Congratulations to Tom Olson, president of the Lisco State Bank in the Western Nebraska community of about 100 people, who will be honored with the American Banker’s Association’s Bruning Award at the annual North American Agricultural Lenders Conference Nov. 7-10 in Omaha.
The award recognizes a banker who who has made significant contributions to agricultural banking over the course of their career and lifetime. That certainly describes Olson, who began working in 1960 at the bank his father started. Today, Olson still works at that bank, in addition to other banks he operates in Nebraska and Colorado. If you drive by the bank in Lisco anytime between 6:30 in the morning and 7 at night, you are likely to catch him in the office.
We featured Tom Olson on the cover of NorthWestern Financial Review in 1987, when he became president of the Independent Community Bankers of America. He has long been active in the industry, always advocating for community banks, particularly those located in rural areas. Mr. Olson is very very wise and I always look forward to visiting with him whenever I go to one of the industry meetings in Nebraska. I am always impressed by bankers who remain engaged in the industry long after they could have retired. The industry needs experienced elders, and Mr. Olson is among a select group of bankers who is filling that role.
The March 1 edition of NorthWestern Financial Review includes an ag-industry outlook featuring analysis from Prof. Ernie Goss of Creighton University, Jeff Wolfgram of Dakota MAC and Dave Cebulla of UMACC and Pine Country Bank. One indication of relative stability in the ag economy is that Midwestern farmland values have held up pretty well through the recession; Goss and Wolfgram both emphasize this point in our story.
Last week the Chicago Fed released new figures on seventh district farmland values. The district as a whole posted a 2 percent increase for 2009, driven by gains of 7 percent in Indiana, 4 percent in Iowa and 2 percent in Illinois. Wisconsin farmland values fell by 1 percent, and Michigan values declined by 6 percent.
Chicago, Kansas City, Minneapolis and St. Louis were among the Federal Reserve districts reporting modest improvements in economic conditions in the Fed’s latest Beige Book. Agricultural outlook improved on higher crop prices, but wet weather delayed harvests and increased costs, e.g., for drying corn before storage or shipment. Energy production increased slightly in Midwestern districts in response to higher crude and natural gas prices. Chicago noted that “higher oil prices assisted the ethanol industry in generating enough income to cover costs.”
Demand for consumer loans was largely unchanged or slightly higher in the Midwestern districts, but Kansas City and St. Louis reported weaker demand for C&I and CRE loans. Chicago “reported a marginal increase in C&I loan demand, however most of this borrowing was going to refinance or pay off existing debt. Contacts also indicated greater interest in mergers and acquisitions and distressed real estate investment.”
Leslie Anderson, president and CEO of a $53-million ag bank in Nebraska, told the House Financial Services Committee that CRA should cover all depository institutions, specifically credit unions. Anderson also proposed:
“eliminating the ‘intermediate small’ bank category from the evaluation process and suggested that calls for a more narrow definition of community development risk complicating the evaluation process and deterring banks from maximiziing CRA opportunities.”
Anderson testified for the American Bankers Association, which posted her testimony.
Some Midwest-specific details on banking and agriculture from yesterday’s Beige Book release:
Chicago reported that credit conditions and availability had improved, as had credit quality “apart from home equity and commercial real estate.” Kansas City and St. Louis were among the Fed districts that reported further weakening in loan demand across most categories. Kansas City also cited declines in mortgage activity and C&I lending. Combined with details from other districts the Fed concluded that loan demand was generally weak and that credit standards remained tight.
Regarding CRE, the Fed said “demand for space remained weak and…nonresidential construction-related activity continued to decline.”
Chicago and Minneapolis reported modest improvements in public construction.
Cold weather, crop disease and drought restricted corn, cotton and soybean production in Chicago and Minneapolis. Weather conditions were favorable for crops in Kansas City and St. Louis, but Kansas City said drought and weak market conditions “were significantly affecting” livestock industries. Lower pork prices hurt hog farmers in the Kansas City region.
Overall, Chicago, Kansas City and Minneapolis were among the districts that described economic activity as stable or showing signs of stabilization. St. Louis said the pace of decline seemed to be moderating.
The Minneapolis Fed prepared today’s Beige Book, which found that economic activity weakened in the Midwest as it did in all Federal Reserve districts.
Banking was mixed, with the Chicago district reporting some improvement in credit conditions and liquidity, stabilization in credit line use and a reduction in deposit loss, which is attributed to the increase in FDIC insurance. The St. Louis district reported that credit standards for most loans were either unchanged or slightly tighter and demand had decreased somewhat. About half the respondents from the Kansas City district reported increases in deposits, but the decline in loan demand “was substantially greater” than in the Fed’s October report. Agricultural loans were an exception.
The Minneapolis district expects agricultural income and spending to rise in the fourth quarter, and “production is expected to increase for corn and remain level for soybeans from last year’s bumper crop.” The Chicago district reported that much of the corn and soybean harvest had been “sold ahead at profitable prices.” Most states were ahead of schedule with winter wheat planting in the St. Louis district, and 90 percent of the crop was rated fair or better. The Kansas City district reported that “above average corn and soybean yields, especially in Nebraska and Kansas, helped support farm incomes.” Farm loan demand increased in the district, but collateral requirements are rising and credit conditions are expected to tighten over the next few months.
