US banks book decade-high agriculture loans in Q4 2024

Agriculture loans at US banks and thrifts hit a decade-high of more than $205 billion in the fourth quarter of 2024 as optimism in the sector peaked following the US election.

Loans totaled $205.19 billion in the period, the highest level since at least 2012, according to S&P Global Market Intelligence data.

Agricultural production loans — or those for funding agricultural production including crops and livestock — were $86.62 billion, up from $85.02 billion in the previous quarter and $82.49 billion a year ago.

Farm loans — those secured for farmlands and improvements on them through mortgages and liens — were $118.57 billion, up from $117.92 billion in the third quarter and $116.67 billion a year before.

Sectorwide, the delinquency rate on farm loans ticked up to 1.09% from 1.06% in the previous quarter and from 0.92% a year ago.

For agricultural production loans, delinquency fell sequentially to 1.08% from 1.17%, but was up from 0.71% a year earlier.

Trump win boosts farmer optimism

Farmer sentiment reached its highest level since May 2021, as optimism about a more favorable regulatory and tax environment for agriculture grew following the US election, the Ag Economy Barometer survey done by CME Group Inc. and Purdue University in November 2024 found.

This optimism remained at the end of 2024, buoyed by "expectations for a more favorable policy environment over the next five years," James Mintert, director of Purdue University's Center for Commercial Agriculture, said in the December 2024 survey.

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Agriculture loan delinquencies at US banks

Among US banks and thrifts with at least $50 million in farm loans extended as of Dec. 31, 2024, Santa Rosa, California-headquartered Summit State Bank reported the highest delinquency rate of 33.27% in the fourth quarter of 2024. The bank's farm loan balance decreased to $76.5 million from $77.7 million a year ago.

Augusta, Wisconsin-based Unity Bank had the second-highest delinquency rate in farm loans, at 17.31%, followed by FB Financial Corp. from Nashville, Tennessee, at 13.18%.

For agricultural production loans, Porterville, California-based Sierra Bancorp posted the highest delinquency rate, at 18.17%. This was the only double-digit ratio booked by US banks and thrifts that lent at least $50 million in agricultural production loans as of Dec. 31, 2024. Other banks in the top 10 of the list booked single-digit delinquency rates ranging from 5.20% to 8.52%, the latter at Minneapolis-based U.S. Bancorp.

Top agriculture lenders

Reno, Nev.-based John Deere Capital Corp. remained the biggest lender to the US agriculture sector in the final three months of 2024. Agricultural production accounted for more than half of its gross loan portfolio — $27.11 billion, up from $26.13 billion a year ago. As in the previous year, the bank did not extend any farm loans.

Bank of America Corp. was in distant second place, with an agriculture loan balance of $5.00 billion. This included $3.07 billion in agricultural production loans and $1.93 billion in farm loans.

Bank of America's loans to the agriculture sector accounted for just 0.4% of its gross loans in the fourth quarter of 2024.