CEO Comments

CEO Comments:

What a difference a year makes! My message to you last spring was all about the uncertainty, anxiety, and fear the pandemic was causing across the globe. Yet, human resiliency and scientific advances began to re-emerge providing hope that we would be able to beat back the scourge of this virus. Fast forward to where we are today, with the pace of vaccinations picking up, it's also accelerating optimism for being able to once again hug loved ones, dine out, travel, conduct business face to face, and generally live our lives as God intended, which will be a huge blessing for us all!

This is a question on the minds of GreenStone staff and members alike. As I write this, the majority of our territory (the State of Michigan) continues to require all businesses that can operate remotely to do so. Given that GreenStone is not a depository institution like most banks and/or credit unions, which handle significant numbers of cash transactions, we are able to conduct a large percentage of our business with our members through a combination of going to their place of business, using our offices by appointment, and through tools such as telephone, virtual meetings, online banking, our customer My Access portal, and drop boxes at all of our locations. While the State of Wisconsin’s current workplace orders are somewhat less restrictive, we have found that operating under one policy for customer service enables us to serve all our members more effectively.

Along with the rest of our team, I’m hopeful the present trends of moderating infection rates and increasing numbers of vaccinations will lead to revised orders allowing us to fully reopen our offices. We are constantly monitoring this and will be ready to respond when state Executive Orders allow us to do so.

By this time, you have received the 2020 annual report. A summary of that report is included on page 25. In short, 2020 was a record setting year for your association despite being the most tumultuous year any of us have ever experienced. The following key results really say it all:

Growth (Accrual Ave. Daily balance) 13% 4.84% Net Earnings (in millions) $270.2 $206.4 Customer Satisfaction 95% 94%

Portfolio Credit Quality 2.69% (adverse) 3.51% Loan growth surged well above 2020 budgeted levels and 2019 actual results as agribusiness customers drew down their lines of credit at the onset of the pandemic for liquidity purposes while our country living segment experienced a “tsunami” of new loan business for vacant land, refinancing, and new home construction due to historically low interest rates.

Net earnings were 30% above 2019 primarily attributed to record setting fee income from interest rate conversions, SBA PPP loan originations, and a significant reduction in the loan loss provision due to robust farm income in the second half of the year driven primarily from government assistance. Ultimately, these strong financial results not only support the foundation for a very strong risk bearing profile, but also serve as the basis for the record setting patronage payment for 2020. If you would like more information, please check out our 2020 Annual Report at www.greenstonefcs.com/2020annualreport.

A month ago our members received their share of this year’s $105 million Patronage payment, which represents approximately a 1.25% reduction in the interest rate for the average GreenStone member on their borrowings in 2020. The year’s patronage lifted the total paid to our members since the program began to $605 million! That’s a 16-year track record of returning profits back to you! We feel especially blessed this year to be able to return another record setting patronage payment considering the challenges we all faced in 2020. As our annual report theme stated, we accomplished this milestone “together.” As I have said over and again, GreenStone is only as good as the members who call us their financial services provider. Your loyalty to GreenStone and honoring your financial commitments is the driving force behind our collective success. I also hope you were able to get involved in our first ever virtual “Patronage Week” celebration the week of March 8 with each day of the week having its own theme to highlight the #PatronagePays benefit and the value of working with GreenStone’s talented team members. If you haven’t yet, take a minute to watch the videos from your local teammates – they have some important messages to share on their relationship working with customers! You can read more on this on page 23 in this magazine, and catch it all online at www.greenstonefcs.com/partnershippays. Like last year we also solicited your vote for one of three charities in our

service area in which GreenStone will award a total of $20,000. The results of the three donations are outlined on page 20 along with the winners of the great branch gift baskets!

Thank you to all who were randomly selected to receive and responded to the customer satisfaction survey last fall. The 2020 survey was delayed for obvious reasons, and we are now back on our usual schedule of sending the survey in March. As such, a new group of randomly selected customers have now received the 2021 survey by mail and/or email.

To those who were selected, your feedback is taken very seriously by all of us at GreenStone including the Board of Directors, myself, and every one of our nearly 600 team members. PLEASE take a few minutes to complete it and send us your feedback. Each year we use these survey results to uncover areas for improvement, and to reinforce outstanding customer service. Thank you in advance for your participation in making your association relevant to your needs!

I pray 2020 and 2021 will not only be remembered for the challenges, but rather the lessons these and other trials have taught us – like grace, kindness, resilience, faith, love, patience, humility, forbearance, and selflessness. This year is off to a much better start than many ever expected. How it ends is much more up to us individually and the attitudes we choose each day than it is the “things” that happen to us. Best wishes for a successful planting season and thank you for your business! As always, feel free to reach out to me directly if I can ever be of assistance.

517-318-4105 dave.armstrong@greenstonefcs.com

Sometimes opportunities find you by happenstance. Such was the case for Eau Claire fruit and vegetable grower Kyle Froehlich, who in 2012 had a friend in real estate selling mainly residential homes.

Young, Beginning, and Small Farmer Feature

“He started getting a couple farms in the mix, so he wanted me to stop by this farm and give him an idea of what it would or wouldn’t be good for,” explains Kyle, who was just getting his first year of solo farming under his belt. The 40-acre farmstead with a home and barn was just three miles north of the fruit and vegetable farm he grew up on in Berrien Center. It was a bit rough. “The fencerows were all overgrown and it needed a lot of work,” Kyle recalls. “Out of curiosity I asked what the inside of the house looked like. I knew as soon as I walked in my fiancé, at that time, would just love it – it was a 115-year-old farmhouse with old barn beams and a very authentic and rustic feel.” Kyle, now 32, was not wrong about fiancé Jessica’s reaction, which led to an unplanned opportunity. “I said, I don’t know if we can get approved for funding, but this just seems right.” In his first year farming, leasing 25 acres from his grandparents, Kyle showed a small profit selling direct to consumers twice a week at two different Chicago farmers markets. His dad, Dean, suggested he approach GreenStone Farm Credit Services for financing, noting their keen insight into agricultural operations. GreenStone is also able to partner with USDA’s Farm Service Agency to help growers utilize the Beginning Farmers and Ranchers Loans program.

➡ Kyle Froehlich poses next to the tomato plants that will soon be ready to harvest for upcoming farmers' markets.

View a highlight reel video at: www.greenstonefcs.com/YBSFSpring21

“Even though the farm wasn’t taken care of, I could see its potential,” Kyle says. “At that time, I approached GreenStone Financial Services Officer Tyson Lemon (who is now a regional VP of sales and customer relations). He explained everything, was very clear and made the process very easy,” says Kyle, who closed on the property three days before Christmas 2012. Each year they invested in cleaning up and improving the farm they named Sunny Harvest Farms. “For the first three years it was a lot of hard work, but it was more about staying focused,” Kyle says. “If the farm would have been in pristine condition, we probably would not have been able to afford it.” Sunny Harvest Farms, which includes a woodlot, now has two high-tech, temperature-controlled 30-foot by 96-foot greenhouses Kyle built, which allow their heirloom tomatoes to reach consumers two months before field-grown tomatoes. The farm also includes six varieties of apples planted in high density, peaches, and high-density raspberries, along with open ground for vegetables and cut flowers. “People who saw this place eight years ago wouldn’t recognize it now – we’re pretty proud of it,” Kyle says.

Kyle grew up on a fruit and vegetable farm in Berrien Center. At a young age he learned that farming was not for the weak or lazy, helping to establish a work ethic and principles he says remain with him today. Growing up in agriculture and after graduating high school, he had sound footings to build on. After two years at Ferris State he transferred to Central Michigan, met Jessica, who would later become his wife, and graduated with a bachelor's degree in business management in 2012. “My grandpa was still in farming at that time, but was wanting to get out, so I leased 10 acres of older apple trees and 15 acres of open ground from him and my grandmother.” To step out of the classroom and into farming, the now engaged couple started making calls to plant suppliers. “Jessica had two years of school yet to become a special education teacher, but by doing this, I could still get a farm season under my belt right after graduation,” he says. While the older apple trees were borderline profitable, a late frost in 2012 that decimated almost the entire apple crop in Michigan, somehow spared several of his trees, meaning the demand would surely drive prices. It looked like a promising start. He went to work building a farming resume by raising a cornucopia of fruits and vegetables that first year. His parents gave him space in their walk-in cooler, “which I was fortunate they let me do,” he adds. His hope and ambition were soaring when Mother Nature notched it down a bit. Just two weeks prior to harvest, the apples he so vehemently cared for, were pummeled with hail and had to go into the lessprofitable juice market. “I was so down. I remember my grandpa saying… ‘this happens, and it won't be the last time it happens,’” Kyle recalls. “After that year I told myself, if I can get through this year, I can do anything. And we've progressed every year since.”

Kyle and Jessica were wed June 1, 2013, the summer after closing on the farmstead. In addition to her full-time, off-farm job at the Berrien Regional Educational Service Agency, Jessica works on the farm and also manages social media and the operation’s website. They still lease Kyle’s grandparent’s ground, however, all but two acres of the apples were removed. They have leased other orchards along the way and are currently leasing 10 acres of apples in Niles. They also have a 25-year lease on four acres they planted to tart cherries. Since they are trying to utilize every square foot they have, everything is planted high density. “We have a couple acres of raspberries that we bought all new equipment to fit in between those raspberries – very small tractors,” Kyle says.

Kyle utilized several older trailers and trucks over the years to haul produce to Chicago. “I knew it was a matter of time before that truck would break down,” he says. “If that happened, we would lose all the payroll it costs to harvest, we would need to be towed and there would be a repair bill. Even so, my biggest concern was losing that connection with my loyal customers, who would have come to the market, not be able to find us and bought from my competition. Transportation is very vital to our business.”

Through GreenStone financing, Kyle bought a new diesel truck facilitated by Lemon’s successor Jeff Ginter, GreenStone Financial Services Officers in Berrien Springs. “It was a nice, smooth, easy process,” Kyle says. “They understand, when you're selling retail, buyers have to get to know you and your product, and they need to fully enjoy both before they become loyal. It takes time and once you get that following, you have to keep striving to do better and better for them every year.” Ginter says, “Greenstone is a good fit for Kyle and Jessica because GreenStone wants to help young farmers succeed. As the premier ag lender in Michigan, and we want to get to know our customers on a personal level, understand their operations, their needs and support them along the way. When he's working on a project, he calls Greenstone to talk through it and see if it makes sense. That’s exactly what we are here for. We don’t want to run or dictate the operation but rather help ensure its success.”

The idea of offering a Community Supported Agriculture program – home delivery service of fresh fruits and vegetables – had been mulling for about four years at Sunny Harvest Farms. “We wanted to start providing some produce to our local community,” Kyle says. While COVID-19 brought much anguish, it also brought opportunity, as more people were at home eating. “It was a great year for us to start,” he says. They started by advertising online and with flyers in the community. “We always had social media before, but this made us create a website for signups and payment,” explains Kyle, while adding that customers have the option of full-size or half-size produce boxes. Delivery is weekly June through October and customers can consult a maturity chart online to see what is available throughout the season. Customers can also pick add-on items. “All of our subscribers follow us on Instagram, where we post a picture of their box the day before delivery,” Kyle says. “There were times when customers said they didn't know the item, but since they had it, they tried it and enjoyed it.”

As Sunny Harvest Farms continues to grow, Kyle and Jessica are looking to build more storage and purchase a larger walk-in-cooler. But for right now, they are going to ride out the elevated lumber prices. In the meantime, they are leasing space for this season. Their family is also growing; they welcomed their fourth son, Tate, in December of 2020. He joins five-year-old twins Everett and Finn, and three-year-old Hayes. “It’s busy but that’s how we’re wired – that’s how we want it,” Kyle says. “Thank goodness the boys are all good sleepers.” ■

➡ Specialized equipment driven by Kyle allows for easy care of raspberries planted in a high density environment.