For 10 years, John Shover, chief executive of First National Bank of Barry, Ill., worried that his agricultural lenders couldn't provide the attention he felt his customers needed. And as the farming and ranching business got more financially complicated, some borrowers showed signs they didn't have the management wherewithal to cope.
Finally, in July he hired Chris Hamilton as "farm representative" for the $69 million-asset bank to assess the operations of existing agriculture loan customers, educate and consult with them, and meet with prospective customers.
"We just didn't have the time to give to our customers on the farm any expertise that we felt was needed," Mr. Shover said. "We felt a full-time farm consultant could do that for us.
"What he gives us ... is the ability to view the whole aspect of the farm customer - where he sits at this time and what his plans are," he said. "It gives us an outside pair of eyes. Sometimes, we get so close to the forest, we don't see all of the trees."
Agriculture banks, even tiny ones such as First National, are increasingly feeling the need to make sure they have a handle on customers' farm management abilities and their capacity to handle cash flow and service debt.
The idea of bank employees consulting with farm customers isn't new, and many agriculture loan officers do it as part of their jobs.
But today's increasing costs and variables in the agriculture industry mean that banks must find the time and the personnel to know their customers even better, even if it means creating a costly full-time position.
"I think you're going to see more of it," Mr. Shover said of nonlender farm consultants. "I think it's a necessity. I don't think we can do the job without personal on-the-farm contact."
First National finances mainly hog and cattle producers, as well ascorn, soybean, and wheat growers in west-central Illinois. Agriculture- related loans make up nearly 70% of the bank's loan portfolio at the peak of the season, Mr. Shover said.
Concerns about those customers mirror those of many farm lenders: For instance, cattlemen have faced low prices, and the costs of farming have increased far faster than its return.
"Expenses are ... just getting tighter all the time - and that's regardless of whether you owe any money or not," Mr. Hamilton said.
Mr. Hamilton, 54, brings with him a degree in agriculture economics from Southern Illinois University, 29 years' experience in grain farming, and 15 years as a commodities broker. Plus, he knows the area, having grown up nearby.
Mr. Hamilton might do some lending in the future, Mr. Shover said, but for now he is focused on farm loan reviews and consulting.
"I think if there is a problem of some kind, we're better able to take care of it quickly," Mr. Hamilton said. "If we spot something that's not good for the customer, it's generally not good for us."
Previously, the bank's lenders weren't able to visit farms as frequently as Mr. Shover wanted. Mr. Hamilton's on-farm visits allow him to examine firsthand the condition of machinery, livestock, and buildings.
"I guess seeing is believing," Mr. Hamilton said.
"If they keep a building up, it probably means they're also keeping up other things as well," he said. "To me, it also says something about their ability to foresee what they need in the future. If they do a good job of having a building built to certain specifications, it tells me they are pretty good planners."
Besides being another pair of eyes, Mr. Hamilton works with farm customers on forecasting, cash flow analysis, and using commodities markets to do hedging and forward contracting, something many farm lenders have been doing more and more.
"We've always recommended forward selling," Mr. Shover said. "One of the problems we've run into is the customers' understanding." Mr. Hamilton can "give a good layman's explanation of it."