View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

STATISTICAL
F

E

D

E

R

A

L

RELEASE

B A N K

R E S E R V E

0

F

D

A

L

L

A

S

Quarterly Survey of
·cultural
Credit Conditions in the
Eleventh Federal Reserve District

..

I

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
i>f Dallas and is available

Ag Banks' Recovery
Leads to Profits

Agricultural Credit
Conditions at Survey Banks
in the Eleventh District

Agricultural banks, banks that specialize in or
have a substantial amount of agricultural loans,
increased their profits in 1992 as a result of enhanced
interest margins and improved asset quality. Quarterly reports revealed that the 498 agricultural banks
in the Eleventh District earned $1.4 billion in profits
in 1992, up 60 percent from the $900 million level
reached in 1991. Their total nonperforming loans fell
by $450 million during 1992.
Profits should remain strong in 1993, given the
robust interest-rate spreads between loans and deposits.
According to the Dallas Fed's Quarterly Survey of
Agricultural Credit Conditions, over the past year
spreads widened by 29 basis points for fixed-rate
loans and 49 basis points for variable rate loans. (One
hundred basis points equal one percentage point.)

Demand for Loans

without charge by writing to

.

••

Percent
100

80

60

40

20

1988

1989
Less

1990

Same

1991

1992

1993

• Greater

(Continued on page 4)

the Research Department,

Funds Available for Additional Lending

Federal Reserve Bank of
Dallas, P.O. Box 655906,

Percent

District Land Valu es

100

1987 dollars per acre

Dallas, TX 75265-5906, or by
800
80

telephoning (214) 922-5254.
700

60

For questions regarding

600

information in the release,

500

40

contact Kevin Yeats,

20

400

....

(214) 922-5167, or Karen
Gee, (214) 922-5178.

300

.... ....
Ranchland - - - - ......

1986

1987

1988

1989

1990

______
1991

1992

0
1987

...,,.

1993

1988

1989
Less

1990

Same

1991

1992

• Greater

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 Beventh District
Rate of Loan Repayment
Percent
100

Loan-Deposit Ratios at Survey Banks

80

Average Actual and Desired Ratios
Percent
60

40

55

20

50
45
1988

1989

Less

1990

•Same

1991

1992

1993

• Greater

•

Actual Ratio

•

Desired Ratio

40

35
1992:1

1992:2

1992:3

1992:4

1993:1

Renewals or Extensions of Loans
Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS

80

Banks Reporting (Percent)

60

Ratio

Apr. 1

1992
Jul. 1

Oct. 1

51
20
15
8
6

49
21
21
8
2

46
23
17
10
5

1993
Apr. 1
Jan. 1

40

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

20

0
1987

1988

1989

Less

1990

•same

1991

1992

1993

50
24
17
6
3

54
21
15
6
3

INTEREST RATES-FIXED

• Greater

Average Rate (Percent)

Amount of Collateral

Loan Type

Apr. 1

1992
Jul. 1

Oct. 1

10.40
10.29
10.55
10.36

10.15
10.20
10.38
10.40

9.79
9.88
9.99
10.01

Apr. 1

1992
Jul. 1

Oct. 1

9.71
9.88
9.83
9.54

9.63
9.77
9.65
9.35

9.03
9.28
9.27
9.11

1993
Jan. 1
Apr. 1

Percent

Feeder cattle
Other farm operating
Intermediate term
Long-term farm real estate

100

80

9.71
9.77
9.99
9.89

9.53
9.66
9.67
9.48

INTEREST RATES-VARIABLE

60

Average Rate (Percent)

40

Loan Type

1993
Apr. 1
Jan. 1

20

0
1987

1988

1989

Less

1990

•same

1991

• Greater

1992

1993

Feeder cattle
Other farm operating
Intermediate term
Long-term farm real estate

9.16
9.25
9.21
9.10

9.07
9.20
9.17
8.99

STATISTICAL

Rural Real Estate Values

RELEASE

CROPLAND-DRYLAND

April 1, 1993
Region

1

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

2

NOTE : Reg ional land values based on a small
number of reporting banks should be used
with caution.
All figures are preliminary.

Average
Value 2
First-Quarter 199 3
Banks 1

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

198

530

.7

.2

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

182
24
24
12
13
19
27
11
24
10
7

526
265
345
307
396
432
671
627
841
751
573

.9
3.3
.5
3.6
-4.6
-.6
.9
1.5
-1.l
3.0
2.2

.3
3.1
.5
4.4
-5.1
.7
.2
1.4
-6.4
2.0
6.6

11

593

4.2

7.7

Northern Louisiana
Southern New Mexico

12
4

619
240

-1.4
-4.6

-1.3
11.1

Eleventh Federal Reserve District
CROPLAND-IRRIGATED

Region

12
NEW

1

MEXICO

Northern High Plains

2 Southern High Plains
3
4
5

6
7

Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas

Central Texas
Coastal Texas
South Texas
Trans-Pecos and Edwards Plateau
12 Southern New Mexico
13 Northern Louisiana

8
9
10
11

Average
Banks 1
Value2
First-Quarter 1993

P ercent Changes
in Values from
Previou s Previou s
Quarter
Year

DISTRICT

120

681

1.1

6.9

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

105
23
24
8
5
8
n.r.
3
11
n.r.
n.r.

652
491
559
426
610
638
n.r.
860
1164
n.r.
n.r.

2.6
.8
1.6
4.3
.4
-4.4
n.r.
-1.0
-.4
n.r.
n.r.

8.7
6.1
1.0
.8
-1.7
-2.8
n.r.
-1.3
-2.5
n.r.
n.r.

10

782

1.9

-6.2

Northern Louisiana
Southern New Mexico

10
6

835
1033

.5
-8.6

3.4
9.4

RANCHLAND

Region

Average
Value 2
Banks 1
First-Quarter 1993

Percent Changes
in Values from
Previou s Previou s
Quarter
Year

DISTRICT

202

292

1.5

-1.3

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

188
22
18
n.r.
13
19
28
17
25
9
7

363
165
140
n.r.
232
345
581
619
759
467
447

2.0
4.4
1.4
n.r.
.7
.2
1.7
1.1
0
1.9
7.5

.6
9.2
2.9
n.r.
-1.2
5.8
2.4
-2.8
-4.4
-7.7
2.7

18

307

.5

-.4

7
7

374
88

.1
-4.0

-14.6
-18.8

Northern Louisiana
Southern New Mexico

STATISTICAL

First-Quarter
Comments

RELEASE

ratio. Increased irrigational efficiency and land
taken out of production by the Crop Reduction
Program are two reasons agricultural land
values have remained steady and shown signs
of increasing.
Region 5-Cross Timbers

District bankers were asked for any additional
comments concerning agricultural land values
or credit conditions. Because of space constraints, these comments were edited.
Region 1- Northem High Plains

Commodity Credit Corporation payments
have been greater than expected.
The cattle market looks good; prices
remain excellent. Moisture conditions have
been excellent for wheat and fall crops. Environmental regulations could pose a threat to the
feedlot industry.

Cattle prices are excellent. Wheat crops
will be fed to livestock instead of harvested.

A milk price decrease has created a cashflow shortage for area dairy operators. Small
grain crops look good because of adequate
rainfall. Forage crops are being planted as
weather permits.
FmHA will no longer subordinate its
claim on loans for livestock or farm equipment
purchases.
Region 8-Central Texas

Since last year, farm balance sheets have
become much stronger and more liquid. Asset
quality has improved over last year. Most farm
borrowers are in much better financial condition than during a year ago, largely because
of Agricultural Stabilization and Conservation
Service disaster and deficiency payments.
Marginal irrigated land is productive and
operationally efficient because of the low
pressure pivot sprinkler systems that have
proved effective. What was once a 60:40 ratio
(dryland to irrigated) has now become a 40:60

a conference sponsored b;•
The Federal Reserve Bank ofDallas
and Southern Methodist Universi(p

Region 6-North Central Texas

Region 2-Southem High Plains

-

I

Reclaiming the Future
Imperatives for Banking
in the 1990s

Demand for farm and ranch loans is increasing. Demand for equipment loans is
strong. Demand for cow/calf and heifer loans
is strong.
Rain in the area is good.
Region 9-Coastal Texas
If rice prices remain low, many farmers
may be forced to shut down. Consequently,
some of these farmers had loan carryovers
from their crop loans. If 1993 results in more
loan carryovers, banks may not consider
offering this type of loan.

Helping bankers take the offensive, rather
than continue defensive measures, is the
purpose of this conference. The agenda
is designed to offer solutions for day-today problems as well as insight into how
each institution can reclaim the promise
of its future.
Speakers Include:

Alan Greenspan
Chairman, Board of Governors
of the Federal Reserve System
Eugene A. Miller
President and COO, Comerica, Inc.
James). McDermott. Jr.
President, Keefe, Bruyette & Woods,
Inc.
Merrie Spaeth
President, Spaeth Communications,
Inc.
Date: Wednesday, May 26, 1993

Ag Banks' Recovery
Leads to Profits
(Continued from page 1)
Respondents' experiences with credit
demands during the first quarter were
mixed. During the first quarter, loan demand
was sluggish in the four plains regions of
Texas, where about 31 percent of the bankers
reported a decrease in the demand for loans
and 19 percent experienced an increase.
Demand was stronger in East and Central
Texas, where 38 percent of respondents
reported an increase and 16 percent reported
a decline. (See the map on page 3.)

Bankers' outlook for the demand for
agricultural loans was stable overall but
strong for certain types of loans. About one.fifth of the respondents expected non-realestate farm loans and operating loans to
increase. Most bankers expected real estate
loans to remain stable.
Land values stabilized across most of the
Eleventh District during the first quarter.
Reported average irrigated land values increased over the past year. Dryland and
ranchland values, which had been declining
over the past seven years, were flat in the
recent quarters.
-Kevin Yeats

Time: Registration 7:00 a.m.
Conference Begins 8:00 a.m.
Adjournment 4: 15 p.m.
Place: Federal Reserve Bank of Dallas

2200 . Pearl Street
Dallas, Texas 75201
Fee:

$165 per person

For more information call:

Tara Barrett (214) 922-5251
Federal Reserve Bank of Dallas