As farms scale in size and require larger loans, and as regulatory costs grow for lenders, mergers and acquisitions in ag banking have accelerated. This trend could bring pros and cons for farmers, as I noted in this article back in 2017: Ag Lending Landscape Contracts
What trends are happening in the ag lending industry now? A few clues are in the recently released Farm Bank Performance Report by the American Bankers Association. The annual report—an analysis by ABA’s economic research team based on FDIC data—examines the performance of the nation’s banks that specialize in agricultural lending.
Here are a few interesting numbers form the 2018 edition:
1,772 U.S. banks specialize in agricultural lending.
Over 1 in every 3 dollars lent by a farm bank is an agricultural loan.
Farm lending continues to increase, even as the number of farm banks decline.
In 2018, U.S. agricultural banks made $108 billion in farm loans, which is a 5.5% increase from 2017.
The majority of farm loans are made in the Corn Belt. Here’s the regional breakdown:
More than 94% of farm banks were profitable in 2018.
Farm banks added more than 1,500 jobs in 2018, a 1.8% increase from 2017.
The median age of a farm bank reached 108 years in 2018.
Most farm banks are small institutions. The median sized farm bank had $128 million in assets. However, there were 50 farm banks with more than $1 billion in assets.
Noncurrent loans (loans 90 days or more past due or in nonaccrual status) have remained at a pre-recession level of 0.52% of total loans.
Farm real estate loans grew at a faster rate than farm production loans. Outstanding farmland loans rose by 6.9%, or $3.8 billion, to $58.1 billion. Farm production loans grew at a pace of 3.5%, or $1.7 billion, to a total of $50 billion.
Read the 2018 Farm Bank Performance Report.
Learn More: Farm Bank Lending Rises to $108 Billion in 2018