CEO Comments

CEO Comments:

2021-Making Tracks

How can any two years be so different in almost the blink of an eye? As we approach the one-year anniversary of our lives being turned upside down by COVID-19 in March of 2020, it’s getting harder to remember what life was like in the last few of months of what we nostalgically refer to as “normal.”

Here at GreenStone, I remember our preoccupation with the impact the wettest conditions in nearly forty years had on yields and ultimately our customers’ financial performance. We were getting ready to launch the State of Michigan’s 2019 Low Interest Disaster Loan program, participating in the national Farm Credit System Annual Meeting in Washington, D.C., hosting our members during our annual Patronage Day celebration at all of our branches, and so on. Plus, all those little things we took for granted like getting a haircut, coming to work in the morning, eating out, going to the theater, attending sporting events, etc. All routine things that few of us likely would have considered blessings. As I’ve said before, up to this point the Coronavirus was like a “tsunami ripple” far out to sea that we thought would have little impact on our daily lives. Certainly, the preliminary reports about the virus causing widespread sickness and deaths in China we thought would never happen here even if, by some remote chance, it did make it to the United States.

I must admit, those early reports didn’t have me convinced about the possible threats of the virus, but the virus did spread and we received our first reports of possible infections in some of our staff and customers. Just as many across our industry and the broader business community did, we pivoted to protect employees and customers while complying with what seemed like a never-ending pronouncement of government orders. On top of the early health impact the virus had, it also threatened to collapse our national economy and created as much, if not more, anxiety than the Great Recession of 2008-2010. The agricultural industry was hit hard as demand, particularly for protein products, evaporated overnight as processing shut down due to high infection rates in workers, all resulting in major commodity prices retreating 25-40% from January levels. Through it all, we strived to keep GreenStone and our staff focused on keeping the availability of essential credit and other financial services flowing to our members while working in an unfamiliar remote environment. Thankfully, our world class information technology team had nearly everything in place that we needed! Meeting our customers’ needs at that time of year under normal circumstances is always a challenge due to the seasonality of agriculture and their cyclical financial needs. Throw in the virtual platform and a call to implement a completely new lending program administered by a federal government agency we had no relationship with, created stress on steroids for many of us here. But you are blessed to be an owner in a cooperative filled with talented, committed, “do the right thing” staff and in spite of it all, we were able to extend nearly $145 million in Paycheck Protection Program (PPP) loans to 1,500 customers, which proved to be just the right “shot in the arm” (no pun intended) to get them through those very uncertain, dark, and volatile few months. Fast forward to the present and my, how things have changed! I’m actually getting used to wearing a face mask (Note: I did not say I liked it!). I’m more proficient at doing business on my laptop than I ever thought was possible. Yields across our territory were generally very good this past fall; in fact, harvest was completed well ahead of the five year average with nearly ideal conditions (remember 2019?); commodity prices have not only recovered since those dark days last spring, but are even setting new five year highs in many cases; interest rates continue to be at historically low levels; exports are increasing; and net farm income is forecasted to be $120 billion, which is 43% higher than 2019 and second highest of all time. I know government payments are reported to make up about 39% of this, but it’s still real money! And, most importantly, we may only be a few months away from having a safe/effective vaccine available for broad enough distribution to hopefully put the COVID-19 in its place for good! Still, I know there are many facing the financial realities of the economic impacts of the past year. As interest rates have dropped, GreenStone proactively worked with customers in 2020 to reduce their rates on over 12,000 loans, saving customers over $32 million in just the first year of the new loan rate.

The positives of the agricultural industry coupled with a skyrocketing housing market led to three times more loan growth than budgeted and record net earnings for GreenStone – and helped strengthen the financial quality and stability of our loan portfolio. Which brings me to the ultimate benefit of being a member of your GreenStone cooperative – Patronage. GreenStone will pay out $105 million in March 2021 - $5 million more in patronage than was returned to members last year. Unfortunately, this will be the first year in the 16-year history of the patronage program that we won’t be able to safely celebrate together at your branch on Patronage Day. Instead, we are inviting you to join us online for our Patronage Week celebration when we’ll also mail your check to you! (See page 21 for additional details). Whether celebrating in person or afar, this record dividend return continues to be a strong indicator of our resilience and financial strength - even in challenging times - to provide superior value to our members. GreenStone will pay out $105 million in March “ 2021 - $5 million MORE in patronage than was returned to members last year.

And that’s not all! In a recent survey, you rated our customer satisfaction at its highest level since 2016 – 95% satisfied - even in the face of doing business in ways that prior to March of 2020 we thought were impossible. Our members continue to astound us with tenacity and passion, and I’m proud to work with a team who provides that same drive and cooperative spirit to help meet your needs. Some have been blessed as compared to many others over the past year. I pray we all take some time to quietly reflect on the dozens of lessons taught by this pandemic – things like never taking the little stuff in life for granted, such as large gatherings, going out for dinner on a Friday night, leaving home without a mask, but also the most important things like, family, friends, coworkers, and having enough to eat. Yes, many have truly suffered as a result of this pandemic from either losing their job or business, to being seriously ill and mental fatigue, experiencing death itself, or some combination. Regardless what life dealt you this past year, one thing we can control is being grateful for what we have. We certainly aren’t “out of the woods” yet, but if we reflect and learn on the lessons provided, then maybe several years from now we can point back to the pandemic of 2020-2021 as a flash point for positive change in our world to the best times we couldn’t have accomplished without it.

Best wishes for a healthy and productive 2021!

Dave Armstrong

517-318-4105 dave.armstrong@greenstonefcs.com