The field of agriculture represents great diversity.
With so many different types of operations and unique situations, lending decisions must take into account the individual situation, said Glen Calnin, a vice president at State Bank of Chilton.
At State Bank of Chilton there is a greater emphasis on agriculture loans. “The agriculture sector is an area where we would like to grow. While the bank engages in a great deal of commercial lending, agriculture presents the most growth opportunity for us,” said Calnin who added that the bank’s ag portfolio is doing nicely.
State Bank of Chilton executes loans primarily with small to medium sized farms. While large corporate farms are usually not its best fit, Calnin said the bank will look at a specific situation and try to make it work. It might mean partnering with another lender or using guaranteed programs designed for the ag sector such as the Farm Service Agency which enables the borrower to undertake longer term pricing. Calnin said ag loans are tailored to the farmers’ goals, objectives and type of operation. Calnin said the bank is okay with single annual principal payments. We can work with that because cash flows in the ag sector are different. For instance, with cash cropping cash flows are not realized on a consistent basis. In cash cropping funds come in after the harvest is sold; whereas the milking cow operation is a consistent cash flow. “We can work with those variables whether it be monthly, quarterly or twice a year. We structure the loan according to their cash flow, what works for them and us,” Calnin said.
Meeting and learning from clients
Before a loan is approved one of the important steps is to visit the farm, meet the farmer, observe the operation and study the production data. This is especially true of new customers. During a busy season farmers don’t have time to break away from their operation to come to the bank. “We are flexible and will schedule a visit that is best for the farmer. Farmers take great pride in their operation, sometimes generations to build. As part of my job I enjoy going out to their place and have them show me how they do things,” Calnin said.
Technology has to be embraced today if one is to be successful in the agriculture sector. >From a technology standpoint things in agriculture have changed a lot. >From plowing to seeding fields to harvesting, equipment today is capable of being programmed with great precision and adapt to different soil conditions. Bank staff attend the annual Farm Technology Days and other educational events allowing bankers to stay current in the ever changing agriculture sector.
An extremely competitive environment for banks is issuing loans for the acquisition of ag real estate, livestock and equipment. Lots of equipment dealers have credit programs with zero percent and it is hard to match that, Calnin said.
An advantage that State Bank of Chilton has is the quickness with which it can act in making loans. That is the advantage of being a smaller bank. Many banks talk about local decision making but that claim is not fully accurate. With larger institutions, different committee levels have to be entered before a loan is approved. “We truly have local decisions. At State Bank of Chilton there is one committee. If the board does not meet for nearly a month, instead of going through the normal channels, we e-mail the information to the committee members for approval,” Calnin said.
The loan process at State Bank of Chilton is a pleasant, common sense approach, without roadblocks, said Calnin. “Thus far I have had no barriers where I could not meet people’s needs.”
State Bank of Chilton’s ability to engage in small business lending remains strong. Other services for business customers are full commercial cash management features but with local service. Such features are driven by the Automated Clearing House (ACH), a nationwide electronic funds transfer (EFT) system that provides for the inter-bank clearing of credit and debit transactions. “Some might think that banking with a community bank it would not offer everything larger US banks would. Within the past year larger small businesses have come to us and realized that we can offer the same commercial cash management services that the larger banks can. That includes ACH direct deposit and other ACH features. One just rolled out this year is remote deposit capture which businesses find beneficial. One can deposit checks directly to the bank by simply scanning in the check,” said Laura Hoerth, State Bank of Chilton executive vice president.
On the personal side the bank has rolled out new pricing with low consumer and mortgage loan rates.
Two new things rolled out a couple months ago are E-statements and mobile banking. “Even our employees are excited to use those features, and I know customers will like them too,” said Hoerth.
Another feature at State Bank of Chilton through mobile banking app is bill pay which more and more customers are finding convenient and safe. “That allows customers to pay bills right from their phone as soon as they receive them and also allows them to pay people. This person to person payment is a free service. For example if one owes another $5 for lunch it can appear in that person’s checking account tomorrow. Things we could not imagine yesterday are now possible and free,” Hoerth said.
Despite the features of mobile banking, we like it when patrons physically visit the bank to make transactions. Our staff’s ability to greet patrons by their first names and build relationships is something we are proud of, Hoerth said.