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

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

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

900
800

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

Ran~~l~~d·········

300

1985

1986

····················.....

....................
......

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

Average Actual and Desired Ratios
Percent
60

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

Banks Reporting (Percent)

Ratio

Less than 41%
41% to 50%
51%to 60%
61% to 70%
More than 70%

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

10.40
10.29
10.55
10.36

Average Rate (Percent)

Loan Type

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

Number of banks reporting.
Dollars per acre.
n.r.-No response or not enough responses.

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

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

3
4
5
6

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

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

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

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

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

Full text of Agricultural Survey : First Quarter 1992

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