AgFirst president holds hope for industry

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Andy Lowrey, president of Columbia-based AgFirst Farm Credit Bank, believes that while Southeastern farmers are facing an uncertain future, the industry is in better shape than many others, according to a detailed interview that appears in Southeastern Farm Press.

Agriculture is in the eye of this financial hurricane, the South Carolina banker told the publication. At the end of 2008, short-term investments are there for agriculture. Long-term investments for agriculture or virtually any other area of industry are just hard to come by, he said.

“Fortunately agriculture is in a stronger financial position tha other sectors of U.S. industry, but we cannot dodge all the financial bullets created by problems in housing and other segments of the financial industry,” he said.

The Farm Credit System was created in 1916 to give rural America better access to credit. Now, the organization is split into 12 regions and is owned by more than 400,000 farmers.

The Farm Credit System is in great financial shape compared to other banking institutions. Short-term there is plenty of money. Long-term the outlook is not so bright, Lowrey said.

“We used to have multiple financial institutions bidding for our business. Now, we are lucky to have three or four we can depend on,” he added.

Lowrey told Southeastern Farm Press that most of the financial problems in the agriculture sector are tied to home lending and can be laid at the feet of the U.S. Congress.

“Fannie Mae set out to increase home ownership in the U.S. from about 60 percent to over 90 percent. In the background, Congress was involved urging higher home ownership. When home lending got an AAA rating, banks and pension funds got involved,” he told the publication.

“Everybody thought home prices could not drop by 20 percent, but they did — and more in many areas of the country. They should have taken a look at farmland prices — in 1980 farmland prices climbed and everyone was saying land prices would never go back to 1970’s levels. By 1987, farm land prices were well below 1980 levels,” he said.

For this year, short-term financing for a crop in the Southeast is still realistic for most farmers, Lowrey believes. Most of AgFirst’s customers who needed $250,000 to finance a crop 2-3 years ago now need $350,000-$400,000 for the same size operation, he said.

“Long-term, buying a farm or making multiple equipment purchases, as farmers move from one crop to another, will be increasingly difficult,” Lowrey contended.

“I visited with 20 farmers recently and all agreed they are going to put off making input purchases, especially fertilizer until the last minute. If this happens on a big scale, supply problems will be a big issue. Sometimes wait-and-see may be wise, but not healthy,” Lowrey stressed.

“The current recession is likely to be long and protracted, but not very deep. It is likely to persist most of 2009. Going into 2010, I think the economic recovery will be slow, but steady,” Lowrey said.

“Consolidation of financial regulators is likely to happen in the future. This is not good for agriculture because most bank regulators know little or nothing about the business cycles that drive agriculture,” he added.

Speaking at a recent agricultural meeting Lowrey said in closing, “Of all the dire things I’ve said about our economy and our financial situation, by far the most frightening is that, going into 2009, the financial universe is in Washington D.C.”

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When isn’t yet history

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Historical re-enactors tend to belong to close-knit groups that attempt to recreate aspects of past historical events or periods, and strive for authenticity and accuracy whenever possibly.

In SC, re-enactments can be seen at a variety of locations on a regular basis, such as Cowpens (scene of the 1781 Revolutionary War battle), Columbia (recalling the Federal devastation of the Confederate city in 1865) and Aiken (site of the 1865 Confederate victory).

Re-enacting isn’t just an American pastime, either. Last weekend, about 4,000 people gathered near the Russian village of Nikolskoye outside St. Petersburg to watch a re-enactment of the battle that led to the breaking of the Siege of Leningrad during World War II.

At least 350 participants, dressed in original Soviet and German military uniforms, staged a 40-minute battle to mark the 65th anniversary of the end of the Siege on Jan. 27, 1944, according to The St. Petersburg Times.

A real German T-4 tank, a Soviet T-34 tank, 45-mm antitank guns, an armored vehicle and a truck were used in the battle, which simulated the repulse of the Germans from Leningrad, as St. Petersburg was then known, by Soviet forces.

However, due to the massive human cost and the relative recentness of the battle, this re-enactment had a much rawer feel to it.

The Siege of Leningrad, which lasted just under 900 days, was one of the longest in human history and cost more than 1.5 million lives. The city’s residents were reduced to eating leather, glue, rats, wood and just about anything else they could find. Hundreds of thousands starved.

As the Times’ story relates, the Siege left an indelible impression on its survivors:

“Valentina Sysoyeva, 81, a survivor of the Siege, who attended the show, said she was ‘moved that young people still remember about the tragedy of the Siege.’

“Sysoyeva was 13 when the Siege began. She said her most dramatic memory of the Siege was dragging a sled carrying the body of her 15-year-old sister, who had died of starvation.

“We buried her in a huge deep mass grave where coffins were stacked on each other four rows up,’ Sysoyeva said.

“Sysoyeva said she only survived by begging for food.

“After my sister died I felt such a great desire to live, and then I like many other children went to beg from military men. They always shared their food with us,” she said.

“Alexander Kruzhkov, 73, who also survived the Siege as a child, said he came to Sunday’s re-enactment with his son and grandson.

“I still can’t hold back the tears when I remember cutting a tiny piece of bread into several parts for my brothers. Our parents had died of starvation by that time,’ Kruzhkov said.”

Credit unions belly up to bailout buffet

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The Wall Street Journal is reporting this morning that the Federal Government is now moving to bail out the credit union network.

“In the latest effort to prop up a sector of the finance industry, federal regulators on Wednesday guaranteed $80 billion in uninsured deposits at the powerful institutions that service the nation’s credit unions,” the paper reported.

The paper added that the vast majority of the nation’s credit union’s are considered financially sound. Some 90 million Americans are believed to hold accounts at credit unions, which reach into virtually every community in the nation.

Meanwhile, The Obama administration is developing proposals to help rescue the banking system that could cost taxpayers much more than the $700 billion bailout Congress already has approved, according to The Associated Press.

“Details are still being worked out,” according to The AP. “But the administration will likely propose spending hundreds of billions more to address the foreclosure crisis, guarantee against losses on some bank assets and expand liquidity programs, according to people with knowledge of the discussions.”

Yes, this is going to end well.

Surprise! City Council wants more money

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A Columbia City Council public hearing to discuss a proposal that would require all rental property owners to pay $11 a year for a business license was met with less than rousing enthusiasm Wednesday morning.

City officials – already noted for being less than vigilant in enforcement of existing ordinances – say the plan would help keep track of owners who do not take care of their property.

Skeptics say it’s just another money-grab by the powers that be.

Indeed, are there not rules and regulations in place regarding the upkeep of rental properties already? Will forcing law-abiding landlords to hand over more of their hard-earned money change the situation?

And how did the Columbia City Council come up with the $11 figure? If you multiply the number of rental property owners by 11, do you somehow end up with a figure that just happens to coincide with the cost of a new project (or projects) that the city council has its eye on, perchance?

2008 a black year for South Financial

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South Carolina’s largest bank company posted a massive $319 million loss during the fourth quarter, it announced Tuesday.

Last year proved disastrous for The South Financial Group of Greenville, which lost $569 million in all, saw its shares fall 72 percent and bid goodbye to founder and longtime chief executive Mack Whittle.

On Wednesday, South Financial stock fell sharply, and was off as much as $1 a share by day-end, closing at around $2.

“The past year has been a terribly difficult one for financial institutions, including TSFG,” said Interim CEO Lynn Harton, in a surprisingly candid statement released by the company.

Company leaders say South Financial is still looking to trim costs, but could also raise fees to customers, The State reported.

Whittle has been a target of blame for the past few months. Critics questions whether he left earlier than expected to protect his estimated $18 million retirement package.

Whittle retired just as the bank was seeking money from the federal bailout, which curbed excessive executive compensation, according to The State.

Gov. Mark Sanford asked the Treasury Department to probe the timing of Whittle’s retirement, but South Financial got $347 million from the government.

The bank took a $7.8 million charge related to Whittle’s severance in the fourth quarter, the company said.

Harton declined comment on Whittle, saying he was focused on what was ahead for the bank, The State reported.

Cayce bank, chief executive part ways

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The chief executive of Congaree Bancshares has stepped down, just days after his bank received $3.3 million in federal bailout funds, The State newspaper reported today.

Hank Ray’s last day with the Cayce-based parent of Congaree State Bank was Jan. 21, but the departure wasn’t announced until Tuesday, the paper reported.

The company’s two-paragraph 8-K filing with the US Securities & Exchange Commission, which can be found here, is remarkably uninformative. It reads:

“Effective as of January 21, 2009, F. Harvin Ray, Jr., resigned from Congaree Bancshares, Inc. as President and Chief Executive Officer. Mr. Ray also resigned as a director of the company. The company thanks Mr. Ray for his service to the company and wishes him the best in future endeavors.
 
“The board of directors has appointed Charlie T. Lovering to serve as the company’s interim Chief Executive Officer while the company commences an immediate search for Mr. Ray’s successor.”

Congaree State Bank is one of SC’s newest financial institutions, having opened its doors in 2006. Ray has also resigned from the company’s board of directors.

Is McClatchy circling the wagons?

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The McClatchy Co., the embattled parent of The State, The Myrtle Beach Sun News, The Charlotte Observer, The Raleigh News & Observer, The Rock Hill Herald, The Hilton Head Island Packet and The Beaufort Gazette, said yesterday it would suspend shareholder dividends after April 1.

The newspaper company said it’s making the move “for the foreseeable future in order to preserve cash for debt repayment,” according to The Sacramento Bee.

McClatchy cut the dividend in half last fall, to 9 cents a share. Then, pressed by declining revenue, it renegotiated its bank loans. Under the new agreement, the Sacramento-based chain was forbidden from paying dividends if its “leverage ratio” exceeded a certain threshold, the Bee reported.

The third-largest U.S. newspaper publisher is struggling to pay off $2 billion in debt related to its purchase of defunct newspaper chain Knight Ridder Inc., according to Reuters.

In recent months, McClatchy and other newspaper companies have explored selling real estate or other assets in a bid to pay off money they borrowed as advertising revenue, long their primary source of income, declines, Reuters reported.

McClatchy is trading at less than a dollar a share.

McClatchy’s press release regarding the announcement can be found here, while a copy of McClatchy’s 2007 Annual Report, ironically titled “Blueprint for Success,” can be found here.