This paper examines the 2020 performance of the 1,642 banks that specialize in lending to agriculture. These farm banks employ 81,000 workers.
Key Findings
The banking industry is the nation’s most important supplier of credit to agriculture providing approximately 50% of all farm loans in the U.S.—$174 billion as of December 2020.
Small loans continue to make up almost half of bank farm and ranch lending with $71 billion in small and micro farm and ranch loans on the books at the end of 2020.
Farm banks held 172,818 PPP loans worth $12.7 billion on their balance sheets at year end 2020, highlighting a commitment to supporting the local workforce and communities.
The nation’s 1,642 farm banks recorded strong asset quality and capital levels in 2020 through serving their communities and sticking to traditional banking practices: a focus on the fundamentals of credit, solid underwriting standards and knowledge of the customer’s business.
Farm banks have deep roots in their communities. The median farm bank will be 111 years old in 2021.
Farm banks’ asset quality improved slightly in 2020 despite a struggling ag economy (as consolidation and cash payments aided the paydown of loans by farmers). Noncurrent ag loans as a share of total lending (loans 90 days or more past due or in nonaccrual status) dropped by 3 basis points to 0.99% in 2020.
As a group, farm banks, remained well-capitalized through 2020, as these banks raised equity capital — a more conservative form of capital - by $4.3 billion, or 9.0%.
In 2020, these farm banks increased employment by 2.4%, adding almost 2,000 jobs, and employing 81,000 rural Americans. Since 2010, employment at farm banks has risen 26.4%.
97.1% of farm banks were profitable in 2020, with 51.3% reporting an increase in earnings.