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

Rural Mainstreet Economy Slows in August: Bank CEOs Report Continuing Losses of Deposits

8/21/2023

August 2023 Survey Results at a Glance:

After four straight months of above growth neutral readings, the Rural Mainstreet Index (RMI) slumped to growth neutral, 50.0, in August.
Farmland cash rents are expected to expand by 1.3% over the next year.
Less than one-third of bank CEOs expect a “soft landing” for the economy. Approximately one-third anticipate a “hard landing,” or negative growth from Federal Reserve rate hikes.
Bankers reported continuing record low deposits.
Only 14.8% expect a stronger farm economy one year out. Almost one-half, or 48.2%, forecast a weaker farm economy 12 months out.
The region’s agriculture exports contracted from $8 billion in the first half of 2022 to $6.8 billion for the same period in 2023 for a 14.6% slump.

OMAHA, Neb. (Aug. 17, 2023) -- The overall Rural Mainstreet Index (RMI) sank to a growth neutral reading for August after four straight months of readings above 50.0 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 in August fell to 50.0 from July’s much stronger 55.6. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“This is the fifth consecutive month that the overall RMI has moved at or above growth neutral. However, I expect recent pullbacks in growth to push the Federal Reserve to forgo an interest rate increase at its next meetings on September 19-20,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

A large share of bankers support a cessation of rate increases. Said Larry Winum, CEO of Glenwood State Bank in Glenwood, Iowa: “In my view, the Federal Reserve should take a long pause on any further increase in interest rates. It’s time for a breather.”

Rural Mainstreet Economy Expands in July: Non-farm Investors Purchased 17.1% of Farmland Sales in Region

7/24/2023

July 2023 Survey Results at a Glance:

July’s overall reading, the Rural Mainstreet Index (RMI), rose above growth neutral for a fourth straight month.
Farmland prices expanded for the 34th straight month.
On average, non-farm investors secured approximately 17.1% of farmland sales in the region, up from 9.1% reported by bankers in April 2022.
More than nine of ten, or 92.5%, indicated that the Fed should cease raising rates.
More than three-fourths of bankers expect that Secretary Yellen’s policy encouraging bank mergers and acquisition would damage community banks and farmers.

OMAHA, Neb. (July 20, 2023) -- After declining below growth neutral in March, the overall Rural Mainstreet Index for July expanded above the threshold for a fourth straight month, according to the July 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 July slipped to 55.6 from June’s 56.9. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“After negative growth during the first quarter of this year, the Rural Mainstreet economy experienced positive but slow economic growth for the second quarter and has now started the third quarter on a healthy note,” said 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 rose to 64.6 from 59.3 in June and 56.3 in May. This was the 34th straight month that the index has advanced above 50.0.

Bankers reported that, on average, non-farm investors secured approximately 17.1% of farmland sales in their area over the past six months. This is almost double the 9.1% reported by bankers in April 2022 when the same question was asked.

Farm Equipment Sales: The farm equipment-sales index for July stood at a tepid 50.0, which was up from 48.3 in June. “Higher borrowing costs have begun to negatively impact purchases of farm equipment,” said Goss.

Rural Mainstreet Economy Expanding in June: Bankers Ranked Federal Reserve Rate Hikes as Greatest Challenge

6/19/2023

June 2023 Survey Results at a Glance:

June’s overall reading, the Rural Mainstreet Index (RMI), rose above growth neutral for the month to its highest level since May 2022.
Bank CEOs ranked Federal Reserve rate hikes as the greatest challenge in the 12 months ahead with rising bank regulations a distant second.
More than half of bankers reported that higher interest rates were impairing farm equipment purchases.
Farm equipment sales declined for only the third time in the past 31 months.
On average, bankers expect farm loan defaults to expand less than 1% over the next 12 months.
The region exported $13.3 billion of agriculture and livestock in 2022. This represented 26.5% growth from the previous year. Mexico was the chief destination, accounting for 55.2% of the region’s farm exports.

OMAHA, Neb. (June 15, 2023) -- After declining below growth neutral for March, the overall Rural Mainstreet Index for June expanded above the threshold for a third straight month to its highest level since May 2022, according to the June 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 June climbed to 56.9, the highest reading since May 2022 and up from last month’s 55.8. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“After negative growth during the first quarter of this year, the Rural Mainstreet economy experienced positive, but slow, economic growth for all of the second quarter. Only 3.4% of bankers reported a downturn in economic conditions for the month,” 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.

Rural Mainstreet Economy Goes Negative for March: Only 13.6% of Bankers Tightened Farm Credit Standards

3/20/2023

March 2023 Survey Results at a Glance:

After hovering around growth neutral for three straight months, the region’s overall economic reading slumped below the threshold to its lowest reading since October of last year.
Farmland prices have now advanced for 30 straight months.
After advancing by over 9% for 2022, bank CEOs expect farmland prices to expand by only 1% over the next 12 months.
Only 13.6% of bankers tightened credit standards for farm loans this year.
Approximately 87% of bankers recommend a Federal Reserve rate hike at its next meetings, March 21-22, with almost one-third supporting a 0.50% increase.
Bank savings deposits rose to a record level.

OMAHA, Neb. (March 16, 2023) -- After three straight months of readings slightly above growth neutral, the Creighton University Rural Mainstreet Index (RMI) fell below the growth neutral threshold, 50.0, according to the latest 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 March sank below the growth neutral threshold. The March index slumped to 45.6 from 50.1 in February. 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. Less than 1% of bankers reported improving economic conditions for the month with 92% indicating no change in economic conditions from February’s slow growth,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Farming and Ranching: The region’s farmland price index decreased to 63.0 from February’s 63.5. This was the 30th straight month that the index has advanced above 50.0.

Rural Mainstreet Economy Begins 2023 on Solid Note: Bank CEOs Rank Higher Input Prices as Greatest Farm Threat

1/23/2023

January 2023 Survey Results at a Glance:

After six consecutive months of below growth neutral readings, the region’s overall economic reading rose above the growth neutral threshold for a second straight month.
In terms of 2023 threats to farms in their area, bank CEOs ranked higher input prices as the greatest threat, followed by higher interest rates.
In terms of 2023 threats to rural bankers, bank CEOs ranked low loan demand as the greatest threat to rural banks, followed by rising regulatory costs.
Farmland prices continued to expand.
Despite higher interest rates, solid farm income pushed farm equipment sales higher.

OMAHA, Neb. (Jan. 19, 2023) -- After six straight months of below growth neutral readings, the Creighton University Rural Mainstreet Index (RMI) climbed above the growth neutral threshold, 50.0, for a second consecutive month, 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 in January rose above the growth neutral threshold. The January index climbed to 53.8 from 50.1 in December. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

FDIC Publishes Guidance on NSF Fees

9/30/2022

By J. Marc Ward - Fredrikson & Byron, P.A

If you charge a fee for non-sufficient funds (NSF) you should be aware of a recent guidance from the FDIC. This is doubly true if you charge multiple NSF fees for re-presentment of an item. And it becomes critical if you rapidly charge these fees without giving your customer sufficient time to cover the amount due.

FDIC guidance does not lay down hard and fast rules regarding NSF policies and practices. It does not define how much time a customer should have between re-presentments but only that it cannot be a “short period of time.”

The biggest challenge for banks that rely on core processors to assess NSF fees will be core processor cooperation. While the FDIC encourages banks to work with these third parties to reduce the risk of unfair or deceptive practices with regard to NSF fees, it has been our experience that data processors are not very cooperative in correcting these practices.