About the presenters….. Ron Markham –Market President, Sr. Vice President Ag & Commercial Lender Ron has over 20 years experience as an agribusiness and commercial lender. He has a bachelor degree in business/ administration with an emphasis of management and finance from UW Lacrosse. Ron and his family live in Monroe. Kevin Raisbeck - Market President, Ag & Commercial Lender Kevin has over 18 years experience in the agricultural industry, including 7 years of banking experience. He has an associate degree in Agri-business from Southwest Wisconsin Technical College and a Bachelor Degree in Business / Administration from Upper Iowa University. Kevin and his family live in rural Lancaster.
Owned by Heartland Financial USA, Inc. Independent Board of Directors Local Decision Making Superior IDC Rating* Mid-Market Bank Personality and high-touch service of a community bank Capital and additional funding sources of a mid- size, publicly traded financial institution Backroom resources and expertise of Heartland Financial Competitive Advantage Experienced team that will make bold recommendations and advocate for their clients Sophisticated and client-convenient technology Capabilities and capacity equivalent to the large banks Breadth of products and deep, mature back room Loan capacity of $40 million per borrower 4 *IDC’s analysis is based on a series of financial ratios. Each ratio, in turn, tells us something important about how well-managed the institution is and how well they are positioned to deal with potentially adverse economic conditions…or to profit from good times. IDC’s method of evaluating financial institutions is based on the acronym CAMEL- capital adequacy, asset quality, margins, earnings returns, and leverage/liquidity.
Listed on Nasdaq. It’s trading symbol is HTLF $5.9 billion multibank holding company, headquartered in Dubuque, IA www.htlf.com 9 independent charters States of banking operations Illinois, Iowa, Wisconsin, Minnesota, New Mexico, Arizona, Colorado, Montana, Kansas and Missouri 86 Banking Centers in 62 communities The Heartland vision is to differentiate itself by highlighting its uniqueness as a commercial banking organization supported by a strong retail delivery system. As one of the top 100 bank holding companies nationwide, Heartland delivers high-quality financial products and service to clients in the Midwestern, Southwestern and Western United States. 5
Production risk Price or market risk Financial risk Institutional risk (Government policy, laws etc.) Human & personal risk
More Specifically… Lower projected margins in 2015... 2016… Steady or higher cropland rents for 2015… 2016… Production costs steady or climbing… Interest rates – where will they go? Land prices… Intergenerational transfers Etc. Etc. Etc.
Know your cost of production Know your break-even costs Accrual accounting Year end balance sheets Accurate record keeping Know your financial ratio’s Use the risk management tools available Strategies on government programs Alternative plans (Plan B) Communicate with your lender and team! o Identify your “TEAM” member for financial risk
12 Farm record keeping is on a “cash basis” Need to have an accurate accounting of all transactions, the more detail the better December 31 (FYE) balance sheet is needed to analyze your financial performance. Yield & production information is also helpful
13 Where are they? What should they be? Why are they important?
26 How sensitive is your operation to interest rates? Example $1,000,000 of debt with a 20 year amortization
27 Rate fixed at 5%, 20 year amortization with balloon payment in 5 years. Rates increase 1% at the end of the first 5 year maturity. Then stay the same for the remaining term. Payment increases by $5,325 per year. Total interest paid $663,500
28 Rate fixed at 5%, 20 year amortization with balloon payment in 5 years. Rates increase 2% at the end of the first 5 year maturity. Then stay the same for the remaining term. Payment increases by $10,825 per year. Total interest paid $746,120
29 Rate fixed at 5%, 20 year amortization fixed for the full term. Rates increase 0% at the end of the first 5 year maturity. Then stay the same for the remaining term. Payment remains the same for the full term. Total interest paid $583,760
30 Total interest paid 5 year fixed, rate increase 1%$663,500 5 year fixed, rate increases 2%$746,120 Fixed for 20 year term $583,760 Which option will help you manage your cash flow & reduce risk?
Federal Crop Insurance Disaster payments PLC (Price Loss Coverage Program) ARC (Agricultural Risk Coverage) MPP LGM Other
Keep your lender in the loop! o Open & honest conversation o Realistic & proactive approach Identify who should be on your team o How often should you meet? o What should you discuss?
Do you have a will? Do you have a living will? Do you have a farm transfer plan? Do you understand your contracts? o Leases, contracts, land contracts, loans Other
Do you have medical & disability insurance? Do you have life insurance? How much should you have? Do you have written goals? Do you have employees? o What risks do you have with employees?
AgriBusiness Bankers Our Team of seasoned AgriBusiness Bankers help you craft unique financial solutions, while offering educational opportunities on a variety of topics. Kevin A. Raisbeck Market President Platteville, Lancaster Banking Centers 608.348.1426 Shari A. Zenz Vice President, AgriBusiness Banker Lancaster Banking Center 608.723.1400 Tim Hardyman Senior Vice President, AgriBusiness Banker Platteville Banking Center 608.348.1445 Ron Markham Market President Monroe Banking Center 608.328.4080 John Edgington Vice President Monroe Banking Center 608.328.4022 Nick Felder AgriBusiness Banker Platteville Banking Center 608.348.1465