Farm banks significantly increased agricultural lending by 13.6 percent in 2014 and held $94.6 billion in farm loans at the end of the year, according to the American Bankers Association’s annual Farm Bank Performance Report.
Asset quality continued to improve at the nation’s 2,036 farm banks as non-performing loans declined to pre-recession levels. ABA defines farm banks as banks whose ratio of domestic farm loans to total domestic loans is greater than or equal to the industry average.
“The agricultural economy may be faced with headwinds in 2015, but farm banks are well positioned to continue serving the needs of farmers and ranchers across the country,” said Brittany Dengler, ABA senior research manager, economic policy and research. “Banks hold nearly half of all farm loans and will remain an important source of ag credit.”
Dengler noted that the entire banking industry – not just farm banks – provide farmers and ranchers with the credit they need. At the end of 2014, banks held $161 billion in farm and ranch loans.
Small and micro loans made up almost half of bank agricultural lending in 2014. A small farm loan is a loan with an original value of $500,000 or less and a micro farm loan is a loan with an original value of $100,000 or less.
Farm banks continued to build high quality capital over the year. Equity capital at farm banks increased 4.8 percent to $46.2 billion in 2014, while Tier 1 capital increased by $3.3 billion to $38.8 billion.
In addition, more than 97 percent of farm banks were profitable in 2014, with 65 percent reporting an increase in earnings.
“Farm banks play a vital role in their communities by providing loans, creating jobs and paying taxes to support rural America,” said Dengler.
Farm banks also added more than 2,300 jobs, a 2.8 percent increase, and employed more than 89,000 rural Americans. Since 2007, employment at farm banks has risen 16.6 percent.
The Farm Bank Performance Report also provides regional summaries:
The Northeast region’s 10 farm banks increased farm loans by 19.7 percent to $556 million. Ag production loans rose 6.1 percent and farmland loans rose 26.9 percent.
The South region’s 203 farm banks increased farm loans by 9 percent to $6.7 billion. Ag production loans rose 17.8 percent and farmland loans rose 6 percent.
The Cornbelt region’s 962 farm banks increased farm loans by 13.8 percent to $41.8 billion. Ag production loans increased 16 percent and farmland loans rose 11.9 percent.
The Plains region’s 787 farm banks increased farm loans by 15 percent to more than $36.5 billion. Ag production loans increased 18.7 percent and farmland loans rose 10.3 percent.
The West region’s 74 farm banks increased farm loans by 10.9 percent to $9 billion. Ag production loans increased 10 percent and farmland loans rose 11.6 percent.
Source: American Bankers Association