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Foreign Banks Continue to Expand into US Agriculture Lending

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June 17th, 2010

TierOne Bank of Lincoln, Nebraska was closed by the FDIC on June 4, 2010 and then sold to Great Western Bank of Sioux Falls, South Dakato which is a subsidiary of National Australia Bank, a large agricultural lender that has expanded its farm-based lending in the United States and appears ready to continue to expand into this sector.

TierOne Bank had 69 branches and about $1.9 billion in assets.  After the purchase, it appears that Great Western Bank will be about $7.5 billion in assets and most of this is based in the ag states of South Dakota, Iowa, Nebraska, Kansas and Missouri.

They are quoted as saying that they continue to want to acquire other farm-orientated banks in the Midwest.  With Bank of the West being owned by a French bank and the large Dutch bank RaboBank expanding in the US, this trend of banking to the farm sector by foreign owned banks will continue.  If the foreign banks have large capital cushions, then this will probably be a good thing for farmers.  If there capital cushion is low, then at the first sign on trouble, these banks may be the first ones to be sold or liquidated.

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation.

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