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Loan Update

From the Desk of Bret Tiller, Vice President of Lending:

With 2019 Ag operating renewals coming to an end, here are a few things to consider for the remainder of the year:

  • Decisions made the remainder of the year will affect the renewal process next year.  The Ag industry is unique where customers present a future plan to a lender before the crops are even planted. As long as they stay within the parameters set in the operating note producers are allowed to make decisions throughout the growing season.  Then we get to see how well the plan worked at renewal time the following year.  Be diligent and stick to your plan.
  • Keep good records.  During most of the production season you are out doing what you do best, farming.  We continue to stress the importance of knowing where you at financially in any given part of the production cycle.   We also like to see accurate records of yields and total production after harvest is complete.  Once those numbers are in feel free to contact your lender for a preliminary check of how the year went (after harvest).  If there is a need for some sort of restructure of debt in the operation it is better to know that earlier than later.  
  • Watch family living expenses throughout the year.  This continues to be an area that sneaks up on operations, if not monitored.  We have seen success with customers who include family living expenses in a personal budget.  Dr. David Kohl recently shared that the old saying, “It’s not how much you earn that makes you success, but how much you spend.”  Family living expenses can make a difference between profit and loss for your farm business. 
  • Maintain adequate working capital.  With narrow margins projected in 2019 cash flows, I can’t stress enough the importance of maintaining working capital and locking in profits when they are available.  We emphasize knowing your breakeven price for your commodities and encourage you to seriously consider converting inventory to cash when there is a profit.  We don't see much chance of a homerun in 2019 but we do think there are a few base hits that will continue to move your operation in the right direction.   We at Flatwater Bank are committed to Agriculture. Feel free to stop by or call in with any questions you may have. 

     Bret