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2017 In Review

From The President
Tom Tracy, Chief Executive Officer

Dave Owens

Dear Farm Credit Illinois Members,

Grain prices in 2017 didn’t rally and the Illinois farm economy is feeling the effect. Farm Credit Illinois’ (FCI) response to today’s market conditions demonstrates its commitment to the mission of lending support to farm families, rural communities, and agribusinesses through both the prosperous and challenging economic cycles.

2017 brings financial resilience

Our strategic focus remained centered on credit quality, stable earnings, and growth, in that order. Despite the low commodity prices and decreased working capital for many members, credit quality remained very strong at 97.50% for all loans owned and managed by the Association. The forecast for 2018 includes continued strong portfolio quality, lower earnings, and moderate growth. Lower earnings are forecast because of expenses associated with significant changes in FCI’s technology infrastructure.

Following a strong year of annual earnings in 2016, net income results were $73.3 million. The 5.30% increase from the prior year was caused by increased patronage income from AgriBank and some increases in loan balances. The increase in net income was offset to some degree by the “Harvest Interest Returns” program discussed below.

Loan volume owned and managed by the Association grew 2.20% from 2016 despite current conditions. This slower growth resulted in a total regulatory capital of 18.34%, a new metric in 2017 with no equivalent prior year ratio.

Education and experience enrich cooperative relationships

When the farm economy faces challenges, farmers more heavily rely on expertise from advisors. It’s crucial these business associates – including lenders and crop insurance agents – have an understanding of which strategies, products, and services can best benefit each unique family farm.

FCI is dedicated to providing training and development opportunities to our team and members to ensure all are exposed to the latest industry information. With expertise in credit, loan, and crop insurance, FCI staff work closely with members whose operations are displaying signs of stress. This strategy helps farm families make proactive, informed decisions – increasing their staying power for generations to come.

Added services and strategic investments enhance cooperative member-value

Your cooperative is continuously striving to meet the needs of its membership. We continue to partner, collaborate, and invest in advances that allow us to serve members better, faster, and with greater value. In 2017, FCI developed plans to enhance member benefits and services. Last summer, rural appraisal services were made available to members and their families to assist with estate planning and settlements and real estate transactions for both buying and selling properties.

The “Harvest Interest Returns” program provided zero percent interest on operating loan balances up to $500,000 during October and November to more than 2,800 farm families – accumulating more than $3 million of interest credit.

FCI invested $10 million to become a co-owner of the Farm Credit System’s leading technology platform – Farm Credit Financial Partners, Inc. (FPI) – alongside four of the 10 largest Associations in the nation. Joining FPI gives us access to a robust, secure, and tested platform which is continually evolving to incorporate the latest technology advancements. Members can expect a secure, evolving online banking platform this fall.

Along with caring for our business and members, the staff team and directors also committed to serve the local marketplace. In 2017, the FCI team collectively volunteered more than 2,100 hours to benefit youth and local charities and to promote agriculture to the public. Your cooperative invested about one percent of the previous year’s net earnings on your behalf toward college agriculture scholarships and donations to organizations and causes including farmdoc, community colleges, FFA, and 4-H.

FCI is proud to support the next generation of farmers through a newly-launched Fresh Roots young and beginning farmers program. It offers lending assistance and learning incentives for farmers up to age 40 or in their first 10 years of farming full-time.

Changes focused on continuing extraordinary member experience

This year requires steadfast operational focus as we complete the FPI technology conversion and implement new services, but our team’s commitment to outstanding member service will not diminish. FCI’s core purpose is the driving force behind each decision, motivating us to continue the pursuit of Helping Farm Families Succeed today and tomorrow.

We look forward to the challenges and opportunities we will face together in the coming year while balancing consistency and change. Change can be energizing, and we are seeing that take hold as new opportunities and leaders emerge from within the Association, bringing new ideas, products, and services forward.

Thank you for choosing to be a member of Farm Credit Illinois and best wishes for a successful and significant 2018.