Pub. 7 2018 Issue 3

April/May 2018 17 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 2017. On Aug. 9, 2017, Lone Star issued a letter stating that its financial statements for 2016 and the first quarter of 2017 “should no longer be relied upon” due to it having discovered “appraisal and accounting irregularities affecting a segment of [Lone Star’s] lending portfolio.” Additionally, the Farm Credit Administration (FCA) withdrew from its database all Lone Star call reports filed with the FCA after 2015. In effect, Lone Star’s finances have been a black hole for over two years. Worse, Lone Star “is not in compliance with some requirements of its general financing agreement with the Farm Credit Bank of Texas, its funding bank.” That bank has dealt with Lone Star’s accounting problems by issuing a “waiver of default” so that Lone Star can continue borrowing from the bank. What is especially troubling about the Lone Star accounting mess is that the FCA apparently has not issued any enforcement order, or written agreement, as the FCA calls such orders, against Lone Star. The absence of any FCA written agreement against Lone Star can be deduced from the fact that in the discussion of FCS regulatory matters in the 2017 Annual Information Statement of the Farm Credit System, published by the Funding Corporation, there is no discussion of written agreements the FCA has entered into with FCS institutions. Prior years’ Information Statements have indicated how many written agreements were outstanding and the total assets of the institutions subject to written agreements. The apparent absence of an enforcement order against Lone Star evidences a serious problem at the FCA — its continued unwillingness to publish its enforcement orders, something the banking regulators routinely do. Any bank with accounting problems of the magnitude of Lone Star’s would have long ago been subject to a tough enforcement order issued by its primary federal regulator, and that order would have been published for all to read. What FCS associations are you competing against? I often find that bankers do not know which FCS association or associations they are competing against or where local FCS offices are located. The Farm Credit Council, the FCS trade association, has helpfully made that information available, on farmcredit.com/ locations. Simply select a state and office type (branch or headquarters) and then click on Apply to find those office locations. You also can search by ZIP code, county, or city. Learn more about your local FCS competition — who they are and where they are located — by using this easy- to-use search tool. Experienced Member FDIC f n b h u t c h . b a n k | 8 0 0 . 2 9 3 . 0 6 8 3 | Our dedicated sta members are here to help you with a broad array of nancial expertise for you and your customers. Pictured (left to right) Mike Pritchett, Curtis Overton, Rod Jones, Dustin Stull, Mike Fahrbach and Shane McCall C M Y CM MY CY CMY K 17_FNB6987_ks_banker_mag_ad_experienced_01.pdf 1 11/21/17 11:23 AM