IBS Journal Supplement 2015
Harvesting the rewards
Farm Credit Bank of Texas (FCBT) has implemented a new lending back-end in the last few years, Misys’ LoanIQ, and has other big projects on the way, including an upgrade and a new front-end. What lessons can be carried into the new challenges?
Farm Credit Bank of Texas (FCBT) is a user of Misys’ syndicated lending system, Loan- IQ, which is now branded by the supplier as Fusionbanking LoanIQ. FCBT implement- ed this in 2008 to replace the sector’s oth- er main syndicated lending system, FIS’s ACBS. Prior to this, the bank also had a false start with Jack Henry’s much broader sys- tem, Silverlake. Since the LoanIQ go-live, the empha-
sis at FCBT has shifted to the front end, with the selection in late 2014 of a sys- tem called CustomLender, which originat- ed at a US vendor, Custom Credit Systems (CCS). Coincidentally, in August 2014, Misys bought CCS, which means FCBT will now be a pioneer for Misys’ emerging integrat- ed offering. While a relatively satisfied user of
LoanIQ, FCBT’s project had its challenges, in part to do with resources from the ven- dor at a time when there were some larg- er banks that were also implementing the system. Nevertheless, the relationship has improved, the lessons have hopefully been taken on board on both sides, and Misys is now a strategic provider to the bank.
The bank
FCBT is somewhat unusual in structure, as its focus is as a wholesale funding bank, providing services to 14 parent banks across New Mexico, Texas, Alabama, Mis- sissippi and Louisiana. The lending, which is all originated by the 14 banks, is to agri- cultural farmers, ranchers, agribusinesses and aqua culture businesses, plus some residential lending activities. The banks’ remit is to support rural US. The co-oper- ative structure is replicated in three other such farm credit banks in the US and prof- its are distributed back to the borrowers. FCBT’s aim is to have a zero cost margin. There are large revolving lines of cred-
it, in the region of $5.5 billion at the top end and in the $2-3 million range at the bottom. Some of the agribusiness loans are large ones, such as that of $500 million that closed at the end of 2014. The loans are held on FCBT’s books and, along with the other three farm credit banks, it issues farm credit bonds through a New Jer- sey-based funding company. FCBT’s sector has been a troubled
‘It was easier for Misys to step down into the mid-market than for Jack Henry to step up.’
Michael Elliott, Farm Credit Bank of Texas
one, initially as a result of the economic crisis and, of late, as a result of droughts, particularly in Texas. Commodity prices can have a big impact, with the oil boom putting a lot of cash into some of the banks’ borrowers. ‘However, year-on-year, through the worst financial crisis in living memory, we have increased our profits,’ says FCBT’s CIO, Michael Elliott. In part, he attributes this to the arrival of a ‘very sav- vy’ CEO in 2003 from one of the other farm credit banks.
The requirement
FCBT originally had an old IBM iSeries- based loan accounting platform which had a system called Cardinal as its heart
10 © IBS Intelligence 2015
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case study: farm credit bank of texas
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