LONGMONT — The collapse of New Frontier Bank in April has added to the woes of area farmers and ranchers already hammered by recession and falling commodity prices.
Greeley-based New Frontier, which had a branch in Longmont and was one of the largest ag lenders in the state, became the second Colorado bank this year to fail after the Federal Deposit Insurance Corp. shut it down for “unsound banking practices and violations of laws and regulations.”
That left New Frontier clients scrambling to find a new bank at a time of year when getting an operating loan is critical for many farmers and ranchers.
Jim Docheff Jr., a dairy farmer near Mead, decided last year to start processing and selling his milk under his own Diamond D brand and move away from selling raw milk in bulk to a co-op, which he’d been doing since starting his farm in 1987.
That was his plan, and New Frontier was his bank.
Docheff said he got wind of the bank’s troubles long before the FDIC stepped in. He started shopping for a new bank months ago.
“We probably talked to nine banks, and five of them just said up front they weren’t making any new loans no matter what,” Docheff said.
He finally found a bank sympathetic to the cyclical nature of agriculture, and he will transfer his account there once the FDIC allows him to.
Many banks are hesitant to take on the risks inherent to farming and ranching, Docheff said. In his case, for example, his books don’t look good right now because of the price of milk.
And a ripple effect would spread beyond the agricultural community, said Mike Flesher, senior vice president of Mountain Plains Farm Credit, a government-sponsored entity that operates much like a credit union.
A large number of farms shutting down would hurt everyone from equipment suppliers to car dealerships, Flesher said. And other businesses that had accounts with New Frontier also are being affected, he said.
“It’s not just about agricultural loans,” Flesher said. “It’s about all those other small businesses out there in northern Colorado who are trying to find a new lender.”
