Agriculture banks are outperforming their peers

That is, at least, better than their counterparts without an agriculture focus.

The Federal Reserve Bank in St. Louis this fall reported that agriculture banks, like Zions Agricultural Finance in Ames, Iowa, have outperformed community banks that depend on clients who are employed outside of the farm sector.  A bank is defined as an agriculture bank if the combined agricultural production and farmland loans account for 25 percent or more of its total loans.

In 2010, farm debt dropped with only a 2 percent increase over one year; in 2009 it was over 3.5 percent. That’s because agriculture banks hold fewer toxic assets than national chains, or even local banks. Even in the face of nationwide foreclosures and short sales, these banks that serve mostly farmers are protected from the weak commercial real estate sector.

The farmers are helping, too. Those that have money tied up in agriculture banks in 2010 repayed their loans at a higher rate than in years past, and asked for fewer extensions on their loans --  signs that might point to an increase in profit across the board.