Pro Farmer Editors
According to the Federal Reserve Bank of Kansas City's "The Main Street Economist" newsletter, agricultural credit standards are tightening. The publication states: "Amid economic weakness
and a financial crisis, commercial banks have
tightened credit standards for various types of loans. While
agricultural borrowers may be concerned about credit
availability, agricultural lenders are equally concerned
about the creditworthiness of agricultural borrowers as the
farm economy weakens."
Jason Henderson, Vice President and Omaha Branch Executive, says agricultural banks are outperforming other commercial banks -- but they still saw their profits decline. "Despite questions regarding
credit availability, commercial banks are extending credit
to agricultural borrowers at lower interest rates. The soft
erosion in agricultural loan quality, however, has led
agricultural lenders to tighten credit standards and shift
more financial risk to borrowers," he writes.
Link to full article.