FCS Financial: One Hundred Years July 2016 | Page 91

foreclosure rates hit 10 percent. Despite the economic downturn, FCS
Financial concluded 2008 with the highest earnings level on record
with net earnings of $40.8 million. As the recession continued in
2009, loan delinquencies started to rise while credit quality declined.
In one effort to help customers cope with the uncertainties of the
recession, FCS Financial hosted a meeting at Lake of the Ozarks in
January to help them hone their management skills as well as network
with each other and FCS Financial staff. Board President Jim Zerr
opened the meeting saying it was the hope of FCS Financial for
participants to learn new business practices to take back and integrate
into their operations and for FCS Financial to learn how they can
serve them better. Jamie Stewart Jr., president and chief executive
officer of Federal Farm Credit Banks Funding Corporation, explained
how the credit system works and how money is attained for their
loans. Noting that 2008 was a bad year for the financial market, he
added the 2009 outlook was “very, very alarming.” Andy Kapp, a rowcrop farmer from Clarksdale, Missouri, said, “Jamie really hit us all
between the eyes with some blunt news. We’d rather have the truth
than the sugar coating. We’ll all be a little more financially prepared.”
In addition to the symposium, FCS Financial hosted seven marketing
meetings around the state.

FCS Financial’s credit quality at year-end 2008 was
approximately 97 percent and by the end of 2009, it dropped further
to 90 percent. Producers continued to struggle and, as Gary Irwin
observed, “We ended up having to put a lot in reserve for loan losses,”
adding, “but even in that year, our worst year since the ag crisis,
we still made $20 million.” To support the financial strength of the
organization, the board voted to suspend patronage payouts in 2010.
“No one had a problem with our decision not to pay patronage that
year,” Gary explained, “because the customers’ biggest concern was
whether or not we’d have funds for them to borrow.”
There is a maxim in business that says there is no such thing as
standing still, you’re either moving forward or moving backward. No
one familiar with the history of FCS Financial could ever accuse them
of standing still. During the summer of 2010, they began developing
a new business model they called segment-centric. “The strategic
plan was built extensively on research that was conducted over a two
to three-year window,” said Gary, “heavily focused on feedback from
customers.”

A Lean, Mean Lending Machine

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