This article originally appeared in the summer 2018 Ranch House Journal.
Owning property, building an agricultural business and maintaining assets that can be passed down to the next generation is a dream that many young Americans in rural areas share. However, as land prices have increased and economies have changed, the good ol’ days — where individuals could work hard, save for a few years and easily buy property — have vanished. In order for many rural Americans to build that dream, they need to enlist the help of a trusted lender.
Serving East Texas for a Century
For more than 100 years, Legacy Ag Credit, ACA in Sulphur Springs, Texas has provided farmers, ranchers and rural homeowners with the money they need to follow their dreams.
A member of the nationwide Farm Credit System, comprised of approximately 75 lending cooperatives located throughout all 50 states and U.S. territories, Legacy supports agriculture and a rural lifestyle by providing financing for its members, said Derrell Chapman, Legacy’s chief executive officer.
“Our mission is to serve agriculture and rural home ownership in a 10-county territory here in northeast Texas. We do that by providing a variety of loan programs to meet the needs of farmers, ranchers and homeowners,” he said.
The Legacy service area is rich in agricultural heritage. It is known as a place where cattle, poultry and crops thrive. With branches in Canton, Gilmer, Kaufman, Longview and Sulphur Springs, Legacy is able to finance loans for residents of Franklin, Gregg, Harrison, Hopkins, Kaufman, Marion, Rains, Upshur, Van Zandt and Wood counties.
Government established. Locally run cooperatives.
Established by Congress in 1916, the Farm Credit System was designed to provide access to credit for farmers and ranchers primarily located in rural areas of the country. A century later, the Farm Credit mission remains unchanged and its member-owned lending institutions have been providing access to credit through both good times and bad.
“One of the things that has differentiated the Farm Credit System, and Legacy in particular, is the commitment to be there for farmers, ranchers and rural homeowners in all economic environments,” Chapman said.
“Some lenders will provide credit in the good times but seem to disappear when times are tough,” he said. “Legacy, and the Farm Credit System, are unique in our commitment to be there offering credit in all economic environments. It is part of the mission of Farm Credit.”
Does a check from your lender sound good?
Another distinguishing characteristic of Farm Credit member institutions like Legacy, is the fact that they are member-owned cooperatives.
In order for a farmer or rancher to borrow money, they must become a member of the cooperative. They do that by making a small — $1,000 or less, based on the loan amount — investment in the stock of the cooperative. In return, the member can share in the profits of the cooperative as a member-owner. Like most Farm Credit institutions, Legacy implemented a patronage program designed to return a portion of its profits to its members.
Chapman said that program is one of the member’s biggest perks.
“In just the last five years,” Chapman said. “Legacy has returned approximately $10 million to its members in cash payments under our patronage program.”
“Our goal, assuming Legacy earns a profit, is to annually return approximately 1 percent of the average members’ outstanding loan balance through a cash patronage payment,” Chapman said. “That payment effectively reduces our average members’ borrowing cost by 1 percent and it can be substantial on some of our larger agriculture and farming loans.”
“One of the most rewarding things we do each year, is personally deliver patronage checks to some of our members,” he said. “The reaction from a member when one of our lenders personally delivers a $20,000 — or sometimes larger — patronage payment is just plain fun. It makes a difference to the member and their families.”
Unlike commercial banks, Legacy does not accept customer deposits as a source of funds for making loans to customers. As part of the Farm Credit System, Congress established the Farm Credit Funding Corporation, a government agency with the authority to issue debt to the public in a variety of rates and terms.
Farm Credit debt is purchased by both individuals and institutional investors. The proceeds from the sale of debt by the Farm Credit Funding Corporation is where Legacy obtains the funds to loan its members.
“Access to the full spectrum of interest rates and terms in the capital markets is a great benefit to our members, and one that allows Legacy to be extremely competitive on longer-term fixed-rate loans,” Chapman said. “Legacy’s ability to offer our members long-term fixed-rate loan terms that can reduce our borrowers’ exposure to fluctuating interest rates over the term of their loans is a distinct advantage for Legacy.”
Lenders who live for agriculture
Experienced lenders, many among them also farmers and ranchers, is something that also distinguishes many Farm Credit institutions like Legacy from its competition.
Many of the loan officers and relationship managers at Legacy have either previously been involved, or are still involved, directly in agriculture. Legacy customers find their relationship manager has often faced similar issues or concerns they themselves face on a daily basis in managing a farming or ranching operation, Chapman said.
“We have lenders on our staff that have actually been farmers,” he said. “They know the customer and are familiar with the problems those farmer and rancher borrowers face every day.”
“And, the majority of Legacy’s board of directors are farmers or ranchers,” Chapman said. “The board brings a broad and experienced perspective on farming and ranching to the overall policies and programs of Legacy and we believe that translates into a benefit for our members too.”
To help get their story out to more producers, Legacy enlisted the help of Ranch House Designs to develop a full-fledged marketing program. The Legacy leadership and board of directors also appreciated how Ranch House is also made up of farmers and ranchers who know the business so well. Their expertise — joined with the Legacy team’s experience — is making for a win-win situation in building the Legacy brand.
Becoming a member
Chapman strongly believes in the mission of Legacy Ag Credit, but said there is a lot of behind-the-scenes work to get farmers, ranchers and rural homeowners the financing they need.
The credit process is similar to most other lenders. Applicants are typically asked to provide information about the type of loan they are seeking, any collateral that may be pledged against the loan, personal financial information — like tax returns or recent business results, if it is a farming or ranching operation — and financial projections, if the loan request is to start a new business.
“We take all of that information, including a review of their recent credit history, and assess the applicant’s ability to repay the loan,” Chapman said. “We try to find a way to say yes and help our applicants fulfill that dream.”
Chapman was involved in the commercial banking industry for more than 30 years, and has been with Legacy and the Farm Credit system for a few months.
While he is new to Farm Credit, he said that he has never been more proud to be a part of an organization like Legacy Ag Credit, the employees he works with on a daily basis and the farmers and ranchers he has a small part in helping every day.
“I am proud of the people that work for Legacy. They take our mission of helping folks achieve their dreams seriously. They are out there every day talking to potential customers, finding out what those customers need and trying to reach everyone we can in our 10-county territory,” Chapman said. “It’s really gratifying to see it all come together and have an applicant fulfill, in many cases, a lifelong dream of becoming a full-time farmer or rancher or a rural home owner. We have a great mission. We’re helping farmers, ranchers and rural homeowners fulfill their dreams, and that’s about as American and apple pie as it gets.”
Legacy Ag Credit, ACA is a $260 million-asset Farm Credit System cooperative headquartered in Sulphur Springs, Texas. Including its home office, Legacy has 31 full-time employees in their Longview, Gilmer, Canton and Kaufman, Texas, locations. Additional information about Legacy can be found at their website, www.legacyaca.com, or on their Facebook page.