March 16, 2023 • 25 mins
An agricultural bank, also known as an AG bank, is a type of financial institution that provides specialized financial services to farmers, agribusinesses, and other rural clients to help them manage their finances, invest in their operations, and grow their businesses. In comparison to other types of banks AG banks often have a more specialized understanding of the unique risks and opportunities of associated with the agricultural sector.
We recently spoke with Brandt Hutchcraft and Steve Taets, who are loan officers with Farmers National Bank in Illinois to better understand the services and differences agriculture banking offers.
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(00:00):
What is AG banking?
How does it differfrom other types of banks?
And what should a business,a farm or an individual in the agriculture
industry know about AGlending institutions?
To help us better understand what AGbanking is and how it helps the community,
we're talking with Brandt Hutchcraftand Steve Tates who are loan officers
(00:22):
with Farmers National Bank in Illinoisto help us better understand what AG
banking offers and how they workwith the agriculture community.
Today on this episodeof small business Talks.
Today we're going to be talking about
agriculture banking or AGbanking and agricultural loans.
(00:45):
And to help us with that discussion,we have Brant Hutchcraft and Steve Tates
who are loan officerswith Farmers National Bank.
Gentlemen, welcome to the podcast.
How are you doing today?
Doing well, Neil.Good.
Thanks for having us, Neil.
Glad to have you.
Let's start off by what exactly is AG
banking and how is it differentfrom other types of banking?
(01:09):
I would say AG Banking is providingfinancial services and products to
agriculture customers to the bank,which can range anywhere from grain
farmers, livestock farmers,specialty crops,
chickens and all things agriculture andhelping our customers kind of navigate.
(01:33):
The economy, the AG economy and figuringout how they can be more efficient
in their business and helping them manageprofits and cash flows and things alike.
Just to touch to that?
Neil, I guess just to compare itto anything we really only have maybe
(01:53):
on the I guess conventionalbanking or commercial banking.
To compare it to that when as AG lendersor AG bankers we're dealing with customers
that are raising a productthat is dependent on weather.
And once they successfully do that,
(02:15):
then they're selling that product that'sdependent on pricing that is affected
by a wide range of things,both domestic and foreign.
And so it's our job to work with ourcustomers and like Steve said, navigate,
help navigate through those peaksand valleys
(02:36):
and then meet their needswith with the wide array of our banking
products that we have hereat Farmers National Bank.
I was going to ask you about that.
Could you describe some of maybe
the different types of farmloans that are available?
Yeah, we got operating lines of credit.
So those are our seasonal loans,basically, that farmers would use
(03:01):
throughout the growing season that wouldultimately be paid off at harvest.
And once they would sell
either their livestock or their grain,then we have machinery or equipment
purchase loans,livestock loans, which could be anything
from in our area, anywhere from livestockexcuse me, hogs, cattle
(03:27):
and then really our larger one probablyis farm real estate purchase loans.
Brand kind of broughtup the big three there.
Neil.
And not to get ahead, but we also offerthose big three types of loans
to commercial borrowers,although we are much heavier
(03:48):
in agriculture than we arecommercial and industrial loans.
But those options are available for those
other businesses and otherindustries as well.
Okay.
Do you notice there'sa preference on any one of them?
Or have you noticed a trendtowards one type or another?
Or is it more specific to whatthe need is of the customer?
(04:10):
Very specific to the need of the customer.
Not everyone needs all three of those
types of loans, whether it beoperating equipment or real estate.
Some of our borrowers are real estateonly, some are operating only.
It specifically boils down to the need
of the customer and whatproducts we have to serve them.
(04:32):
Which brings up an interesting question.
What types of farmingoperations do you deal with?
What type of AG business doyou typically work with?
Well, I kind of brought it up
in the beginning, Neil,when I mentioned grain farmers, livestock,
specialty crops, chickens,vegetables, produce.
Those are our main agriculturebusinesses here in our areas.
(04:53):
And we do mix in pretty heavily with someagri related businesses such as grain
elevators, trucking companies,farm equipment dealers,
custom applicators, greenhouses, inputproviders, all things related to AG.
It's just the nature of where we live
(05:14):
and where we are and just the bank beingingrained in that industry.
So if I was a new customer,
what information would I commonly need toprovide to approach getting an AG loan?
Well, whenever I get a phone callfrom a new customer, actually had one this
(05:36):
morning,I call it the foundation of information.
So typically what that's going to consistof is a year end balance sheet and we like
to have three previousyears of tax returns.
And then probably most importantly,
I guess it's all important,but we like to get a projection of either
(05:57):
the current marketing year or the nextmarketing year for that specific farm.
If it is a farmer that we're dealing with,there's obviously additional or other
information that we may or may not requiredepending on who we're dealing with.
And that could be marketing plans,proof of insurance, things of the like.
(06:19):
I'll just kind of addon to that a little bit, Neil.
When you initially meet with the customer
and we collect financial information,in my opinion the historical financial
information is good,but you're more building a file
with that based on what you needfor bank regulations and things.
But really when you meet with a customer,it kind of boils down to more budgeting
(06:44):
and figuring out what their cost layoutmight be for, say,
the next year or two years and kindof working with them to figure out what
products might work best and whattimeline for those products would fit.
But for me, it really boils downto what's your budget for the year?
What are your costs?
And we can build the revenuestructure from there.
(07:07):
I'm going to ask about how loandecisions are made within the bank.
Are they done via committee or are they
an individuallenders just walk us through a little bit
of the decision makingprocess and how that works.
Well, it's probably dependent on the size,but it really all starts with the lender.
(07:28):
So either someone that we've already been
working with or if it's a new borrower,depending on what we're discussing.
But each of us have a certain dollar
amount that we're allowed to approvewith each individual customer.
(07:49):
So anything above and beyond that is when
we would go to our to our oversightcommittee here internally at the bank.
But, yeah, it's it's more dependenton size, but it it starts with us,
you know, myself, Steve,and the other lenders here at F and B.
What kind of a time frame are you lookingat between coming in and getting
(08:11):
a decision from startingthe process to getting a decision?
That's a good question, Neil,
because it offers us a chance topromote the bank and the fact that we are
rather quick in decision making becauseall of our decisions are made locally.
Brandt alluded to the size
(08:31):
of the operation or the borrowerand how that's handled.
And if that needs to go to a committeeof people above and beyond the lender,
the good thing is,a lot of times you don't have to wait.
It can be a very quick processthat can be done digitally through email.
(08:52):
Loan borrower has a loan request,
and it can be sent out electronicallyto those committee members,
and they can respond withina relatively short amount of time.
A lot of times, if it's smaller borrower,smaller loan request, the loan officers,
typically,if the need is there,
(09:12):
the loan could happen as soonas the same day as the request.
An advantage for us and the bank asa whole to be able to offer that.
I think that is, if you want to touch base
on any other things you would say wasan advantage that you have,
being a small, more community bank thanyou are, let's say, like a multinational.
(09:34):
You're not the chase that you feelyou offer compared to, like yeah, I.
Mean, I think the promptness is where we
even try to strive to differentiateourselves, at least in the area.
Even
every year, there seems to be greatercompetition for a number of reasons,
(09:57):
whether there's just not as manybanks in the AG industry or farms.
Farms are getting larger,but the number of farms is shrinking.
So when we have our clientele,that our potential clientele drinking,
(10:18):
we have to do something either betteror different than the other guys.
And I think that the quickness or
the turnaround time with any of our loandecisions puts us ahead of everybody else.
And how much can be loanedout to any one customer?
Right now?Today, that number is $10 million to any
(10:39):
one borrower or what we would considera relationship,
which typically is an individual ora group of individuals that are connected
via legal entities suchas corporations or LLCs.
If all of those entities,
including the individual or groupof individuals tied together,
(11:00):
is above 10 million, that's kind of ourlimit where we would make a cut off.
I think we've already covered this,but I'm going to ask it anyway.
Walk us throughthe approval process again.
Sure.I can start there.
Neil okay,the first thing is it takes a phone call
(11:21):
or somebody to even stopin the bank or an email.
And really the first part of the processis meeting that customer.
We take pride in sitting face to facein most cases, not all cases.
If the borrower doesn't want to sitface to face, they don't have to.
They can reach us email,text, or phone pretty simply.
(11:43):
And we have some handy tools on ourwebsite where people can submit
information to uselectronically and securely.
So that helps from time to time.
But the majority of us lenders here
at Farmers Bank are meetingwith the customers initially,
which you could almost call somewhat of aninterview to figure out their business.
(12:05):
And as much as you can about it,
whether it be the background orthe financials kind of front to back what
the business is and what the requestout of the borrower might be.
Beyond the initial interview,
brant kind of touched on it beforeit's collecting financial information.
Usually the regulation,there is two or three years of federal
(12:26):
and state income tax returnsand a personal financial statement
which would lay out all your assets,which is everything that somebody owes
versus all your liabilities,which is what you owe.
I meant to say assets are what you own.
But the financial statement, the bankmay do a credit check if we need to.
(12:50):
Those don't play all that important whenyou talk about AG banking in itself.
But once we've collected those financials,we will analyze those,
whether it be the lender on our ownanalyzing the financials,
or we have a group of what youwould call a credit analyst.
We have a group of three folks of thosethat if the request has any size to it,
(13:14):
they have to kind of getin and help us out with that.
So we appreciate havingthat group with us.
Beyond that, we also kindof touched on the approval process.
It'll boil down to the sizeof the request, whether the individual
loan officer can give itthe green light or not.
Beyond a certain limit, it will becomean approval by committee.
(13:39):
And if the request is so great to whereit involves board credit approval,
that can sometimes come into play as well,those would be your largest borrowers.
Additionally, too, we don't necessarilyforce or expect everybody to come to us.
We communicate beforehand, but oftentimes
(14:03):
we'll go on site onto the farm.
I think that's just a niceadded touch in doing so.
And then in particular,the last few years and going forward,
technology has really helpedus be able to do that.
We're going to switch the conversation
(14:24):
a little bit more to aboutFarmers National Bank.
I think I want to ask, how long hasFarmers National Bank been an AG bank?
Well, we've existed for 120 years.
I guess we're in our 121st yearand starting in Profitstown, Illinois.
(14:47):
So I would say for all of those 120 years,farmers National Bank would.
Be an AG bank.
How do you keep your identity and remain
in the business as an AGlending institution?
Well, Neil, I think it boils down towhere we live and where we're all banking,
(15:08):
and it just kind of comeswith the territory.
Most of the economy in our markets is
driven by agriculture orbusinesses related to agriculture.
So it just naturally comes into playwhen we're in the markets that we're in.
Profitstown, Geneseel, Morrison,
all are heavily driven by agriculture,so it comes along with the territory.
(15:32):
And I think the bank does a good job
of staying in contact with whether it begrandpa to father son,
just kind of keeping in touchwith the generational farmers in the area
to kind of keep the historyof the bank going.
That actually lends me into my nextquestion, which is going to be,
how do you typically form and maintainthese relationships for the time frame?
(15:55):
You're talking over years with a customer.Right?
It's just continuing tocommunicate with them,
whether it be the older generation oryounger generation,
finding ways to connect withpeople who want to meet face to face
and people who may notwant to meet face to face.
(16:15):
And every business and every customer,even farmers are different.
They may be similar in some respects,but they are very different.
So just staying in contact with them
and being available reallyby phone, email or text.
And the bank does a pretty goodjob of staying responsive.
A lot of times our lenders are doingbusiness on weekends and things at nights
(16:39):
and we try and do the bestwe can to stay available.
And I think leading up,
kind of following up on that question,what does Farmers National Bank do to keep
up with all the different AG customersthat you work with and how do you navigate
this rather volatile industrywith your customers?
(17:02):
Kind of piggybackingon what Steve just said.
Consistent contact.
Everyone's different.
We're not here to pester anybody.
I mean, everybody's busy, we're busy.
But I think knowing a good time to callsomeone and that could just be reflective
of something's goingon in a certain industry.
(17:24):
And maybe we're checking in on that.
But I guess in answering, what do we do?There's a number of things.
I mean, the bank provides us, obviously,a wealth of information and knowledge
at our disposal,different articles, publications.
The Internet obviously is a great tool.
(17:46):
Then there's also learning opportunities
that the bank allows us to seek outwhether that's through our local
universities, particularlyUniversity of Illinois here.
And then, I guess, our banking coalitions,I don't know what you call them we have
Illinois Bankers Association,the Community Bankers Association.
(18:08):
They'll put on various learning
opportunities where they'll bringin speakers or professors,
and then we try to get to those asmuch as we can, particularly now.
And going forward, COVID kindof put a halt to some of that.
And then, with the exception of myself,some of us actually farm.
(18:29):
And that's important.
So obviously when they're doing it, like
Steve, for instance, they're in itso they know what's going on.
So that's very importantto a lot of our customers.
What do you see is the future of both
Farmers National Bankand of AG lending in general?
(18:53):
I think the future of the bank wouldbe to remain committed to agriculture.
The saying around here is,it's who we are and what we do.
You may have heard that before.
And in terms of AG banking,
it's about navigatingthe cycles of agriculture.
Soon the good years, how do you manage those
(19:15):
profits to remain liquid for badyears and things like that.
But if you can navigate those upsand downs with your customers,
you're going to go a long way,especially in agriculture.
Borrowers appreciate that.
And if you can kind of walk them through
how to handle their ups and downs,it goes a long way.
The bank has a long reputation of beingable to do that,
(19:40):
sticking it out with customerswho may be having a down year.
Things like that has been a hugereputation for the bank over the years.
Our customers.
They know farmers.
National bank knows AG.
It's 85% of what we do,that's 85% of our loans are AG related.
(20:06):
So obviously, as the AG industry goes,so does Farmers National Bank.
But the most important thing isthe bank's reputation within the area.
It's our job, myself and Steve and others,
we've been successfulfor the past 120 years.
So it's our job to not only maintainthat success, but try to grow it and grow
(20:30):
it in the right way and maybedo it for the next 120 years.
Not saying I'm goingto be here for 120 years.
Maybe I have to I don't know.
Go ahead.
I can add one more thing to that andthe history of the bank.
(20:52):
The bank has always made a strongcommitment to succession planning.
Everything is well thoughtout ahead of time.
So if you have a borrower who may be
somewhat attached to a certain lender,there's a certain time frame, typically,
where the bank likes to introduce newpeople before just passing them off,
(21:12):
so people can get comfortablewith each other and their operations.
And Brandt mentioned it,we'll go out onto your farm site
and introduce any new people that wayand just try and stay in touch.
But the bank has done a good jobof keeping the succession going.
And we have a nice group of young lenders
here that are kind of the next in line,and there will be another line after that.
(21:35):
And so the bank has always been proactivein making sure that the customers could be
served and if it has to be with somebodyelse, that there's a warm up time frame
for those folks to getacclimated to each other.
I really like what you just talked about,
the succession plan, because that,I think, is really important.
(21:57):
This is an important part of people's
lives, and I think that helpsdifferentiate you.
And I think that showsthe commitment that you have to your
customers to even go that farand think that through for them.
I think that's a great idea.
We're coming up towards the end here,
and what I like to do is turn it overto both of you to give me your final
(22:18):
thoughts, anything you'd liketo impart into the conversation.
And then also how do we get in touch
with you and what'sthe best way of doing that?
Well, I guess
any final thoughts I may have may just berehashing what I've already touched upon.
But I know we're here,
(22:39):
we're talking about Farmers National Bank,but I think the 120 years,
whatever the success that we may have,is a reflection on our customers.
There's different areas.
It's not like the state of Illinois has
(23:00):
great farming abilities above and beyond,north, southeast and west,
but in this area, in our locations wherewe operate, we have good quality farming
customers and we have a goodmajority of those here at this bank.
So that's just a pure reflection on them.
(23:21):
So as they go, we go, and we really hopeto partner with them going forwards.
Yeah, I agree with Brant, Neal andanyone looking to get a hold of us.
I mentioned it earlier.
Our branches are in Genesee, Illinois.
Profitstown Illinois,and Morrison, Illinois.
And we have a group of eight lendersacross those branches.
(23:45):
And we can be reached in a number of ways.
I mean, you can go online to our website,Farmersnationalbank Bank,
or you could call any of the branches,stop into any of the branches,
and a lot of times you could send an emailor a text if you have a lender's phone
number, which we can get to youif the request is there.
(24:10):
And we also have, again,a secure portal through our website to
coordinate financialinformation and things.
Excellent.
Steve Brandt, I want to thank you verymuch for enlightening us about what AG
banking and AG lending is and for tellingus a lot about Farmers National Bank.
(24:32):
We're going to put the link to the website
in the show notes on the podcast so peoplecan also go down there and be able to link
directly to be ableto get in touch with you.
So again, thank you guys very muchfor your insight and for giving us
a little bit moreinformation about the area.
And again, thank you for your time today.
Thanks, Neil.
(24:53):
Thanks for having us.
Thank you for listening to our podcast.
If you liked our episode,
we ask you to subscribe to ourchannel or share it with a friend.
You may also contact us with your feedback
at the email addresslisted in the show notes.
What is AG banking?
How does it differfrom other types of banks?
And what should a business,a farm or an individual in the agriculture
industry know about AGlending institutions?
To help us better understand what AGbanking is and how it helps the community,
we're talking with Brandt Hutchcraftand Steve Tates who are loan officers
(00:22):
with Farmers National Bank in Illinoisto help us better understand what AG
banking offers and how they workwith the agriculture community.
Today on this episodeof small business Talks.
Today we're going to be talking about
agriculture banking or AGbanking and agricultural loans.
(00:45):
And to help us with that discussion,we have Brant Hutchcraft and Steve Tates
who are loan officerswith Farmers National Bank.
Gentlemen, welcome to the podcast.
How are you doing today?
Doing well, Neil.Good.
Thanks for having us, Neil.
Glad to have you.
Let's start off by what exactly is AG
banking and how is it differentfrom other types of banking?
(01:09):
I would say AG Banking is providingfinancial services and products to
agriculture customers to the bank,which can range anywhere from grain
farmers, livestock farmers,specialty crops,
chickens and all things agriculture andhelping our customers kind of navigate.
(01:33):
The economy, the AG economy and figuringout how they can be more efficient
in their business and helping them manageprofits and cash flows and things alike.
Just to touch to that?
Neil, I guess just to compare itto anything we really only have maybe
(01:53):
on the I guess conventionalbanking or commercial banking.
To compare it to that when as AG lendersor AG bankers we're dealing with customers
that are raising a productthat is dependent on weather.
And once they successfully do that,
(02:15):
then they're selling that product that'sdependent on pricing that is affected
by a wide range of things,both domestic and foreign.
And so it's our job to work with ourcustomers and like Steve said, navigate,
help navigate through those peaksand valleys
(02:36):
and then meet their needswith with the wide array of our banking
products that we have hereat Farmers National Bank.
I was going to ask you about that.
Could you describe some of maybe
the different types of farmloans that are available?
Yeah, we got operating lines of credit.
So those are our seasonal loans,basically, that farmers would use
(03:01):
throughout the growing season that wouldultimately be paid off at harvest.
And once they would sell
either their livestock or their grain,then we have machinery or equipment
purchase loans,livestock loans, which could be anything
from in our area, anywhere from livestockexcuse me, hogs, cattle
(03:27):
and then really our larger one probablyis farm real estate purchase loans.
Brand kind of broughtup the big three there.
Neil.
And not to get ahead, but we also offerthose big three types of loans
to commercial borrowers,although we are much heavier
(03:48):
in agriculture than we arecommercial and industrial loans.
But those options are available for those
other businesses and otherindustries as well.
Okay.
Do you notice there'sa preference on any one of them?
Or have you noticed a trendtowards one type or another?
Or is it more specific to whatthe need is of the customer?
(04:10):
Very specific to the need of the customer.
Not everyone needs all three of those
types of loans, whether it beoperating equipment or real estate.
Some of our borrowers are real estateonly, some are operating only.
It specifically boils down to the need
of the customer and whatproducts we have to serve them.
(04:32):
Which brings up an interesting question.
What types of farmingoperations do you deal with?
What type of AG business doyou typically work with?
Well, I kind of brought it up
in the beginning, Neil,when I mentioned grain farmers, livestock,
specialty crops, chickens,vegetables, produce.
Those are our main agriculturebusinesses here in our areas.
(04:53):
And we do mix in pretty heavily with someagri related businesses such as grain
elevators, trucking companies,farm equipment dealers,
custom applicators, greenhouses, inputproviders, all things related to AG.
It's just the nature of where we live
(05:14):
and where we are and just the bank beingingrained in that industry.
So if I was a new customer,
what information would I commonly need toprovide to approach getting an AG loan?
Well, whenever I get a phone callfrom a new customer, actually had one this
(05:36):
morning,I call it the foundation of information.
So typically what that's going to consistof is a year end balance sheet and we like
to have three previousyears of tax returns.
And then probably most importantly,
I guess it's all important,but we like to get a projection of either
(05:57):
the current marketing year or the nextmarketing year for that specific farm.
If it is a farmer that we're dealing with,there's obviously additional or other
information that we may or may not requiredepending on who we're dealing with.
And that could be marketing plans,proof of insurance, things of the like.
(06:19):
I'll just kind of addon to that a little bit, Neil.
When you initially meet with the customer
and we collect financial information,in my opinion the historical financial
information is good,but you're more building a file
with that based on what you needfor bank regulations and things.
But really when you meet with a customer,it kind of boils down to more budgeting
(06:44):
and figuring out what their cost layoutmight be for, say,
the next year or two years and kindof working with them to figure out what
products might work best and whattimeline for those products would fit.
But for me, it really boils downto what's your budget for the year?
What are your costs?
And we can build the revenuestructure from there.
(07:07):
I'm going to ask about how loandecisions are made within the bank.
Are they done via committee or are they
an individuallenders just walk us through a little bit
of the decision makingprocess and how that works.
Well, it's probably dependent on the size,but it really all starts with the lender.
(07:28):
So either someone that we've already been
working with or if it's a new borrower,depending on what we're discussing.
But each of us have a certain dollar
amount that we're allowed to approvewith each individual customer.
(07:49):
So anything above and beyond that is when
we would go to our to our oversightcommittee here internally at the bank.
But, yeah, it's it's more dependenton size, but it it starts with us,
you know, myself, Steve,and the other lenders here at F and B.
What kind of a time frame are you lookingat between coming in and getting
(08:11):
a decision from startingthe process to getting a decision?
That's a good question, Neil,
because it offers us a chance topromote the bank and the fact that we are
rather quick in decision making becauseall of our decisions are made locally.
Brandt alluded to the size
(08:31):
of the operation or the borrowerand how that's handled.
And if that needs to go to a committeeof people above and beyond the lender,
the good thing is,a lot of times you don't have to wait.
It can be a very quick processthat can be done digitally through email.
(08:52):
Loan borrower has a loan request,
and it can be sent out electronicallyto those committee members,
and they can respond withina relatively short amount of time.
A lot of times, if it's smaller borrower,smaller loan request, the loan officers,
typically,if the need is there,
(09:12):
the loan could happen as soonas the same day as the request.
An advantage for us and the bank asa whole to be able to offer that.
I think that is, if you want to touch base
on any other things you would say wasan advantage that you have,
being a small, more community bank thanyou are, let's say, like a multinational.
(09:34):
You're not the chase that you feelyou offer compared to, like yeah, I.
Mean, I think the promptness is where we
even try to strive to differentiateourselves, at least in the area.
Even
every year, there seems to be greatercompetition for a number of reasons,
(09:57):
whether there's just not as manybanks in the AG industry or farms.
Farms are getting larger,but the number of farms is shrinking.
So when we have our clientele,that our potential clientele drinking,
(10:18):
we have to do something either betteror different than the other guys.
And I think that the quickness or
the turnaround time with any of our loandecisions puts us ahead of everybody else.
And how much can be loanedout to any one customer?
Right now?Today, that number is $10 million to any
(10:39):
one borrower or what we would considera relationship,
which typically is an individual ora group of individuals that are connected
via legal entities suchas corporations or LLCs.
If all of those entities,
including the individual or groupof individuals tied together,
(11:00):
is above 10 million, that's kind of ourlimit where we would make a cut off.
I think we've already covered this,but I'm going to ask it anyway.
Walk us throughthe approval process again.
Sure.I can start there.
Neil okay,the first thing is it takes a phone call
(11:21):
or somebody to even stopin the bank or an email.
And really the first part of the processis meeting that customer.
We take pride in sitting face to facein most cases, not all cases.
If the borrower doesn't want to sitface to face, they don't have to.
They can reach us email,text, or phone pretty simply.
(11:43):
And we have some handy tools on ourwebsite where people can submit
information to uselectronically and securely.
So that helps from time to time.
But the majority of us lenders here
at Farmers Bank are meetingwith the customers initially,
which you could almost call somewhat of aninterview to figure out their business.
(12:05):
And as much as you can about it,
whether it be the background orthe financials kind of front to back what
the business is and what the requestout of the borrower might be.
Beyond the initial interview,
brant kind of touched on it beforeit's collecting financial information.
Usually the regulation,there is two or three years of federal
(12:26):
and state income tax returnsand a personal financial statement
which would lay out all your assets,which is everything that somebody owes
versus all your liabilities,which is what you owe.
I meant to say assets are what you own.
But the financial statement, the bankmay do a credit check if we need to.
(12:50):
Those don't play all that important whenyou talk about AG banking in itself.
But once we've collected those financials,we will analyze those,
whether it be the lender on our ownanalyzing the financials,
or we have a group of what youwould call a credit analyst.
We have a group of three folks of thosethat if the request has any size to it,
(13:14):
they have to kind of getin and help us out with that.
So we appreciate havingthat group with us.
Beyond that, we also kindof touched on the approval process.
It'll boil down to the sizeof the request, whether the individual
loan officer can give itthe green light or not.
Beyond a certain limit, it will becomean approval by committee.
(13:39):
And if the request is so great to whereit involves board credit approval,
that can sometimes come into play as well,those would be your largest borrowers.
Additionally, too, we don't necessarilyforce or expect everybody to come to us.
We communicate beforehand, but oftentimes
(14:03):
we'll go on site onto the farm.
I think that's just a niceadded touch in doing so.
And then in particular,the last few years and going forward,
technology has really helpedus be able to do that.
We're going to switch the conversation
(14:24):
a little bit more to aboutFarmers National Bank.
I think I want to ask, how long hasFarmers National Bank been an AG bank?
Well, we've existed for 120 years.
I guess we're in our 121st yearand starting in Profitstown, Illinois.
(14:47):
So I would say for all of those 120 years,farmers National Bank would.
Be an AG bank.
How do you keep your identity and remain
in the business as an AGlending institution?
Well, Neil, I think it boils down towhere we live and where we're all banking,
(15:08):
and it just kind of comeswith the territory.
Most of the economy in our markets is
driven by agriculture orbusinesses related to agriculture.
So it just naturally comes into playwhen we're in the markets that we're in.
Profitstown, Geneseel, Morrison,
all are heavily driven by agriculture,so it comes along with the territory.
(15:32):
And I think the bank does a good job
of staying in contact with whether it begrandpa to father son,
just kind of keeping in touchwith the generational farmers in the area
to kind of keep the historyof the bank going.
That actually lends me into my nextquestion, which is going to be,
how do you typically form and maintainthese relationships for the time frame?
(15:55):
You're talking over years with a customer.Right?
It's just continuing tocommunicate with them,
whether it be the older generation oryounger generation,
finding ways to connect withpeople who want to meet face to face
and people who may notwant to meet face to face.
(16:15):
And every business and every customer,even farmers are different.
They may be similar in some respects,but they are very different.
So just staying in contact with them
and being available reallyby phone, email or text.
And the bank does a pretty goodjob of staying responsive.
A lot of times our lenders are doingbusiness on weekends and things at nights
(16:39):
and we try and do the bestwe can to stay available.
And I think leading up,
kind of following up on that question,what does Farmers National Bank do to keep
up with all the different AG customersthat you work with and how do you navigate
this rather volatile industrywith your customers?
(17:02):
Kind of piggybackingon what Steve just said.
Consistent contact.
Everyone's different.
We're not here to pester anybody.
I mean, everybody's busy, we're busy.
But I think knowing a good time to callsomeone and that could just be reflective
of something's goingon in a certain industry.
(17:24):
And maybe we're checking in on that.
But I guess in answering, what do we do?There's a number of things.
I mean, the bank provides us, obviously,a wealth of information and knowledge
at our disposal,different articles, publications.
The Internet obviously is a great tool.
(17:46):
Then there's also learning opportunities
that the bank allows us to seek outwhether that's through our local
universities, particularlyUniversity of Illinois here.
And then, I guess, our banking coalitions,I don't know what you call them we have
Illinois Bankers Association,the Community Bankers Association.
(18:08):
They'll put on various learning
opportunities where they'll bringin speakers or professors,
and then we try to get to those asmuch as we can, particularly now.
And going forward, COVID kindof put a halt to some of that.
And then, with the exception of myself,some of us actually farm.
(18:29):
And that's important.
So obviously when they're doing it, like
Steve, for instance, they're in itso they know what's going on.
So that's very importantto a lot of our customers.
What do you see is the future of both
Farmers National Bankand of AG lending in general?
(18:53):
I think the future of the bank wouldbe to remain committed to agriculture.
The saying around here is,it's who we are and what we do.
You may have heard that before.
And in terms of AG banking,
it's about navigatingthe cycles of agriculture.
Soon the good years, how do you manage those
(19:15):
profits to remain liquid for badyears and things like that.
But if you can navigate those upsand downs with your customers,
you're going to go a long way,especially in agriculture.
Borrowers appreciate that.
And if you can kind of walk them through
how to handle their ups and downs,it goes a long way.
The bank has a long reputation of beingable to do that,
(19:40):
sticking it out with customerswho may be having a down year.
Things like that has been a hugereputation for the bank over the years.
Our customers.
They know farmers.
National bank knows AG.
It's 85% of what we do,that's 85% of our loans are AG related.
(20:06):
So obviously, as the AG industry goes,so does Farmers National Bank.
But the most important thing isthe bank's reputation within the area.
It's our job, myself and Steve and others,
we've been successfulfor the past 120 years.
So it's our job to not only maintainthat success, but try to grow it and grow
(20:30):
it in the right way and maybedo it for the next 120 years.
Not saying I'm goingto be here for 120 years.
Maybe I have to I don't know.
Go ahead.
I can add one more thing to that andthe history of the bank.
(20:52):
The bank has always made a strongcommitment to succession planning.
Everything is well thoughtout ahead of time.
So if you have a borrower who may be
somewhat attached to a certain lender,there's a certain time frame, typically,
where the bank likes to introduce newpeople before just passing them off,
(21:12):
so people can get comfortablewith each other and their operations.
And Brandt mentioned it,we'll go out onto your farm site
and introduce any new people that wayand just try and stay in touch.
But the bank has done a good jobof keeping the succession going.
And we have a nice group of young lenders
here that are kind of the next in line,and there will be another line after that.
(21:35):
And so the bank has always been proactivein making sure that the customers could be
served and if it has to be with somebodyelse, that there's a warm up time frame
for those folks to getacclimated to each other.
I really like what you just talked about,
the succession plan, because that,I think, is really important.
(21:57):
This is an important part of people's
lives, and I think that helpsdifferentiate you.
And I think that showsthe commitment that you have to your
customers to even go that farand think that through for them.
I think that's a great idea.
We're coming up towards the end here,
and what I like to do is turn it overto both of you to give me your final
(22:18):
thoughts, anything you'd liketo impart into the conversation.
And then also how do we get in touch
with you and what'sthe best way of doing that?
Well, I guess
any final thoughts I may have may just berehashing what I've already touched upon.
But I know we're here,
(22:39):
we're talking about Farmers National Bank,but I think the 120 years,
whatever the success that we may have,is a reflection on our customers.
There's different areas.
It's not like the state of Illinois has
(23:00):
great farming abilities above and beyond,north, southeast and west,
but in this area, in our locations wherewe operate, we have good quality farming
customers and we have a goodmajority of those here at this bank.
So that's just a pure reflection on them.
(23:21):
So as they go, we go, and we really hopeto partner with them going forwards.
Yeah, I agree with Brant, Neal andanyone looking to get a hold of us.
I mentioned it earlier.
Our branches are in Genesee, Illinois.
Profitstown Illinois,and Morrison, Illinois.
And we have a group of eight lendersacross those branches.
(23:45):
And we can be reached in a number of ways.
I mean, you can go online to our website,Farmersnationalbank Bank,
or you could call any of the branches,stop into any of the branches,
and a lot of times you could send an emailor a text if you have a lender's phone
number, which we can get to youif the request is there.
(24:10):
And we also have, again,a secure portal through our website to
coordinate financialinformation and things.
Excellent.
Steve Brandt, I want to thank you verymuch for enlightening us about what AG
banking and AG lending is and for tellingus a lot about Farmers National Bank.
(24:32):
We're going to put the link to the website
in the show notes on the podcast so peoplecan also go down there and be able to link
directly to be ableto get in touch with you.
So again, thank you guys very muchfor your insight and for giving us
a little bit moreinformation about the area.
And again, thank you for your time today.
Thanks, Neil.
(24:53):
Thanks for having us.
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