Farm Credit Bank weighing merger


Directors of the Farm Credit Bank of Baltimore will meet today to consider a merger with a sister institution in Columbia, S.C., that could lead to the creation of a new cooperative banking system extending from Pennsylvania to Florida.

The possibility of a consolidation with the Farm Credit Bank of Columbia "is on the agenda for discussion at tomorrow's meeting," Jack Curry, a spokesman for the Sparks-based bank said yesterday.

The bank, which is Maryland's largest agricultural lender, did not offer any hint as to how its seven-member board would vote on the issue. The two institutions have been holding talks since March.

Marie Stiles, a spokeswoman for the Farm Credit Bank of Columbia, said it was her understanding "that the ball is in Baltimore's court." The local bank has been presented with a memorandum of understanding suggesting a consolidation "and they need to vote on it to put the machinery into motion" that would lead to a merger, she said.

A merger requires the majority approval of the 40 affiliated Agricultural Credit Associations of the two banks that actually make the loans to farmers.

Ms. Stiles said the banks were prepared to make a joint announcement as early as today. "It will depend upon what they [the Baltimore Bank's board] do tomorrow," she said yesterday.

If a merger is approved, Ms. Stiles said the names of the banks would be changed and the headquarters of the consolidated operation would be in Columbia.

The Baltimore Bank has about 160 workers and bank officials have conceded that there would be a loss of jobs in a merger, although they have said it is unclear how many that would be.

Gene L. Swackhamer, president of the Sparks bank, said last month that a merger is just one form of restructuring being considered as the bank seeks to cut its operating costs and to boost its lending power. The bank needs to be more competitive with commercial lenders that are becoming more aggressive in vying for loans to farmers to pay for such things as planting crops, equipment, land and houses, he said.

Another alternative, Mr. Swackhamer said, is to downsize into what he called a "wholesale bank" that would offer limited services to its affiliated Agricultural Credit Associations.

He said the goal of the restructuring plan is to reduce the bank's annual operating cost by between $6 million and $7.5 million.

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