On-Line Competition: Farm Credit System Taking Loan Applications Over

One of community bankers' biggest competitors for agriculture loans has taken its business on-line.

Last week Farm Credit Services began accepting loan applications through its Web site. Potential borrowers provide basic information, such as name, address, loan amount requested, and farm income. Decisions are made in as little as a day.

Farm Credit Services is an arm of the Farm Credit System, the government-sponsored entity that provides ag loans to members, which can be banks or other types of lenders.

Though Farm Credit Services operates in 11 midwestern and southeastern states, it will act as a clearing house for electronic loans nationwide. Outside its market, other farm credit banks will make the loans.

"We are giving farmers access to financial solutions 24 hours a day," said Lynn Stevens, director of alternative delivery channels for Agribank FCB in St. Paul, the farm credit bank Farm Credit Services uses.

The on-line application was tested over the summer, Ms. Stevens said, but wasn't officially launched until Oct. 28.

Analysts said the on-line option will be attractive to many farmers.

"There is a segment of farmers who are computer literate and who see advantages to handling business affairs electronically," said Ken Obrecht, editor of Agri Finance, a publication of Doane Agricultural Services Co., St. Louis.

Doane has just completed a survey that found almost 35% of farmers have computers with modems. Among farmers who said they plan to expand their operations, half said they have a modem.

Bankers were split.

Dennis H. White, president and chief executive officer of First Bancshares of Valley City, N.D., a $110 million-asset bank holding company, said competing with an on-line system will be tough.

But Dennis A. Everson said electronic banking is not important to farmers in his area.

"Ninety-nine percent of the agriculture customers we deal with are interested more in service and relationships than easy access to credit," said Mr. Everson, senior vice president of $270 million-asset First Dakota National Bank in Yankton, S.D.

"Farm Credit Services is a formidable competitor in our area," he said. "But as a competitor, I am not too worried" about on-line lending.

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