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Farm Bank Lending Rises to $108 Billion in 2018
USAgNet - 04/24/2019

U.S. farm banks increased agricultural lending by 5.3%, or $5.5 billion, to $108 billion in 2018, according to the American Bankers Association’s annual Farm Bank Performance Report. The report--an analysis by ABA’s economic research team based on FDIC data--examines the performance of the nation’s 1,772 banks that specialize in agricultural lending. ABA defines farm banks as banks whose ratio of domestic farm loans to total domestic loans is greater than or equal to the industry average.

In 2018, farm banks’ asset quality remained healthy and non-performing loans stayed at a pre-recession level of 0.52 percent of total loans. More than 94% of farm banks were profitable in 2018, with more than 63% reporting an increase in earnings. Farm banks also served as job creators, adding more than 1,500 jobs in 2018, a 1.8% increase, and employing more than 86,000 rural Americans. Since 2008, employment at farm banks has risen 24.4%.

“Even in the face of a slowing ag economy and harsh weather, farm banks continue to perform strongly while meeting the credit needs of farmers, ranchers and their communities,” said ABA Chief Economist James Chessen. “They play a critical role in the success of farms large and small, and their civic engagement and the jobs they provide make them the lifeblood of many rural communities across the country.”

Farm banks also continued to build high-quality capital throughout 2018 and are well-insulated from risks associated within the agricultural sector. Equity capital at farm banks increased 6.1% to $48.7 billion, while Tier 1 capital increased by $3.3 billion to $46.7 billion. The capital-to-assets ratio improved as well with the median Tier 1 leverage ratio for farm banks rising by 42 basis points during 2018.

The entire banking industry provides farmers and ranchers with the credit they need. At the end of 2018, banks held $186 billion in farm and ranch loans. The U.S. banking industry is also a major source of funding to small farmers with more than $76 billion in small and micro farm and ranch loans on the books at the end of 2017. A small farm loan is a loan with an original value of $500,000 or less and a micro farm loan is a loan with an original value of $100,000 or less.


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