To guard against headwinds in the agricultural sector, the Federal Deposit Insurance Corp. recommended that institutions consider the “overall financial status” of farm loan borrowers.
So far farm loans are holding up well, but bankers gathered at an industry conference this week said they are growing increasingly concerned that credit quality will weaken if the U.S. and China don’t reach a deal soon.
If the no-premium agreement announced by First Horizon and Iberiabank this week is a sign that sellers’ asking prices will come down, then Regions might reconsider its anti-M&A stance, a company executive said.
Banks are taking back more farmland through foreclosure than at any point in the past three years as low crop prices, epic flooding and the Trump administration’s trade spat with China have left many farmers struggling to pay their debts.
Farmers were already taking on more debt to cover losses from falling crop prices. New tariffs and other retaliatory moves could hurt ag borrowers further and lead to loan losses and tighter underwriting.
