agriculture - Center for Farm Financial Management - University of

Credit Analysis Solutions

AGRICULTURE

FINPACKUniversity of Minnesota130 Ruttan Hall1994 Buford AvenueSt. Paul, Minnesota 55108

Phone: (612) 625-1964Toll-Free: (800) 234-1111Fax: (612) 625-3105Email: [email protected]: www.FINPACK.com

Used by lenders since 1980, FINPACK sets the industry standard for superior credit analysis tools, training and technical support. Simply enter tax returns and balance sheets and FINPACK will generate reports displayed on the following pages.

• Helps you accomplish your work more efficiently than ever before It is fast and easy to learn. You will be amazed at how much time it can save you.

• Delivers better information about your customers’ financial situation Balance sheets, cash flows, consolidations, global cash flow analysis, accrual financial analysis, and historic spreads provide an accurate picture of borrower performance.

• Lets you do the banking while we do the technical work No need to double check spreadsheet formulas

• Gives you an edge in building better customer relations Provides financial information your customers can understand and use to manage their businesses

• Offers you the most cost effective credit analysis available When compared to other systems or maintaining your own spreadsheets, FINPACK saves you money—period

What does FINPACK do for you?

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FINPACK lets you choose the reports you need for each borrower—whether it’s basic reports for low-risk credit customers or detailed reports to analyze complex customers.

The Flexibility to Meet AllYour Customer Needs

The FINPACK Sample Guide provides an overview of the entire set of tools and reports that FINPACK can give you. If you have wondered what exactly FINPACK does or how it presents financial information, this book will give you the answers.

The book gives you a quick overview for each FINPACK tool. Each section includes a short description of the financial tool and then shows you a sample report.

Will you ever use all of FINPACK’s tools? Probably not, so take a look at the tools that you regularly use. You may also want to look at other tools that you would like to use but haven’t had an easy way to implement at your institution.

FINPACK has been upgraded annually for over 30 years based on comments from lenders who use the software. With this history of field testing and refinement, we think it will serve your needs well.

About This Book

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FINPACK Agriculture at a Glance

Balance Sheets Detailed Balance Sheet Summary Balance Sheet Balance Sheet Trend Reports Financial Analysis Tax Forms/Income Statement Schedule F Accrual Analysis Global Cash Flow Projections Annual Cash Flow Monthly Cash Flow

Credit Analysis Collateral Analysis Credit Decision Scorecard Risk Rating Loan Presentation FSA Forms Package

Portfolio Risk Analyst

Training and Support Customer Support FINPACK Training FINPACK Commercial About CFFM

p. 5p. 11p. 13

p. 15p. 19p. 29

p. 33p. 39

p. 47p. 49p. 51p. 53p. 61

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p. 71p. 73p. 75p. 77

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Balance sheet data entry is simple and straightforward. Once the first balance sheet is complete, it is easy to copy and revise for the next renewal season. FINPACK provides two balance formats – detailed or summary.

Detailed Balance Sheet:

• Generate ratio analysis, including working capital, current ratio, and debt to asset ratio

• Automatically create trend reports

• Balance sheet data flows directly into cash flow to minimize data entry

• Consolidate balance sheets from multiple entities

• Input forms can be used to gather customer data or use forms with last year’s values displayed

• Or get customer data electronically using FINPACK Lite, a free balance sheet only version of FINPACK available to your customers

Summary Balance Sheet:

• Input simple, single column balance sheets

• Quick and easy balance sheet format for small or low risk customers

• Useful to enter historical balance sheets for a new customers

Both Balance Sheet formats provide data directly to FINPACK’s Schedule F analysis, risk rating and the loan presentation manager.

Balance Sheets

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Balance Sheets

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Slim Jim Sample1/1/2008

Current Assets Value

Cash and checking (Schd A) 26,034Prepaid exp. & suppl. (Schd B) 2,422Growing crops -Accounts receivable -Hedging accounts -Other current assets -

Crops (Schd G) Quantity Value/UnitCorn 69,707 4.03/bu. 280,919Corn Silage 690 25.00/ton 17,250Alfalfa Hay 7 105.00/ton 756Soybeans 19,794 11.20/bu. 221,693Crops under gov't loan -

Mkt lvst (Schd H) No. Value/UnitFinish Beef 739 115.00/cwt. 599,144

Current Liabilities Balance

Accrued interest 19,359Accounts payable and other accrued expenses -

Int P & I PrincipalCurrent loans (Schd T) Rate Due Balance5thNB-Operating 8.00 213,623 207,1005thNB-Cattle 7.375 608,628 579,513

Government crop loans -Principal due within 12 months on term liabilities 45,482

Total Current Assets 1,148,218 Total Current Liabilities 851,455

Intermediate AssetsCost MarketValue Value

Breeding livestock - -Machinery (Schd J) 305,400 502,500Titled vehicles (Schd K) 1,053 1,450Other intermediate assets - -

Intermediate Liabilities (Schd U)Int Principal P & I Principal Intermed

Loan Rate Balance Due Due BalanceFSA-Bin Loan 3.125 43,989 15,586 14,128 29,861John Deere Credit-7230 7.25 10,282 6,670 5,918 4,364John Deere Credit-Combine 8.75 48,406 19,038 14,768 33,6385thNB-Chopper - 12,028 4,009 4,009 8,019

Total Intermediate Assets 306,453 503,950 Total Intermediate Liabilities 75,882

Long Term AssetsCost Market

Land (Schd M) Acres Value ValueHome site 15 5,000 30,000

Bldgs & improve. (Schd N) 436,476 462,700Other long term (Schd O) 2,401 2,401

Long Term Liabilities (Schd V)Int Principal P & I Principal Lg Term

Loan Rate Balance Due Due BalanceFifth National Bank-Barn 8.75 298,500 32,778 6,659 291,841

Total Long Term Assets 443,877 495,101 Total Long Term Liabilities 291,841

Total Farm Liabilities 1,219,177Personal Liabilities (Schd W) 43,744

Cost MarketTotal Liabilities (d)(e) 1,262,921 1,262,921Retained Earnings/Contributed Capital [a-d] 789,557Market valuation equity [b-a] 248,720Net Worth [b-e] 1,038,277

Total Farm Assets 1,898,548 2,147,269Personal Assets (Schd P) 153,930 153,930

Total Assets (a)(b) 2,052,478 2,301,199

I certify that my statements on this balance sheet are true, complete, and correct to the best of my knowledge and belief.

Signature(s) Date

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Detailed

Balance Sheet

Slim Jim Sample Balance Sheet: 1/1/2008 Page 2 1/29/2009 2:15:16 PM

Schedule J: Machinery and equipment

Model Year Pct. Cost Market

Make/Model Year Serial No./VIN Purchased Ownership Value Value

TRACTOR LOADER - 1989 100.00 % - 3,500

SNOWBLOWER - 1990 100.00 % - 1,500

SPRAY MONITOR - 1990 100.00 % - 500

SILO UNLOADER - 1991 100.00 % - 250

1600 GL WATER TANK - 1992 100.00 % - 200

AUGER 8x41 - 1993 100.00 % - 750

BULK BIN - 1994 100.00 % 153 200

RC 8R30 - 1995 100.00 % 264 750

CIH Tractor - 1995 100.00 % 1,728 12,500

LOADER - 1995 100.00 % 167 1,000

Generator - 1995 100.00 % 216 1,750

BUFFALO ROLLER MILL - 1999 100.00 % 2,165 6,000

FEED WAGON - 2001 100.00 % 4,872 7,500

JD 7230 Tractor - 2002 100.00 % 43,752 65,000

RIPPER 2002 2002 100.00 % 8,987 12,500

JD 6430 Tractor 1997 2002 100.00 % 36,647 50,000

SPREADER - 2003 100.00 % 10,487 15,000

GRAIN CART - 2003 100.00 % 10,487 15,000

COMPUTER - 2004 100.00 % 1,469 100

SPRAYER SPECIALTIES - 2004 100.00 % 11,416 15,000

MONITOR - 2004 100.00 % 3,693 4,000

JD 7210 Tractor w loader - 2004 100.00 % 33,872 55,000

MOWER 50 BU - 2004 100.00 % 5,677 8,500

TRAILER - 2005 100.00 % 1,782 2,000

WAGON - 2005 100.00 % 6,075 8,500

BLOWER - 2005 100.00 % 871 1,000

JD 9610 COMBINE - 2005 100.00 % 50,220 85,000

30FT FLEX HEAD - 2005 100.00 % 10,530 15,000

8-30 CORN HEAD - 2005 100.00 % 4,860 19,500

20' CHOPPER - 2005 100.00 % 9,315 13,000

SPRAYER CONTROL 2006 2006 100.00 % 3,716 5,000

ROUND BALE RACK 2006 2006 100.00 % 2,336 4,000

WAGON 2006 2006 100.00 % 2,953 10,000

10X61 AUGER 2006 2006 100.00 % 3,870 5,000

Wagon 2007 2007 100.00 % 3,096 10,000

12 Ton Gear 2007 2007 100.00 % 1,665 2,000

Chopper 2007 2007 100.00 % 13,045 20,000

Hay Buster (33%) 2007 2007 100.00 % 5,700 6,000

Hay Buster 2007 2007 100.00 % 9,315 20,000

Total machinery and equipment 305,400 502,500

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Schedule Q: Personal vehicles

Model Year Pct. Cost Market

Make/Model Year Serial No./VIN Purchased Ownership Value Value

Dodge Pickup (25%) 1993 - 100.00 % 150 150

Chev VAN (50%) 2001 - 100.00 % 1,000 1,000

Ford Taurus 2001 2006 100.00 % 3,500 3,500

Lexus 2002 2007 100.00 % 9,280 9,280

Total personal vehicles 13,930 13,930

Schedule T: Current loans

Interest Principal Accrued Normal Past Due Month

Rate Balance Interest P & I P & I Due Balance

5thNB-Operating 8.00 % 207,100 3,762 213,623 - 3 207,100

5thNB-Cattle 7.375 % 579,513 4,184 608,628 - 8 579,513

Total current loans 786,613 7,945 822,251 - 786,613

Schedule U: Intermediate loans

Interest Principal Accrued Normal Past Due Month Final Principal Intermed

Rate Balance Interest P & I P & I Due Year Due Balance

FSA-Bin Loan 3.125 % 43,989 83 15,586 - 12 2010 14,128 29,861

John Deere Credit-7230 7.25 % 10,282 69 6,670 - 11 2009 5,918 4,364

John Deere Credit-Combine 8.75 % 48,406 743 19,038 - 10 2010 14,768 33,638

5thNB-Chopper - % 12,028 - 4,009 - 9 2010 4,009 8,019

Total intermediate loans 114,705 895 45,303 - 38,823 75,882

Schedule V: Long term loans

Interest Principal Accrued Normal Past Due Month Final Principal Lg Term

Rate Balance Interest P & I P & I Due Year Due Balance

Fifth National Bank-Barn 8.75 % 298,500 10,519 32,778 - 8 2026 6,659 291,841

Total long term loans 298,500 10,519 32,778 - 6,659 291,841

Schedule W: Personal loans

Accrued interest 171

Personal accounts payable

FED & STATE TAX DUE 2,600

Principal due within 12 months on term loans 3,815

Interest Principal Accrued Normal Past Due Month Final Principal

Current Loans Rate Balance Interest P & I P & I Due Year Due Balance

Intermediate

Long Term

Mutual Insurance-House 5.125 % 40,973 171 6,000 - multiple 2017 3,815 37,158

Total personal loans 40,973 171 6,000 - 3,815 37,158

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Schedule Y: Ratio analysis Cost Market

Current ratio 1.35 1.35

Working capital 296,763 296,763

Current percent in debt 74 % 74 %

Intermediate percent in debt 25 % 15 %

Long term percent in debt 66 % 59 %

Personal percent in debt 28 % 28 %

Total debt to asset ratio 62 % 55 %

Total equity to asset ratio 38 % 45 %

Total debt to equity ratio 1.60 1.22

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Slim Jim and Sarah SampleSummary Balance Sheets (market)

Jan 1, 2006 Jan 1, 2007 Jan 1, 2008Current AssetsCash and checking 12,247 9,576 26,034Prepaid expenses and supplies 44,831 859 2,516Crop inventory 228,756 223,427 520,618Livestock held for sale 501,000 569,149 599,144Total current assets 786,834 803,011 1,148,312

Intermediate AssetsMachinery and equipment 467,100 497,550 502,500Titled vehicles - 2,600 1,450Total intermediate assets 467,100 500,150 503,950

Long Term AssetsLand 5,000 15,000 30,000Buildings and improvements 60,000 479,000 462,700Other long term assets 2,231 2,231 2,401Total long term assets 67,231 496,231 495,101

Total farm assets 1,321,165 1,799,392 2,147,363Total personal assets 114,550 146,700 153,930Total assets 1,435,715 1,946,092 2,301,293

Current LiabillitiesAccounts payable and other accrued exp. 21,000 - -Accrued interest 6,728 14,334 19,619Principal due within 12 months on term loans 32,369 53,509 44,545Current loans 579,351 646,632 786,613Total current liabilities 639,448 714,475 850,777

Intermediate & Long Term LiabilitiesIntermediate loans 169,443 101,100 76,819Long term loans 0 293,762 291,841Total farm liabilities 808,891 1,109,337 1,219,437

Personal liabilities 70,507 47,567 41,140Total Liabilities (including deferreds) 879,398 1,156,904 1,260,577

Annual Noncurrent Debt PaymentsFarm P & I payments 37,366 91,951 78,081Personal P & I payments 6,000 6,000 6,000

EquityNet worth 556,317 789,188 1,040,716Net worth change 0 232,871 251,528

Ratio AnalysisCurrent ratio 1.23 1.12 1.35Current ratio (farm and personal) 1.23 1.12 1.35Working capital 147,386 88,536 297,535Working capital (farm and personal) 147,386 88,536 297,535Current pct in debt 81 % 89 % 74 %Intermediate pct in debt 36 % 20 % 15 %FINPACK © Center For Farm Financial Management Prepared by: Wynn Richardson

University of Minnesota University of Minnesota

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Slim Jim and Sarah Sample Historic Report: Summary Page 2 1/30/2012 10:56:48 AM

Jan 1, 2006 Jan 1, 2007 Jan 1, 2008Current & interm. % in debt 65 % 63 % 56 %Long term pct in debt - 59 % 59 %Total debt to asset ratio 61 % 59 % 55 %Total equity to asset ratio 39 % 41 % 45 %Total debt to equity ratio 1.58 1.47 1.21Loan to value % - - 68 %Collateral margin - - 603,567Collateral coverage ratio - - 1.5 %

FINPACK © Center For Farm Financial Management Prepared by: Wynn Richardson


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When you need a quick and easy source of historical financial performance, FINPACK’s tax database is the answer. You can enter data for Schedules F, C, E, or Form 1040, Form 1065, Partnerships, Form 1120 Corporate, or Form 1120-S. You can also enter accountant prepared income statements.

With Tax Forms and Income Statement, you can:

• Using any of the tax databases or the income statement, you can spread historical income and expenses

• Automatically import last year’s or the average of several past year’s historic income and expenses into your cash flow projections

• Use the Schedule F data to develop cash-to-accrual Schedule F Analysis

• Consolidate income statements and tax databases from multiple entries

Tax Forms andIncome Statement

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Slim Jim SampleSch F - Farming

Tax year 2003 2004 2005 2006 2007 Average

Statement type Tax Return Tax Return Tax Return Tax Return Tax Return

Principal product Beef Cattle Beef Cattle Beef Cattle Beef Cattle Beef CattleActivity code 112111 112111 112111 112111 112111Accounting method Cash Cash Cash Cash Cash

PART I: Farm Income -- Cash Method1. Sales of livestock & other items bought for resale 1,196,356 590,521 570,375 539,937 1,816,151 942,6682. Cost or other basis of items on line 1 821,701 364,396 407,896 455,051 1,242,063 658,2213. Subtract line 2 from line 1 374,655 226,125 162,479 84,886 574,088 284,4474. Sales of livestock, produce, grains, etc. 79,772 329,879 248,157 350,232 42,186 210,0455a. Cooperative distributions 61 60 648 - 91 1725b. Cooperative distributions, taxable amount 61 60 648 - 91 1726a. Agricultural program payments 29,304 24,214 91,972 39,913 20,028 41,0866b. Agricultural program payments, taxable amount 29,304 24,214 91,972 39,913 20,028 41,0867a. CCC loans reported under election - - - - - -7b. CCC loans forfeited - - - - - -7c. CCC loans forfeited, taxable amount - - - - - -8a. Crop insurance proceeds / Disaster payments - 24,495 - - - 4,8998b. Crop insurance / Disaster payments, taxable amount - 24,495 - - - 4,8998d. Amount deferred from previous year - - - - - -9. Custom hire (machine work) income 2,120 - - - - 42410. Other income - - 3,368 68,700 - 14,41411. Gross income 485,912 604,773 506,624 543,731 636,393 555,487

PART II: Farm Expenses -- Cash and Accrual Method12. Car and truck expenses - - - - - -13. Chemicals 26,297 24,359 23,983 11,879 15,650 20,43414. Conservation expenses - - - - - -15. Custom hire (machine work) 6,819 2,568 6,395 2,496 2,310 4,11816. Depreciation 95,572 45,044 141,768 186,691 47,584 103,33217. Employee benefit programs - - - - - -18. Feed purchased 74,832 49,080 31,927 40,070 149,268 69,03519. Fertilizers and lime 33,730 28,379 38,132 37,640 34,606 34,49720. Freight and trucking - 2,825 2,658 10,988 23,068 7,90821. Gasoline, fuel, and oil 10,174 19,898 25,208 23,310 25,405 20,79922. Insurance (other than health) 10,797 14,648 11,540 13,720 19,877 14,11623a. Interest, mortgage - - - 8,964 26,707 7,13423b. Interest, other 34,313 25,148 27,123 27,168 74,075 37,56524. Labor hired 10,357 6,095 5,918 7,200 11,506 8,21525. Pension and profit-sharing plans - - - - - -26a. Rent or lease: vehicles, machinery, equipment - - - - - -26b. Rent or lease: land, animals, etc. 90,543 85,759 86,150 84,384 101,276 89,62227. Repairs and maintenance 18,516 19,884 15,307 11,779 17,275 16,55228. Seeds and plants purchased 38,772 80,071 45,322 315 46,128 42,12229. Storage and warehousing - - - - - -30. Supplies purchased 7,279 6,152 4,923 10,261 26,271 10,97731. Taxes 84 70 84 80 60 7632. Utilities 4,214 4,246 3,405 3,337 4,078 3,85633. Veterinary, breeding, and medicine 2,511 6,088 3,781 9,779 8,314 6,09534. Other expenses 18,072 13,181 8,128 7,627 11,238 11,649FINPACK © Center For Farm Financial Management Prepared by: Wynn Richardson


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Slim Jim Sample Tax Form / Income Statement: Sch F Page 2 1/31/2012 10:36:27 AM

Tax year 2003 2004 2005 2006 2007 Average

35. Total expenses 482,882 433,495 481,752 497,688 644,696 508,10336. Net farm profit or loss 3,030 171,278 24,872 46,043 -8,303 47,384

PART III: Farm Income -- Accrual Method38. Sales of livestock, produce, grains, etc. - - - - - -39a. Cooperative distributions - - - - - -39b. Cooperative distributions, taxable amount - - - - - -40a. Agricultural program payments - - - - - -40b. Agricultural program payments, taxable amount - - - - - -41a. CCC loans reported under election - - - - - -41b. CCC loans forfeited - - - - - -41c. CCC loans forfeited, taxable amount - - - - - -42. Crop insurance proceeds - - - - - -43. Custom hire (machine work) income - - - - - -44. Other income - - - - - -45. Total, lines 38-44 - - - - - -46. Beginning inventory of livestock, produce, grains, etc. - - - - - -47. Cost of livestock, produce, grains, etc. purchased - - - - - -48. Add lines 46 and 47 - - - - - -49. Ending inventory of livestock, produce, grains, etc. - - - - - -50. Cost of livestock, produce, grains, etc. sold - - - - - -51. Gross income - - - - - -

Cash Flow for Debt ServiceNet farm profit or loss 3,030 171,278 24,872 46,043 -8,303 47,384+ Other non-taxable income - - - - - -+ Depreciation 95,572 45,044 141,768 186,691 47,584 103,332+ Interest paid on term debt 14,012 13,647 6,669 4,997 38,442 15,553- Non-recurring income - - - - - -+ Non-recurring expense - - - - - -= Cash available for debt service 112,614 229,969 173,309 237,731 77,723 166,269

Farm Term Debt Coverage (cash basis)Cash available for debt service 112,614 229,969 173,309 237,731 77,723 166,269+ Cull income - - - - - -+ Personal income 21,473 25,488 33,201 28,889 46,660 31,142- Family living expense 74,564 83,312 82,710 77,164 75,382 78,626- Income and social security tax 53,342 42,684 26,270 19,397 8,167 29,972= Capital debt repayment capacity (cash basis) 6,181 129,461 97,530 170,059 40,834 88,813Annual P & I payments on term debt 76,111 91,579 51,641 37,366 91,951 69,730Term debt coverage ratio (cash basis) 0.08 1.41 1.89 4.55 0.44 1.68

Efficiency RatiosOperating expense ratio 73 60 62 51 78 65Depreciation expense ratio 20 7 28 34 7 19Interest expense ratio 7 4 5 7 16 8Net farm income ratio 1 28 5 8 -1 8



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At a minimum, most lenders ask borrowers for a balance sheet and a Schedule F tax return each year. The challenge is analyzing these documents to determine credit worthiness. An analysis of Illinois farms found that there is a 66 percent difference between Schedule F cash net income and accrual net income.

So how can you use Schedule F information to make informed loan decisions? FINPACK’s Schedule F Accrual Analysis makes this job easy.

FINPACK’s Schedule F Accrual Analysis:

• Requires only the beginning and ending balance sheets and a Schedule F tax return

• With a little additional information, FINPACK generates an accrual analysis

• Spreads the net farm income, financial ratios, and earned net worth change over multiple years

• Compare individual farm ratios to industry averages

Schedule F Accrual Analysis

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Slim Jim SampleSchedule F Analysis

2005 2006 2007Analysis type Sch F Sch F Sch F

Income StatementGross cash farm income 914,520 998,782 1,878,456Total cash farm expense 795,035 863,155 1,866,530Net cash farm income 119,485 135,627 11,926Inventory change 60,498 32,242 320,893Depreciation -40,766 -56,378 -56,858Net farm income from operations 139,217 111,491 275,961Net farm income 139,217 111,491 275,961

Financial Standards MeasuresLiquidity (ending)Current ratio (farm only) 1.23 1.12 1.35Working capital (farm only) 147,386 88,536 296,763Working capital to gross revenues 14.8 % 8.3 % 13.5 %Solvency (market)Debt to asset ratio 61 % 61 % 56 %Equity to asset ratio 39 % 39 % 44 %Debt to equity ratio 1.58 1.57 1.30Profitability (cost)Rate of return on assets 11.9 % 8.2 % 18.7 %Rate of return on equity 29.1 % 16.3 % 38.5 %Operating profit margin 26.6 % 24.2 % 41.4 %Net farm income 139,217 111,491 275,961EBITDA 205,293 211,607 438,627Repayment CapacityCapital debt repayment capacity 104,873 99,194 328,422Capital debt repayment margin 53,232 61,828 236,471Replacement margin 53,232 47,487 235,097Term debt coverage ratio 2.03 2.65 3.57Replacement margin coverage ratio 2.03 1.92 3.52EfficiencyAsset turnover rate (cost) 44.7 % 33.8 % 45.3 %Operating expense ratio 79.4 % 80.1 % 80.1 %Depreciation expense ratio 4.1 % 5.3 % 2.6 %Interest expense ratio 2.5 % 4.1 % 4.8 %Net farm income ratio 14.0 % 10.5 % 12.5 %

Net Worth GrowthEarned net worth change 59,588 60,005 236,115Earned net worth change (%) 14 % 16 % 44 %Market net worth change 77,146 274,716 164,039Market net worth change (%) 22 % 64 % 23 %

Accuracy ChecksCash discrepancy 454 -2 220Cash discrepancy to gross revenues 0.0 % 0.0 % 0.0 %



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Slim Jim Sample : Schedule F Analysis Page 2 1/31/2012 9:56:05 AM

2007 Income Statement

Income Expense

Sale of livestock purchased for resale 1,816,151 Feeder livestock purchases 1,269,418Sales of raised crops and livestock 42,186 Chemicals 15,650Government payments 20,028 Custom hire (machine work) 2,310Cooperative distributions 91 Feed purchased 149,268

Fertilizers and lime 34,606Freight and trucking 23,068Gasoline, fuel, and oil 25,405Insurance (other than health) 19,877Interest, mortgage 26,707Interest, other 74,075Labor hired 11,506Rent or lease: land, animals, etc. 101,276Repairs and maintenance 17,275Seeds and plants purchased 46,128Supplies purchased 26,271Taxes 60Utilities 4,078Veterinary, breeding, and medicine 8,314Other expenses 11,238

Gross cash income 1,878,456 Total cash expense 1,866,530Net cash income 11,926

Beginning Purchases/ Sales/ Ending InventoryInventory Changes Inventory Deposits Withdrawals Inventory ChangePrepaids and supplies 859 2,422 1,563Hedging gains or losses - 3,000 - - -3,000Crops and feed 223,427 520,618 297,191Market livestock 569,149 599,144 29,995Other assets 2,231 - - 2,401 170Accrued interest 14,334 19,359 -5,025Total inventory change 320,893Net operating profit 332,819

Beginning EndingDepreciation Inventory Purchases Sales Inventory DepreciationMachinery and equipment 301,794 36,467 - 304,435 -33,826Titled vehicles 1,158 - - 1,042 -116Buildings and improvement 448,629 9,697 - 435,410 -22,916Total depreciation -56,858

Net farm income 275,961



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Profitability Measures Cost Market Statement of Owner's Equity

(A) Net farm income from operations 275,961 284,905 (a) Beginning net worth 701,284Rate of return on assets (E/F) 18.7 % 16.8 %Rate of return on equity (G/H) 38.5 % 27.7 % Net farm income 275,961Operating profit margin (E/I) 41.4 % 42.5 % Personal income (+) 46,660Asset turnover rate (I/F) 45.3 % 39.5 % Family living expense (-) 75,332

Income taxes (-) 8,167(B) Change in market valuation - 8,944 Change in personal assets (+) -3,036(C) Interest expense 105,807 105,807 Change in nonfarm accounts payable (+) 29(D) Value of operator labor & mgt 57,356 57,356 (b) Total change in retained earnings (=) 236,115(E) Return on farm assets (A+C-D) 324,413 333,357(F) Average farm assets 1,732,516 1,986,205 Change in market value of capital assets 8,944(G) Return on farm equity (A-D) 218,605 227,549 Change in deferred liabilities - 81,021(H) Average farm net worth 568,258 821,948 (d) Total change in market valuation = -72,076(I) Value of farm production 784,126 784,126

(e) Total change in net worth (b+d) 164,039

Liquidity Measures Begin End Ending net worth calculated (a+e) 865,323Ending net worth reported 865,103

(J) Current assets 803,011 1,148,218 Discrepancy 220(K) Current liabilities 714,475 851,455

Current ratio (J/K) 1.12 1.35 Statement of Cash FlowsWorking capital (J-K) 88,536 296,763Working capital to gross revenues 4.0 % 13.5 % (f) Beginning cash balance (farm & personal) 9,576

Gross cash farm income 1,878,456Solvency Measures (Market) Begin End Cash farm expenses (-) 1,866,530

Net cash from hedging transactions (+) -3,000(L) Total assets 1,961,092 2,311,949 (g) Cash provided by operating activities (=) 8,926(M) Total liabilities 1,259,808 1,446,846

Net worth (L-M) 701,284 865,103 Sale of capital assets -Net worth change 163,819 Purchase of machinery and equipment (-) 36,467

Purchase of farm buildings (-) 9,697Current debt to assets (K/J) 89 % 74 % Purchase of personal assets (-) 10,266Intermediate debt to assets 20 % 15 % (h) Cash provided by investing activities (=) -56,430Long term debt to assets 57 % 59 %Personal debt to assets 32 % 28 % Net money borrowed less repaid (-) 101,021Total debt to assets ratio (M/L) 64 % 63 % Personal income (+) 46,660

Family living expense (-) 75,332Income taxes (-) 8,167

Repayment Capacity (i) Cash provided by financing activities (=) 64,182

Net farm income from operations 275,961 Net change in cash (g+h+i) 16,678Depreciation (+) 56,858 Ending cash balance (farm and personal) 26,034Personal income (+) 46,660 Discrepancy 220Family living expense (-) 75,332Payments on personal debt (-) 6,000Income taxes (-) 8,167Interest on term debt (+) 38,442

(N) Capital debt repayment capacity (=) 328,422(O) Scheduled term debt payments 91,951(P) Capital debt repayment margin (N-O) 236,471(Q) Cash replacement allowance 1,374

Replacement margin (P-Q) 235,097

Term debt coverage ratio (N/O) 3.57Replacement coverage ratio (N/O+Q) 3.52



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Accrual A

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Cash Accuracy Check

Beginning cash balance 9,576 Ending cash balance 26,034Gross cash farm income 1,878,456 Total cash farm expense 1,866,530Personal income 46,660 Family living expense 75,332Hedging account withdrawals - Hedging account deposits 3,000Capital sales - Capital purchases 56,430Net money borrowed 101,021 Net principal payments -Gifts and inheritances - Gifts given -

Income taxes 8,167Total inflows 2,035,713 Total outflows 2,035,493

Discrepancy (inflows - outflows) 220Discrepancy to gross revenues 0.0 %



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Current Ratio

FINBIN My Farm

2002 2003 2004 2005 2006 2007

2

1.5

1

0.5

0

Current RatioThe extent to which current farm assets, if liquidated, would covercurrent farm liabilities.

Total current farm assets divided by total current farm liabilities.

Strong Greater than 1.7Caution 1.7 to 1.1Vulnerable Less than 1.1

Working Capital to Gross Revenues

FINBIN My Farm

2002 2003 2004 2005 2006 2007

30

25

20

15

10

5

0

Working Capital to Gross RevenuesMeasures operating capital available against the size of thebusiness.

Working capital dividied by gross revenues.

Strong Greater than 25Caution 25 to 10Vulnerable Less than 10

Debt to Asset Ratio (mkt)

FINBIN My Farm

2002 2003 2004 2005 2006 2007

80

60

40

20

0

Debt to Asset Ratio (mkt)The proportion of total farm assets owed to creditors.

Total farm debt divided by total farm assets.

Strong Less than 30%Caution 30% to 60%Vulnerable Greater than 60%

Debt to Equity Ratio (mkt)

FINBIN My Farm

2002 2003 2004 2005 2006 2007

4

3

2

1

0

Debt to Equity Ratio (mkt)The relative amount of money borrowed as a percentage of equitycapital.

Farm debt divided by equity.

Strong Less than 0.43Caution 0.43 to 1.5Vulnerable Greater than 1.5



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Accrual A

nalysis


Rate of Return on Assets-cost

FINBIN My Farm

2002 2003 2004 2005 2006 2007

35302520151050

Rate of Return on Assets-costThe rate earned on the total business investment, equity andborrowed capital.

Net farm income + interest - value oper labor & mgmt divided byaverage farm assets.

Strong Greater than 8%Caution 8% to 4%Vulnerable Less than 4%

Rate of Return on Equity-cost

FINBIN My Farm

2002 2003 2004 2005 2006 2007

50

40

30

20

10

0

Rate of Return on Equity-costThe rate earned on equity capital invested in the business.

Net farm income - value oper labor & mgmt divided by average farmnet worth.


Operating Profit Margin (cost)

FINBIN My Farm

2002 2003 2004 2005 2006 2007

50

40

30

20

10

0

Operating Profit Margin (cost)Measures the operating efficiency of the business in terms ofreturn as a percentage of gross income.

Net farm income + interest - value of labor & mgmt divided by thevalue of farm production.


Net Farm Income (cost)

FINBIN My Farm

2002 2003 2004 2005 2006 2007

350,000300,000250,000200,000150,000100,00050,000

0

Net Farm Income (cost)The net income from the farm that is available for ownerwithdrawals, income taxes and equity growth.

Cash income - cash expense + inventory change - depreciation.



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Term Debt Coverage Ratio

FINBIN My Farm

2002 2003 2004 2005 2006 2007

3.53

2.52

1.51

0.50

Term Debt Coverage RatioThe ability of the business to generate enough income to cover allscheduled intermediate and long term debt payments.

Net farm oper income + net nonfarm income + interest on term debt -fam liv & taxes / term debt prin & int.


Replacement Margin Coverage Ratio

FINBIN My Farm

2002 2003 2004 2005 2006 2007

3.53

2.52

1.51

0.50

Replacement Margin Coverage RatioA ratio below 1.0 indicates you did not generate enough income tocover term debt payments and unfunded capital purchases.


Asset Turnover Rate (cost)

FINBIN My Farm

2002 2003 2004 2005 2006 2007

706050403020100

Asset Turnover Rate (cost)Measures efficiency of capital invested in the business in terms ofthe gross revenue generated by each dollar of investment.

Value of farm production divided by average farm assets.


Operating Expense Ratio

FINBIN My Farm

2002 2003 2004 2005 2006 2007

80

60

40

20

0

Operating Expense RatioThe portion of gross revenue used to pay operating expenses.

Farm operating expense - interest expense divided by gross income.

Strong Less than 60%Caution 60% to 80%Vulnerable Greater than 80%



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Accrual A

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Global cash flow is important when both business and personal cash flows need to be analyzed to determine a credit’s true financial situation. A global cash flow allows a lender to look at the combined sources and uses of cash from multiple business entities along with cash flow from personal sources.

The FINPACK Global Cash Flow calculates debt coverage for each individual business entity and for the individuals involved in the business.

With Global Cash Flow, you can:

• Easy methodology to quickly present the entire cash flow position

• Analyze repayment ability from multiple businesses, multiple individuals, and guarantors

• Requires only tax returns from each entity

• Calculates debt coverage ratios for each entity and global debt coverage for the combined entities

• Easily add projected new or proposed debt payments and income to the analysis

Global Cash Flow

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Slim Jim SampleGlobal Cash Flow Analysis

Actual $2005 2006 2007 Average

Sch F - FarmingNet farm profit or loss 24,872 46,043 -8,303 20,871+ Other non-taxable income - - - -+ Depreciation 141,768 186,691 47,584 125,348+ Interest paid on term debt 6,669 4,997 38,442 16,703- Non-recurring income - - - -+ Non-recurring expense - - - -= Cash available for debt service 173,309 237,731 77,723 162,921Debt payments 51,641 37,366 91,951 60,319Debt coverage ratio 3.36 6.36 0.85 3.52

Sch C - TruckingNet profit or loss 27,729 21,027 22,303 23,686+ Depreciation - - - -+ Interest 4,203 3,602 3,465 3,757- Disallowed meals and entertainment (50%) - - - -+ Depreciation, depletion, interest in COGS - - - -+ Expenses for business use of your home - - - -- Non-recurring income - - - -+ Non-recurring expense - - - -= Cash available for debt service 31,932 24,629 25,768 27,443Debt payments 13,265 13,265 13,265 13,265Debt coverage ratio 2.41 1.86 1.94 2.07

Sch E - HousesNet profit or loss 5,902 7,145 6,229 6,425+ Depreciation, depletion 2,730 2,730 2,730 2,730+ Interest - - - -- Non-recurring income - - - -+ Non-recurring expense - - - -= Cash available for debt service 8,632 9,875 8,959 9,155Debt payments - - - -Debt coverage ratio - - - -

1040 - Jim & SarahAdjusted gross income 100,789 116,288 64,874 93,984+ Other non-taxable income - - - -- Income tax 8,912 9,812 3,500 7,408- Living expenses 45,000 45,000 45,000 45,000- Non-recurring income - - - -+ Non-recurring expense - - - -= Cash available for debt service 46,877 61,476 16,374 41,576Debt payments 23,332 23,332 23,332 23,332Debt coverage ratio 2.01 2.63 0.70 1.78

Global Debt CoverageBusiness and personal cash available for debt service 260,750 333,711 128,824 241,095- Business income included in personal income 58,503 74,215 20,229 50,982= Net global cash available for debt service 202,247 259,496 108,595 190,113Total debt payments 88,238 73,963 128,548 96,916Total debt coverage ratio 2.29 3.51 0.84 2.22FINPACK © Center For Farm Financial Management Prepared by: Wynn Richardson


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Slim Jim Sample Global Cash Flow Analysis: Global Page 2 1/31/2012 9:56:41 AM

Proposed New Income & DebtNew building

2005 2006 2007 AverageOriginal total debt coverage ratio 2.29 3.51 0.84 2.22

Adjusted Prior Three YearsBusiness and personal cash available for debt service 260,750 333,711 128,824 241,095- Business income included in personal income 58,503 74,215 20,229 50,982+ Proposed new income 50,000 50,000 50,000 50,000= Adjusted net global cash available for debt service 252,247 309,496 158,595 240,113Existing debt payments 88,238 73,963 128,548 96,916+ Proposed new debt payments 7,250 7,250 7,250 7,250= Total debt payments 95,488 81,213 135,798 104,166Adjusted total debt coverage ratio 2.64 3.81 1.17 2.54



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Don’t need a monthly cash flow for all of your borrowers? The FINPACK Annual Cash Flow requires less time and data but provides a complete cash flow with pro-forma accrual analysis for theplanning year.

The Annual Cash Flow is a quick and easy annual cash flow plan that includes:

• Projected annual cash flow

• Projected change in working capital

• Projected debt coverage

• Pro-forma income statement

• Pro-forma balance sheet

• Links to past history for accurate and convenient data entry

Your completed plan can be printed directly on FSA forms, using FINPACK’s FSA Forms tool.

Annual Cash Flow

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Slim Jim Sample2008

Executive Summary

Projected Cash Flow Summary Term Debt Coverage

Total operating inflow 1,335,008 Net farm income from operations 94,573Total operating outflow (-) 1,073,745 Depreciation (+) 74,605Capital purchases (-) - Personal income (+) 48,000Capital sales (+) - Family living expense (-) 78,000New credit (+) 515,625 Personal loan payments (-) 6,000Loan payments (-) 709,578 Income and social security tax (-) 25,000Net cash flow (=) 67,309 Interest paid on term debt (+) 32,599

Capital debt repayment capacity (=) 140,777Beginning cash balance (+) 26,034 Term debt payments 78,081Operating loan borrowings (+) 292,400 Term debt coverage 1.80Operating loan principal payments (-) 382,789Ending cash balance (=) 2,954 Farm Financial Standards Measures

Beginning operating loan balance 207,100 Liquidity Beginning EndingEnding operating loan balance 116,711 Current ratio 1.3 1.5

Working capital 296,763 361,013Projected Change in Working Capital Working capital to gross revenue 24.4 % 29.6 %

Change in cash -23,080 Solvency (market)Change in current inventories (+) -68,501 Debt to asset ratio 56.5 % 51.2 %Change in operating loan balance (-) -90,389 Equity to asset ratio 43.5 % 48.8 %Change in other current loans (-) -63,888 Debt to equity ratio 1.3 1.0Change in princ due on term loans (-) -1,554Estimated change in working capital (=) 64,250 Profitability (market)

Rate of return on assets 5.7 %Projected Income Statement Rate of return on equity 4.1 %

Operating profit margin 18.4 %Gross cash farm income 1,287,008 Net farm income 94,573Inventory change - income items (+) -69,108 EBITDA 247,155Gross revenue (=) 1,217,900

Repayment CapacityCash farm operating expense 970,745 Capital debt repayment capacity 140,777Interest expense (+) 78,583 Capital debt repayment margin 62,696Depreciation (+) 74,605 Replacement margin 50,049Inventory change - expense items (+) -606 Term debt coverage 1.80Total farm expense (=) 1,123,327 Replacement margin coverage ratio 1.55Net farm income 94,573

EfficiencyProjected Earned Net Worth Change Asset turnover rate (market) 30.7

Operating expense ratio 79.7 %Net farm income 94,573 Depreciation ratio 6.1 %Personal income (+) 48,000 Interest expense ratio 6.4 %Family living expense (-) 78,000 Net farm income ratio 7.8 %Income & social security tax (-) 25,000Personal loan interest expense (-) 2,014 Shocks to Term Debt Coverage RatioPersonal asset depreciation (-) 1,393Earned net worth change (=) 36,166 10% decrease in gross income 0.24

10% increase in operating expenses 0.563% increase in interest rates 1.33

FINPACK © Center For Farm Financial Management Prepared by: Dale Nordquist

University of Minnesota Center for Farm Financial Mgmt

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Slim Jim Sample Annual Plan: 2008 Page 2 1/30/2009 8:33:52 AM

PROJECTED NET CASH FLOW

Cash Inflows Quantity Price Inflow Cash Outflows Outflow

Corn 35,000 bu. 4.00/bu. 140,000 Feeder livestock purchase 515,625Soybeans 19,794 bu. 11.20 /bu. 221,693 Seed 60,948Finish Beef 736 head 95.00 /cwt. 908,960 Fertilizer 48,330Direct & CC govt payments 16,094 Crop chemicals 18,216Patronage dividends, cash 261 Crop insurance 22,248Personal wages & salary 48,000 Drying expense 6,210Total operating inflows 1,335,008 Crop purchases 11,425

Purchased feed 53,446New Credit Veterinary 5,5675thNB-Cattle 515,625 Supplies 18,558Total new credit 515,625 Marketing 16,997

Fuel & oil 35,600Repairs 18,000Custom hire 3,000Hired labor 12,000Land rent 111,400Real estate taxes 75Farm insurance 6,000Utilities 4,300Dues & professional fees 1,300Miscellaneous 1,500Family living/Owner draw 78,000Income & social sec taxes 25,000Total operating outflows 1,073,745

Loan PaymentsFifth National Bank-Cattle 612,189John Deere Credit-7230 6,670Farm Service Agency-Bin Loan 15,586Fifth National Bank-Chopper 4,009John Deere Credit-Combine 19,038Fifth National Bank-Barn 32,778Mutual Insurance-House 6,000Annual operating loan interest 13,308Total loan payments 709,578

Total cash inflows 1,850,633 Total cash outflows 1,783,323

Net cash flow 67,309

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CROP AND LIVESTOCK PRODUCTION

Production Per OperatorEnterprise Units Unit Share Production

Corn 414.0 Acres 165.0 bu. 100 68,310 bu.Corn Silage 42.0 Acres 18.0 ton 100 756 tonSoybeans 474.0 Acres 48.0 bu. 100 22,752 bu.

Total crop acres 930.0 Acres

CROP INVENTORY SUMMARY

Beginning From To EndingInventory Produced Purchased CCC Fed Sold CCC Inventory

Corn (bu.) 69,707 68,310 - - -35,591 -35,000 - 67,426Corn Silage (ton) 690 756 9 - -905 - - 550Alfalfa Hay (ton) 7 - 112 - -119 - - 0Soybeans (bu.) 19,794 22,752 - - - -19,794 - 22,752

LIVESTOCK INVENTORY SUMMARY

Beginning Purchased / Sold / EndingInventory Produced Trans In Died Trans Out Inventory

Finish Beef (head) 739 - 750 -3 -736 750

PROJECTED INVENTORY CHANGE

Begin Begin Ending EndingCommodity Inventory $/Unit Value Inventory $/Unit Value Change

Corn 69,707 4.03 280,919 67,426 3.50 235,991 -44,928Corn Silage 690 25.00 17,250 550 25.00 13,750 -3,500Hay, Alfalfa 7 105.00 756 0 105.00 21 -735Soybeans 19,794 11.20 221,693 22,752 8.50 193,392 -28,301Finish Beef 739 810.75 599,144 750 810.00 607,500 8,356Total income items 1,119,762 1,050,654 -69,108

Prepaid exp. & suppl. 2,422 2,422 -Accrued interest (end) 18,753 (beg) 19,359 606Total expense items 21,175 21,781 606

Total inventories 1,140,937 1,072,435 -68,501

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PROJECTED BALANCE SHEETProjected

Beginning EndingCurrent AssetsCash and checking 26,034 2,954Prepaid exp. & suppl. 2,422 2,422Crops 520,618 443,154Mkt lvst 599,144 607,500Total current assets 1,148,218 1,056,030

Intermediate AssetsMachinery 502,500 452,250Titled vehicles 1,450 1,305Total intermediate assets 503,950 453,555

Long Term AssetsLand 30,000 30,000Bldgs & improve. 462,700 439,565Other long term 2,401 2,401Total long term assets 495,101 471,966Total farm assets 2,147,269 1,981,551

Personal assets 153,930 152,537Total assets 2,301,199 2,134,088

Current LiabilitiesAccrued interest 19,359 18,753Operating loan(s) 207,100 116,711Fifth National Bank-Cattle 579,513 515,625Principal due on term loans 45,482 43,928Total current liabilities 851,455 695,017

Intermediate LiabilitiesJohn Deere Credit-7230 4,364 -Farm Service Agency-Bin Loan 29,861 15,733Fifth National Bank-Chopper 8,019 4,010John Deere Credit-Combine 33,638 18,870Total intermediate liabilities 75,882 38,613

Long Term LiabilitiesFifth National Bank-Barn 291,841 285,181Total long term liabilities 291,841 285,181Total farm liabilities 1,219,177 1,018,812

Personal liabilities 43,744 39,758Total liabilities 1,262,921 1,058,570

Net worth 1,038,277 1,075,519Net worth change 37,241Debt to asset ratio 55 % 50 %

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FINPACK makes monthly cash flow planning easy and accurate. The monthly cash flow can project annual operating loan needs and repayment capacity for the year, any portion of a year, or multiple years (up to ten years).

Monthly Cash Flow includes:

• Projected monthly cash flows

• Projected operating loan transactions and balances

• Projected debt coverage

• Pro-forma income statement

• Pro-forma balance sheets

Your completed plan can be printed directly on FSA forms, using FINPACK’s FSA Forms tool.

Monthly Cash Flow

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Slim Jim Sample2008 Cash Flow

Executive Summary

Projected Cash Flow Summary Term Debt Coverage

Total operating inflow 1,335,062 Net farm income from operations 94,950Total operating outflow (-) 1,073,685 Depreciation (+) 74,605Capital purchases (-) - Personal income (+) 48,000Capital sales (+) - Family living expense (-) 78,000New credit (+) 515,625 Personal loan payments (-) 6,000Loan payments (-) 707,647 Income and social security tax (-) 25,000Net cash flow (=) 69,355 Interest paid on term debt (+) 32,082

Capital debt repayment capacity (=) 140,637Beginning cash balance (+) 26,034 Term debt payments 78,081Operating loan borrowings (+) 292,400 Term debt coverage 1.80Operating loan principal payments (-) 382,789Ending cash balance (=) 5,000 Farm Financial Standards Measures

Beginning operating loan balance 207,100 Liquidity Beginning EndingPeak operating loan balance (Feb) 211,644 Current ratio 1.3 1.5Ending operating loan balance 116,711 Working capital 296,763 360,928

Working capital to gross revenue 24.4 % 29.6 %Projected Change in Working Capital

Solvency (market)Change in cash -21,034 Debt to asset ratio 56.5 % 51.2 %Change in current inventories (+) -68,355 Equity to asset ratio 43.5 % 48.8 %Change in operating loan balance (-) -90,389 Debt to equity ratio 1.30 1.05Change in other current loans (-) -63,888Change in princ due on term loans (-) 722 Profitability (market)Estimated change in working capital (=) 64,165 Rate of return on assets 5.7 %

Rate of return on equity 4.2 %Projected Income Statement Operating profit margin 18.5 %

Net farm income 94,950Gross cash farm income 1,287,062 EBITDA 248,792Inventory change - income items (+) -69,126Gross revenue (=) 1,217,936 Repayment Capacity

Capital debt repayment capacity 140,637Cash farm operating expense 970,685 Capital debt repayment margin 62,556Interest expense (+) 78,467 Replacement margin 49,906Depreciation (+) 74,605 Term debt coverage 1.80Inventory change - expense items (+) -771 Replacement margin coverage ratio 1.55Total farm expense (=) 1,122,986Net farm income 94,950 Efficiency

Asset turnover rate (market) 30.7Projected Earned Net Worth Change Operating expense ratio 79.7 %

Depreciation ratio 6.1 %Net farm income 94,950 Interest expense ratio 6.4 %Personal income (+) 48,000 Net farm income ratio 7.8 %Family living expense (-) 78,000Income & social security tax (-) 25,000 Shocks to Term Debt Coverage RatioPersonal loan interest expense (-) 2,015Personal asset depreciation (-) 1,393 10% decrease in gross income 0.24Earned net worth change (=) 36,542 10% increase in operating expenses 0.56

3% increase in interest rates 1.37

FINPACK © Center For Farm Financial Management Prepared by: Dale Nordquist


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Slim Jim Sample Cash Flow Plan: 2008 Cash Flow Page 2 1/30/2009 8:18:49 AM

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

CASH INFLOWS

Beg cash bal 26034 5000 5000 59543 5000 5000 5000 5000 84885 65813 25024 5000 26034Corn - - 140000 - - - - - - - - - 140000Soybeans - - 221693 - - - - - - - - - 221693Finish Beef - - - - - - - 909014 - - - - 909014DCP payments - 5633 - - - - - - - 10461 - - 16094Pat dividend - - 261 - - - - - - - - - 261Pers. wages 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000Total inflow 30034 14633 370954 63543 9000 9000 9000 918014 88885 80274 29024 9000 1361096

CASH OUTFLOWS

Seed - - - 41040 19908 - - - - - - - 60948Fertilizer - - - - 48330 - - - - - - - 48330Chemicals - - - - 18216 - - - - - - - 18216Crop insur. - - - - - - - - 1176 9480 11592 - 22248Drying fuel - - - - - - - - - - 6210 - 6210Pur. Silage - - - - - - 217 - - - - - 217Pur. Hay 384 1154 1211 1260 1311 1359 1410 - - 970 1020 1070 11149Feeder lvstk - - - - - - - - - 515625 - - 515625Purch. feed 5321 5321 5321 5321 5321 5321 5321 - - 5400 5400 5400 53446Veterinary 554 554 554 554 554 554 554 - - 563 563 563 5567Supplies 1848 1848 1848 1848 1848 1848 1848 - - 1875 1875 1875 18558L. Marketing - - - - - - - 16997 - - - - 16997Fuel & oil - - - 5933 5933 5933 - - 5933 5933 5933 - 35600Repairs 720 720 1440 1440 2160 1440 1440 1440 2160 2160 2160 720 18000Cust hire - - - 1500 - - - - - - 1500 - 3000Labor - - - 2400 2400 - - - 2400 2400 2400 - 12000Land rent - - 55700 - - - - - - - 55700 - 111400RE taxes - - - - 38 - - - - 38 - - 75Farm insur. - 6000 - - - - - - - - - - 6000Utilities 269 269 269 269 269 269 269 269 269 269 806 806 4300Dues & fees - - 1300 - - - - - - - - - 1300Misc. 125 125 125 125 125 125 125 125 125 125 125 125 1500Living/Draw 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 78000Income taxes - - 25000 - - - - - - - - - 25000Min end bal 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000Tot. outflow 20720 27491 104267 73190 117912 28349 22683 30331 23563 556337 106784 22059 1078685

Opr. surplus 9314 -12858 266686 -9647 -108912 -19349 -13683 887684 65322 -476063 -77760 -13059 282411

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

NEW CREDIT

5thNB-Cattle - - - - - - - - - 515625 - - 515625Tot new cred - - - - - - - - - 515625 - - 515625

LOAN PAYMENTS

5thNB-Cattle - - - - - - - 612189 - - - - 612189JDCC-7230 - - - - - - - - - - 6670 - 6670FSA-Bin Loan - - - - - - - - - - - 15586 155865thNB-Chop.. - - - - - - - - 4009 - - - 4009JDCC-Combine - - - - - - - - - 19038 - - 190385thNB-Barn - - - - - - - 32778 - - - - 32778InsCo-House 500 500 500 500 500 500 500 500 500 500 500 500 6000Tot loan pay 500 500 500 500 500 500 500 645467 4509 19538 7170 16086 696271

Surp. or def 8814 -13358 266186 -10147 -109412 -19849 -14183 242216 60813 20024 -84930 -29145 101765

ANNUAL OPERATING LOAN TRANSACTIONS & BALANCES

Beg AO bal 207100 198286 211644 - 10147 119559 148148 162331 - - - 84930 207100AO borrowing - 13358 - 10147 109412 28589 14183 - - - 84930 31781 292400AO int. pay - - - - - 8740 - - - - - 2636 11376AO prin. pay 8814 - 211644 - - - - 162331 - - - - 382789

End AO bal. 198286 211644 - 10147 119559 148148 162331 - - - 84930 116711 116711Accrued int. 5143 6464 7875 7875 7943 - 988 2070 2070 2070 2070 - -End cash bal 5000 5000 59543 5000 5000 5000 5000 84885 65813 25024 5000 5000 5000

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CROP & LIVESTOCK PRODUCTIONProduction Per Operator

Enterprise Units Unit Share Production

Corn, Feed 414.0 Acres 165.0 bu. 100 68310 bu.Corn Silage 42.0 Acres 18.0 ton 100 756 tonSoybeans 474.0 Acres 48.0 bu. 100 22752 bu.

Total crops 930 Acres

CROP & LIVESTOCK SUMMARY

Beg Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Corn equivalentsProduced bu. - - - - - - - - - 68310 - - 68310Sold bu. 35000

Corn bu. - - 35000 - - - - - - - - - 35000Price $/bu. - - 4.00 - - - - - - - - - 4.00

Fed bu. 3158 3406 3690 3939 4185 4431 4680 - - 2448 2700 2953 35591Inventory bu. 69707 66549 63143 24453 20514 16329 11897 7218 7218 7218 73079 70379 67426 67426

Hay equivalentsPurchased ton 4 12 12 13 13 14 14 - - 10 10 11 111Price $/ton 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - - 100.00 100.00 100.00 100.00Fed ton 11 12 12 13 13 14 14 - - 10 10 11 119Inventory ton 7 - - - - - - - - - - - -

Silage equivalentsProduced ton - - - - - - - - 756 - - - 756Purchased ton - - - - - - 9 - - - - - 9Price $/ton - - - - - - 25.00 - - - - - 25.00Fed ton 80 87 94 100 106 113 119 - - 62 69 75 905Inventory ton 690 610 523 429 329 223 110 - - 756 694 625 550 550

SoybeansProduced bu. - - - - - - - - - 22752 - - 22752Sold bu. - - 19794 - - - - - - - - - 19794Price $/bu. - - 11.20 - - - - - - - - - 11.20Inventory bu. 19794 19794 19794 - - - - - - - 22752 22752 22752 22752

Finish BeefPurchased head - - - - - - - - - 750 - - 750Price $/cwt. - - - - - - - - - 110.00 - - 110.00Sold head - - - - - - - 739 - - - - 739Price $/cwt. - - - - - - - 95.00 - - - - 95.00Inventory head 739 739 739 739 739 739 739 739 - - 750 750 750 750

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PROJECTED INVENTORY CHANGE

Begin Begin Ending EndingCommodity Inventor $/Unit Value Inventory $/Unit Value Change

Corn equivalents 69707 4.03 280919 67426 3.50 235992 -44927Hay equivalents 7 105.00 756 0 0.00 0 -756Silage equivalents 690 25.00 17250 550 25.00 13752 -3498Soybeans 19794 11.20 221693 22752 8.50 193392 -28301Finish Beef 739 115.00 599144 0 0.00 0 -599144Finish Beef 0 0.00 0 750 810.00 607500 607500Accounts receivable 0 0 0Hedging accounts 0 0 0Other current assets 0 0 0Total income items 1119762 1050636 -69126

Prepaid expenses & supplies 2422 2422 0Growing crops 0 0 0Accounts payable (End) 0 (Beg) 0 0Accrued interest (End) 18589 (Beg) 19359 771Total expense items 21011 21781 771

Total inventories 1140772 1072417 -68355

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BALANCE SHEETSProjected

1/1/2008 1/1/2009ASSETS

Current AssetsCash and checking 26034 5000Prepaid exp. & suppl. 2422 2422Crops 520618 443136Mkt lvst 599144 607500Total current assets 1148218 1058058

Intermediate AssetsMachinery 502500 452250Titled vehicles 1450 1305Total intermediate assets 503950 453555

Long Term AssetsLand 30000 30000Bldgs & improve. 462700 439565Other long term 2401 2401Total long term assets 495101 471966

Total farm assets 2147269 1983579

Personal assets 153930 152537Total assets 2301199 2136116

LIABILITIES

Current LiabilitiesAccrued interest 19359 18589Prin due on term loans 45482 462055thNB-Cattle 579513 515625Operating loan(s) 207100 116711Total current liabilities 851455 697130

Intermediate LiabilitiesFSA-Bin Loan 29861 15208John Deere Credit-7230 4364 -John Deere Credit-Combine 33638 175465thNB-Chopper 8019 4009Total inter. liabilities 75882 36763

Long Term LiabilitiesFifth National Bank-Barn 291841 286570Total long term liab. 291841 286570

Total farm liabilities 1219177 1020463

Personal liabilities 43744 39759Total liabilities 1262921 1060222

Net worth 1038277 1075894

Net worth change 37617

Total debt to asset ratio 54 % 49 %

46

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The FINPACK Collateral Analysis builds from the balance sheets to calculate Loan to Value and the Collateral Margin. Proposed loans and projected collateral can be added to complete the picture. Collateral Analysis can feed directly into Presentation Manager and Risk Rating.

With Collateral Analysis, you can:

• Select loans and collateral from balance sheet

• Enter multiple collateral groups, when applicable

• Standardize discount percentages (although discount percentages can also be overridden for individual analysis)

• Link loan to value and collateral margin to the Risk Rating and Presentation Manager components of FINPACK

Collateral Analysis

47

Co

llateral Analysis

Slim Jim Sample1/1/2008

Collateral Analysis

Principal Market Disc. Discounted Prior Net Loan to

Loan Balance Collateral Value Pct. Value Liens Collateral Value

All Secured Loans

2008 Operating 225,000 Crop inventory 520,618 90.00 468,556 - 468,556

Fifth National Bank-Barn 298,500 Livestock held for sale 599,144 90.00 539,230 - 539,230

5thNB-Cattle 579,513 Machinery and equipment 502,500 75.00 376,875 58,688 318,187

5thNB-Operating 207,100 Titled vehicles 1,450 75.00 1,088 - 1,088

Land 30,000 100.00 30,000 - 30,000

Buildings and improvement 462,700 60.00 277,620 - 277,620

2008 Production 310,000 90.00 279,000 - 279,000

Total 1,310,113 2,426,412 1,972,368 58,688 1,913,680 68.5 %

Total loan to value 1,310,113 1,913,680 68.5 %

Collateral coverage margin 1.46

Collateral margin 603,567

48

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Use FINPACK’s Credit Decision Scorecard to fast track the review and decision making process for smaller loans.

With Credit Decision Scorecard, you can:

• Develop your own customized scorecard using the criteria most important to you

• Allows you to define essential criteria that must be met to make the loan

• Gathers the customer data that you specify

• Evaluates customer data compared to minimum approval criteria that you establish

• Provides the flexibility to document reasons to override automatic approvals or rejections

Credit Decision Scorecard

49

Cred

it Decisio

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recard

Sam & Pat DunnNew equipment purchase

Scorecard: Sample small business

Pre-qualifying CriteriaMust meet ALL criteria for automatic approval

Yes Is the requested loan amount less than $50,000?

Yes Is this loan to a business, not an individual?

Yes Is the purpose of this loan other than a line of credit or for inventory?

Yes Has at least one principal personally guaranteed the loan?

Yes Has the business generated a positive net profit each of the last three years?

Customer DataApplicant credit score 690Co-applicant credit score 670Loan amount 35,000Collateral value 60,000

Financial CriteriaMust meet ALL criteria for automatic approval

0.58 Loan to value 0.75 or less

670 Minimum credit score 650 or greater

24 Debt to income 40 or less

Approval:Yes, meets scorecard criteriaBy:Ima Lender



50

Cre

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Dec

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ore

card

FINPACK’s flexible risk rating tool meets the needs of your institution. Risk Rating automatically links to data from client plans and analyses. FINPACK makes risk rating fast and consistent.

With Risk Rating, you can:

• Create your own risk rating model(s)

• Link to data from the balance sheet, collateral analysis and ratio analysis

• Include customized external criteria, such as credit score

Risk Rating

51

Risk R

ating

Slim Jim Sample2007 Rating

Risk Rating Model: Loan Scoring, Agriculture

Balance Sheet(s): January 1, 2008; January 1, 2007; January 1, 2006

Earned Net Worth Analysis: 2007

CRITERIA RESULT SCORE x WEIGHT = TOTAL

LiquidityCurrent ratio 1.4 4 2 8

SolvencyDebt to asset ratio (mkt) 62.9 5 2 10Net worth growth % (mkt) 50.2 (Average) 1 2 2

Repayment CapacityTerm debt coverage ratio (projected) 2.16 1 3 3

Security AnalysisLoan to value 68 3 3 9

Overall Rating: 4 -- Acceptable risk Total Score: 32

OVERALL RATINGS

Total Weighted PointsFrom To Rating Recommendation

65.00 72.00 9 Lowest quality - liquidation possible58.00 64.99 8 Low quality51.00 57.99 7 High degree of risk44.00 50.99 6 Above average risk37.00 43.99 5 Average risk30.00 36.99 4 Acceptable risk23.00 29.99 3 Good quality, little risk16.00 22.99 2 High quality, minimal risk12.00 15.99 1 Highest quality, very low risk

Notes

52

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The FINPACK Presentation Manager provides a consistent and concise loan presentation format customized to your bank’s needs.

Users of the FINPACK Presentation Manager can:

• Combine FINPACK data and your narrative into a loan presentation

• Base loan presentations on a template that can be customized and standardized for the entire institution

• Take advantage of powerful and familiar word-processing features

• Select which data to import from balance sheets, collateral analysis, risk rating, and cash flow plans

• Automatically update linkages to imported data when source data changes from year to year

• Attach virtually any FINPACK document as an appendix, such as a balance sheet or historical financial spreads

Loan Presentation

53

Loan P

resentation

Credit Presentation

Borrower Information

Borrower: Slim Jim SampleAddress: 1032 Hwy 21

Cattleford , IA 51555

Telephone: 712-555-1234E-mail:

Owned Acres: 1 5Acres Operated: 9 3 0

Type of Operation: Beef finishingYears in Business: 2 4Years at Current Location: 24

Date:Loan Officer: Aggie Lender

Date of Last Review: 02/23/2007

Risk Rating Score:32 (4 -- Acceptable risk)

Tax I D #

Customer Since: 1993

Nature of Business/Operation Description:

Produces corn and soybeans and finishes 750 steers per year.

Purpose of Request:

Sources of Repayment:

54

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Credit Presentation

Borrower Information

Borrower: Slim Jim SampleAddress: 1032 Hwy 21

Cattleford , IA 51555

Telephone: 712-555-1234E-mail:

Owned Acres: 1 5Acres Operated: 9 3 0

Type of Operation: Beef finishingYears in Business: 2 4Years at Current Location: 24

Date:Loan Officer: Aggie Lender

Date of Last Review: 02/23/2007

Risk Rating Score:32 (4 -- Acceptable risk)

Tax I D #

Customer Since: 1993

Nature of Business/Operation Description:

Produces corn and soybeans and finishes 750 steers per year.

Purpose of Request:

Sources of Repayment:

55

Loan P

resentation

Present and Proposed Loans

Loan PresentBalance

ProposedBalance

Int.Rate

Rate Formula Term(s) MaturityDate

2008 Operating 0 225,000 8.000 Base -1.00 LOC 12/31/2008Fifth NationalBank-Barn

298,500 298,500 8.750 Base -1.25 Fixed 08/15/2026

5thNB-Cattle 579,513 579,513 7.375 Base -1.00 Var 08/31/20085thNB-Operating 207,100 207,100 8.000 Base - 1.00 LOC 02/1/2008

1,085,113 1,310,113 7.894

Collateral Analysis

Loan PrincipalBalance

Collateral DiscountedValue

Prior Liens Net Collateral

2008 Operating 225,000 Crop inventory 468,556 - 468,556Fifth NationalBank-Barn 298,500 Livestock held for

sale 539,230 - 539,230

5thNB-Cattle 579,513 Machinery andequipment 376,875 58,688 318,187

5thNB-Operating 207,100 Titled vehicles 1,088 - 1,088Land 30,000 - 30,000Buildings andimprovements 277,620 - 277,620

2008 Production 279,000 - 279,000Totals 1,310,113 1,972,368 58,688 1,913,680Loan to value 68%Collateral margin 603,567

UCC Filing Number:UCC Filing Date:

Ratio Analysis

Current ratio 1.3Debt to asset ratio (mkt) 62.9Debt to equity ratio (mkt) 1.69Loan to value 68Total assets (mkt) 2,301,199Total liabilities 1,262,921Peak AO balance (FINFLO) 211,644FINAN Rate of return on assets (mkt) 12.2FINAN Rate of return on equity (mkt) 20.2FINAN Term debt coverage ratio (accrual) 3.57

56

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Recommendation

Strengths:

Weaknesses:

Exceptions to Policy: None

Conclusion and Recommendation:

_________________________________ _________________Loan Officer Date

57

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Slim Jim SampleBalance Sheets at Market

Jan 1, 2004 Jan 1, 2005 Jan 1, 2006 Jan 1, 2007 Jan 1, 2008Current AssetsCash and checking 9,631 4,147 12,247 9,576 26,034Prepaid expenses and supplies 6,042 46,704 44,831 859 2,422Crop inventory 331,861 197,543 228,756 223,427 520,618Livestock held for sale 364,396 451,109 501,000 569,149 599,144Total Current Assets 711,930 699,503 786,834 803,011 1,148,218

Intermediate AssetsMachinery and equipment 329,450 388,720 467,100 497,550 502,500Titled vehicles - - - 2,600 1,450Total Intermediate Assets 329,450 388,720 467,100 500,150 503,950

Long Term AssetsLand 5,000 5,000 5,000 30,000 30,000Buildings and improvements 62,000 62,000 60,000 479,000 462,700Other long term assets 1,777 1,777 2,231 2,231 2,401Total Long Term Assets 68,777 68,777 67,231 511,231 495,101

Total Farm / Business Assets 1,110,157 1,157,000 1,321,165 1,814,392 2,147,269Total Personal Assets 99,000 97,400 114,550 146,700 153,930Total Assets 1,209,157 1,254,400 1,435,715 1,961,092 2,301,199

Current LiabillitiesAccrued interest 3,021 8,542 6,728 14,334 19,359Accounts payable and other accrued exp. - - 21,000 - -Current LoansFifth National Bank-Operating 45,000 124,000 124,300 86,400 207,100Fifth National Bank-Cattle 366,612 412,859 455,051 552,633 579,513Farmers Coop-Feed - - - 7,599 -Total Current Loans 411,612 536,859 579,351 646,632 786,613Principal due within 12 months on term loans 77,932 44,972 32,369 53,509 45,482Total Current Liabilities 492,565 590,373 639,448 714,475 851,455

Intermediate LoansJD Combine 10,219 - - - -Mach&Equip. 33,886 - - - -John Deere Credit-6430 29,314 19,875 10,328 128 -Fifth National Bank-M & E 9,027 5,878 2,755 - -Farm Service Agency-Bin Loan 84,099 71,417 57,983 44,086 29,861John Deere Credit-7230 - 24,067 17,321 8,465 4,364John Deere Credit-Combine - - 81,056 48,421 33,638Fifth National Bank-Chopper - - - - 8,019Total Intermediate Loans 166,545 121,237 169,443 101,100 75,882

Long Term LoansFifth National Bank-Barn - - - 293,762 291,841Total Long Term Loans 0 0 0 293,762 291,841

Total Farm Liabilities 659,110 711,610 808,891 1,109,337 1,219,177Personal liabilities 122,614 73,932 70,507 47,567 43,744Deferred liabilities 116,820 118,984 129,750 102,904 183,681Total Liabilities (including deferreds) 898,544 904,526 1,009,149 1,259,808 1,446,602FINPACK © Center For Farm Financial Management Prepared by: Dale Nordquist


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Slim Jim Sample Historic Report: Balance Sheets at Page 2 1/29/2009 2:21:11 PM

Jan 1, 2004 Jan 1, 2005 Jan 1, 2006 Jan 1, 2007 Jan 1, 2008

EquityRetained earnings 383,533 417,244 474,986 551,620 789,557Market valuation equity -72,920 -67,370 -48,420 149,664 65,040Net worth 310,613 349,874 426,566 701,284 854,597

Net worth change 0 39,261 76,692 274,718 153,312

Ratio AnalysisCurrent ratio 1.4 1.2 1.2 1.1 1.3Working capital 219,365 109,130 147,386 88,536 296,763Current pct in debt 69 % 84 % 81 % 89 % 74 %Intermediate pct in debt 51 % 31 % 36 % 20 % 15 %Current & interm. % in debt 63 % 65 % 65 % 63 % 56 %Long term pct in debt - - - 57 % 59 %Total debt to asset ratio 74 % 72 % 70 % 64 % 63 %Total equity to asset ratio 26 % 28 % 30 % 36 % 37 %Total debt to equity ratio 2.89 2.59 2.37 1.80 1.69Loan to value % - - - - 69 %Collateral margin - - - - 591,539

59

Loan P

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The FINPACK FSA Forms Package will generate the required forms to process FSA guaranteed loans, interest assistance, and direct loan applications. The Forms Package links to either the FINFLO monthly cash flow plan or the Annual Plan and automatically extracts the necessary information to fill out the selected application. The resulting forms appear as if they were distributed by FSA.

For FSA Interest Assistance, the FSA Forms Package will generate the supporting information for the request. Multiple loans can be selected for consideration so that you can determine which loans qualify for interest assistance and document the results.

The following forms are generated:

• Application of Guarantee

• Preferred Lender Application for Guarantee

• Farm Business Plan Worksheets for Direct Loans

FSA Forms Package

61

FSA Fo

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62

FSA

Fo

rms

Slim Jim Sample Cash Flow Plan: 2008 Cash Flow FSA Page 2 1/30/2009 1:34:00 PM

FSA Cash Flow and Interest Assistance Needs Analysis - 2008

W/Out IA With IA With IAInflows 2008 Annual Opr 5thNB-Cattle

Beginning cash 26034 26034 26034Gross cash income 1389062 1389062 1389062Nonfarm income 48000 48000 48000Borrowing, term loans - - -Borrowing, annual operating 189834 189834 189834Borrowing, other current 515625 515625 515625Capital sales - - -Total inflow 2168555 2168555 2168555

Outflows

Cash farm expenses 1048586 1045705 1027027Capital purchases - - -Principal, term loans 47481 47481 47481Principal, beg annual opr 207100 207100 207100Principal, new annual opr 189834 189834 189834Principal, other current 579513 579513 579513Family living 78000 78000 78000Income taxes 25000 25000 25000Nonfarm interest expense 2186 2186 2186Total outflow 2177700 2174819 2156141

Net Cash Flow -9145 -6264 12414

Loans Selected for FSA Interest Assistance Needs Analysis

Beginning P & I Average Interest EstimatedPrincipal Payment Principal Assistance Payment With

Loan Balance Due Balance Amount Assist

Annual Opr 207100 393599 72022 2881 3907185thNB-Cattle 579513 612189 466956 18678 593511

63

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This form is available electronically. Form Approved – OMB No. 0560-0155FSA-2211 U.S. DEPARTMENT OF AGRICULTURE Position 3(09-03-10) Farm Service Agency

APPLICATION FOR GUARANTEEINSTRUCTIONS TO LENDER: LOAN APPLICANT WILL COMPLETE PARTS A AND B. LENDER WILL COMPLETE PARTS C THROUGH I.NOTE: According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to, a

collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is 0560-0155. The time required to complete this information collection is estimated to average 3.5 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. RETURN THIS COMPLETED FORM TO YOUR COUNTY FSA OFFICE.

PART A – LOAN APPLICANT INFORMATION1. APPLICANT’S NAME 2. CO-APPLICANT’S NAME 3. APPLICANT’S TELEPHONE NO.

(Include Area Code)

4. APPLICANT’S ADDRESS 5. APPLICANT’S 9 DIGIT SSN OR TAX ID NO.

6. APPLICANT’S BIRTH DATE 7. CO-APPLICANT’S BIRTH DATE 8. CO-APPLICANT’S 9 DIGIT SSN 9. TOTAL NUMBER OF HOUSE-HOLD MEMBERS

10. TYPE OF OPERATION: 11. ACRES OWNEDINDIVIDUAL

CORPORATION

PARTNERSHIP

COOPERATIVE

TRUST

L.L.C

JOINT OPERATION12. ACRES RENTED

OTHER (Explain)

13. MARTIAL STATUS: MARRIED SEPARATED UNMARRIED (INCLUDING SINGLE, DIVORCE, AND WIDOWED)

14. Have you ever conducted business under any other name? If ''YES'', what name? YES NO

15. Have you or any member of the entity obtained a direct or guaranteed loan from USDA?

16. If "YES" to Item 15, was the loan paid in full? If not paid in full, please explain:

17. Have you or any member of the entity ever been in receivership, been discharged in bankruptcy, or filed a petition for bankruptcy? 18. If "YES" to Item 17, provide details:

19. Are you or any member of the entity delinquent on any debt to the United States Government?20. Are you (or members holding a majority interest if an entity applicant) a United States citizen?

21. If "NO" to Item 20, are you a non-citizen national, or a qualified alien? (Please provide documentation)22. Are you a veteran? If "YES", indicate branch and dates of service:

23. Are you an employee, related to an employee, or an associate of an employee, of the Lender or Farm Service Agency?24. Are you farming or ranching now? If ''YES", number of years experience: 25. If ''NO'' to Item 24, but you have operated a farm in the past, list dates:

Voluntary Information for Monitoring PurposesEthnicity, race, and gender information is requested in order to monitor FSA's compliance with Federal laws prohibiting discrimination against loan applicants and to determine if you qualify for targeted funds. You are not required to furnish this information, but are encouraged to do so. Failure to complete this information may result in you not receiving access to targeted funds for which you may be eligible. Entity applicants should base their answers on the ethnicity, race, and gender of the owners of a majority interest in the entity.26. ETHNICITY

Hispanic or LatinoNot Hispanic or Latino

27. RACE (Choose as many boxes as applicable)American Indian or Alaska Native Native Hawaiian or Other Pacific IslanderAsian WhiteBlack or African American

28. GENDERMALEFEMALE

FSA USE ONLY: 29A. DATE RECEIVED 29B. DATE COMPLETED

The U.S. Department of Agriculture (USDA) prohibits discrimination in all of its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, political beliefs, genetic information, reprisal, or because all or part of an individual’s income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Assistant Secretary for Civil Rights, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue, S.W., Stop 9410, Washington, DC 20250-9410, or call toll-free at (866) 632-9992 (English) or (800) 877-8339 (TDD) or (866) 377-8642 (English Federal-relay) or (800) 845-6136 (Spanish Federal-relay). USDA is an equal opportunity provider and employer.

Jim Sample Laura(712) 555-1234

2159 Hwy 30Currie, MN 56123 123-45-6789

5/4/1962 10/8/1964 234-56-7890 2

✔ 15

926

✔

64

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FSA-2211 (09-03-10) Page 3 of 5PART C - TYPE OF ASSISTANCE REQUESTED32. REQUESTED NO.

OF33. LOAN TYPE

FO OL OL/LOC CL34. LOAN AMOUNT OR LOC CEILING

$

35. INTEREST RATE

% FIXED VARIABLE

36. INTEREST ASSISTANCE REQUESTED

YES NO

37. REPAYMENT PERIOD (Years)

38. SUBSEQUENT LOAN IN SAME OPERATING CYCLE

YES NO

39. REPAYMENT TERMS

PART D – FUNDS PURPOSE40.

PURPOSES FOR WHICH FUNDS WILL BE USED41.

AMOUNT

$

$

$

$

$

$

PART E - PROPOSED SECURITY42.

ITEM DESCRIPTION43.

LIEN POSITION44.

ESTIMATED VALUE45.

AMOUNT OF PRIOR LIEN

46.COLLATERAL

VALUE

$ $ $

$ $ $

$ $ $

$ $ $

$ $ $

$ $ $

$ $ $

TOTALS: $ $ $

PART F - ENVIRONMENTAL INFORMATION

YES NOBased on a site visit to the loan applicant's operation and discussion of the operating plan, answer the following: (If "YES" please explain and attach to this form):

47. Floodplains: If the loan will be secured by real estate, does the property contain any existing structures (i.e. farm dwellings or service buildings) or does the proposal involve development (i.e. construction, channeling, or other alteration) located within the 100-year floodplain as defined by FEMA floodplain maps, NRCS soil surveys, or other documentation?

48. State Water Quality Standards: Did the investigation indicate the operation may violate State Water Quality Standards?

49. Historical and Archaeological Sites: Does the property contain structures over 50 years old, structures with significant architectural features, or does the property have any historical significance which may make it eligible for the National Register of Historic Places?

50. Wetlands and Highly Erodible Land: Will loan funds be used for any purpose that may contribute to the erosion of Highly Erodible Land or the Conversion of Wetlands; OR will loan funds be used to drain, dredge, fill, or otherwise manipulate any land or reduce the flow, circulation, or reach of water?

51. Hazardous Substances: If the loan will be secured by real estate, did the ''due diligence'' investigation in respect to underground storage tanks and contamination from hazardous substances indicate contamination?

1 1 ✔ 298,500

8.750 ✔ ✔15

✔

Barn remodel300,000

Barn 1st 480,000 0 360,000

480,000 0 360,000

✔

✔

✔

✔

✔

65

FSA Fo

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Fo

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You know your borrowers and their individual business risks.But how is your entire portfolio positioned to face the volatility of today’s agriculture? PRA creates a database of your borrowers and generates reports that help you see where the stress points are if market conditions change.

• Stress test individual segments or your entire portfolio

• Segment your portfolio by farm type, size, performance and leverage position

• Base stress tests on past or projected financial performance

• Identify borrowers who contribute most to portfolio risk

• Generate reports to summarize the financial position and performance of portfolio segments

• Build customer loyalty by providing them benchmarks of financial performance

Portfolio Risk Analyst (PRA)

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Financial Standards Measures(Farms Sorted By Net Farm Income)

Avg. OfAll Farms Low 20% 20 - 40% 40 - 60% 60 - 80% High 20%

Number of Farms 51 10 10 10 10 11

Liquidity MeasuresCurrent ratio 2.38 2.12 2.81 2.58 2.11 2.42Working capital 709,277 356,209 448,615 453,780 559,715 1,635,449Working capital to gross revenues 35.9 % 22.8 % 45.1 % 45.9 % 30.5 % 38.4 %

Solvency (market)Farm debt to asset ratio 31 % 33 % 24 % 32 % 32 % 31 %Farm equity to asset ratio 69 % 67 % 76 % 68 % 68 % 69 %Farm debt to equity ratio 0.44 0.50 0.32 0.47 0.48 0.45

Profitability (cost)Rate of return on assets 14.3 % -1.2 % 7.9 % 12.3 % 14.3 % 23.0 %Rate of return on equity 20.8 % -5.3 % 9.6 % 17.2 % 21.2 % 34.8 %Operating profit margin 24.6 % -2.2 % 17.5 % 29.6 % 27.4 % 31.5 %Net farm income 380,920 -19,817 156,835 235,895 363,629 1,096,499EBITDA 475,921 61,093 223,979 314,529 465,920 1,237,887

Repayment CapacityCapital debt repayment capacity 387,031 15,642 169,165 244,731 367,324 1,069,995Capital debt repayment margin 308,446 -54,284 114,818 180,381 288,368 948,902Replacement margin 285,489 -69,969 95,489 159,625 263,988 915,329Term debt coverage ratio 4.93 0.22 3.11 3.80 4.65 8.84Replacement margin coverage ratio 3.81 0.18 2.30 2.88 3.55 6.92

EfficiencyAsset turnover rate (cost) 58.0 % 54.0 % 45.3 % 41.4 % 52.0 % 73.0 %Operating expense ratio 83.7 % 104.5 % 88.9 % 81.0 % 83.4 % 76.3 %Depreciation expense ratio 3.0 % 3.2 % 4.6 % 4.8 % 3.2 % 2.1 %Interest expense ratio 1.8 % 1.9 % 2.1 % 3.1 % 2.4 % 1.2 %Net farm income ratio 20.1 % 1.3 % 18.9 % 24.3 % 20.0 % 25.7 %

Portfolio Risk Analyst © Center For Farm Financial Management Prepared by: OIT


69

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s)

-16

7,07

6

-5

4,53

7

-3

2,02

6

-2

1,15

6

-6,2

80

1,8

61

2

3,20

8

3

5,40

7

14

1,05

1

-36

5,15

018

-14,

631

-24,

945

Tota

l far

m e

xpen

se (a

ccru

al)

451,

471

609,

949

698,

707

955,

805

1,

197,

307

1,

590,

651

2,

356,

306

6,

915,

774

8,

662,

385

225,

706

18

1,06

2,19

5

70

4,64

8N

et fa

rm in

com

e fro

m o

pera

tions

90,

784

153,

465

256,

136

272,

808

333,

349

568,

856

838,

275

1,

620,

730

2,

407,

832

-

757,

596

18

29

8,29

2

32

0,56

1G

ain

or lo

ss fr

om c

apita

l sal

es

0

0

0

0

0

0

0

0

1

1,00

0

018

0

0

Net

farm

inco

me

90,

784

153,

465

256,

136

278,

308

333,

349

568,

856

838,

275

1,

620,

730

2,

407,

832

-

757,

596

18

30

0,57

7

32

0,56

1

Rat

e of

retu

rn o

n as

sets

(mkt

)

4

.8

8

.1

12

.2

14

.4

16

.0

19

.5

29

.2

40

.1

110

.2

1

.918

14.8

19.4

Rat

e of

retu

rn o

n eq

uity

(mkt

)

6

.3

13

.5

22

.9

25

.4

28

.6

38

.3

51

.1

66

.4

129

.7

2

.118

27.0

51.1

Ope

ratin

g pr

ofit

mar

gin

(mkt

)

10

.3

16

.7

25

.6

32

.9

35

.8

39

.1

47

.0

113

.6

344

.6

4

.518

34.5

35.0

Ass

et tu

rnov

er ra

te (m

kt)

28.6

32.8

35.8

43.1

45.8

54.5

75.3

83.2

90.9

19.8

18

45

.1

55

.5

Cur

rent

ratio

- en

ding

(far

m o

nly)

1.49

1.81

2.10

2.40

2.55

4.15

1

3.32

2

9.04

3

4.18

1.31

18

2.

43

2.

67W

orki

ng c

apita

l - e

ndin

g (fa

rm o

nly)

98,

764

294,

080

491,

175

674,

623

913,

742

989,

403

1,

370,

197

1,

868,

941

4,

684,

928

81,

028

18

83

6,59

1

9

7,24

0W

orki

ng c

apita

l to

gros

s re

venu

e

11

.6

16

.0

25

.3

34

.2

38

.2

48

.2

61

.5

96

.1

179

.4

9

.518

37.1

9.5

Term

deb

t cov

erag

e ra

tio

2.

10

3.

12

4.

09

4.

40

5.

68

6.

60

12.

94

17.

83

35.

70

-10.

2918

4.90

6.16

Rep

lace

men

t cov

erag

e ra

tio

1.

64

2.

21

2.

52

3.

31

5.

68

6.

40

7.

03

8.

93

12.

35

-10.

2918

4.33

6.16

Ope

ratin

g ex

pens

e ra

tio

89

.6

83

.3

72

.3

62

.2

60

.7

58

.8

53

.7

43

.4

34

.7

108

.618

62.0

62.2

Dep

reci

atio

n ex

pens

e ra

tio

8

.8

6

.5

4

.9

3

.6

3

.2

2

.5

1

.9

1

.7

0

.3

10

.618

3.4

2.6

Inte

rest

exp

ense

ratio

3.7

3.2

2.8

1.9

1.6

0.9

0.7

0.4

0.0

4.8

18

1

.8

3

.9

End

farm

ass

ets

(mkt

)

1,43

6,41

2

1,79

5,49

9

2,13

2,90

4

2,68

9,21

6

3,25

6,20

7

4,54

6,01

9

5,97

9,30

8

8,53

9,35

3 1

5,26

9,81

7

1,15

8,19

018

3,

000,

245

1,

590,

935

End

farm

liab

ilitie

s

2,60

1,82

6

1,56

1,64

6

1,10

1,10

1

75

7,13

4

71

3,93

3

67

3,92

9

32

0,58

6

11

7,98

1

5

1,75

9

7,47

7,01

018

740,

876

746,

538

Tota

l end

ing

asse

ts (m

kt)

1,

532,

400

1,

836,

754

2,

354,

079

2,

767,

900

3,

433,

109

4,

687,

689

6,

211,

444

8,

539,

353

15,

382,

817

1,

297,

134

18

3,01

6,00

9

1,67

3,44

6To

tal e

ndin

g lia

bilit

ies

2,

704,

836

2,

217,

511

1,

408,

237

1,

109,

202

896,

757

755,

624

638,

247

488,

824

226,

741

10,

645,

801

18

95

5,10

6

99

0,01

7E

ndin

g ne

t wor

th (m

kt)

684,

543

1,

021,

045

1,

460,

930

1,

805,

992

2,

265,

916

3,

063,

119

4,

153,

103

5,

772,

793

7,

262,

569

376,

938

18

2,02

0,75

2

68

3,43

0N

et w

orth

cha

nge

77,

310

160,

603

219,

717

275,

479

387,

722

783,

835

948,

376

1,

754,

273

5,

707,

175

32,

571

18

29

1,44

6

28

9,67

7M

arke

t net

wor

th c

hang

e (%

)

8

.3

11

.8

16

.0

22

.2

25

.8

48

.7

69

.0

93

.0

366

.9

2

.118

25.1

73.6

Farm

deb

t to

asse

t rat

io

66

56

49

45

39

31

23

13

5

7718

44

62

Tota

l deb

t to

asse

t rat

io

64

54

48

45

39

31

23

13

4

7118

44

59

Per

sona

l inc

ome

0

0

0

0

2

,730

5

,642

11,

582

22,

015

59,

237

0

18

8

46

0Fa

mily

livi

ng e

xpen

se

4,1

74

3

3,56

3

4

8,45

2

6

2,11

1

7

6,59

0

7

9,66

0

8

7,55

3

9

9,38

8

30

0,00

0

018

70,

438

8

,347

Inco

me

and

soci

al s

ecur

ity ta

x

0

0

0

7

80

8,9

31

1

6,62

0

2

2,85

1

7

8,69

9

12

1,00

0

018

2

,813

0

Cap

ital p

urch

ases

42,

909

96,

898

111,

775

194,

205

236,

037

270,

595

311,

902

618,

282

4,

047,

527

16,

603

18

21

5,95

0

33

0,97

5C

apita

l sal

es

0

4

29

1,8

01

2,2

30

4,0

73

8,7

50

1

8,36

6

2

8,44

9

6

0,27

0

018

2

,343

2

,102

Por

tfolio

Ris

k A

naly

st ©

Cen

ter F

or F

arm

Fin

anci

al M

anag

emen

t

Uni

vers

ity o

f Min

neso

ta

Pre

pare

d by

: OIT

Uni

vers

ity o

f Min

neso

ta

70

Po

rtfo

lio R

isk

Ana

lyst

The FINPACK team is committed to providing world-class service and technical support. Our qualified technical support professionals are prepared to handle your support needs on a case-by-case basis or in an ongoing partnership. We provide timely, reliable service to ensure every customer’s business success.

Customer Support

71

Custo

mer Sup

po

rt

72

Cus

tom

er S

upp

ort

We want you to be able to quickly use FINPACK powerful capabilities, so we offer a number of training opportunities to help you learn how to fully use FINPACK.

Contact us to learn about:

• Two-day FINPACK workshops for lenders

• On-site training for your staff

• Webinars customized for your institution

• Online training courses

• Periodic webinars on specific FINPACK topics

FINPACK Training

73

FINPA

CK

Training

74

FIN

PAC

K T

rain

ing

A better way to review all your creditsFINPACK, the industry standard for ag credit analysis software, offers equally powerful commercial analysis. Like our ag analysis, FINPACK’s commercial analysis features a comprehensive set of tools designed to save you time and enhance the quality of your commercial credit analysis.

Double your power, not your costWhen you have both the ag and commercial versions of FINPACK, you’ll maximize the efficiency of your entire lending operation — and receive a 50% discount on the commercial version. Our pricing structure is designed to be affordable, whether you have one location or more than 100.

See for yourselfCall 800-234-1111 to set up a webinar and find out how FINPACK can increase efficiency and reduce risk in your lending operation.

FINPACK Commercial

75

FINPA

CK

Co

mm

ercial

76

FIN

PAC

KC

om

mer

cial

The Center for Farm Financial Management (CFFM) provides educational programs and software tools that are practical, timely, and applicable to real-world situations.

• First used by lenders in 1980, FINPACK is the original off-the-shelf agricultural credit analysis tool used broadly by banks

• FINPACK is used by lenders, farmers and educators throughout the United States and Canada

• CFFM has over 30 years of experience developing farm financial management software

• Our dedicated staff knows farm financial management and production agriculture

• We are committed to the development of practical, fast, and accurate farm financial tools

• We are committed to outstanding software support and customer service

Toll-Free: (800) 234-1111Fax: (612) 625-3105eMail: [email protected]

About CFFM

77

Ab

out C

FFM

78

Ab

out

CFF

M

FINPACKUniversity of Minnesota130 Ruttan Hall1994 Buford AvenueSt. Paul, Minnesota 55108

Phone: (612) 625-1964Toll-Free: (800) 234-1111Fax: (612) 625-3105Email: [email protected]: www.FINPACK.com

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