Academic journal article ABA Banking Journal

Helping Ag Banks Keep Score

Academic journal article ABA Banking Journal

Helping Ag Banks Keep Score

Article excerpt

There was a time when a large percentage of our population was needed to grow America's food and fiber, and help feed and clothe the world. Today, less than 2% of the population are farmers or ranchers.

It's a little different at ABA this year. Your leadership's rural roots make it very much a part of American agriculture. I have the good fortune to run a ranch as well as a bank in Oklahoma. Chairman-elect Matt Williams is an ag banker in Nebraska. And Vice-Chairman Jeff Plagge runs a three-bank holding company in Iowa, whose institutions are active in ag banking. In that sense, we all have dirt under our fingernails. We all understand the independent, can-do spirit of American farmers and ranchers. And we all appreciate the importance of agriculture in the American economy.

Any way you look at it, ag banking is a vitally important part of ABA--and the American economy. That's why we created a new members-only tool--the Agricultural Banks Performance Scorecard--to help ag banks gain some perspective on their performance and how it compares with their peers.

Last year, the nation's 2,185 "farm banks" increased farm and ranch lending by 5.6%, according to ABA data. ABA has a formal definition for "farm banks." They are FDIC-insured institutions whose ratio of domestic agricultural loans to total domestic loans was greater than or equal to 14.61% in 2011.

Yet ag lending is so important that more than 5,500 banks--nearly 75% of all banks--reported ag loans on their books at the end of 2011. The portfolio totaled $130 billion. Banks continue to be the most important supplier of ag credit.

The scope of ag lending, and lenders' need to gain perspective on what they're doing, led ABA to create the scorecard. …

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