It’s a new year, which means new plans, new goals… and new financial statements. Now that 2014 has rolled around, many of us have seen, or will soon see, requests from our lenders for an updated personal financial statement. As a credit analyst, I have seen financial statements of all sorts come across my desk – from the bare minimum to the fully detailed. In all honesty, I am more excited when I see the latter. Why, you ask? The more details to a financial statement, the better job I can do for you, my customer.
I view my job as a credit analyst almost as a puzzle solver. I am given multiple financials – tax returns, personal statements, balance sheets, income statements – either to create a new loan proposal and/or to ensure we are assisting our customers to the best of our ability. The more details I am given, not only is my job made easier, but quite often I am also able to create a better loan presentation than if I were given the bare minimum.
Ok, then what are the details I (the credit analyst) am looking for? I look not at the front page of the financial statement, but at the schedules attached.
Real Estate
• How much land is rented? Owned?
• When was the property purchased and for how much? Have improvements been made? What is the value of the property?
• Is there a loan on the property? If so, what are the payments and the interest rate?
Cattle
• How many momma cows and calves do you own? Do you calve in spring, fall or both? What is the value of your cows?
• Do you own any bulls and what is their value?
• Do you have feeder calves and/or yearlings and what is their value?
Crops
• What crops are grown?
• How many acres planted/harvested?
• How many bushels are in storage and where (owned/rented)?
• How much has been invested in growing crops?
These are just a couple examples of the schedules and the information that might be required. All this information, while it may seem tedious to many, helps me (the analyst) present a complete picture of your operation to your lender. The more details we have, the better job we can do in assisting you in building and growing your operation to its fullest potential. Additional benefits to you, the farmer/rancher, are that you can see the equity you have built up in your operation and know exactly where you stand financially, and that there is a lesser chance of your lender having to reach out to you multiple times for additional information when you come to him with a request. Detailed financial statements are a win-win for both the agricultural lender and the farmer/rancher.
