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Community Banks Serve Rural America. Community banks are four times more likely to operate offices in rural counties and remain the only banking presence in over one-third of all U.S. counties. There are over 1100 agricultural banks (25 percent of portfolios in agriculture). While community banks hold 25 percent of total banking industry assets, they make nearly 90 percent of the banking industry’s farm loans.
In 2021, agricultural loans were extended by over 4,000 banks while 67 FCS institutions held agricultural loans. However, the FCS now holds 22 percent more farm loans than banks due to their rapid growth in tax-free real estate lending, which increased by 45 percent and $45 billion between 2015 to 2020, a growth rate over twice that of commercial banks. Congress should pass legislation similar to ECORA (H.R. 1977 / S. 2202) from the previous Congress (to be renamed the “Access to Credit for our Rural Economy Act of 2023” (ACRE) in the 118th Congress) to address this disparity.
Farm Credit System. As the only GSE competing directly against private lenders the FCS was granted tax and funding advantages by Congress to serve bona-fidefarmers and ranchers and a narrow group of farm-related businesses that provide on-farm services.
Through its regulator, the FCS has sought non-farm lending opportunities through “investment bonds” even though such lending exceeds the constraints of the Farm Credit Act. The FCS also seeks blanket authority to approve their “investments” in lieu of obtaining their regulator’s approval. ICBA opposes granting the FCS’s blanket approval authorities.
Congress should reform and refocus the FCS’s authorities in order to limit FCS’s non-farm and non-statutory lending.
March 22, 2022
Washington, D.C. (March 22, 2022)—The Independent Community Bankers of America® (ICBA) and the nation’s community banks celebrate America’s local farmers, ranchers and agricultural enterprises during National Ag Day in honor of their contributions to provide safe, abundant, and affordable products that support our country’s food supply and strengthen local economies nationwide.
“Community banks have faithfully served the agriculture community, providing the lion’s share of funding, to ensure America’s land stewards have the financial support they need to remain viable and vibrant,” ICBA President and CEO Rebeca Romero Rainey said. “The agriculture sector is critical to our nation’s health and prosperity and the nation’s community banks will continue to be a partner in the success of our farmers and ranchers—in good years and lean years—as they have for more than a century.”
Community banks under $10 billion in assets provide 80 percent of all financing to agriculture from the banking sector and are often the catalysts for new and expanded business opportunities within their communities. In fact, community banks provide approximately $155 billion in agriculture loans.
National Ag Day was founded in 1973 to tell the story of American agriculture and remind citizens of agriculture’s vital role in our society. ICBA offers the following facts about the agriculture industry:
“Community banks are proud to finance our nation's farmers and ranchers and look forward to building on this tradition of service—whenever and wherever called upon,” said Romero Rainey.
The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.
With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.