Wednesday, January 28, 2015

"Talked To A Banker"

I have an acquaintance that is an Ag lender. Yesterday I ran into him at a function and we were chatting. I asked the question how do you lend in an environment where a loss is looking to be reality. He stated that their take on it is first and foremost limit losses, no unnecessary spending, and more collateral. He acknowledged that the majority will be farming for a loss unless something changes.

 I was old enough through the 80's to go to farm auctions with dad and grandpa. I pray that those days are not on our horizon again. From a young persons perspective a prolonged period of this and we will lose the majority of the young people that have been drawn into Ag. There are differing attitudes towards young producers out there. Some are willing to welcome them into the industry with open arms and some see them as over optimistic competition and would like to see them "taken out".

My talk with the banker reassured me that equity is what is necessary to carry through a down turn to the red. Unfortunately not many young producers are healed enough to bleed much red with so little equity. Be care full what you wish for as some of you may need those young producers at your retirement sale."

Yes I have two lined up if it comes to that.  I am sure there are many more who would be interested.  He makes some good points on Market Talk, it is an interesting thread.

Our banker sent me flowers.  They sent the farm loan officer to work on this year's loan to the house.  They said don't worry about a thing, you are one of our best customers and even if you weren't we would tell you to take care of yourself and get better.  Don't worry about your financials.

They are very conservative rural, farm loan bankers.  They are the best source of cash I've had in my life.  Their financial sheets show they are better prepared for problems than most any bank in Ohio.

I have had good bankers all of my life but these folks are the cream of the crop.  They may not be rated an A+ bank but they are in my 11 years of experience with them.

"The Merchants National Bank is headquartered in Hillsboro and is the 34th largest bank in the state of Ohio. It is also the 1,088th largest bank in the nation. It was established in 1879 and as of September of 2014, it had grown to 125 employees at 13 locations. The Merchants National Bank has a B+ health rating."

Do you like your bank?

Ed Winkle


  1. Ed do you or bankers really think this will be a year were farmers FARM at a loss . I would expect 99% of the farmers have there costs under control and should have postive cash flows. Maybe we will lower our spending /profit expectations but I think if you can raise a "average" crop in 2015 you had better be OK or make some real changes as this is nothing like what it was trying to make money in the '80's .regards-kevin

  2. That might be an overstatement but every budget shows red ink. It is not a capital building year for sure. Everyone in the industry is concerned, I know I am. The sky may not be falling but it is not blue skies. It is a gloomy forecast. Our bank is solidly behind us but we have been building for 50 years. My savings account started when I was five and I still have one. I am not sure how to answer your question because it varies bank to bank and farm to farm.


  3. The first money I ever borrowed was $1200 to buy a used Jeep. The loan officer knew me and my family and wrote out the loan while I was talking to him. When I told him I wasn't sure if I was going to buy it or not he told me that if I decided against it to just call him in the morning and he would cancel the loan. Borrowed it on my signature, as I did a few other times. All that is gone now; the bank got caught in a bad case where one rogue loan officer was taking bribes to shunt customers off to a leasing company not affiliated with the bank and the examiners may as well have put up a cot in the lobby. From then on absolutely no slack on any transaction, and it didn't matter if you had done business with them for fifty years or not. When we refinanced our house and shop a few years ago I was astonished at how much harder it was to qualify for a loan compared to about ten years ago. More paperwork by a huge margin, and most of it was documentation of income and assets. They are a lot stricter about debt to equity than they were before the crash.