Farm Lending Stabilizes, but Bank Liquidity Tightening

Lending at agricultural banks appeared to stabilize in the third quarter of 2017, but risks in the sector have remained alongside a persistently weak agricultural economy. After declining in the winter months, the volume of loans used to finance non-real estate farm purchases rebounded in the third quarter to a level similar to a year ago. Despite the rebound in lending activity, however, risk ratings on new farm loans have increased somewhat, interest rates have edged higher and loan-to-deposit ratios—a key measure of bank liquidity—also have increased.