LOUISVILLE, Ky. — The banking industry continued to be the primary source for agricultural credit during 2011, according to the American Bankers Assoc. (ABA) annual Farm Bank Performance Report.

With more than half of all outstanding farm loans issued, the nation’s 2,185 farm banks – defined by ABA as FDIC-insured (Federal Deposit Insurance Corp.) banks whose ratio of domestic farm loans were greater than or equal to 14.61 percent last year – increased farm and ranch lending by 5.6 percent to $3.8 billion, the report reflected.

“Farm banks posted solid performance in 2011, reflecting the overall strength of the agricultural economy,” said John Blanchfield, senior vice president and director of ABA’s Center for Agricultural & Rural Banking, in a recent press release. “The growth in farm loans shows banks continue to meet the credit needs of both large and small farms and remain the most important supplier of agricultural credit.”

In the Corn Belt region, 641 farm banks increased farm loans by 6.6 percent and employment by 2.9 percent, according to the report.

“As vital, taxpaying members of their communities, farm banks continue to provide opportunities for rural Americans to finance farms, ranches, businesses and homes, while adding jobs and supporting the agricultural economy,” noted Blanchfield.

Nationally, farm banks added 6,327 jobs in rural America since 2007, a 7.8 percent increase during the span. The industry employed almost 87,000 workers at the end of 2011, the report stated.

The Farm Credit System (FCS) reported similar trends in its annual report, issued on Feb. 17, citing an increase in combined net income of $45 million, to $3.94 billion for the year ended Dec. 31, 2011. A net income of $3.495 billion was recorded during 2010.

The increase trickled down to regional FCS offices, including Farm Credit Services of Mid-America, an ag lending cooperative with more than 95,000 customers throughout Indiana, Kentucky, Ohio and Tennessee. The lender reported earnings in 2011 of $278.6 million, a 30.2 percent increase over 2010, along with owned and managed assets of $18.4 billion, 5 percent more than in 2010.

“The growth trend is continuing, especially in mortgage loan growth,” said Paul Bruce, senior vice president of finance and chief financial officer for FCS of Mid America. “We attribute that to two things: a very low rate environment, as well as very profitable years for the grain industry.”

Exciting new programs such as FCS’ rate conversion program, along with customary low, long-term fixed rates, are keeping agents busy with new and repeat customers so far during 2012, according to Bruce.

“For the first quarter, from a volume standpoint, our mortgage volume has grown about $370 million since the beginning of the year,” he said. “Normally during this early part of the year we would experience some growth, but not nearly this strong.

“We’re seeing a lot of new transactions with farmers buying property and taking advantage of the opportunity to make great income due to grain prices, as well as taking advantage of our low fixed-interest rates.”

FCS of Mid-America converted more than 24,000 customers’ loans to lower rates in 2011, which will save those customers some $94 million over the next three years, according to the company.

As of last Friday, more than 12,600 FCS Mid-America customers had opted for the Farm Credit Loan Conversion Program, paying about $350 apiece for the one-time opportunity to lower their interest rates. The program is just another way for the association to provide value to rural communities struggling through the prolonged U.S. economic downturn, according to Bruce.

“This is the strongest first quarter we’ve had since 2008, which is when the financial industry had its collapse. The farm economy has weathered what the rest of the economy didn’t weather quite so well,” he said.

“The (FCS) achieved a high level of earnings in 2011, reflecting, in part, the continued robust agricultural environment,” agreed Jamie B. Stewart Jr., president and CEO of the Federal Farm Credit Banks Funding Corp.

FCS plans to increase its workers to meet marketplace demands, improve customer service and prepare for planned retirements in the next five years. Hiring will remain a crucial priority in 2012, according to company officials. Bruce indicated his Louisville-based office plans to add up to 120 new hires in 2012.

“Because of the growth we’ve experienced over the last few years, there is definitely potential for employment within the FCS for those with an agricultural education background,” he said.

Read the 2011 Farm Bank Performance Report at www.aba.com

The 2011 FCS financial report may be read at www.farmcreditnetwork.com/ newsroom/press-releases/view/804