According to the American Bankers Association's annual Farm Bank Performance Report released Wednesday, agricultural lending from farm banks was up by 9% in 2013, finishing out the year with $87.8 billion in loan holdings.
Asset quality continued to improve at farm banks as non-performing loans declined to 1.22% of total loans, close to pre-recession levels, ABA says.
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.
"There are some headwinds forecasted for the agricultural economy in 2014, but farmers and their bankers are in good shape to weather any storm that may be brewing," said John Blanchfield, senior vice president and director of ABA's Center for Agricultural and Rural Banking. "Banks remain the most important source of ag credit, holding nearly half of all farm loans."
Total farm and ranch lending from all banks was $149 billion at the end of 2013.
Farm banks continued to build high quality capital over the year. At the end of 2013, over 99% of all farm banks met the regulatory requirement for being well-capitalized.
In addition, more than 96% of farm banks were profitable in 2013, with over half reporting an increase in earnings.
"As vital, tax-paying members of their communities, farm banks provide critical funding to support rural Americans while adding jobs and boosting the agricultural economy," said Blanchfield.
Small and micro-small loans made up almost half of bank agricultural lending in 2013. The nation's 2,152 farm banks farm banks also added nearly 2,000 jobs, a 2.1% increase, and employed 91,900 rural Americans. Since 2007, employment at farm banks has risen 15.1%.
• The Northeast region's 10 farm banks increased farm loans by 21.7% to $503 million. Ag production loans rose 7.3% and farmland loans rose 30.3%.
• The South region's 224 farm banks increased farm loans by 6.5% to $6.6 billion. Ag production loans rose 11.4% and farmland loans rose 4.8%.
• The Corn Belt region's 1,014 farm banks increased farm loans by 9% to $38.4 billion. Ag production loans increased 9.7% and farmland loans rose 8.3%.
• The Plains region's 828 farm banks increased farm loans by 9.3% to more than $33.9 billion. Ag production loans increased 9% and farmland loans rose 9.7%.
• The West region's 76 farm banks increased farm loans by 10.3% to $8.3 billion. Ag production loans increased 12.3% and farmland loans rose 8.6%.
View the complete 2013 Farm Bank Performance Report, and watch ABA's Blanchfield and two ag bankers discuss the report below.