November 1, From the Desk of Adam Boryca, Cozad Branch

Transcription

1 November 1, 2014 Markets: by Eric Ide Where we were compared to where we are Live Cattle (Sep): $ $ $ $ $ Feeder Cattle: (Oct): $ $ $ $ $ Steers: (7 wt avg.): $ $ $ $ $ Heifers: (7 wt avg.): $ $ $ $ $ Corn (Sep): $ 3.58 $ 5.02 $ 8.15 $ 7.58 $ 3.93 Beans (Sep): $ $ $ $ $ Shocking Statistics from Dr. Kohl From the Desk of Adam Boryca, Cozad Branch Recently, I had the opportunity to be on a panel discussion for an Ag Conference in Omaha NE. One of the members of the panel was Dr. David Kohl of Virginia Tech University. During the discussion, he shared some statistics and comparisons between the rapid value increase in Real Estate in the southern United States in the early 2000 s and the Midwest now. Here is some of the info he shared: The 10 most profitable years in the history of farming were: 72-75; 05-06; 08; 11-13; Six of these years were in the last ten years.

2 November 1, 2014 Page 2 There have been only 4 super cycles in Ag: after WWI, after WWII, 70 s, and Now. The average super cycle was 2-4 years. The current super cycle has been 10 years. The 10 year percent change in Farm Real Estate values in Iowa, North Dakota, South Dakota & Nebraska is %. This is very comparative to the sand states of Florida, Arizona, Nevada, & California during the tech boom from So what happened to the Sand States The sand states seen a drop of 50% in value in 08. Why is Dr. Kohl worried about the Midwest Ag Real Estate Values? As I stated, in Nebraska, the value of RE over the last 10 years increase 350%. The average 10 year percent change in Farm Real Estate Values in the US was only 179%. What is scary is, if you overlay the farm states growth from with sand states growth from 02-08, they are identical. So, he left with the question. If we see a decline in real estate values in the Midwest, what percent decline will we see? Record Keeping From the Desk of Richard Johnson, Lexington Branch As we approach renewal season we will be asking our customers to update their records. Often times it seems a bother to collect the information for the bank. We really use your information to assist you in your financial decisions. A study by the University of Indiana found the following on farm record keeping practices: 1) 99% keep their records for tax purposes 2) 62% use the records for evaluating their business 3) 52% look at their records annually (probably when the bank or tax preparer asks for them) 4) 19% review them monthly 5) 18% use them to compare to their peers 6) 13% reviewed them when making a major purpose. Only 13% review their finances before making a major purchase! Do you review your financial records before you make a major purchase? A lot of customers consult their banker before they make a major purchase. Some do that for assistance, some do it to confirm their decision, and, sadly, some do it because their banker knows their finances better than they do.

3 November 1, 2014 Page 3 As noted earlier we at Homestead really do use your records. We don t ask for the information just to fill your files. We hope you know and understand your finances. The Nebraska Bankers Association will be hosting Dr. David Kohl again in December of We hope you will accept our invitation to attend the meetings and get his take on the economy while listening to his reasoning on why your records are important to your operation. If you ve finished harvest we hope it was a safe and successful event. If you haven t finished harvest, be careful. From the desk of Isaiah Graham, St. Paul Branch My name is Isaiah O. Graham and I am the new Branch Manager of the St. Paul and Wolbach locations. I am extremely happy to be joining the Homestead Bank family. I grew up outside of Central City and graduated high school there. I received my degree in Business Management with an emphasis in Banking/Insurance from Northeast College in Norfolk, NE. For the last 10 years I have been with Wells Fargo Bank and worked for the company in many different managerial roles in multiple cities that include Sioux Falls, SD Norfolk, NE Grand Island, NE Fort Collins, CO and North Platte, NE. Most recently I was the Business Relationship Manager in Grand Island, NE. My wife and I have 2 children (Grace would be 2½ years old, she passed away during childbirth and Noah is 8 months old) and we are expecting another child at the start of May. I look forward to meeting and working with all the area customers. I appreciate your loyalty and business. CONSTRUCTION ZONE From the Desk of Kevin Hoffart, Schuyler Branch I hope everyone had a safe and happy October and especially Halloween. If you haven t been to the Schuyler Office of Homestead Bank within the last 30 days, you will be quite surprised the next time you stop in to see us. The remodeling project is in full swing and things have changed a great deal. We have put in a new teller line, closed off the walkway between buildings with a new office, covered windows, moved windows, painted and wallpapered the walls and are starting on the new flooring. It will include some tile in the lobby and new carpet. In addition, we will be changing some of the décor with new window coverings, new chairs and many new decorations. We hope to have it completed by early December. We believe it will look very nice when it is finished. If we don t get it done in time for our normal Christmas open house, we plan to have an open house when it is finished.

4 November 1, 2014 Page 4 The remodel isn t the only thing we have been doing this past month. We have been out with Harvest lunches and plan to do some more in November. We are sponsoring approximately a dozen women to the Ag-Ceptional Women s conference in Norfolk on November 21 st and we are getting ready to sponsor and host some farmers for the Ag & Beyond conference in Norfolk on December 10 th. Hopefully, by that time, our remodeling is complete and we are ready to start working with our Ag customers to get ready for next year. At the end of this month is Thanksgiving. I think we all have been blessed again this year and we have many things to be thankful for. Everyone, including myself, should try to remember that whenever something doesn t go as well as planned. Fall is Here From the Desk of Jeff Spiehs, Albion Branch There is no doubt about it, fall is here. Huskers are 8-1 and in First in the Big 10 West Division, harvest is in full swing, the leaves are a changing and the days are getting shorter and cooler. In the Albion area we did see a hard freeze a week ago which finally took the green out of the corn. With the hard freeze and dry windy conditions this last week, corn moisture levels have finally started to fall into the 16%-18% range. Remember, October was the month in which the Fall price was set on your Corn and Soybean Federal Crop Insurance Policies. Make sure to stay in touch with your crop insurance agent as you may be in a loss situation even if you raise an average or above average crop. It will be important to report your bushels as soon as possible this year to determine whether or not you will have a payable loss. There have been many producers locking in and protecting the price on feeder calves. Whether you use options, hedging, margin calls or Livestock Risk Protection (LRP), make sure you have a plan in place and know where your break-even is at. Run a couple of what if scenarios to see what happens to your bottom line if feed prices go up or down, what if we have a bad winter and have a poorer rate of gain or higher death loss? We are seeing cost of gains under $0.80 per lb., we have not seen it that low in several years. Are you also protecting the input/feed side as well? As we make it through the month of November remember to slow down, watch out for children who are anxious to help out dad and grandpa in the field. As always, be safe.

5 November 1, 2014 Page 5 Fall Colors From the Desk of Bob Ritzdorf, Howells Branch The color of the trees in this area is spectacular this fall. Someone said it s because we had excellent moisture in August and September and although we have had some frost, we have not had a killing freeze. This has resulted in the leaves slowly turning to yellow, orange, red and still some green is mixed in spectrum. The soybean harvest is complete with good yields and the corn harvest has been going full tilt the last ten days. After harvest is an excellent time to meet with your banker to do a balance sheet or map out a strategy going into the end of the year and next year. We will all have many decisions to make with the lower prices in grain. There will be tax planning for both livestock and grain farmers. There is a new farm program to consider at your local FSA office. It also seems like Congress is waiting until after elections to give us any other possible decisions that may impact us. This makes everyone scramble at year end. My first boss back in the 70 s before the crash of the 80 s stated many poor marketing decisions are made trying to save taxes. Everyone still needs a plan, but discuss purchases or anything else with your tax person or your banker. It may affect everyone next year and beyond. I talked with a local CPA and he said that many tax returns this year may look good, but won t reflect what is really happening until the 2015 tax return. For many, current corn and soybeans prices are below breakeven on a normal yield. With all the fertilizer, chemical, and seed corn dealers already knocking on your door, it will be important to pencil things out for next year before making decisions. Contact your local Homestead Bank where we can help you pencil out a balance sheet and do some what if s for next year. Fall Yield Reports From the Desk of Justin Schneider, Homestead Insurance Harvest price on corn and soybeans were set October 31st with corn ending up at $3.49 and soybeans at $9.64. There is a very good chance you had a revenue loss on your corn and soybeans this year. To make sure we don t miss any revenue losses, you need to report your yields to your insurance agent ASAP. Even if you don t have a loss, it is much easier to report those yields right now while everything is still easy to find. Once we get the yields reported, new average yields will be established for 2015 and we will be able to give you accurate quotes for next year. If you kept production separate on any non-irrigated acres that you would like to set up under their own units, we should be able to do that for next year. All prices, rates, and information are collected from different sources. Information is not guaranteed and is intended for informational purposes only.