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Wednesday, 21 March 2012 12:46

The Bank of Holland targets farmers

Written by  Rod Kackley
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Jim BishopGRAND RAPIDS — The Bank of Holland Senior Vice President Jim Bishop believes agriculture is going to play a major role in Michigan’s economic comeback story “and we want to be a part of that.”

The Farm Service Agency in February awarded eligibility to the bank to start to offer FSA loans. Bishop told MiBiz that the eligibility opens the door for the bank to offer to federally guaranteed loans and helps The Bank of Holland gain entry into what he sees as an exciting market.

“We live in an area that has abundant natural resources and a number of very good agriculture entrepreneurs,” he said. “We want to grow this into a significant share of our annual business.”

The Bank of Holland has concentrated on manufacturing in the past. Bishop said that experience should serve the institution well as it does more business in the agricultural sector.

“Manufacturing expertise does translate to agriculture,” he said. “In any business, there is an element of making sure you are properly running the operation. It is a matter of managing the enterprise or — with a business that can be seasonal like agriculture — properly managing its cycles.”

TableFSA packages are direct and guaranteed for farm ownership (FO) and operating loans (OL) and are often made to farmers and ranchers who have run out of other options after failing to obtain commercial credit from a bank or another lender, or beginning farmers who don’t have the credit history or collateral to qualify for loans.

However, Bishop said The Bank of Holland does not see FSA loans as a “last resort” for struggling farmers.

“The most difficult thing in agriculture is valuing lending collateral that has no true value until it goes to market. Programs like FSA help bridge that gap,” he said. “It is more than a loan. It is an enhancement to a customer relationship if it makes sense to the customer and the bank. If they are successful, we are successful.”

He also said it fits in nicely with the Small Business Administration and U.S. Department of Agriculture loans, the latter of which The Bank of Holland has been offering for the past two years.

Brad Dyksterhouse“We have originated $32 million in USDA loans since we began offering those products just two years ago,” said Brad Dyksterhouse, SVP at The Bank of Holland.

The lender was named the USDA Business & Industry Lender of the Year, and is Michigan’s first and only USDA Business & Industry Certified Lender.

A majority of The Bank of Holland’s USDA loan activity is geared toward business and industry. If a manufacturer in a rural area needs help, the business would qualify for that assistance. As a result, Dyksterhouse said the bank has done a lot of refinancing for people who were having trouble with their original bank.

“But we are also seeing more investment in buildings and equipment, expansion and bus acquisitions,” he said. “From what we are seeing, we are finally getting to where some of that new money activity is coming in versus refinancing.”

The West Michigan farm economy does seem to be in good shape. Land prices continue to escalate according to the latest USDA statistics and the February 2012 Agricultural Newsletter from the Federal Reserve Bank of Chicago. It showed that credit is available in the Seventh Federal Reserve District, which includes all of Michigan and several surrounding states, and that rates are at historic lows.

Bishop said it is hard to predict how long inexpensive money will be so available to farmers and ranchers. He explained that depends on what the Federal Open Market Committee is going to do to impact rates. However, he also feels that as the economy improves, we will see rates increase due to inflation.

“That is inevitable,” he said. “The other concern is competition. That is what created the bubble in the real estate industry. We don’t want to see that happen again. I think we will continue to have competition keeping rates relatively low, but I think the industry will stay true to the underwriting terms. That could mean properties won’t move as fast.”

The Fed’s newsletter also shows last year was very good for the agriculture industry across the country. While some might take that as an indication now is a perfect time to be in farming and ranching, Bishop is not ready to go quite that far.

“Last year was very good for much of the industry,” he said. “We are seeing very high commodity prices, but we are seeing extreme pressure on feed costs going up.”

However, Bishop also pointed out that West Michigan is seeing an amazing turn of events in property values.

“We saw developers buying land years ago. Some of those tracts that have not been developed are going back to farmers now. That is great for the area,” he said.

Dyksterhouse also said the farm economy does currently look strong, but he is tempering that optimism with a forecast that could be described as guardedly optimistic.

“I think small business owners are seeing the economy is turning the corner and they are looking to take advantage of opportunities,” he said. “When more business owners see the edge of that corner, I think we will see more activity and some great growth.”

Read 1587 times Last modified on Sunday, 12 August 2012 10:38

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