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

Rural Mainstreet Economy Down for 10th Straight Month

6/21/2024

Farmland Prices Fall for a Second Consecutive Month

June 2024 Survey Results at a Glance:

For a 10th straight month, the overall Rural Mainstreet Index sank below growth neutral according to bank CEOs in the region.
After 53 straight months of above growth neutral for farmland prices, prices declined for a second straight month.
Farm equipment sales sank below growth neutral for the 12th time in the past 13 months.
Delinquency rates for farm and business loans on Rural Mainstreet have remained virtually unchanged over the past six months according to bank CEOs.
Only 8.7% of bankers have increased their farm loan rejection rates, while approximately 13.0% and 4.3% reported restructuring or reducing the loan-to-value ratios, respectively.
According to trade data from the International Trade Association, regional exports of agriculture goods and livestock for 2024 year-to-date were down 4.1% from the same period in 2023.

OMAHA, Neb. (June 20, 2024) — For a 10th straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the June survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for June sank to 41.7 from 44.2 in May. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“Higher interest rates, weak agriculture commodity prices and sinking agriculture equipment sales pushed the overall reading below growth neutral for the 10th straight month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

According to James Brown, president of Hardin County Savings Bank in Eldora, Iowa, “Farm operating loans are up 20% in total volume compared to last year, a sign that cash flow and cash (balances) are down from last year.”

Rural Mainstreet Economy in Negative Territory Again

5/17/2024

Farmland Prices Fall for First Time in Almost Five Years

May 2024 Survey Results at a Glance:

For a ninth straight month, the overall Rural Mainstreet Index sank below growth neutral.
The farmland price index dropped below growth neutral after 53 straight months above the 50.0 threshold.
Farm equipment sales sank below growth neutral for the 11th time in the past 12 months.
Bankers registered average yearly cash rents of $245 per acre for non-irrigated crop land in the region.
According to trade data from the International Trade Association, regional exports of agriculture goods and livestock for 2024 year-to-date were down 9.5% from the same period in 2023.

OMAHA, Neb. (May 16, 2024) — For a ninth straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the May survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for May fell to 44.2 from 45.8 in April. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“Higher interest rates, weaker agriculture commodity prices and higher grain storage costs pushed the overall reading below growth neutral for the ninth straight month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Rural Mainstreet Economy Weakest Since June 2020

3/22/2024

One in Three Banks Tightened Farm Credit Standards

March 2024 Survey Results at a Glance:

For a seventh straight month, the overall Rural Mainstreet Index sank below growth neutral to its lowest level since June 2020.
Approximately three-fourths of bank CEOs indicated that their local economy was in a recession, or would enter a recession in the first half of 2024.
Almost one in three bankers indicated that their bank had tightened credit standards on farm loans.
Only 1.1% of bankers reported higher farm delinquency rates over the past six months.
For the 52nd straight month, farmland prices expanded.
The farm equipment sales index slumped below growth neutral for the ninth time in the past ten months to its lowest level since May 2020.

OMAHA, Neb. (March 21, 2024) — For a seventh straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the March survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for March fell to 38.0, its lowest level since June 2020, and down from 46.2 in February. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“Higher interest rates, weaker agriculture commodity prices and higher grain storage costs pushed the overall reading to its lowest level since the early months of the pandemic,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Busine ss.

As reported by Jeff Bonnett, CEO of Havana National Bank in Havana, Ill., “Our farm operators, like their peers across the cornbelt, are still storing 2023 crop awaiting at least break-even pricing. Without an upward push in commodity prices, the 2024 crop projections mirror 2023.”

Rural Mainstreet Economy in Negative Territory for Sixth Straight Month

2/19/2024

44% of Bankers Reported Worsening Farm Finances

February 2024 Survey Results at a Glance:

For a sixth straight month, the overall Rural Mainstreet Index sank below growth neutral.
Almost three-fourths of bank CEOs named low farm commodity prices as the biggest risk for farms in 2024.
More than four of 10 bankers named falling farm commodity prices as the biggest risk for community banks in 2024.
Approximately 44% of bankers indicated that the financial positions of farmers in their area had weakened over the past six months.
Farmland prices expanded for the 51st straight month.
The farm equipment sales index slumped below growth neutral for the eighth time in the past nine months.

OMAHA, Neb. (Feb. 15, 2024) — For a sixth straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the February survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for February fell to 46.2 from 48.1 in January. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“Higher interest rates, weaker agriculture commodity prices and a credit squeeze are having a significant and negative impact on Rural Mainstreet businesses and on Rural Mainstreet farmers,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Rural Mainstreet Economy Slumps into Negative Territory for Fifth Straight Month

1/22/2024

Farm Equipment Sales Fall as Farmland Prices Expand

January 2024 Survey Results at a Glance:

For a fifth straight month, the overall Rural Mainstreet Index sank below growth neutral.
Farmland prices expanded for the month. The last time the farmland price index fell below growth neutral was November 2019.
Higher borrowing costs, tighter credit conditions and weaker grain prices pushed the farm equipment sales index below growth neutral for the seventh time in the past eight months.
Of those farmers transitioning in the next decade, bank CEOs expect 53.8% to transfer ownership to heirs, and 42.3% anticipate the sale to other farmers in the area.
Economic confidence remained very weak.

OMAHA, Neb. (Jan. 18, 2024) — For a fifth straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the January survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for January rose to 48.1 from 41.7 in December. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“Higher interest rates, weaker agriculture commodity prices and a credit squeeze are having a significant and negative impact on Rural Mainstreet businesses and on Rural Mainstreet farmers. Jim Eckert, CEO of Anchor State Bank in Anchor, Ill. indicated that unless crop prices improve, 2024 will not be a good year for area farmers,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Rural Mainstreet Economy Slumps into Negative Territory for Fourth Straight Month

1/2/2024

More Than Half of Bank CEOs Expect 2024 Recession

December 2023 Survey Results at a Glance:

For a fourth straight month, the overall Rural Mainstreet Index sank below growth neutral.
Farm loan delinquencies fell to one-tenth of one percentage point over the past six months.
More than half of bank CEOs expect a 2024 recession.
According to the International Trade Administration, the export of agriculture products from the region declined from $14.1 billion for the first ten months of 2022 to $12.0 billion for the same period in 2023 for a 14.7% slump.

OMAHA, Neb. (Dec. 21, 2023) — For a fourth straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the December survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for December rose to 41.7 from 40.4 in November. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“Higher interest rates and a credit squeeze are having a significant and negative impact on Rural Mainstreet businesses. Approximately 13.3% of bank CEOs indicated that their local economy was already in a recession while another 43.3% expect a recession in early 2024,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Rural Mainstreet Economy Slumps to a 2023 Low in October: Checking Deposits Declined Again

10/23/2023

October 2023 Survey Results at a Glance:

For a second straight month, the overall Rural Mainstreet Index sank below growth neutral to a 2023 low.
For the fourth time in the past five months, farm equipment sales declined.
Approximately 26.9% of bankers have tightened credit standards for farm borrowers.
Approximately 34.5% of bank CEOs have tightened credit standards for business borrowers.
Roughly 44.4% of bankers named low or falling crop prices as their top concern regarding farm profitability in the next 12 months.
Rising or high interest rates were identified by 22.2% of bank CEOs as the greatest concern regarding farm profitability in the next 12 months.
Checking deposits fell to their lowest level since May of this year.

OMAHA, Neb. (October 19, 2023) — For a second straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral according to the October survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for October fell to 44.4 from September’s 49.5. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“This is the weakest recorded reading for 2023 and points to weaker farm and non-farm economies. Despite this weakness, only 26.8% of banks reported tightening credit standards for farmers while 34.5% indicated that their bank had tightened credits standards for businesses in their area,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Rural Mainstreet Economy Slows in September: Half of Bankers Expect Economic Conditions to Worsen

9/25/2023

September 2023 Survey Results at a Glance:

For the first time since March of this year, the overall Rural Mainstreet Index sank below growth neutral.
Approximately half of bankers expect economic conditions to worsen in the next six months.
A downturn in farm income was registered by bank CEOs as the No. 1 challenge to banking profitability for the next 12 months.
For the fifth time in the past 12 months, farming equipment sales declined.
Fewer than 4% of bankers reported an upturn in farm loan delinquencies over the past six months.
Bank CEOs expect rising interest rates to represent the second greatest challenge to banking operations over the next 12 months.
Approximately 46.4% of bankers indicated that they expect another banking crisis in 2023.
The region’s agriculture exports, including processed foods, fell from $19.95 billion in the first seven months of 2022 to $18.45 billion for the same period in 2023, for a 7.4% slump.

OMAHA, Neb. (September 21, 2023) — For the first time since March of this year, the overall Rural Mainstreet Index (RMI) sank below growth neutral for September, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for September fell to 49.5 from August’s 50.0. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“This is the weakest recorded reading since March of this year. Bankers indicated that the biggest challenge to community bank profitability over the next 12 months will be a downturn in farm income,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Rural Mainstreet Banks Lose Deposits Again: Bank CEOs Expect Flat Farmland Prices Over Next 12 Months

5/22/2023

May 2023 Survey Results at a Glance:

The May 2023 Rural Mainstreet Index (RMI) rose above growth neutral to its highest reading since May 2022.
On average, bankers estimated that farmland prices in their area rose 4.3% over the past 12 months.
On average, bankers expect farmland prices in their area to remain stagnant (0%) for the next 12 months.
For the second straight month, checking deposits decreased to a record low.
Approximately 84.6% of bank CEOs expect banks to continue to report insolvency challenges.
Between the 2008-09 banking crisis and December 2022, the region lost 41.5% of its banks through mergers and insolvencies.

OMAHA, Neb. (May 18, 2023) -- After declining below growth neutral for March, the overall Rural Mainstreet Index expanded above the threshold for a second straight month, according to the May monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading in May climbed to 55.8 from April’s 50.1. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“The Rural Mainstreet economy continues to experience slow economic growth. Only 11.5% of bankers reported improving economic conditions for the month, with 88.5% indicating no change in economic conditions from April’s slow growth,” said Dr. Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Farming and Ranching Land Prices: The region’s farmland price index dropped to 56.3 from April’s 64.6. This was the 32nd straight month that the index has advanced above 50.0.

Bankers reported that non-pasture farmland prices in their area grew by an average of 4.3% over the past 12 months. The bankers responded negatively about the future by reporting an average expected price growth of 0.0% over the next 12 months.

Rural Mainstreet Economy Records Moves Higher: Bank CEOs Report Loss of Deposits, Two-Thirds Oppose Bailouts

4/24/2023

April 2023 Survey Results at a Glance:

April’s overall reading, the Rural Mainstreet Index (RMI), rose above growth neutral for the month.
More than three of four, or 76.2%, of bank CEOs oppose the recent “bailout” of Silicon Valley Bank and Signature Bank.
Two-thirds of bank CEOs oppose all bank bailouts (i.e., community, regional and multibillion dollar banks).
Approximately 64% of bankers reported depositors exiting due to higher financial risks.
Checking deposits plummeted to a record low.
Farmland prices expanded for the 31st straight month.

OMAHA, Neb. (April 20, 2023) -- After declining below growth neutral for March, the overall Rural Mainstreet Index expanded above the threshold for the month, according to the April monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading in April climbed to 50.1 from March’s 45.6. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“The Rural Mainstreet economy continues to experience slow, to no, to negative economic growth. Only 8% of bankers reported improving economic conditions for the month with 84% indicating no change in economic conditions from March’s negative growth,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.