Despite some economic challenges facing the agriculture industry—including low farm incomes and falling commodity prices—the nation’s 1,400 ag banks remain in “sound financial condition,” Federal Reserve Governor Michelle Bowman said in remarks to bankers during an industry event in New Mexico today.
Examinations of ag banks have shown that these institutions are continuing to overcome liquidity challenges and remain competitive in their markets, Bowman said, though she added that regulators “continue to closely monitor capital levels and to encourage prudent capital planning and concentration risk management, given the potential for unforeseen challenges and emerging risks associated with agricultural lending.”
She also highlighted the importance of ag lenders working constructively with borrowers that find themselves facing difficulties during times of economic stress. “[S]imply pushing every borrower with challenges out of the bank does not benefit the long-term interest of the bank or the community it serves,” she said. “The Federal Reserve recognizes the benefits when lenders work prudently with troubled borrowers in a way that serves the long-term interests of all stakeholders.”