Curt started by sharing the Banker’s Decision Grid, which looks at two different parameters: Collateral Position and Cash Flow Position. When either—or both of these—is negative, there is a need for the lender to communicate the need for the borrower to make some changes. They may be to “settle” if both parameters are negative, “restructure” if collateral is negative, or be put on a “watch list” if cash flow is negative. Only when both parameters are positive is there an “acceptable and performing” status.

 

Curt also shared some of his favorite quotes, such as, “You don’t run a business hoping you don’t have a recession,” from Jamie Dimon. “The goal is not only to earn high returns at the top of the cycle but also avoid giving them back at the bottom,” from Duff McDonald. One of his personal quotes is, “I lent you cash, I want paid back with cash.” And finally, one from his uncle Joe, “Show me your budget and I’ll show you what you value!” The last one is a good quote for all of us to keep in mind.

 

He summarized his presentation with these comments:

• Things are going to get worse for a while in Rural America.

• Succession planning is perhaps the most overlooked risk.

• Few, if any, major commodities are priced above average breakeven.

• Younger bankers and farmers are ill equipped to deal with it on their own. They’ve never seen bad times.

• The endless increase in land values may well be coming to an end.

• Being proactive is going to save a lot of grief.

• Separating NEEDS from WANTS is going to be a key driver of success.

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This article is the opinion and perspective of the author and others quoted here, and may or may not be consistent with those of anyone else. Mention of specific people or items in the article is not an endorsement of the individual, the company or the organization from which it originates.

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Don Tyler

ASAC Board Member