ABA Banking Journal - February 2010 - (Page 14)
Community Banking Pass the Aspirin: Handling family-business customers, especially at “the changing of the guard” p. 20 Share your thoughts at www.ababj.com/blog/277.html AG pulse 2010 AN ABA BANKING JOURNAL ROUNDTABLE Real estate challenges in ag land Potential for a continued downturn in farmland values carries implications good and bad and, and its values, are funny things. In some parts of the country, commercial real estate lenders, facing withering reappraisals of collateral, hope not to see raw land marked back down to farmland values. But in markets served by farm lenders, the bankers’ concern often seems to be raised most when farmland values rise too high, or too quickly, or for too long. In many markets, these two cases are actually two facets of the same matter. During the long housing boom, with its cheap credit for builder and prospective borrower alike, what had been farmland was transformed into suburbia. Some of By Steve Cocheo, executive editor. This roundtable was held during ABA’s late 2009 National Agricultural Bankers Conference. See www.aba.com/ Solutions/AgriculturalBanking.htm for activities of the ABA Center for Agricultural and Rural Banking 14 FeBruArY 2010/AbA bAnKinG JouRnAl L those new subdivisions are homes, some will be ghost towns, and some, never actually having gone beyond land clearance, have been going back to nature. RoundtAble PARticiPAnts Gene copenhaver First Bank and Trust Co. Abingdon, Va. Kreg denton First Community Bank of Western Kentucky, Clinton, Ky. dennis everson First Dakota National Bank Yankton, S.D. leo nelson Capital One Bank, Bastrop, La. ed o’leary Talking Credit blog, www.ababj.com cori Price South Valley Bank & Trust Klamath Falls, Ore. Subscribe at www.ababj.com Falling values, nationally and locally Last year the U.S. Department of Agriculture reported a 3.2% decline in national farmland values, the first drop since 1987. The average was $2,100 per acre, as reported in Land Values and Cash Rents 2009 Summary. Regional changes varied widely, from no change in the Northeast to a fall of 11% in the Mountain states. These numbers reflect decreases in all land and buildings on farms. Similar declines were seen in 2009 for cropland and pasture land. The annual report, published in August 2009, was based on January 2009 numbers. National numbers only bear out what some bankers see locally. “We have had many outside influences
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