MidAtlantic Farm Credit Reports Second Quarter Financial Results

Westminster, MD - August 16, 2012

MidAtlantic Farm Credit, a members-owned cooperative and a lending institution of the nation-wide Farm Credit System, recently announced financial results for the second quarter of 2012.

Net income for the second quarter and first half of 2012 was $15.8 million and $26.5 million, compared with $10.3 million and $21.1 million, respectively, for the same periods in 2011. Average loan volume for the first half was $2.185 billion, compared to $2.301 billion for the same period in 2011.

"While it's always tempting to want more growth," says Bob Frazee, CEO of MidAtlantic Farm Credit, "we are proud of the fact that farmers are doing well in our region and that they are able to pay down their debt. We know that farming is cyclical, and it is a good sign that our borrowers are taking advantage of the trend of higher commodity prices, and preparing for the next down cycle."

Members have been cautious about incurring more debt in MidAtlantic’s five-state territory; the lender’s portfolio has been showing a positive trend in credit quality. Nonaccrual loans decreased to $62.3 million at June 30, 2012, compared to $69.6 million at December 31, 2011 and $95.9 million at June 30, 2011. The Association’s nonaccrual loans as a percentage of total loans also decreased to 2.89 percent at the end of the quarter, compared to 3.21 percent at the end of 2011.

During the second quarter of 2012, the Association recorded a provision for loan losses of $1.75 million, compared to $4.0 million in the second quarter of 2011. For the first half of 2012, the provision for loan losses with was $3.5 million, compared to $6.0 million in the first half of 2011.

MidAtlantic’s capital ratios remain well in excess of regulatory minimums. At June 30, 2012, shareholder’s equity totaled $440.2 million, and the permanent capital ratio was 17.64 percent, compared with the 7.00 percent minimum mandated by the Farm Credit Administration (FCA).

Results for the second quarter of 2012 included a $3.8 million distribution from the Farm Credit System Insurance Corporation, which insures the System’s debt obligations.

Loan Officer by Day, Blogger by Night

You may have read the article on the front page of the Delmarva Farmer, but we’re pretty proud that our loan officer, Cara Sylvester was featured.  As a MidAtlantic Farm Credit loan officer, farm wife, and mother it’s hard to believe that she finds time to sit down and blog.

When Cara first began her blog, “…Story Worth Telling,” in 2008, she focused mostly on her life in general, touching on farming here and there.  Recently she has begun focusing on agriculture and has launched “Farm Women Fridays” featuring local farm women and the work they do on and off the farm.

The idea for her featured blogs came from her volunteer work with CommonGround, a corn and soybean check-off funded national initiative aimed at starting conversations and making connections between the women who grow food and the women who buy it.

Her goal is for people to feel like they know her, through her combination of agriculture-related blogs and personal stories. She says she keeps the tone informal and leaves the technical jargon and research statistics to other bloggers.  Cara says, “The more people that read it, the more they will understand the people behind the farms.”

Her goal is to run the “Farm Women Fridays” series through Labor Day, provided she has enough women willing to be featured.  Anyone wishing to suggest someone for the series can comment on her blog site, storyworthtelling.blogspot.com, or write to her Twitter account, @carabecca.

Kudos, Cara!  And we look forward to reading more about local farm women in your blog.

Tell all your “peeps”

Want a chance to win $250? Well, then it is time to sharpen up your photography skills because our fair photo contest has begun!

It’s time to scour your local fairgrounds for those priceless photo op moments where your child wins a blue ribbon in the show ring, the fair queen is crowned, or that fuzzy little chick looks like it is dying to have its’ photo taken (like the photo shown, courtesy of Michelle Bambary who was our 2011 contest winner).

The rules are simple – just go to our Facebook page and click “Fair Photo Contest” to enter your picture between now and September 30, 2012. Once we open the photos up to the public on October 1, 2012, you’ll want to tell your “peeps” to vote for you to win the grand prize. There are also prizes for 2nd and 3rd place and voting will end on October 19, 2012.

So what are you waiting for? Find your camera, become a fan of our Facebook page, and head out to your local fairs to capture the winning $250 ag-related photo of your fair-weather friends!

Partnering for Success

We are strong believers in the value of education and experience. Over the spring 2012 semester, we partnered with a team of six University of Delaware College of Agriculture and Natural Resources undergraduate students to accomplish a market research project for our association.

The students were diversified in their age and majors such as statistics, resource economics, food and agribusiness marketing and management, and natural resource management. During the research project they were mentored by Dr. Tom Ilvento, professor of food and resource economics, and Laurie Wolinski, center director for the Northeast center for Risk Management Education.

The students gained experience in collecting, analyzing, and trending secondary data. They also were able to draw conclusions and make recommendations based on their analysis. At the end of the semester, the students made a final presentation to our marketing staff in our Dover, DE office. They did a great job!

Dr. Ilvento said, “We really appreciate the opportunity you (MidAtlantic Farm Credit) provided; this gave our students some real world experience.” Well, Dr. Ilvento, we are really happy to have worked with the students and enhance their college education, as well as teach them about the Farm Credit System, too.

So, are you an agribusiness or related company? Do you have market research projects that you would like completed? If so, consider partnering for success with a team of college students to prove you believe in the value of education and hands on experience. The connection we have now established between UD and MidAtlantic is a pure example of partnering for success. Great job, team!

It's Easy Being Green: Keeping Cool

Heating and cooling total about 44 percent of your home’s energy costs, so careful attention to temperature settings can reap big savings. “Ceiling fans cool the room in summer and only cost 10 percent as much as air conditioning,” says Abby Buford, a spokesperson for Lowe’s. “And it’s easy to install one.” Lowe’s makes it especially easy with a whole website—lowes.com/energy—filled with videos and step by step instructions on tasks that will help you save money on your energy bills. Reverse the fan’s motor so that it’s running clockwise, and you’ll save money in the winter as well.

Another opportunity to save is by plugging up the holes in your home. “A lot of energy leaks out of a house,” says Dick McClary at Home Depot. Plug small holes with caulk (such as where input lines come into your home), and consider adding insulation to attics, the basement ceiling and around windows and doors. “But don’t forget that it’s air that provides the insulation—not the insulation itself,” says McClary. “Think of a double-paned window…it’s not the second layer of glass that makes the house tighter, it’s the trapped air between the layers. So don’t “squish” your insulation into a space— or you won’t be doing any good.” Other leaky areas include doors that don’t fit tightly (add weatherstripping), the fireplace flue (make sure it’s closed when not in use), and the empty space behind electrical outlets (add a pre-cut insulation layer).

When in doubt, says McClary, ask an expert—either a sales associate at your local store, or on the web. Most companies have complete sections dedicated to going green. “There’s a bigger emphasis than ever on educating the consumer,” says Kathleen Kuhn of HouseMaster. “Ask questions, take notes, and spend some time making small repairs and upgrades. I guarantee that small projects can pay off big—both for the value of your home, and for its energy efficiency.”



Article by Sandy Wieber, SVP Marketing, MidAtlantic Farm Credit

It's Easy Being Green: Getting in Hot Water

There are lots of other ways to save money on your water usage. By now, you know to take a shower instead of a bath (you’ll save about 50 percent of the water), to turn off the water when you’re brushing your teeth, and to run full loads, whether you’re doing the dishes or the laundry. But Kathleen Kuhn, CEO of HouseMaster Home Inspections, says that there are other easy fixes for do-it-yourselfers. “The least handy person can install water saving showerheads and faucets,” says Kuhn, “and save thousands of gallons of water a year.” All the parts you need are available at your local hardware store, or order the Niagara Water Conservation Kit at niagaraconservation.com for under twenty-five bucks. Kuhn also recommends turning the thermostat on your water heater to 120 degrees Fahrenheit. “That’s still hot, but it saves a lot of money heating the water,” she says. Save even more by purchasing an insulating wrap for your water heater, and wrap it around the tank.

Heating and cooling are a huge percent of your home's energy costs. Don't worry, we'll give you tips on "keeping cool" and saving big tomorrow.


Article by Sandy Wieber, SVP Marketing, MidAtlantic Farm Credit

It's Easy Being Green: Plugging Away

Your appliances are some of the biggest energy consumers in your whole house. And the biggest of the big is your refrigerator. “If you’ve been meaning to replace it but feel bad about getting something new when something old “sorta” works, think again,” says Danny Seo. “A refrigerator that’s ten years old is likely to be using twice as much energy today as the first day you plugged it in.” When you head out to the appliance department, look for ENERGY STAR rated refrigerators. They are the most efficient in their category and can save you hundreds of dollars in energy costs. “The ENERGY STAR rating will show you how efficient the motor is,” says Dick McClary, a department supervisor at Home Depot in Towson, Maryland. “But a new front loading washing machine will save you a ton of money on water, too.” Front loading machines use only a small amount of water, which can save up to 7,000 gallons of water each year (or about 60 percent of what your current appliance uses).

There lots of other ways to save on water usage. We'll talk about getting out of "hot water" tomorrow!


Article by Sandy Wieber, SVP Marketing, MidAtlantic Farm Credit

It's Easy Being Green: Become a Vampire Slayer

You have vampires in your home. They’re not exactly undead, but they’re appliances that continue to suck energy even when they are turned off. According to the Department of Energy, vampire energy loss represents between five and eight percent of a single family home’s total electricity use per year. That’s almost an extra month’s bill! Luckily, these vampires are easy to stake. Unplug larger items, like plasma televisions, which can use the equivalent of about $160 a year (1,400 kiloWatt hours) when not in use. Or go to smarthomeusa.com and purchase an electrical strip that actually stops the current when the appliance is not in use (around $30). If you don’t want to turn the appliances off, try reducing the brightness of your television and computer screens by half, and power consumption of the entire machine will drop by about 30 percent.

You're appliances are also big energy consumers. We'll talk tomorrow about "plugging away".


Article by Sandy Wieber, SVP Marketing, MidAtlantic Farm Credit

It's Easy Being Green: Seeing the Light

You know that you should be saving energy at home. After all, in the United States, buildings (that includes your house) account for 36 percent of our total energy use, 65 percent of our electricity consumption, and 12 percent of all potable water consumed. In fact, according to the Green Building Resource Center, a typical 1,700 square foot wood frame home has the same environmental impact of clear-cutting one acre of forest. If that isn’t enough reason for you to save energy, consider this: saving energy can save you money. And you don’t have to be a contractor to make the changes necessary. “Sometimes the smallest changes can be the biggest changes,” says Danny Seo, former co-host of HGTV’s Red, Hot and Green.

see the light
“How easy is it to change a light bulb?” asks Linda Foy, a spokesperson for Baltimore Gas and Electric (BGE). “It’s one of the easiest steps that homeowners can take, but it can make a big impact.” Simply switch your regular light bulbs to CFLs (that’s compact fluorescent bulbs) and start saving money immediately. Regular incandescent light bulbs use more than 90 percent of their energy to generate heat, not light, which costs the country energy and the homeowner money. CFL’s use 75 percent less energy and last up to 10 times longer—saving you about anywhere from $30 - $65 over the life of the bulb. So, yes, throw out the bulbs you have and replace them now. Although the bulbs are a little more expensive than standard bulbs, you’ll see the savings quickly.

Did you know that you also have vampires in your home! True... check back tomorrow for more details!



Article by: Sandy Wieber, MidAtlantic Farm Credit SVP Marketing

MidAtlantic Farm Credit Announces Results of Election

MidAtlantic Farm Credit, an agricultural lending cooperative, recently announced the results of their annual election of board and nominating committee members.

The following were elected to serve on the cooperative's board of directors: Deborah A. Benner, Mt. Joy, PA and Jennifer L. Rhodes, Centreville, MD.

Benner, along with her husband, owns and operates Yippee Farms, a dairy operation consisting of three dairy facilities. They also grow alfalfa, rye, corn and other grains on 700 acres.

Rhodes owns and operates Deerfield Farms LLC, a 110-acre poultry and grain farm with her two sons. She is also employed as an extension educator for the Agriculture and Natural Resources, Univeristy of Maryland, Extension, Queen Anne's County.

Elected to serve on the 2013 nominating committee were: Alan D. Balmer, Lebanon, PA; Jerry A. Burner, Luray, VA; Kirk D. Carmean, Snow Hill, MD; David M. Crum, Walkersville, MD; Paul R. Dotterer, Union Bridge, MD; Timothy F. French, Woodstock, VA; Douglas W. Green, Princess Anne, MD; Robert M. Hutchison, Cordova, MD; Bryan C. Melvin, Wyoming, DE; Burton D. Messick, Laurel, DE; George O. Morris, Centreville, MD; and Jay L. Weaver, Myerstown, PA.

In order to serve as a director or on the nominating committee you must be a member/stockholder of MidAtlantic Farm Credit.


About MidAtlantic Farm Credit

MidAtlantic Farm Credit (MidAtlantic) is one of the largest agricultural lenders on the East Coast. Their chartered territory includes parts of Delaware, Maryland, Pennsylvania, Virginia and West Virginia. They are part of the national Farm Credit System, a cooperative lender with more than 500,000 borrowers and a portfolio of over $178 billion.

MidAtlantic Farm Credit Reports First Quarter Financial Results

MidAtlantic Farm Credit, a members-owned cooperative and a lending institution of the nation-wide Farm Credit System, recently announced financial results for the first quarter of 2012.

Net income for the quarter was $10.7 million compared with $10.8 million for the first quarter of 2011. Net interest income for the first quarter was $16.8 million, the same as in the first quarter last year. Average loan volume for the first quarter was $2.187 billion, compared to $2.306 billion for the same period in 2011.

“Agricultural producers in our area are doing fairly well,” said Bob Frazee, president and CEO of MidAtlantic. “Commodity prices are generally good, and we’ve seen our membership strengthening their operations by managing their expenses and paying down some of their debt. In addition, the lack of growth in the housing sector is impacting some of our industries—especially nurseries and greenhouses, sawmilling, and timber.”

Members have been cautious about incurring more debt in MidAtlantic’s five-state territory; the lender’s portfolio has been showing a positive trend in credit quality. Nonaccrual loans decreased to $64.4 million in the first quarter of 2012, compared to $69.6 million at December 31, 2011 and $85.2 million at March 31, 2011. The Association’s nonaccrual loans as a percentage of total loans also decreased to 3.00 percent at the end of the quarter, compared to 3.21 percent at the end of 2011.

“Since the peak during the third quarter of 2011--when we were managing over $90 million of nonaccrual loans--we have successfully worked with our borrowers to reduce the nonaccrual loans while helping to preserve other agriculture related activities which had some dependency on the stressed borrowers businesses,” said Frazee.

During the first quarter of 2012, the Association recorded a provision for loan losses of $1.75 million, compared to $2.0 million in the first quarter of 2011.

MidAtlantic’s capital ratios remain well in excess of regulatory minimums. At March 31, 2012, shareholder’s equity totaled $427.8 million, and the permanent capital ratio was 17.43 percent, compared with the 7.00 percent minimum mandated by the Farm Credit Administration (FCA).

About MidAtlantic Farm Credit

MidAtlantic Farm Credit (MidAtlantic) is one of the largest agricultural lenders on the East Coast. Their chartered territory includes parts of Delaware, Maryland, Pennsylvania, Virginia and West Virginia. They are part of the national Farm Credit System, a cooperative lender with more than 500,000 borrowers and a portfolio of over $178 billion. For more information about MidAtlantic, visit http://www.mafc.com.

Good Records are Key

If you think you just need to keep your records for tax purposes, you could be missing profit opportunities. If you are not keeping detailed records, there are plenty of resources to help you get started including your Farm Credit account executive.

Whenever the topic of records comes to mind, everyone immediately thinks of financial records or the records needed to prepare tax returns. While certainly important, they are not the only records needed for a farm operator to assure himself of maximum profits. What records are needed? Obviously, it starts with financial records, and includes production records, capital asset records, environmental and health records and personnel records.

Financial Records. The most basic of all records are those needed to prepare a business’ annual income tax return. For far too many businesses, this is both the beginning and end of records. Big mistake! Financial records should go far beyond what is needed for the preparation of taxes. For example, tax returns require only the dollar amount of sale, while good financial records will record individual sales, the detail of the sales and organize it all in a way that makes possible management reports based on those records possible. While the sale matters, so does pricing, promptness of payment and shrinkage.

Production Records. Good production records go far beyond corn yields or milk per cow. The best of them integrate the farm’s financial records to allow the operator to closely follow the true profits of a given enterprise. A dairy cow is a great example of this. Suppose the farmer has two cows, one produces 20,000 pounds of milk per year and the other 28,000 pounds. If this is the extent of records, the more valuable cow would seem to be obvious. But consider that the 20,000-pound cow calves every 12 months, while the 28,000-pound cow calves every 18 months. In a three-year period, the 20,000-pound cow produces 60,000 pounds of milk and three calves, while the 28,000-pound cow produces 56,000 pounds of milk and two calves. Without the records, you wouldn’t know which cow is more profitable.

Capital Asset Records. When did you buy that piece of equipment and for how much? These are important considerations, now that it is not uncommon for single pieces of equipment to cost over $250,000. Further, what does it cost to operate the piece? Good capital asset records will be well organized and work hand-in-hand with the depreciation schedule of the business.

Environmental and Health Records. Environmental and health records have been increasing in importance for quite a while and this trend will continue. What did you do with your manure? What spray did you use, where was it applied and by whom? What was given to your animals, when and by whom? An error here could cost you the farm!

Personnel Records. Employee’s pay records are critically important: if everything is not done correctly and records are not properly kept, the farmer will experience much distress. Simple things, like a file for each employee that is maintained for years after the employee departs, must be standard procedure. This file must contain authorizations for any withholdings, as well as personal information such as address, marital status and social security number. Also important are job applications, evaluations and time-off records; to say nothing of time cards and pay rates. It wasn’t that long ago that a farmer could be profitable and secure if he properly tilled the soil, planted and harvested on time. While still true today, it is now also important that records of many types be topnotch. It is for this reason MSC Business Services offers accountants that specialize in ag accounting, lease software specifically designed for farmers, offers a Payroll Service for farmers and can perform consultations in all areas of concern to today’s farmer.

Article complements of Mike Evanish, MSC Business Services

There's more to a loan than just the rate!

Just about every day of the week, we get calls that go something like this:

Customer: I just got a better rate at the bank than what you offered me on my farm loan.

Us: What fees and costs do you have to pay?

Customer: I didn’t ask.

Us: Please ask them what the fees and closing costs are, then we can compare the two deals.

This customer—like a lot of customers—just assumed that the rate was the only item to consider when shopping around for a loan. Actually, there are many things to consider in choosing a lender and some of these may be even more important than the loan rate.

For example: if a lender has a rate that is one percent cheaper than another—but the loan fees and closing costs are one percent of the loan—then you really wouldn’t save much. The total deal must be evaluated to compare one to another. It is important when comparing loan information from competing lenders to take all of these items into consideration.

At MidAtlantic Farm Credit we offer competitive rates, costs and fees. We strive to give above average service—as we want satisfied customers. But we don’t just stop there. As a cooperative lender, MAFC has returned millions of dollars to our borrowers through patronage refunds!

If you didn't already know, we just distributed over $26.5 million to our borrowers in April. The lawyers won’t let us tell you that you’ll get a guaranteed patronage payment every year. But our history speaks pretty loudly: since 1990, MidAtlantic has declared $371 million in Patronage and has distributed Cash of $249 million!!

If you have loans through other banks, and their not putting their profits in your profits, you might just want to give us a call. Because it pays to do business with Farm Credit.

MidAtlantic Farm Credit Announces Grand Prize Winner

MidAtlantic Farm Credit announced the winner of their annual meeting grand prize, a John Deere Gator. The winner was Leo Duncan of Frederick, MD. (View the YouTube video of the prize presentation.)

Mr. Duncan is a retired athletic director and math teacher who moved back to his family farm in Frederick county about 13 years ago where he now assists his brothers with their beef and hay operations.

When the prize was delivered to his farm, Mr. Duncan said, "I just can’t believe I won. There are all kinds of odd jobs we can use it for around the farm. I know my brothers and I will get a lot of use out of it.”

Mr. Duncan was one of 1,400 attendees at MidAtlanic's stockholder meetings, held earlier this month throughout Pennsylvania, Delaware, Maryland, and Virginia. All meeting attendees were eligible for the prize, which was awarded in a random drawing.

The grand prize, a John Deere Gator XUV 550 Crossover Utility Vehicle is equipped with a powerful V-twin engine and independent four-wheel suspension. The custom artwork was designed by local graphic designer Barbra Colquitt of Colquitt Design in honor of the 95th anniversary of the Farm Credit System.

Nine Tips to Improve Your Credit Score

When you apply for a car loan, mortgage, or other financing, the loan officer tells you that they must pull your credit score. What does that mean? How is it figured? Let us explain a bit more about credit scoring and how it affects your ability to receive credit in today’s market.

There are three consumer bureaus that collect and analyze credit information on consumers: TransUnion, Experian, and Equifax. The three agencies compile information on your open, closed and cancelled accounts. They also use public record to figure your credit score, including judgments, liens, and other public record items. Your score is considered a FICO® score. Each reporting agency may have a different name for the score. Scores vary from a range of 300-850. Typically the higher the score, the more likely you are to get the loan or financing request approved. Each lending institution has different cutoff scores.

Here are nine tips from FICO® to improve your credit score:

• Pay your bills on time.

• If you have missed payments, get current and stay current.

• Be aware that paying off a collection account, or closing an account on which you previously missed a payment, will not remove it from your credit report.

• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.

• Keep balances low on credit cards and other revolving credit.

• Pay off debt rather than moving it around.

• Don’t close unused credit cards as a short-term strategy to raise your score.

• Don’t open a number of new credit cards that you don’t need, just to increase your available credit.

• Avoid credit repair agencies that charge a fee to improve your score.

Are you now curious about your credit? Visit www.annualcreditreport.com for your free report today! To receive a free “Understanding Your FICO Score” guide, drop us an email at info@mafc.com.

Top 3 Tips for Obtaining a Farm Loan

Some folks say that it’s impossible to start farming now. And even if you could find a great property, it's hard to find a lender who is willing to talk to you. While that is probably true at times, thankfully, you've arrived at the one lender who is always willing to talk to you. After all, "farm" is our middle name!

 

Here are our 3 top tips for obtaining a farm loan:

 

#1 Create a great credit history.
You may not have had a farm loan before, but that doesn’t mean that you don’t have a credit history. Your credit record includes your credit card information (how much credit you have available on each of them, if you have an outstanding balance, if any of your payments have been late), and other loan information (such as car loans, student loans, or any other mortgages).

If you don’t have a credit history, there are other ways to create one, like getting information from past landlords or service vendors, such as gas and electric companies or telephone companies.

One of the most important parts of a great credit history - always, always, always pay your bills on time. Statistically, it has been proven that if you pay your current loans as you agreed to, you are more likely to pay future loans as agreed to as well. And that’s good news for any lender.

 

#2 Have a plan.
You must have a plan for success. Create a business plan, whether it’s in writing or something you can talk about. This is a blueprint for establishing and then meeting your goals. The plan should include what you want to do, how much money you’ll need, and what ways you’ll repay the money.
If you have never written a business plan, never fear. You can find information about doing them from your local cooperative extension office.

 

#3 Ask about special financing programs.
When you talk with a lender about financing, be sure to ask about any special programs or partnership opportunities. We aren’t just lending you money; we want you to look at all funding options to help you succeed. Here are a couple of programs to keep in mind:

• StartRight – this is a MidAtlantic Farm Credit program geared specifically for young, beginning, small and minority farmers. We have low interest term, operating and best management practice loans. You can find more information about this program here.
• Farm Service Agency – offering guaranteed and direct loans to qualifying borrowers.
• Federal or State Funding – USDA and NRCS has several grant programs available.  Small Business Administration – the 504 Loan program is a financing program for expanding farms

It seems like a lot to think about, but don’t worry. You don’t have to be the expert in farm loan financing – that’s our job. You enjoy being the expert in your farm business.

MidAtlantic Farm Credit Hires Crop Insurance Representative in Pennsylvania

Kathi Levan, crop insurance manager, has announced the hiring of Jordan Risser as a crop insurance sales representative for MidAtlantic Farm Credit’s Penn region. According to Levan, Risser’s responsibility will be business development and acquiring new crop insurance customers throughout the 15 county territory in southeastern Pennsylvania which makes up the Penn Region.

“The crop insurance industry overall is undergoing considerable changes because of current political and economic realities,” Levan noted. Many farmers and the crop insurance agencies that serve them are finding that keeping up with product changes and complying with new regulations is a complex task.”

MidAtlantic Farm Credit focuses solely on providing agricultural credit to farmers, rural landowners and agribusiness and our insurance agents specialize only in crop insurance products,” she adds. “Because of that, we are able to maintain a high level of expertise and demand for our services is increasing. By having Jordan join our team we will be able to exceed producer needs for risk management advice.”

Jordan grew up on his family’s dairy farm in Lancaster County and comes to Farm Credit with a crop insurance background. “His background in farming and knowledge of crop insurance will be a real asset to current customers as well as developing new business relationships,” Levan says.

Jordan resides in Elizabethtown, PA with his wife and enjoys farming, hunting and camping in his spare time. He is a graduate of Delaware Valley College where he obtained a degree in Agronomy.

About MidAtlantic Farm Credit

MidAtlantic Farm Credit is one of the largest agricultural lenders on the east coast providing credit and crop insurance in Delaware, Maryland, Pennsylvania, Virginia and West Virginia. They are part of the national Farm Credit System, a cooperative lender with more than 500,000 borrowers and a portfolio of over $160 billion.

What's in Your Rate? (Part 2)

Yesterday we shared 13 of the 26 factors that affect your rate. Today, we're sharing the other 13! So, here goes:

1. Co-borrowers – will there be other people on the loan, and if so, what does their credit look like? All parties involved in the loan will be used in determining the rate.

2. Debt Ratio – how much money is made monthly versus the cost of monthly bills. The typical ratio that lenders looks at is 42%.

3. Housing Ratio – what does the ratio from above look like when you add in the cost of the mortgage? Usually a good housing ratio is 28%.

4. Improvements Needed – this will affect the value of the property. Remember from yesterday's post that the lower the percentage of the loan amount to the value of the property, typically the better the rate.

5. Employment Type – self-employed, hourly employed, bonus-based pay – these all affect the risk factors of whether you’ll be able to pay back the loan.

6. Employment History – this also affects the risk to the lender. If you show a consistent history of employment, the better chance for a lower rate.

7. Documentation Available – are you able to produce all documentation (bank statements, taxes, retirement accounts, etc.) to show your assets? This will help ease the risk factors for a lender and help lower the rate.

8. Relocation – are you being temporarily or permanently relocated by an employee? That will determine if the house is considered a secondary (higher rate) or primary residence (lower rate).

9. Seller Contributions – if the seller is able to contribute money towards closing costs, that will increase the amount you have available for a down payment.

10. Gifts – again, lowering the amount of loan you’ll need with gifts from family members will help to lower the interest rate. 11. Cash-out – if you refinance and want to walk away from closing with money in your pocket, you may be increasing the percentage of loan to property value.

We hope this information is useful to you! If you have other burning questions you'd like us to answer, post a comment here or send us an email at info@mafc.com.

What's in Your Rate?

In our previous post, we shared some of the frequently asked questions to a lender. One of those questions was “what’s your rate?” And the answer was “it depends.” That’s not the answer most people want to hear, but it’s true. There are approximately 26 different factors that goes into quoting rates. We'll share 13 today and the other 13 in tomorrow's blog.

1. Loan Size – how much money are you asking for? Often if you are requesting an amount under a certain level (i.e. $100,000), there may be a slight increase in rate.

2. Loan-to-Value (LTV) – what percentage is your loan amount to the value of the property? Typically, the lower the percent, the lower the rate.

3. Combined Loan-to-Value (CLTV) – this ratio includes not only the current loan you are wanting, but any additional loans on the property, such as a home equity.

4. Credit Score – the higher the credit score, the lower the rate.

5. Credit History – the less credit history you have, the less knowledge a lender has of your repayment ability, possibly making you slightly more risky. The better the payment history, the better the rate.

6. Escrow Preference – some lenders require escrows, or money put aside to pay for things such as taxes, insurance, etc. If you choose not to escrow, you may be penalized by having a higher rate.

7. Closing Date – it is important to lock in on a rate that is as close to your closing date as possible. The longer the rate lock period, the higher the rate will be.

8. Loan Type – fixed, variable, balloon – these all have varying rates because of the variation of risks.

9. Property Type – a residential house will have a lower interest rate than a commercial farm on 50 acres.

10. Occupancy Type – typically rental or investment properties have higher interest rates.

11. Residency – rates will be lower if you plan to live in the house full-time versus using it as a second home.

12. Available Assets – what additional assets do you have as possible collateral? The more down payment you have, usually the lower the rate.

13. Asset Seasoning – how long have you had your assets? There may be restrictions for assets owned under a certain timeframe that could affect the rate.

You don't have to remember all of these, but if your lender is quoting you a rate without asking some of these questions, be sure to ask them what criteria they are using to factor your rate.

Check back tomorrow for the other 13 factors that affect your rate.

MidAtlantic Farm Credit's CEO Receives Award

Bob Frazee, CEO of MidAtlantic Farm Credit received the University of Maryland Distinguished Alumnus Award. These awards are presented annually to the University of Maryland alumni who have achieved recognition for excellence in their profession or field.

Bob was recognized at the Twelfth Annual Alumni Association Awards Gala held on Saturday, April 14, 2012. Visit Bob’s blog to read his acceptance speech. For more information about the awards, visit http://alumni.umd.edu.