Full text of Agricultural Survey : First Quarter 1992
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STATISTICAL F E D E R A L RELEASE R E S E R V E B A N K 0 F D A L L A S Quarterly Survey of ·cultural Credit Conditions in the Eleventh Federal Reserve District First Quarter 1992 Lower Rates Increase Lending Agricultural Credit Conditions at Survey Banks in the Eleventh District Demand to r Loans The Quarterly Survey ofAgricultural Credit Conditions indicates that both interest rates and farm Quarterly Survey of Agricultural Credit Conditions is compiled from a survey of Eleventh District agricultural bankers. This publication is prepared by the Federal Reserve Bank of Dallas and is available land values continued to decline slowly in the first quarter of 1992. The interest rates that banks charge on most types of farm loans continued to decline during the first quarter, falling between 20 and 25 basis points on all types of loans. Banks reported that the average cost of funds also declined by 56 basis points. Over this same period, the prime rate fell 71 basis points and the national average rate paid on short-term certificates of deposit declined as much as 80 basis points. Bank profits should rise as the difference between loan rates and deposit rates increases. These improved financial conditions will enable banks to extend credit to worthy borrowers. without charge by writing to Percent 100 80 60 40 20 0 1986 1987 1989 1988 Less • Same 1990 • 1991 1992 Greater (Continued on page 4) the Research Department, Availabi lity of Funds Federal Reserve Bank of Dallas, Station K, Dallas, Percent District Land Values 100 1987 dollars per acre Texas 75222, or by telephoning (214) 220-5127. 1.000 80 900 800 60 For questions regarding information in the release, contact Fiona Sigalla, (214) 220-5129, Kevin Yeats, (214) 220-5116 or Kelly Whealan, (214) 700 600 500 400 •·•·•••.•.....•·•• ••... Irrigated 20 Ran~~l~~d········· 300 1985 1986 40 ····················..... .................... ...... 1987 ...... . ............ . ........... 1988 1989 ................ ...... 1990 1991 ~ 1986 1992 1987 t988 Less 1989 • Same 1990 • 1991 1992 Greater 220.5124. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) STATISTICAL RELEASE Agricultural Credit Conditions at Survey Banks in the Eleventh District Rate of Loan Repayment Percent 100 Loan-Deposit Ratios at Survey Banks 80 Average Actual and Desired Ratios Percent 60 40 20 0 1986 1987 1988 Less 1989 • Same 1990 1991 1992 Actual Ratio • Desired Ratio • • Greater 1991:1 1991:2 1991:3 1991:4 1992:1 Renewals or Extensions of Loans Percent 100 DISTRIBUTION OF LOAN-DEPOSIT RATIOS 80 Banks Reporting (Percent) 60 Ratio 40 Less than 41% 41% to 50% 51%to 60% 61% to 70% More than 70% 20 0 1986 1987 1988 Less 1989 • same 1990 1991 Apr. 1 1991 J u l. 1 Oct. 1 45 25 18 8 4 44 22 22 9 3 43 23 17 10 7 1992 Apr. 1 Jan. 1 48 21 16 9 6 51 20 15 8 6 1992 • Greater Average Rate (Percent) Amount of Collateral Loan Type Apr. 1 1991 Jul. 1 Oct. 1 1992 Jan. 1 Apr. 1 11.81 12.20 12.22 11.91 11.79 11.86 11.99 11.74 11.47 11.57 11.57 11.48 10.58 10.65 10.78 10.71 Percent Feeder cattle Other farm operating Intermediate term Long-term farm real estate 100 80 10.40 10.29 10.55 10.36 60 Average Rate (Percent) 40 Loan Type 20 0 1986 1987 1988 Less 1989 • same 1990 • Greater 1991 1992 Feeder cattle Other farm operating Intermediate term Long-term farm real estate Apr. 1 1991 Jul. 1 Oct. 1 1992 Apr. 1 Jan. 1 11.77 11.86 11.87 11.55 11.43 11.56 11.52 11.23 10.91 11.15 11.12 10.89 9.89 10.03 9.95 9.76 9.71 9.88 9.83 9.54 STATISTICAL Rural Real Estate Values RELEASE CROPLANO-DRYLAND April 1, 1992 Region 1 Number of banks reporting. Dollars per acre. n.r.-No response or not enough responses. 2 NOTE: Regional land values based on a small number of reporting banks should be used with caution. All figures are preliminary. Eleventh Federal Reserve District Average Banks' Value 2 First Quarter 1992 Percent Changes in Values from Previous Previous Quarter Year DISTRICT 183 526 -1.8 -2.8 TEXAS Northern High Plains Southern High Plains Northern Low Plains Southern Low Plains Cross Timbers North Central Texas East Texas Central Texas Coastal Texas South Texas Trans-Pecos and Edwards Plateau 170 18 24 13 13 16 23 12 22 11 5 521 256 341 284 415 417 677 606 897 707 547 -2.2 -.8 - 1.9 -2.1 -2.3 -4.7 -1.4 -4.7 2.9 -6.6 - 1.7 -3.1 -1.8 -2.4 -9.3 -10.3 -5.3 .1 -3.7 5.1 -B.6 -15.4 13 573 -3.5 3.0 7 6 630 211 2.3 1.6 .5 -4.0 Northern Louisiana Southern New Mexico CROPLAND-IRRIGATED Region 12 NEW 2 3 4 5 6 7 MEXICO Northern High Plains Southern High Plains Northern Low Plains Southern Low Plains Cross Timbers North Central Texas East Texas 8 Central Texas 9 Coastal Texas 10 South Texas 11 Trans-Pecos and Edwards Plateau 12 Southern New Mexico 13 Northern Louisiana Average Value2 Banks' First Quarter 1992 Percent Changes in Values from Previous Previous Quarter Year DISTRICT 111 638 -3.5 -B.6 TEXAS Northern High Plains Southern High Plains Northern Low Plains Southern Low Plains Cross Timbers North Central Texas East Texas Central Texas Coastal Texas South Texas Trans-Pecos and Edwards Plateau 95 18 23 10 5 4 n.r. n.r. 10 6 5 608 458 566 381 626 652 n.r. n.r. 1178 742 868 -3.8 -4.3 -.6 -3.4 -1.2 -3.8 n.r. n.r. .1 -13.4 -.2 -6.6 -9.4 -2.2 -15.6 1.2 1.2 n.r. n.r. 3.1 -3.4 -17.2 8 894 -3.5 8.4 7 9 803 873 -.3 -2.8 -4.8 -7.0 Northern Louisiana Southern New Mexico RANCHLAND Region Average Banks' Value2 First Quarter 1992 Percent Changes in Values from Previous Previous Quarter Year DISTRICT 187 292 -.8 -1.4 TEXAS Northern High Plains Southern High Plains Northern Low Plains Southern Low Plains Cross Timbers North Central Texas East Texas Central Texas Coastal Texas South Texas Trans-Pecos and Edwards Plateau 177 17 16 14 13 18 23 21 23 10 4 359 147 137 145 235 335 570 657 801 513 437 -1.0 -.5 -3.9 -5.7 -.3 -3.7 -.9 - .3 1.6 -2.2 .6 0 -1.3 2.6 -13.8 5.8 4.0 -1.9 1.3 2.3 5.6 -B.6 18 296 -2.1 2.0 4 6 477 96 9.7 1.4 30.0 -14.8 Northern Louisiana Southern New Mexico STATISTICAL First-Quarter Comments District bankers were asked for additional comments concerning agricultural land values or credit conditions. These remarks reflect the opinions of individual bankers, not the Federal Reserve Bank of Dallas. Comments were edited. Region 1-Northem High Plains Poor fall harvest conditions have caused a delay in repayment of operating loans. Projections of operating farm loans look much better than in 1991. The amount of renewals needed is still unknown, as government disaster payments have not been finalized . The wheat crop looks excellent. Harvest acres for wheat will increase due to weather conditions and expectations of better prices. Wet and muddy conditions have increased the cost of weight gain, causing considerable losses on cattle. Feeder cattle are at a break-even point due to weight gain costs and price decreases. Region 2-Southem High Plains A large percentage of our agricultural operating loans will not pay out this year. Lower RateS- rcontinuedfrom page 1J Banks also are reporting excessive liquidity. To reduce deposits, banks lower deposit interest rates more rapidly than loan rates. When deposit growth exceeds loan growth, bank managers lower deposit rates to induce depositors to withdraw their funds. This alternative may be better than investing excess funds in low-yielding investment securities. Bankers are optimistic about farmers' ability to service their debt on new and outstanding loans. One-third of the surveyed bankers reported an increase in loan demand in the first quarter of 1992. RELEASE Many of these loans were renewed and extended. We are attempting to obtain Farmers Home Administration (FmHA) assistance with many of our farm customers; however, the FmHA application process is slow and is delaying our progress, thus causing severe hardships on our borrowers. Region 3-Northem Low Plains Adequate production and an early freeze led to poor quality and prices for cotton and peanuts. These conditions created a large number of potential carryovers. Good winter moisture has improved an otherwise very bleak outlook. Region 4-Southem Low Plains Continued wet weather during the past quarter has decreased the demand for new loans and the rate of repayment. The need for renewals and extensions has increased. Credit will continue to become more difficult to obtain as long as regulators continue to overburden community banks with new regulations. Region 6--North Central Texas Abnormal moisture conditions may cause some serious problems in the future, as farmers are having difficulty planting com and milo. Some may have to plant cotton, which will increase demand for This level of loan demand, while about the same percentage as a year ago, is higher than loan demand in the three previous quarterly surveys. The portion of respondents facing lower demand for loans declined to 18 percent. The remaining 49 percent stated that demand was unchanged. Thirty-one percent of bankers surveyed expect renewals or extensions to increase, while only 13 percent expect extensions to decrease. The value of all types of farm land within the District also drifted downward. Dry land values declined almost 2 percent during the first quarter of 1992. Irrigated land values declined by about 3.5 percent, while ranch land values fell 0.8 percent. operating loans. Weather also delayed or prevented altogether the planting of fall wheat. We expect a short wheat crop and possibly higher prices. Region 8-Central Texas Loan delinquencies are down from one year ago, which helps improve credit conditions. Another good haying season is expected for 1992. Farm and range conditions are excellent. Ranchers are restocking their herds. Deteriorating conditions surrounding the broiler business are causing serious financial problems for several borrowers. Region 9-Coastal Texas The recent court decision concerning the $60,000 tools-of-trade exemption could have a serious impact in farm lending to families that meet the minimum net worth requirement. Region 10-South Texas Farmers are busy planting spring crops. Planting time is late this year primarily because of extensive rainfall in our area during the early months of 1992. Farmers will have good sub-moisture this year. Dallas Fed Moving to New Location The Federal Reserve Bank of Dallas is pleased to announce that it is moving to its new headquarters building. The move will begin May 29 and continue through July. Because departments are scheduled to move at different times, please call the old departmental number before trying the new main number listed below. New address: 2200 N. Pearl Street, Dallas, Texas 75201 Mailing address: Station K, Dallas, Texas 75222 New main phone number: (214) 922-6000 Toll-free number: (800) 333-4460 New main fax number: (214) 922-6500