The client was a hog farmer who saw the value of his livestock drop significantly in March of 2020 after the coronavirus pandemic struck, prompting lockdowns and the closure of restaurants from coast to coast. Together with his financial partner Prospect Bank, an innovative plan was hatched: the bank actually lent the farmer more money to purchase additional pigs that he could fatten over the following five months, to have a pork supply ready for when — or if — the world began to open back up.
“The hog market was very uncertain at the time,” recalls Matt Hoose, Chief Agribusiness Officer at Prospect Bank. “But that was an extremely satisfying process. I hadn’t known this individual for a long time and we were still developing a comfort level with one another, but it just speaks volumes about Prospect Bank. I talked to my boss, and there was no hesitation: ‘Yes, we need to help this person.’ It made all kinds of sense to take that risk, and it paid off.”
By that summer, much of the U.S. was reopening — putting pork back on dinner plates nationwide, and money in hog farmers’ pockets. It was one of those instances where the personal approach of a community bank, combined with the agricultural savvy of a former farmer like Hoose, made all the difference for both the client and the financial institution. And it’s not an unusual occurrence at Prospect Bank, which has a suite of financial products known as FarmWise tailored to the farmers it serves.
“A typical business has receivables flowing in and out monthly. But a farmer is going to plant a crop in April and May. He’s going to harvest it in September, October, and maybe November. And then he’s going to get paid,” Hoose says. “He’s going without cash flow for literally 11 months out of the year. So, it’s important to have a bank that understands that. You’re not going to ask a farmer to make monthly payments on that combine. He’s going to pay for it once a year when the cash flow comes in, and it’s very important to have a bank that understands that.”
Someone who can talk the talk
Hoose knows all this from personal experience. He grew up on a family farm outside Rossville, Ill., studied agribusiness at Illinois State University, and had planned to head home and work his family’s acreage when it was sold. So, he stayed on the business side, working in agricultural lending and finance before arriving at Prospect Bank, which has served the citizens of Central Illinois since 1873.
“It’s important to the farming community that you have somebody who can talk the talk,” Hoose says. “Farmers, they’re going to have a different language than their friends and family members who may have run other businesses. Having grown up in that environment, to be able to speak their language and understand what they’re living through — that type of experience is invaluable.”
Farmers not only speak a different language than other business owners, but they also have very different financial needs due to the seasonal nature of their work. FarmWise understands that and offers products such as a checking account built just for farmers with seasonal fluctuations in their balance, lines of credit that help farmers pay for pre-harvest expenses, and financing options for crop production costs, equipment, or even the purchase of additional farmland.
Offering that degree of financial flexibility is crucial. Seed and fertilizer run about $400 an acre for corn and $260 an acre for soybeans, Hoose says, and those are among the expenses that need to be paid before the farmer makes his money after the harvest. If the farmer is renting the land, rent payments are typically due upfront, and in cash. And the array of necessary equipment — from tractors to cultivators to planters to combines — can cost into the hundreds of thousands of dollars.
For each farm, an individual solution
“If you think about it, you're laying out every one of your expenses without any guarantees that you're going to have a crop,” Hoose says. “Now, most every farmer in this area carries crop insurance that can cover a good part of lost income. But it’s certainly not going to cover all of it. If you’ve worked with a lender for a while, you’ve had those years where maybe things haven’t been as good. We have stood beside farmers in situations where it may not make financial sense, but we’re not going to abandon them. We're going to sit down and figure out, OK, how do we move your operation back to profitability?”
Once again, it’s that unique touch offered by a community bank. Just like being able to work quickly and help a farmer buy a farm out of foreclosure. Just like checking with contacts throughout the community to ensure a title is going to clear. Just like offering solutions in tough times to a farmer who is a neighbor as much as a client.
“I tell my farmers, ‘I don't try to shove you into a box.’ We try to create that lending box around your operation. Even though everybody's raising corn and soybeans, everybody's operation has different needs depending on where they may be,” Hoose says. “An older farmer may have more of a need for deposits than he does for loans. A younger farmer is still building his business and has more need for lending products. We look at each farm individually, and Prospect Bank is as nimble as any institution I've ever worked for. We want to ensure we do what’s right for our clients.”
Interested in learning more about the FarmWise program from Prospect Bank? Visit BankProspect/FarmWise for more information, call (877) 465-4154, or visit one of their nine branches throughout Central Illinois: in Ashmore, Brocton, Champaign, Gilman, Homer, Kansas, Sidell, Watseka or the main location at 177 West Wood St. in Paris.