Farm banks increased their agricultural lending by 7.9 percent in 2015 and held $100.3 billion in ag loans at year’s end, according to the ABA Center for Agricultural and Rural Banking’s annual Farm Bank Performance Report released today. With farm income forecast to decline in 2016, farm banks have prepared for turbulence by increasing the quality of capital and assets.
“Farm banks saw solid performance in 2015, remain well-capitalized and are well positioned to continue serving the needs of their communities despite any potential turbulence in the ag sector,” said ABA Economic Research Director Brittany Kleinpaste. “Banks hold nearly half of all farm loans and will remain an important source of ag credit.”
Farm banks reported continued improvement in asset quality in 2015, with non-current loans declining to a pre-recession level of 0.47 percent of total loans. They also continued to build high quality capital, with equity capital rising 4.9 percent to $47.7 billion. In addition, more than 97 percent of farm banks were profitable in 2015, with 63 percent reporting an increase in earnings.
The report also shows that small and micro-small loans made up almost half of bank agricultural lending in 2015. The nation’s 1,976 farm banks — defined as those whose ratio of domestic farm loans to total domestic loans is greater than or equal to the industry average — added more than 2,500 jobs, a 2.9 percent increase, and employed 90,000 rural Americans.