2020 Annual Report Message from the CEO and Board Chair
Our message a year ago highlighted the importance of partnership between GreenStone, its members, the agricultural industry, and the broader rural community. This was particularly relevant then as many of you endured one of the most stressful growing seasons in decades. Yet, GreenStone was able to once again bring tangible value to our partnership with you by paying a record patronage payment at a time when many really needed it. Little did any of us know then what was brewing just over the horizon.
Together We Survive
On March 23, 2020, we entered a new year of challenges together. Like many other businesses around the country, GreenStone was forced by a little-known virus – COVID-19 – that rapidly developed into one of the world’s worst pandemics since the early 1900’s, to close its offices and significantly adjust the way it did business.
Since then, not only has COVID-19 infected millions and killed over 500,000 in the U.S. alone, it has decimated many businesses in the hospitality, entertainment, and travel related industries as well. Over $3.1 trillion dollars have been spent by the federal government in 2020 through the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help prop up the economy and provide relief to individuals, those who have lost their jobs, and those fighting to save their businesses.
For many of us, our daily lives as we knew them before the pandemic have been turned upside down. Routine trips to the grocery store, doctor’s office, haircut, going out to eat, or to a movie have been limited, and required a face mask and social distancing. Many who have been fortunate enough to retain their job have had to pivot to a remote/virtual work environment while learning how to adapt “on the fly” to new processes and technologies to meet the needs of customers. At the same time, many have been coping with their children being at home and having to juggle not only their job in a virtual environment, but help guide their children who have also had to adjust to learning online, which has only compounded already high stress levels. All of this, on top of those who have been personally touched by the symptoms of the virus, from minimal fatigue to the loss of loved ones. The impacts stretch the gamut and effect each of us individually.
Through it all, we have been pleasantly surprised how these challenging times have brought out the best in many people and further strengthened the partnership GreenStone has with you, its members.
For its part, GreenStone was prepared to deal with the pandemic with state-of-the-art technology systems that allowed it to conduct business remotely when Executive Orders were issued last spring and forced us to close our offices. Tools like video conferencing, secure virtual private network (VPN) connections, laptop computer applications for answering telephones remotely, online banking and loan applications, My Access for the secure transfer of confidential information, among many other tools helped us to transition in a nearly seamless manner to provide you with the liquidity and financial services so vital to your business and personal needs.
You, our members, were gracious, patient, flexible, and adaptable in helping us help you, especially during those very uncertain and anxious early days of the pandemic. Many of you stepped out of your comfort zone and used the online tools even though it was likely awkward and unfamiliar at first.
Our employees also did their part, by stepping up and executing their piece of the partnership by being gracious (especially with one another!), patient, flexible, adapting to new technology many had not needed to use before, and all while having to make many decisions on the spot in a fog of ambiguity. In fact, you confirmed the success of our service in our 2020 customer satisfaction survey with a 95% satisfied or very satisfied rating. This is GreenStone’s best rating since 2016, and a one percent increase over 2019 despite working under unprecedented conditions.
While 2020 will be remembered for one of the worst crises to hit our country and the world, it will also go down as one of the best in GreenStone’s 20 year history, because of our commitment to you, and most importantly, your commitment to us.
Together We Provide
As you will see in the financial statements on the following pages, GreenStone’s loan growth outpaced 2019 by 3.6% while earnings exceeded last year’s record by $64 million. The quality of the loan portfolio also remained well managed despite plummeting commodity prices and a great deal of uncertainty last spring.
Federal Reserve actions in the early days of the pandemic lowered interest rates to all-time lows, creating significant loan demand especially in our country living and capital markets segments. Some sought to relocate to rural areas as a result of the pandemic, while others put their dreams in action taking advantage of lower interest rates. Customers in our agribusiness segment drew down lines of credit early in the crisis for liquidity purposes, which further helped boost loan volume.
Portfolio growth was also augmented by GreenStone answering the call to process federal government stimulus Paycheck Protection Program (PPP) loans through the Small Business Administration (SBA). In spite of the fact GreenStone had no relationship or experience with the SBA, and that the PPP was a brand new program with rules and processes changing hourly at times, many of our staff worked around the clock serving the needs of our eligible customers by helping guide them through the process. This resulted in nearly $145 million of loan volume to just under 1,500 eligible customers in 2020 alone.
In addition, the low interest rate environment created an opportunity for many of our customers to benefit through GreenStone’s unique low fee loan conversion process, allowing over 12,000 loans to convert to an average 1.03% lower interest rate. This provided customers a savings of over $32 million in the first year of the lower rate alone.
Rebounding commodity prices later in the year, coupled with record setting government assistance specifically targeted for agriculture and stable land values, combined to minimize projected loan loss provisions, further contributing to strong year-end net earnings.
And, if this wasn’t enough, the experience GreenStone staff gained through the administration of the PPP loan program was put to good use in answering the call of the State of Michigan over the summer of 2020 to deliver $15.6 million in CARES grants to nearly 500 qualifying farmers and agricultural processors for personal protective equipment to help keep their employees safe from COVID-19.
Together We Succeed
Ultimately, the combination of exceptionally strong loan growth, high fee income generated from processing a record number of interest rate conversions, the unanticipated programs like PPP loans and the Michigan CARES grants, plus low loan losses, all provided another opportunity for the GreenStone board of directors to approve a new single year record patronage payment of $105 million to be paid to members in March 2021, eclipsing last year’s record $100 million. This is a strong sign of GreenStone’s financial strength and commitment to provide real value to its partners (our members) even in tough times.
It’s been a rollercoaster year, with significant challenges and equally steep opportunities. But we got through it successfully because we did it together. We thank all of you for everything you did to operate your businesses and personal lives to the best of your ability, commitment to feeding the rest of us during these very uncertain times, and loyalty to GreenStone! You certainly held up your end of this partnership, and hopefully, we did as well!
We did it together!