Greenstone Farm Financing for Northern Michigan - Ben Mahlich
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FINANCING AND MONEY MANAGEMENT From a lender’s perspective… Ben Mahlich, Regional Vice President
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Transcript of Greenstone Farm Financing for Northern Michigan - Ben Mahlich
FINANCING AND MONEY MANAGEMENT
From a lender’s perspective…
Ben Mahlich, Regional Vice President
Farm Credit System
GSE established in 1916
80+ associations
• GreenStone ranks sixth in assets
Four system banks
500,000 customers nationally
$260 billion total assets
$199 billion in loans, leases and related services to customers
13,000 employees nationwide
System Bank Chartered Territories
AgriBank District
GreenStone’s Territory & Branches
GreenStone Overview
Serving Michigan and northeast Wisconsin
36 locations
475 employees
$6.9 billion owned and managed assets
23,000 customers
$163 million total patronage paid since 2005
• $29 million paid from 2013 net earnings
96% customer satisfaction
GreenStone History 2000 - 2013
2000 and 2003 mergers
Annual growth in loan volume
• 10.3% compounded growth rate
• $1.6 billion to $6.6 billion
Members: 14,000 to 23,000
Net operating rate reduced 68 basis points
Loan spreads reduced 32 basis points
Financial services: $5.6 million to $7.4 million
AgBus3.77%
Broilers1.45%
Cash Crops20.14%
Dairy22.35%
Eating Places0.75%Fruit
3.47%Gov. Guar.
0.58%
Grain andField Beans
0.68%
Greenhouseand Nursery
2.53%
Hogs3.71%
Landlords0.94%
Livestock2.91%
Misc.6.05%
Non-AgriBus.0.01%
Part-time/No Major Ag Prod
17.22%
Potatoes2.09%
Poultry0.61%
Rural Home3.12%
SugarBeets1.74%
Timber4.56%
Vegetables1.31%
Portfolio Diversification
As of December 31, 2013
Volume by Enterprise
Products and ServicesReal estate lending
Land loans
AgriBusiness financing
Operating lines of credit
Construction financing
Home mortgages
Equipment loans
Facility and equipment lease financing
AgDirect equipment lending
Farm cash management accounts
Fund held accounts
Commercial and consumer credit cards
Crop insurance
Life and disability insurance
Tax planning and preparation
Accounting software and services
Appraisal services
Market Segments
Traditional farmers
• Young, beginning and small farmers
Commercial producers
Capital markets
Country living residents
• Part-time farmers
Market Segment
As of December 31, 2013
Number of Customers by Segment
AgriConsumer12,097, 51%
Traditional10,768, 45%
Commercial693, 3%
Capital177,1%
Market Segments
As of December 31, 2013
Volume by Segment
AgriConsumers, 1,149, 18%
Traditional2,701, 42%
Commercial1,638, 25%
Capital Markets 948, 15%
Farm Market Share
As of June 30, 2013
65%
55%
83%
57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
MI WI
Dec-03 Dec-04
Dec-05 Dec-06
Dec-07 Jun-08
Dec-08 Jun-09
Dec-09 Jun-10
Dec-10 Jun-11
Dec-11 Jun-12
Dec-12 Jun-13
GreenStone77%
Commercial Banks77%
Credit Availability
From a lender’s perspective…
Credit Considerations
Capital position drives credit availability
• GreenStone has 14.7% permanent capital ratio
Credit available with built in controls and conditions
Sound record keeping and business planning
Risk mitigation to limit volatility
Cash flow and working capital
Weakening land values may increase conservatism
Common Credit Standards
Owner equity
Working capital
Term debt repayment capacity
Loan to appraised value
Loans and Financing
From a lender’s perspective…
Loan Pricing
Pricing expectations
• Yield curve will lift and flatten
• Rates at or very near low
• Inflation will rise which will take interest rates with it (when? and how far?)
Financial institutions have new rules
• Capital/Liquidity requirements
• Financial regulatory reform
• Servicing regulations
Financing Process
Initial meeting
Application
Data gathering
Credit analysis
Decision and customer feedback
Appropriate Data Needed
Historical profit and loss statements
Balance sheet
Projections
Business plan
SWOT analysis
Competitor analysis
Industry analysis
Risk management
Credit Enhancement Tools
Use of SBA or FSA guarantees
MEDC support programs
Grants
State and national disaster assistance programs
Agricultural Expansion Opportunities
There are both large and small scale investment opportunities within Michigan’s food processing industry
Given the state’s economic situation, location, diversity, and population center access, there is GREAT potential to expand processing
GreenStone’s Values
Customer first
Deliver quality
Get involved
Do the right thing
