OMAHA, Neb. -- For the second time in the past three months, the overall index for the Rural Mainstreet economy declined and remained below growth neutral, according to the April survey of bank CEOs in a 10-state region.

The Rural Mainstreet Index (RMI), which ranges between 0 and 100, sank to 44.2 from 47.4 in March. Despite the pullback, the index is more than double the reading of 21.7 for April 2009.  A reading of 50.0 is considered growth neutral.

"The RMI has remained below growth neutral for 26 consecutive months. However, over the past several months, the RMI has been trending upward. While the negatives are clearly getting less negative as the agricultural economy improves, urban economies in the area are outperforming the rural," said Creighton University economist Ernie Goss. Goss and Bill McQuillan, CEO of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005.

The farmland-price index moved above growth neutral for a third straight month to 59.5 from 58.2 in March.  After beginning a downward slide in spring 2008, farm and ranch land prices have once again begun to grow.  Increases were typified by comments such as that of Michael Johnson, CEO of Swedish American State Bank in Courtland, Kan., "Approximately 800 acres of dryland sold two weeks ago at an all-time high." In Utica, Neb., Larry Rogers, executive vice president of First Bank, reported one sale that brought $8,025 per acre for a 143-acre farm.

The farm equipment-sales index soared to 57.2 from March's 41.4 and February's 42.4.  Prior to February, both farmland price growth and farm equipment sales had been slipping.

"We are tracking significant improvements in farm and ranch land prices and farm equipment sales.  I expect both of these factors to remain healthy in the months ahead," said Goss.

According to John Schmaderer, president of Tri-County Bank in Stuart, Neb., increases in cattle prices are having a positive impact on producers in the area.

This month, bank CEOs were asked about their support or opposition to too-big-to-fail policies for banking.  Of the bankers, 57 percent think the federal government should not intervene and should instead allow the market to decide failures and successes. Nancy Ruyle, CEO of Citizens Bank in Rogersville, Mo., summarized much of the opinion saying that "'Too big to fail' should go away, or they (banks) should have their own fund for insurance."

For a second straight month, all bank indicators were healthy. Loan volumes advanced to 61.1 from March's 55.2 and February's weak 43.7. For April, the checking-deposit index climbed to 62.7 from 56.2 in March. The index for certificates of deposit and other savings instruments slipped to 52.5 from 54.4 in March.

Hiring in rural areas has yet to bounce above growth neutral. However, the new-hiring index moved higher to 46.7 from March's 45.7. This was the 28th consecutive month that the index has been below growth neutral.  Only 10 percent of the bankers said hiring was up from last month, while 17 percent of bank CEOs reported that April hiring was down from March.

"Despite a weak hiring index, the rate of job losses for Rural Mainstreet is approximately one-fourth of what the region was experiencing just six months ago," said Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton.

Bank CEOs were also asked whether they support the extension of a 45-cent-per-gallon blender credit for ethanol production beyond Dec. 31.  Approximately 82 percent of the bankers indicated that this incentive should be extended; only 8 percent were opposed to the extension. Ten percent were unsure.

Retail sales were less than healthy for the month with an April retail-sales index of 43.4, up from March's 42.4.

For the first time since June 2007, the home-sales index rose above growth neutral for Rural Mainstreet. The home-sales index bounced higher to 52.5, from 46.5 in March and 37.5 in February. "With the end of the tax credit for first-time home buyers on April 30, we are tracking upturns in home buying in the region," said Goss.

However, Dale Bradley, CEO of Citizens State Bank in Miltonvale, Kan., expects more real estate foreclosures on the horizon. This could hamper any housing recovery, he said.

Each month, community bank presidents and CEOs in nonurban, agriculturally and resource-dependent portions of an 11-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road.  Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

This survey represents an early snapshot of the economy of the rural, agriculturally and energy dependent portions of the nation. The Rural Mainstreet Index is a unique index covering 11 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy.

SOURCE: Creighton University.