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Rural Mainstreet Index Fears Farm Foreclosure Threat to Banks

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The Creighton University Rural Mainstreet Index is still below growth-neutral, which it has been for some time. The index jumped six points from September to October, but low crop prices are still inhibiting growth.

Ernie Goss, author of the index, says, “As a result of low commodity prices and weak farm income, 9.5 percent of bank CEOs expect farm foreclosures to become the biggest threat to banking operations over the next five years,” says Goss. He doesn’t think the bottom is in yet in terms of foreclosures, delinquincies, and bankruptcies. Goss says the bottom is still out there.

Lenders who participated in the RMI survey say they’re also keeping an eye on the Federal Reserve for another potential rate hike. Goss says rural bankers are mostly supportive of a possible rate hike, saying, “about 64 percent of bankers expect one more rate hike in 2017.”

As combines are rolling across rural America, bankers are reporting mixed results. The survey shows only two percent of bankers expect corn prices from $3.50 to $3.75 were above break-even levels.

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Source;  NAFB News

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