Small farm loans are big business for banks

Small farm loans total $69 billion in 2007, according to ABA study

Demand for agricultural credit continues to rise. The banking industry provides the most credit to agriculture with $114.2 billion in total farm loans outstanding at the end of 2007, according to the American Bankers Association's Center for Agricultural & Rural Banking's annual "Farm Bank Performance" report. A significant amount of this lending--$69 billion--supports small farms.

Farm banks, which ABA defines as community banks with more than 14 percent of their total loans dedicated to agriculture, had another strong year in 2007. The 2,307 farm banks in the United States, 73 percent of which are located in the Plains and the Corn Belt, continue to be the largest lenders to young, beginning, part-time and small farm owners, according to the ABA study.

"Thanks to the banking industry, rural Americans enjoy opportunities to finance their farms, ranches, businesses, and homes," said John Blanchfield, director of the association's Center for Agricultural & Rural Banking. "Banks provide the broadest array of financial products and services to rural Americans when and where they need it."

Some additional highlights from the ABA report include:

--More than 99 percent of the nation's farm banks at the end of 2007 were considered "well capitalized," which is the highest capital rating given by federal banking regulators.

--Agricultural loans at farm banks grew 9 percent in 2007 to $51.7 billion.

--Nearly 60 percent of all farm loans held by farm banks at the end of 2007 were for amounts less than $250,000.

--Demand for farm real estate loans continues to be strong. At the end of 2007, nearly 48 percent of all farm loans at farm banks financed farm real estate.

For more information visit www.aba.com.

5/19/08
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Date: 5/5/08

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