I have just received a copy of the report cited below, as well as a copy of
the report for the state of Maryland. Available on the web
at http://www.sba.gov/ADVO/lendinginus2.html. You might also want to see
http://www.sbaonline.sba.gov/advo/
Paper and microfiche copies of all Advocacy reports are also
available for purchase from the National Technical Information Service,
(703) 605-6000.
Comments and technical questions may be directed to Dr. Robert Berney, SBA's
chief economist, or to Dr.
Charles Ou, 409 Third Street, S.W., Washington, D.C. 20416, (202) 205-6930;
fax (202) 205-6928.
Office of Advocacy
U.S. Small Business Administration
NEWSRELEASE
SBA Number: 99-03 ADVO
For Release: March 9, 1999
Contact: Kathryn Tobias (202)205-6938
SMALL FARM LENDERS RATED STATE BY STATE; LARGE BHCS ALSO RATED
FOR "SMALL FARM FRIENDLINESS"
WASHINGTON - Small farms are receiving more loan dollars from banks, but
fewer loans, according to
a new state-by-state study. Small Farm Lending in the United States,
published by the Office of Advocacy
of the U.S. Small Business Administration, ranks the "small farm
friendliness" of banks within states
and offers an overview of small farm lending nationwide. A companion study,
Small Farm Lending by
Bank Holding Companies, for the first time rates the top 57
multi-billion-dollar bank holding companies
(BHCs) for their lending to small farms.
Both studies rely on data from banks' June 1998 "call reports" to banking
regulators, and both are
designed to help small farmers identify the banks most likely to meet their
credit needs.
The state-by-state study finds:
While the stock of small farm loans under $250,000 increased by 3.9
percent, from $48.4 billion in
June 1997 to $50.3 billion in June 1998, the number of such loans
declined by 4.6 percent. Either
the average loan size is rising or many small loans have been repaid.
The smallest banks-those with less than $100 million in assets-have the
largest share of small
farm loan dollars as a percentage of total assets (9.9 percent). The
largest banks have a small
farm loan share some 100 times smaller (0.1 percent).
More than half (51.1 percent of the dollar value) of small farm loans
are made by the smallest
banks although these banks own less than 6 percent of total bank
assets. Conversely, the largest
banks, which own 56.7 percent of bank assets, make only about 5 percent
of small farm loans.
Recent consolidations in banking have hit the smallest banks hardest,
reducing their number by
6.7 percent, from 6,047 to 5,644. Thus, there are fewer small banks to
lend to small farms.
"I'm concerned about what these figures mean for small farmers as well as
small firms in their
communities," said SBA Chief Counsel for Advocacy Jere W. Glover. "The small
farmer can take little
comfort from growth in farm lending that is concentrated in large loans over
$1 million. Such loans
increased at more than six times the rate of small loans in 1998. By
publicizing this information, we
believe we'll encourage bank competition in lending to the small farm and
rural sectors."
The companion study, Small Farm Lending by Bank Holding Companies, provides
nationwide detail
about the small farm lending of BHCs-the very large bank holding companies
with branches in many
states. Such detail may not appear in a given state report if the BHC is
headquartered in a different
state.
The top five BHCs in lending to small farms in 1998 were Mercantile
Bancorporation, Norwest,
Union Planters, Marshall & Ilsley, and Commercial Bankshare.
The 57 largest BHCs are less involved in small farm lending than they
are in lending to small
businesses. Although they hold two-thirds of all bank assets, these
BHCs have only 11.1 percent
of the $50.3 billion in small farm loans outstanding.
The BHCs had an average share of just 0.18 percent of their total
assets in small farm lending.
Only one of the BHCs-Mercantile Bancorporation-had more than 1 percent.
"In light of the continuing trend toward merger and consolidation in the
banking industry, the bank
holding company study adds an important piece to the picture" Glover said.
"If the BHCs are buying up
banks in a town and not making farm loans, the local leaders need to be
aware of that."
Advocacy's lending studies are analyses of the "call reports" that banks
file in June each year with
their bank regulatory agencies. The studies are available on the Internet's
World Wide Web at
http://www.sba.gov/ADVO/lendinginus2.html. Paper and microfiche copies of
all Advocacy reports are also
available for purchase from the National Technical Information Service,
(703) 605-6000.
Comments and technical questions may be directed to Dr. Robert Berney, SBA's
chief economist, or to Dr.
Charles Ou, 409 Third Street, S.W., Washington, D.C. 20416, (202) 205-6930;
fax (202) 205-6928.
Banks that participate in the SBA's preferred or certified lender programs
should be considered small business
friendly. To locate the top Small Business Administration lenders in your
region, contact your local SBA district
office or the Small Business Answer Desk at 1-800-827-5722.
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