Community Banking News Blog | Community Bankers of Iowa (CBI)

Rural Mainstreet Index Soars to Record High: 90% of Bankers Report Labor Shortages Restraining Growth

5/24/2021

May Survey Results at a Glance:

Overall index rocketed to a record high.
Approximately, 60.6% of bank CEOs reported that their local economy expanded between April and May.
Almost nine of 10 bank CEOs indicated that hiring at their bank and in the area was restraining growth.
For the first time since 2013, the regional farmland prices expanded for eight straight months.
On average, bankers reported annual cash rent per acre of $228, which represented growth of 7.3% over the past 12 months.

OMAHA, Neb. (May 20, 2021) – For the sixth straight month, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The overall index for May jumped to a record high of 78.8 from April’s very healthy 69.0. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

Approximately, 60.6% of bank CEOs reported that their local economy expanded between April and May.

Iowa Legislature Update: Week Ending May 13, 2021

5/14/2021

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Iowa lawmakers inch toward adjournment
Legislative leaders worked mostly behind the scenes this week crafting a massive tax relief package, setting the stage for adjourning the 2021 session potentially as early as next week.

House and Senate GOP leaders have been at odds over their must-do items on tax policy. The latest Senate bill, SF619, is a sweeping proposal that includes many of the priorities leaders from both chambers have wanted to include in tax reform this year. Among the bill’s chief provisions:

Fully implementing income tax cuts passed in 2018 in SF2417, which reduces rates and the number of tax brackets.
The tax changes were set to go into effect only if revenue targets were met.
Eliminating what is known as “federal deductibility,” which allows taxpayers to deduct what they pay in federal taxes from their Iowa tax bill
Shifting mental health services funding from local property taxes to the state
Expanding the childcare tax credit to apply to taxpayers making up to $90,000. Currently, only those making up to $45,000 qualify for the credit.
Phases out the inheritance tax over three years, with a full repeal in 2024
Requires health insurers to pay providers the same rate for telehealth mental health services as they pay for an in-person visit
Creates an Energy Infrastructure Revolving Loan Program to develop energy infrastructure.

Iowa Legislature Update: Week Ending April 29, 2021

4/30/2021

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Census results show Iowa keeping all four congressional seats
Iowa will retain all four of its seats in the U.S. House after preliminary data from the 2020 Census show Iowa with modest population growth of 3.6 %.

As more detailed Census data is released, Iowa lawmakers will be required to vote on new congressional and legislative districts that become effective for the 2022 election. Iowa has an often-praised, nonpartisan process for drawing new political maps. Most of the work is left to computers, which will draw new district lines to create 50 Iowa Senate and 100 Iowa House seats, along with four districts for U.S. Congress.

The Des Moines and Iowa City metro areas had the fastest growth in population and are expected to gain new legislative seats, while most rural parts of the state continue to lose residents.

Rural Mainstreet on Strong Growth Path: Farmland Prices Expanding Rapidly

4/19/2021

April Survey Results at a Glance:

Overall index dipped but remained in strong growth territory from March’s record high.
The farmland price index advanced its highest level since November 2012.
The farm equipment-sales index rose to its highest reading since February 2013.
Housing index soars to record level with bids above listing prices.
Lack of available workers is restraining job growth.
Approximately 9.1% of farmland sales over past six months have gone to nonfarmer investors.
Fully 100% of bank CEOs indicated that export markets were important, or very important, to their local economy.

OMAHA, Neb. (April 15, 2021) – For the fifth straight month, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The overall index for April slipped to a still healthy 69.0 from a record high 71.9 in March. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral. Approximately, 37.9% of bank CEOs reported that their local economy expanded between March and April.

Rural Mainstreet Index Rockets to Record High: More Than Two-Thirds of Bankers Reported Expanding Local Economy

3/23/2021

March Survey Results at a Glance:

Overall index rocketed to a record high for the month.
Approximately, 68.8% of bank CEOs reported an expanding local economy, while the remaining 31.2% indicated little or no growth.
The farmland price index advanced its highest level since November 2012.
The farm equipment-sales index rose to its highest reading since February 2013.
Approximately 82.8% of bank CEOs recommended that the Federal Reserve raise interest rates by at least one-fourth of one percentage point in the next 12 months.
Despite recent job gains, the region’s nonfarm employment level remains 218,600 jobs below its pre-COVID-19 level.

For the fifth time in the past six months, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its highest level since launching the survey in January 2006.

Overall: The overall index for March soared to a record high 71.9 from February’s solid 53.8. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

Approximately, 68.8% of bank CEOs reported that their local economy was expanding, while the remaining 31.2% indicated little or no growth.

“Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the Rural Mainstreet Economy. Only 3.1% of bank CEOs indicated economic conditions worsened from the previous month. Even so, current rural economic activity remains below pre-pandemic levels,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Iowa Legislature Update: Week Ending March 18, 2021

3/19/2021

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Iowa Senate passes bill eliminating inheritance tax, phasing income tax cuts in sooner
The Iowa Senate has unanimously passed legislation to scrap the state's inheritance tax and to phase in planned income tax cuts more quickly, advancing one of Republican Gov. Kim Reynolds' key legislative priorities. The bill, Senate File 576, passed the chamber Wednesday on a 46-0 vote, with four senators absent. It now goes to the Iowa House for consideration. Read more: Des Moines Register

Call for Support of Central Filing System Legislation
The Senate version of legislation to create a central filing system relating to security interests in farm products was previously approved in Senate State Government Committee and is now SF 486. This bill has now been referred to the Senate Ways and Means Committee since it contains a fee for filings, which makes it eligible for action until the end of the session. CBI supports this legislation, and urges members to contact their Senator and ask them to support SF 486.

Iowa Legislature Update: Week Ending March 11, 2021

3/12/2021

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Bill banning credit unions from buying banks eligible for Senate debate
Legislation that prohibits a credit union from purchasing an Iowa-chartered bank passed out of the Senate Commerce Committee last week and is now eligible for debate by the full Senate. CBI urges members to contact their Senator and urge them to support SF 530 when it comes up for debate.

The need for this legislation was brought about when Green State Credit Union purchased First American Bank in Fort Dodge in 2019 and completed the transaction without receiving the required approval from the Iowa Division of Banking (IDOB). CBI’s Board affirmed its support for this legislation at its January Board meeting, and CBI testified in favor of the legislation in a Senate subcommittee meeting on the bill. While prohibiting the purchase of a bank by a credit union, SF 530 would still allow for the sale or transfer of participations or real property assets.

Iowa Legislature Update: Week Ending Feb. 25, 2021

3/3/2021

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Essential workers, disabled Iowans will receive vaccine access soon
Iowa will likely allow essential workers and people with disabilities to receive a COVID vaccine in March, now that the state is seeing a steady supply of vaccines from the federal government, Gov. Kim Reynolds said last Thursday.

“We’re finally able to generally answer the question that so many Iowans are asking, and that’s ‘when is it my turn,’” Reynolds said.

So far, the state has seen almost 620,000 vaccinations. Of those over the age of 65, an estimated 53 percent have received at least the first dose of the two-dose course of the COVID vaccine.

The next group to become eligible for the vaccine will be those considered essential workers and people with disabilities who live at home. Those groups are expected to receive vaccines in early March, with 70 percent receiving the vaccine by early April. At that time, vaccine availability could be expanded to additional groups, Reynolds said.

Rural Mainstreet Economy Expands Again: Economic Outlook Soars to Highest Level since 2011

2/22/2021

February Survey Results at a Glance:

Overall index rose to its highest reading since January 2020.
Business and economic outlook soared to its highest level since March 2011.
Bank CEOs estimated 2021 cash land rent for non-irrigated, non-pastureland at $218.
Rural Mainstreet retail sales remain very weak.
The February farmland price index climbed to its highest level since May 2013.
Bankers expect farm equipment sales to expand by 3.8% over the next 12 months.

OMAHA, Neb. (Feb. 18, 2021) – For the fourth time in the past five months, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its highest level since January 2020.

Overall: The overall index for February rose to 53.8 from January’s 52.0. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the Rural Mainstreet Economy. Only 8% of bank CEOs indicated economic conditions worsened from the previous month. Even so, current rural economic activity remains below pre-pandemic levels,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Rural Mainstreet Economy Stabilizes in Growth Range: Concerns Over Loan Defaults Drops Significantly

2/1/2021

January Survey Results at a Glance:

Overall index rose to its second highest reading since before COVID-19.
Bankers biggest economic concerns for 2021 are excessive inflation and higher long-term interest rates.
For the first time since 2013, Creighton’s survey has recorded four straight months of above growth-neutral farmland prices.
Farm equipment-sales index rose to its highest reading since April 2013.
Approximately 44% of bank CEOs expect low loan demand to be the greatest issue facing their banks for 2021, up from 7% last year at this time.
Only 4% of bankers indicated that rising loan defaults and bankruptcies represented their greatest concern for 2021, down significantly from the 32% in 2020 survey.

OMAHA, Neb. (Jan. 21, 2021) – For the third time in the past four months, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its second highest level since January 2020.

Overall: The overall index for January rose to 52.0 from December’s 51.6. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Recent sharp improvements in agriculture commodity prices, federal farm support payments, and Federal Reserve’s record low short-term interest rates have underpinned the Rural Mainstreet Economy in a solid and positive growth range. However, the rural economy remains well below pre-pandemic levels,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.