North Dakota Credit Unions Stand Out In The Field Of Ag Lending

Roughrider cooperatives build on a tradition of personal service and expert knowledge to sow the seeds of lending success.

There are 36 credit unions in North Dakota. Ten of them are among the top 39 credit unions nationwide in agriculture loan concentration. Five of them are among the 15 largest ag lenders in the state.

North Dakota is one of the leading providers of agricultural products in the nation, says Melanie Stilwell, president and CEO of Western Cooperative Credit Union ($334.0M, Williston, ND) for the past 16 years. Farmers need loans.

Western Cooperative was chartered by seven farmers in 1938, and two of its five current board members are farmers. Stilwell grew up on a farm. So did all of the lenders at her member-owned cooperative.

That history is similar to other North Dakota credit unions that were founded by farmers and farm organizations in the 1930s and 1940s.


At a time when farmers were struggling and credit was difficult to obtain, credit unions stepped in to fill that need, says Steve Schmitz, president and CEO at First Community Credit Union ($795.8M, Jamestown, ND). Even though most North Dakota credit unions have expanded to a community charter, there are still strong ties to agriculture in our membership and communities.

A $112 million loan financed through a consortium of credit unions shines a light on the impact of the cooperative model in rural America. Learn more in Credit Unions Are Leading The Way In USDA Lending.


First Community Credit Union
Data as of 03.31.18

HQ: Jamestown, ND
ASSETS: $795.8M
MEMBERS: 44,075
12-MO LOAN GROWTH: 33.4%
ROA: 0.69%

These are deep relationships, rooted and nurtured in rural areas where credit unions are often the only game in town.

If you’re not able to fund a rancher or farmer, that’s going to constrain your ability to serve your membership base, says Phil Love, president and CEO of Pactola, a commercial and agricultural lending CUSO based in Rapid City, SD.

But credit unions are financing more than a crop or a herd. They also are typically that farming family’s primary financial institution. Agriculture is a livelihood. A way of life. And it’s complicated.

Ag loans is a catch-all term that includes annual operating loans for items such as seed, fertilizer, repairs, and land rent. There are also term loans of three to five years for farm equipment as well as long-term notes of 10 to 25 years for real estate.

It’s a specialty, Schmitz says. Without experience you’ll learn some expensive lessons.

I was looking at records from a loan to buy land 80 years ago. For collateral, it listed character.’ It can still be that way.

Melanie Stilwell, President/CEO, Western Cooperative Credit Union

Foul Weather Friends

Farming is a notably risky venture. Weather affects yield. Crop prices affect everything. Equipment is expensive. The whole thing, in fact, is expensive. Ag lenders commit money, resources, and reputation.


Western Cooperative Credit Union
Data as of 03.31.18

HQ: Williston, ND
ASSETS: $334.0M
MEMBERS: 18,814
ROA: 0.34%

Schmitz at First Community says a typical farm of 3,000 to 5,000 acres growing primarily soybeans and corn has an average total farm relationship of $1 million to $2.5 million. It would likely need an annual operating loan of $500,000 to $1.5 million and additional financing for equipment and real estate.

At year-end, First Community had 31.67% ― or $165.2 million ― of its loan portfolio committed to ag lending. The collateral? The land itself, along with equipment, livestock, crops in the ground, and crops in inventory.

You might be surprised to learn you can take a lien on growing crops, Schmitz says. But farmers carry federal crop insurance, so you take an assignment of the crop insurance proceeds in the event of a partial or complete crop failure.

There’s also the personal commitment from both sides, which factors into the back-and-forth needed to handle financing a business where borrowers often can’t completely pay off annual cash advances at the end of the year.

Click the tabs below to view graphs.


A tractor and air drill like this used for seeding typically costs $650,000 to $700,000.


Western Cooperative runs ad for special rates on ag equipment loans, sometimes as low as 2.99%.


Collateral, including cattle, is but one way ag lending is a whole different animal than commercial lending in the city.



Callahan Associates |
Rank State Name Percentage Total Dollar Amount of
Agricultural Related Loans
$ Granted Assets
1 ND Hometown 83.31% $85,980,114 $34,610,881 $115,621,409
2 IN Beacon 74.71% $733,490,076 $173,997,595 $1,253,529,161
3 ND Community 74.62% $20,771,630 $8,875,097 $166,162,880
4 MT Richland 65.44% $23,859,838 $11,745,035 $83,458,195
5 IN Jackson County Co-op 61.66% $10,026,878 $2,868,718 $22,020,991
6 NE The Archer Cooperative 60.51% $33,905,678 $18,801,915 $62,741,824
7 MN Dawson Co-op 58.82% $74,605,808 $33,896,608 $154,290,809
8 ND Dakota West 54.43% $71,377,680 $34,821,886 $242,200,939
9 CO Peoples 53.49% $23,514,332 $15,500,615 $50,247,490
10 MT Daniels-Sheridan 51.83% $14,617,355 $9,388,260 $53,531,023

Click here for the full list.

Ten North Dakota credit unions are among the top 39 in the country ranked by concentration of ag loans in their total portfolio, according to 2017 year-end data from Callahan Associates.




Callahan Associates |
Rank State Name Total Ag Loans
1 ND Choice Financial Group $266,074,000
2 ND First International Bank Trust $149,403,000
3 ND First Community Credit Union $148,970,658
4 ND Bell State Bank Trust $138,842,000
5 ND First State Bank of North Dakota $135,666,000
6 ND American Federal Bank $135,578,000
7 ND Bank Forward $133,710,000
8 ND Town Country Credit Union $129,640,468
9 ND American Bank Center $110,311,000
10 ND Dakota Community Bank Trust $92,914,000

Click here for the full list.

According to Callahan data, five of the top 15 ag lenders in North Dakota at year-end 2017 were credit unions.

These are true relationships, says Stilwell, who grew up 40 miles west of Minot in a family that had farmed for generations.

But that’s not unique to her family history.

I was looking at records from a loan to buy land 80 years ago, the Western Cooperative CEO says. For collateral, it listed character.’ It can still be that way. There’s not much they won’t do to keep that farm in the family. It’s not like a car loan. You don’t walk in and hand over the keys. Farmers don’t do that.

Western Cooperative had $60.6 million in ag loans as of March 31, 2018 33.6% of its entire portfolio. The delinquency rate for those loans is 1.52%.

For the record, the ag lending delinquency rate for the entire credit union industry was 1.07% at year-end, according to data from Callahan Associates. It was 0.72% for indirect lending, perhaps the most opposite product to ag lending.

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But it’s a long road from a delinquency to a foreclosure or repossession. Stilwell says Western Cooperative has written off only three ag loans for a total of approximately $350,000 in her 20 years with the credit union.

That’s the result of lending practices that have been based on relationships for generations, practices aimed at handling the ebbs and flows of life and business on the farm and ranch. Those practices are also key to a sustainable business for the cooperative itself.

Most of our ag borrowers operate family farms and many live in tight-knit communities, says Nicholas Dresser, the credit union’s ag/business loan manager. Word gets around quickly when someone receives good service or not. Developing relationships and being visible is important.

Growing Interest

Tips For Tilling The Ag Portfolio

Steve Schmitz, president and CEO of First Community Credit Union, has been with Jamestown, ND, cooperative for 18 years, the past eight in his current role. Here, he shares three tips for any credit union considering digging into ag lending.

  • Have the proper experience, policies, and processes in place before offering any business loans, including ag lending.
  • Don’t treat ag/commercial lending like consumer lending or you will suffer loan losses.
  • Act like credit union and help those in need, but do not become the lender of last resort. Other financial institutions will figure that out and send their bad credits to you.

Pactola gets a call a week from credit unions interested in ag lending, says Love, whose CUSO currently works with approximately 75 credit unions, primarily in the Dakotas, Minnesota, Iowa, and Texas.

And whereas ag lending is commercial lending, it’s also particularly specialized.

You have to consider a lot more than the debt ratio, especially with larger operations, Love says.

Lenders need to consider marketing plans, including the use of swaps and hedges on global commodities markets. Equipment keeps getting more expensive and sophisticated. For example, drones and advanced electronics on tractors help determine where to apply insecticides and fertilizers.

Then there’s the diverse approach to cash flow and collateral that comes with serving operations that spend a big chunk of their money in the spring in anticipation of profiting from proceeds harvested in the fall. Add to that the uncertainty that comes with financing a typical seven-year cycle that Love says consists of two years of big profits, three years of losses, and two years of breaking even.

Then there are the personal visits that give lenders a firsthand view of what they need to see. Western Cooperative and First Community make regular visits and send people with the experience to know who they’re talking to and what they’re looking at.

It’s a far cry from a typical consumer loan that can be decisioned in minutes.

There’s a lot more financial analysis, since you have to determine if a business is viable, not just whether your wages can cover your monthly payments, says Dresser, the ag/business loan manager at Western Cooperative.

According to Dresser, at a minimum, lenders must examine balance sheets, cash flow projects, and tax returns. Appraisals, lien perfection, and insurance requirements are also more complicated.

Then during the year, there can be additional term loans, numerous line-of-credit advances, more farm visits, and a year-end review — all before starting the entire process over.

It’s more personal, Dresser says. You’re working mostly with family farms and ranches, and you have a lot of interaction with the member. The decisions made at the credit union can have a huge impact on families and their communities.

May 21, 2018

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