Bank CEO confidence continued to grow this month but remains limited by low farm commodity prices, according to Creighton University’s monthly survey of bank CEOs in rural areas of a 10-state region.
The Rural Mainstreet Index fell to 46.2 from 48.1 in January, below growth-neutral 50 for the sixth straight month. Nearly 75 percent of CEOs reported low commodity prices as the No. 1 risk for farms this year. Forty-four percent of CEOs reported falling commodity prices as their No. 1 challenge for the coming year. An even share reported that the financial positions of area farmers had weakened during the past six months.
This month’s confidence index increased to 40.4 from 38.5 in January even as weak agriculture commodity prices and recently high interest rates continued to limit banker confidence.
Despite commodity concerns, farmland prices increased for the 51st straight month. The loan volume index for February fell to 66 in February from 71.9 in January, while the checking deposit index fell 14 points to 48. The index for certificates of deposits and other savings instruments fell two points to 60. The index for regional farmland prices fell to a still-strong 57.7 from 64 in January as 19 percent of bankers reported that farmland prices increased from the previous month.
The index for farm equipment sales fell below 50 for the eighth time in the past nine months, rising 1.8 points to 49.5. “Higher borrowing costs, tighter credit conditions and weaker grain prices are having a negative impact on the purchases of farm equipment,” said Ernie Goss, chair in regional economics at Creighton University’s Heider College of Business.
In other report findings:
- Both home sales and retail sales indexes have fallen below 50 for the last four months. February’s home-sales index dropped to 35.4 from 38 in January. “Elevated mortgage rates and a limited supply of homes are sinking the home sales index below growth neutral in rural areas,” Goss said. The retail-sales index fell two points to 44 this month. “High consumer debt and elevated interest rates are cutting into retail sales on the Rural Mainstreet Economy,” Goss said.
- The new hiring index fell one point to 49 as most bankers saw no change in hiring this month.
The states covered by the RMI survey are Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.