U.S. agricultural banks increased farm and ranch lending by 13.9 percent, or $10 billion, in 2012 and held $81.8 billion at the end of the year, according to the American Bankers Association’s annual Farm Bank Performance Report.
The nation’s 2,215 farm banks also added more than 3,615 jobs, a 4.2 percent increase, and employed 90,569 rural Americans.
“The continued growth in farm loans demonstrates the important role banks play in the success of farms and ranches both large and small,” said John Blanchfield, senior vice president and director of ABA’s Center for Agricultural and Rural Banking. “Banks remain the most important source of ag credit holding more than half of all farm loans.”
More than 95 percent of farm banks were profitable in 2012, with 67 percent reporting an increase in earnings.
“The ag economy is strong and getting stronger with a favorable outlook. Our nation’s farm banks remain optimistic despite the challenge to find additional revenue sources,” said Blanchfield.
Farm banks experienced an improvement in asset quality in 2012, as customers benefited from the strong farm economy. Non-performing loans declined to 1.49 percent of total loans, close to pre-recession levels.
“As vital, tax-paying members of their communities, farm banks provide funding to support rural Americans, while adding jobs and boosting the agricultural economy,” said Blanchfield.
The Farm Bank Performance Report also provides regional summaries:
- The Northeast region increased farm loans by 10 percent to $350 billion. Ag production loans rose 11.3 percent and farmland loans rose 9.3 percent.
- The South region improved profitability and increased farm loans by 3.7 percent rising to $6.1 billion in 2012. Farm banks in the South employ more than 11,200 men and women.
- The Cornbelt region increased farm loans by 15.6 percent and improved profitability. Farm banks in the Cornbelt employ more than 37,200 men and women.
- The Plains region increased farm loans 13.9 percent to more than $31.5 billion. Farm banks in the Plains region employ more than 33,800 men and women.
- The West region increased farm loans by 14.9 percent to $8.1 billion and increased employment by 2.7 percent, or 7,500 men and women.