May 3, 2018

This piece is presented by The First National Bank in Sioux Falls.

In many ways, the newest branch of The First National Bank in Sioux Falls is like most others. Customers can make deposits, visit an ATM and be assisted through a drive-thru.

From there, though, the new location at 5217 S. Louise Ave. is unlike any other. It’s home to The First National Bank agriculture team and filled with analysts, lenders and resources for ag customers.

“We’re really trying to make it convenient for our ag producers,” ag banking manager Brian Gilbert said. “It can be tough to get downtown sometimes, especially if you’re pulling a trailer, so we think our customers are really going to appreciate the convenience and recognize our dedication to their industry.”

The First National Bank draws on a long history and current first-hand knowledge in serving agriculture.

“Our roots are in agriculture. And we’re still excited about it and looking to grow,” Gilbert said. “We have a fantastic team. Most of us grew up on a farm and still go home to help our families plant and harvest crops.”

One lender still starts the day at 4 a.m. sorting hogs, he added.

“They really get it. They know the struggles that farmers are going through. They’re living it side-by-side with them,” Gilbert said. “There are few family-owned banks that understand agriculture and are large enough to lend to some of the larger producers, and that sets us apart too. Producers aren’t just a number. The owners of First National really understand family business and family farming, and it means something to them.”

We asked Gilbert to elaborate on what he’s seeing in his industry this year.

What’s your sense of the landscape for the agriculture market as we head toward spring?

It’s going to be difficult for the next few years with the profit margins being very tight. But we’ve got some bright spots this year for the immediate future. Our grain farmers have had an opportunity to lock in at least a modest profit if they get typical yields. I would say the name of the game is take advantage of hitting singles and doubles because it will be a tight market for a while given the extremely favorable yields we’ve experienced the last few years, which has created a large supply.

Are we having issues with demand for grain?

No, we just have a little oversupply to chew through. We’ve had three or four consecutive years at or above traditional yields, and with all the discussions around trade wars, that will impact our farmers, and we’re looking at that fairly closely. And while it might not take our markets down, it will create extreme volatility, so that’s a tough thing for farmers to swallow, and they need to be on top of their market plans so where there is profit potential they protect it.

In the livestock sector, profits on the cattle side in 2017 were better than they had been in awhile, but we came off two of the worst years on record, so we needed a bounce back. It was pretty tough. I look for the hog and cattle sector to have a bit of a bumpy ride, especially with tariffs and talk of retaliation. That will impact our ability to sell those products. Twenty-five percent of our pork goes to China, so that could be a huge impact.

What’s the message for farmers evaluating their lending options and opportunities?

Interest rates, while they’ve increased a little bit in the last year or so, are still at a historically low level, so that’s a good thing. You hear about the ag crisis of the 1980s and how horrible it was on farmers and banks, and my message is we are nowhere near there. The farming economy, the producers, still have record levels of equity, so while we may give some back because of the tight or negative profit margins, farmers are still really healthy.

They need to be mindful of taking profit opportunities and locking in a profit when they can and make sure they’re using all the tools available, from crop insurance to hedging to forward contracting. First National Bank is still very open and ready to lend money to farmers, whether it’s existing customers or new ones. We’re looking to grow in the ag market. That’s exciting for me, and it’s exciting for the lenders that work for us and the producers alike.

What about smaller farmers? Can they work with you to finance their operations?

Absolutely. We lend money to farms of all sizes. And now, a lot of times farmers will come in and say they have full-time jobs in town but want to get started farming, and we absolutely will help. We also have knowledge of FFA and government programs to help small and beginning farmers, and we have a program within the bank that encourages lenders to seek out some of those startup farms, young and beginning farmers, because we know that’s a focus of our organization and the communities we serve.

The new Louise Avenue branch will hold a grand opening June 22.

To learn more about agriculture lending at The First National Bank in Sioux Falls, contact the agriculture branch at 605-335-5110.