December 7, 1996 in Nation/World

Agamerica To Leave Spokane After 73 Years, Farm Credit Bank Moves To Sacramento In March

Grayden Jones Staff writer
 

After 73 years in Spokane - including the tumultuous 1980s when it built a downtown skyscraper and then nearly went out of business - AgAmerica Farm Credit Bank is moving to Sacramento to save money.

The move, effective March 1, will eliminate 66 jobs.

AgAmerica is the largest Spokane-based financial institution, with $6.6 billion in loans to 62,000 customers in nine states, including Washington and Idaho.

The change will not affect Northwest Farm Credit Services, also based in Spokane. The association makes loans directly to farmers, ranchers and rural homeowners with money it borrows from AgAmerica.

A handful of AgAmerica employees will remain in Spokane, but no decision has been made about whether the bank will sell its 17-story white office tower at Wall Street and First Avenue.

The move is part of an agreement to assign one management team to operate AgAmerica and the Western Farm Credit Bank of Sacramento, which serves five southwestern states and Hawaii.

After touring Spokane in Wednesday’s snowstorm, directors of AgAmerica and Western Farm agreed to jointly manage the banks in Sacramento. AgAmerica’s president, James Kirk, and Western Farm’s president, James Cirona, were named co-chief executives of the effort.

“The decision to leave Spokane was an agonizing one,” Alan Dillman, chairman of AgAmerica and a Nebraska farmer, said Friday. “What drove our decision was that it must have a favorable impact on the farmers and ranchers we serve.”

Officials said implementing a joint management team will cost $10.8 million, with the largest share paying for severance and early retirement of employees who will lose their jobs.

But the banks estimate they will pay that back in two years, saving an estimated $5 million annually in payroll and operating efficiencies.

Employees of both institutions will be eligible to apply for the approximately 106 jobs in Sacramento, down from the 175 total positions currently in both cities.

The deal ends four months of intense discussion between the two agricultural lenders, and years of informal talks about the possibility of creating a mega-bank in the West.

However, AgAmerica’s Kirk said there are no plans to merge the two banks in the future.

Area business leaders lobbied the banks a final time during the snowstorm tour and business meeting. Five company owners, including Goodale & Barbieri Cos.’ president, Don Barbieri, told the bank directors about the benefits of operating a business in Spokane.

“It’s very disappointing,” said Rich Hadley, president of the Spokane Area Chamber of Commerce, which helped organize the tour. “AgAmerica is a headquarters entity, so they are very professional, and have high-paying jobs which we need. So this is a loss.”

Kirk said Spokane stacked up well against Sacramento. But the city may have been a victim of AgAmerica’s own success.

Unlike Western Farm Credit, AgAmerica’s three lending associations do not rely on the bank for marketing, data processing, training and legal assistance. The associations, which are highly profitable and independent, did not fight for AgAmerica to stay in Spokane, but urged it to take whatever steps were necessary to keep their costs low.

But in California alone, there are 18 associations extremely dependent on Western Farm for a variety of services. They and another nine associations located in Nevada, Arizona, Utah and Hawaii opposed moving the bank to Spokane.

“It basically came down to a decision by our customers,” Kirk said.

Kirk will co-manage the banks until Cirona retires in 1998. At that time, Kirk will assume control of both banks, with assets totalling $13.7 billion.

The bank’s downtown Spokane building, erected in the early 1980s by previous managers, became a monument to the bloated Farm Credit system. But plummeting land values and mismanagement threatened to ruin the bank, which federal regulators prepared to liquidate in 1989.

As a last ditch effort, new managers were installed and a government-backed loan for $90 million was approved. The reorganization - coupled with a fortuitous drop in interest rates - saved the bank.

In 1994, the Spokane Farm Credit Bank merged with the Omaha Farm Credit Bank to create AgAmerica.

, DataTimes MEMO: This sidebar appeared with the story: BANK PROFILES

AgAmerica Farm Credit Bank, Spokane Territory: Washington, Montana, Idaho, Oregon, Wyoming, Alaska, Iowa, Nebraska and South Dakota. Employees: 70. Customers: Three lending associations and 62,000 borrowers. Assets: $7.9 billion.

Western Farm Credit Bank, Sacramento Territory: California, southeastern Idaho, Nevada, Arizona, Utah and Hawaii. Employees: 109. Customers: 27 lending associations and 20,000 borrowers. Assets: $5.78 billion.

This sidebar appeared with the story: BANK PROFILES

AgAmerica Farm Credit Bank, Spokane Territory: Washington, Montana, Idaho, Oregon, Wyoming, Alaska, Iowa, Nebraska and South Dakota. Employees: 70. Customers: Three lending associations and 62,000 borrowers. Assets: $7.9 billion.

Western Farm Credit Bank, Sacramento Territory: California, southeastern Idaho, Nevada, Arizona, Utah and Hawaii. Employees: 109. Customers: 27 lending associations and 20,000 borrowers. Assets: $5.78 billion.


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