Despite the fact that ag banks have performed much better than their commercial counterparts, agricultural lenders are tightening credit standards. This is generally due to the overall weakness in the nation’s economy and uncertainty about the economic recovery.
According to a recent report on CattleNetwork, Jason Henderson, vice president and Omaha-branch executive, Federal Reserve Bank of Kansas City, says that while loan defaults remain low, delinquency rates, charge-offs, and risk ratings are rising, and continued deterioration in the agricultural economy could further erode the creditworthiness of agricultural borrowers.
Further weakness in agricultural loan quality could lead to additional tightening of lending standards and an increase in loan denials for agriculture, he adds.
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