FEDERAL RESERVE BANK OF DALLAS OCTOBER 1996 BANKING & COMMUNITYPP . erspectiveserspectives The One That Didn’t Get Away Hughes Springs Catches Catfish Business By Leveraging Public And Private Resources In 1993, GAF Fisheries Inc. in Hughes Springs, Texas, wanted to build a processing plant and expand its farm to produce catfish for 40 . restaurants operated by a related com- . pany, Great American Foods. Although . Texans eat about 25 percent of the . farm-raised catfish consumed in the . United States, only 2 percent of the fish . are produced in Texas. With a process- GAF Fisheries, a catfish processing plant in Hughes . ing plant and larger farm, GAF . Springs, Texas. Fisheries could ensure a steady supply . and consistent quality for the David . Beard Catfish Restaurants. Fisheries purchased 1,500 acres of . “Before we built the plant and fish . land for the plant and fish farm. The . farm, we were purchasing approxi- . city, however, would need to upgrade INSIDE . mately $7.5 million of processed cat- . its wastewater treatment system and . fish from Mississippi each year to sup- . sewer and water lines to accommodate Sources of HMDA Data . ply our restaurants,” says Mike . GAF’s operations. Ä . Jenkins, president of GAF Fisheries. “The city of Hughes Springs want- Helping Turn a Vision “With the new farm and plant, we can . ed the processing plant in its communi- Into Reality . raise some fish locally, and we can . ty, and other cities were competing to Ä process up to 80,000 pounds of live . have GAF move to their areas,” says A Small Bank with Big Ideas fish each day.” . Clay Meadows, business development Ä Hughes Springs, a town of 2,000, . director with Northeast Texas Economic Community Development was the logical site for the processing . Development District (NETEDD), a non- Through Service plant and expanded farm because . profit corporation established in the . GAF Fisheries and Great American . 1960s to facilitate economic develop- Foods are based in the area. GAF ment and growth in a 16-county region. (continued on page 2) ublic & Private Partnership PP(continued from page 1) Hughes Springs needed access to state guarantees 80 percent of the bank can guarantee up to $10 million and is . and federal grant money to build the . loan, was crucial to a bank’s decision an excellent program” says infrastructure, according to Meadows. to extend GAF Fisheries a loan Washington. “The program made it NETEDD assisted the city in . because the venture was essentially a easier for us to extend the loans.” obtaining approval for two grants for . startup and the loan guarantee would The bank loan commitments in infrastructure improvements, one from . help a bank offset some of the risk of turn helped cinch the $750,000 Texas the Texas Capital Fund and the other . the project,” says Meadows. Capital Fund grant and the $1.3 million . from the Economic Development . Denis Washington, vice president . EDA grant, used to improve the city’s Administration (EDA). of lending services at Texarkana . sewer and water infrastructure, says One of the stipulations of the . National Bank, liked the opportunity to . Meadows. Texas Capital Fund was that GAF . use the USDA B&I program, and . The processing plant and farm Fisheries have a commitment for . extended two loans to GAF Fisheries . have created 82 new jobs in Hughes financing, which it did not. So Meadows . totaling $3 million. One, for $2,605,000, . Springs since the plant opened in . worked with Jenkins to put together a . was used to refinance the fish farm . March 1996. This puts GAF well on its loan proposal that incorporated a busi- and construct the processing plant. way to surpassing its commitment to ness and industrial (B&I) loan guaran- The other loan, for $395,000, provided . the city to create 100 jobs within three tee from the U.S. Department of working capital. Great American Foods . years. Agriculture (USDA)/Rural Development stockholders also injected $1.2 million . By creating jobs, rural economic . Program in Temple, Texas. for startup costs. development such as this provides an “The B&I loan guarantee, which “The USDA B&I loan guarantee . incentive for families to stay in their . communities, says Meadows. With the new water and sewer . infrastructure in place, Hughes Springs . is promoting development of contract . fish farms that will sell fish to the pro- . cessing plant and create more jobs. In . addition to GAF’s farm, a 1,000-acre . fish farm is under construction in . Hughes Springs. “Without the combination of public grant programs, Texarkana National Bank loans and the loan guarantee, this project would not have happened,” says Meadows. “It took each one to bring about the development. Programs such as the EDA grant, Texas Capital Fund and the Rural Development B&I loan guarantee are essential to rural communities’ ability to From left: David Beard, chairman, David Beard Catfish, Denis R. Washington, vice president, Texarkana attract and support businesses.” Ä National Bank, and Clay Meadows, Northeast Texas Economic Development District. 3 Fast Facts DID YOU KNOW . ? Sources of HMDA Data Hughes Springs, a rural Northeast Texas town of 2,000, is home to the state’s only commercial catfish processing plant. Development of On July 30, the Federal Financial the plant necessitated improvements in the city’s wastewater treat- Institutions Examination Council (FFIEC) ment facility and sewer and water lines. A combination of private announced the availability of 1995 mort- funds and a USDA loan guarantee were used for plant construction gage lending data. The reports reflect and public grants were used for infrastructure improvements. lending activity for the more than 9,500 institutions covered by the Home Technical Assistance Mortgage Disclosure Act (HMDA). Northeast Texas Economic Development District The public can obtain the data in the NETEDD assisted in obtaining approval for the Texas Capital following locations and formats: Fund and EDA grants for Hughes Springs. GAF Fisheries and • Financial institutions subject to the NETEDD also worked with Texarkana National Bank to package HMDA provide their disclosure statement the USDA B&I loan-guarantee application. at the institution’s home office and in at least one branch office in each additional Infrastructure Grants to City metropolitan statistical area (MSA) where Texas Capital Fund Infrastructure Program $750,000 it has offices. A grant for installation of water lines to the processing plant. • Each MSA has a central depository for HMDA data. Central depositories Economic Development Administration $1.3 million have HMDA disclosure statements for A grant for wastewater treatment, sewer, water and access individual financial institutions reporting in improvements to meet the processing plant’s needs. the MSA, as well as a statement that includes aggregate data for all reporting Business Loans institutions in the MSA. The location of Texarkana National Bank $3 million the central depository for a specific MSA Two loans to GAF Fisheries Inc.: a 10-year, $2,605,000 loan at may be obtained by contacting the an adjustable rate of 13/4 over prime to refinance the fish farm FFIEC at (202) 634-6526 or at and build the processing plant and a seven-year, $395,000 loan www.ffiec.gov/hmda on the Internet. at the same rate to be used for working capital. • The FFIEC makes HMDA data direct- ly available to the public. An order form USDA’s Rural Development Business and Industrial Loan Guarantee can be obtained by calling the HMDA Guaranteed 80 percent of the Texarkana National Bank loans. Assistance Line at (202) 452-2016. • Internet users can access HMDA For more information: information by geographic area or finan- Northeast Texas Economic Development District cial institution. Additionally, the user can P.O. Box 1967 determine a financial institution’s market Texarkana, Texas 75504 share of HMDA reportable loans for a (903) 794-3434 specified area. Access this information from the Internet at rtk.net/www/data/hmda_gen.html. Additional information regarding the availability of 1995 HMDA data is includ- ed in Notice 96-78 from the Federal Reserve Bank of Dallas. For a copy of this notice, contact the Dallas Fed’s Public Affairs Department at (214) 922- 5254 or (800) 333-4460, ext. 5254. Ä JoAnn Kane— Executive Director, McAuley Institute ommentary CC Our work with community-based non- Helping Turn a profits has been as diverse as the geo- graphic areas we serve in the District. Vision Into Reality In Pasadena, Texas, for example, we are working with a consortium of McAuley Institute believes that women’s shelter providers to build tran- In Houma, Louisiana, for example, housing should be a core element of sitional housing for survivors of domes- we worked with local leaders to launch community-based development activi- tic violence. Farther south, we made a a comprehensive redevelopment plan ties. It is hard, if not impossible, to loan to Proyecto Azteca to finance the to rebuild the community after the rav- dream of safe neighborhoods without first six units in its self-help housing ages of Hurricane Andrew. including in the picture well-built project in San Juan, Texas. Proyecto “When I came in, the work Catholic homes, with children playing, flowers has gone on to produce an additional Housing Services had already done blooming and generous neighbors. 35 units. with McAuley gave the organization a This image’s hold on our imagination In Louisiana, we worked with the year’s head start on groups that hadn’t and housing’s great impact on the . Southern Mutual Help Association to worked with McAuley,” says Paul economy ensures that this form of . secure development deposits to subsi- James, program manager of Catholic development will always be high on .