If you want to increase the blood pressure of any agricultural lender, mention “review by the federal examination team.” Tension mounts as lending regulation and compliance intensifies due to the Dodd-Frank Act’s mandates as a result of the recent financial crisis. This, in turn, will impact the amount and depth of financial reporting required by you as a producer in the upcoming loan renewal season, and when you request loans for long-term financing of land or expansion.
At the 59th ABA National Agricultural Bankers Conference in Indianapolis, IN, a session led by the FDIC provided insight on what you can expect in financial documentation requirements. The session was well conducted by two experienced regulators. They were quick to point out that agricultural loans, for the most part, are performing quite well in many regions of the country. That being said, here are some topics on their radar screens.
Folks, it is not going to be business as usual for loan requests and decision-making. Similar to air travel, plan to buckle up and take a deep breath because turbulent times could be coming!
Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at firstname.lastname@example.org.