This presentation was provided to the Northwest Michigan Food & Farming Network at their council study session on March 20, 2014. It is the property of Greenstone Farm Credit Services. It includes the video of Ben's presentation embedded at the front of the SlideShare deck. You can click the "next slide" arrow to advance to the PPT slides. And here's the YouTube link alone: http://youtu.be/1fy5OANTQu4

1. FINANCING AND
MONEY MANAGEMENT
From a lender’s perspective…
Ben Mahlich, Regional Vice President

2. 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

3. System Bank Chartered Territories

4. AgriBank District

5. GreenStone’s Territory & Branches

6. 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

7. 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

8. AgBus
3.77%
Broilers
1.45%
Cash Crops
20.14%
Dairy
22.35%
Eating Places
0.75%Fruit
3.47%
Gov. Guar.
0.58%
Grain and
Field Beans
0.68%
Greenhouse
and Nursery
2.53%
Hogs
3.71%
Landlords
0.94%
Livestock
2.91%
Misc.
6.05%
Non-
AgriBus.
0.01%
Part-time/No
Major Ag Prod
17.22%
Potatoes
2.09%
Poultry
0.61%
Rural Home
3.12%
Sugar
Beets
1.74%
Timber
4.56%
Vegetables
1.31%
Portfolio Diversification
As of December 31, 2013
Volume by Enterprise

9. Products and Services
Real 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

10. Market Segments
Traditional farmers
• Young, beginning and small farmers
Commercial producers
Capital markets
Country living residents
• Part-time farmers

11. Market Segment
As of December 31, 2013
Number of Customers by Segment
AgriConsumer
12,097, 51%
Traditional
10,768, 45%
Commercial
693, 3%
Capital
177,1%

12. Market Segments
As of December 31, 2013
Volume by Segment
AgriConsumers, 1,149,
18%
Traditional
2,701, 42%
Commercial
1,638, 25%
Capital Markets
948, 15%

13. 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
GreenStone
77%
Commercial
Banks
77%

14. Credit Availability
From a lender’s perspective…

15. 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

16. Common Credit Standards
Owner equity
Working capital
Term debt repayment capacity
Loan to appraised value

17. Loans and Financing
From a lender’s perspective…

18. 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

19. Financing Process
Initial meeting
Application
Data gathering
Credit analysis
Decision and customer feedback

20. Appropriate Data Needed
Historical profit and loss statements
Balance sheet
Projections
Business plan
SWOT analysis
Competitor analysis
Industry analysis
Risk management

21. Credit Enhancement Tools
Use of SBA or FSA guarantees
MEDC support programs
Grants
State and national disaster
assistance programs

22. 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

23. GreenStone’s Values
Customer first
Deliver quality
Get involved
Do the right thing