FCS institutions accept- ing such funds from their members publicly disclose that those funds are not insured by the FDIC or by any other federal entity. Report FCS Lending Abuses Bankers are continuing to send Farm Credit Watch reports of FCS lending abuses such as FCS loans for rural estates, weekend getaways, and hunting preserves. Email reports of similar lending abuses in your market to green- acres@ely-co.com . Please provide as much detail as pos- sible about any loan that violates the spirit, if not the law, governing FCS lending. Z Q FCS Competitor — continued To contact Bert Ely, email bert@ely-co.com ; fax (703) 836-1403; phone (703) 836-4101; or mail PO Box 320700, Alexandria, Va. 22320. Make your bank’s opportunity a “done deal” ... fast! Contact Gene Uher in Sioux Falls at 605.201.1864 or guher@bellbanks.com 3100 13th Ave. S. | Fargo, ND 3000 Call us for a quick response, competitive rates and flexible underwriting. Compete with the “big guys!” r 1BSUJDJQBUJPO MPBOT DPNNFSDJBM BHSJDVMUVSBM DPOTUSVDUJPO PQFSBUJOH MJOFT BOE UFSN MPBOT r #BOL TUPDL PXOFSTIJQ MPBOT r #BOL CVJMEJOH GJOBODJOH r #VTJOFTT QFSTPOBM MPBOT GPS CBOLFST r .VMUJ GBNJMZ MPOH UFSN QFSNBOFOU GJOBODJOH .FNCFS '%*$