The demand for farm loans continued to rise in 2008 and the banking industry provided the majority of all farm credit, according to the American Bankers Association (ABA) Center for Agricultural & Rural Banking’s annual “Farm Bank Performance” report. A significant amount of this lending went to support small farms.
In 2008, the U.S. banking industry held $123.5 billion in farm loans, which includes $69.1 billion in small farm loans of which $26 billion in very small farm loans. In 2007, the banking industry held $114.2 billion in farm loans. The number of small farm loans in 2008 surpassed 1.2 million, with the vast majority – almost 1 million — under $100,000.
“Banks continue to meet the credit needs of agriculture, especially for small farms,” said John Blanchfield, director of the association’s Center for Agricultural & Rural Banking.
Farm bank deposits increased 6.9% from $197 billion in 2007 to $211 billion in 2008. The number of full-time employees at farm banks increased 2.3% from 71,303 in 2007 to 72,942 in 2008. A farm bank is defined by ABA as a FDIC-insured bank with assets less than $1 billion whose ratio of domestic farm loans to total domestic loans is greater than or equal to 14.20% in 2008.
The study, which analyzed the performance of 2,247 farm banks in the U.S., found:
- Total loans at farm banks grew 8.2% to $170 billion from $151.7 billion in 2007.
- Farm banks hold $9.8 billion in loans $100,000 or smaller to small farmers and an additional $11.6 billion in loans between $100,000 and $250,000.
- The 2,247 farm banks held approximately $258.6 billion in assets in 2008, up 7.9% from 2007.
- Farm bank income, before taxes, totaled $3 billion, which was 10.3% lower than in 2007. In 2007, it was $3.4 billion.
Source: News release from the American Bankers Association