Hoosier Banker James Brown Correspondent Banking NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE WEALTH MANAGEMENT & TRUST Retirement Plans (401K, PENSION & MORE) Investment Management Insurance Financial & Estate Planning Trust Partnering MEMBER FDIC EQUAL HOUSING LENDER CORRESPONDENT BANKING LENDING SERVICES Holding Company Lending » Acquisition Financing (BOTH WHOLE BANK & BRANCH) » Stock Buy Back Financing » ESOP Financing » Additional Capital for Growth & etc. Fed Funds Lines of Credit Loan Participations Commercial Credit Cards & Purchasing Cards DEPOSIT & TREASURY SERVICES DDA Accounts Fed Funds Sweeps Accounts Certificates of Deposit Wire Transfer / ACH INTERNATIONAL SERVICES Foreign Exchange (BOTH CHECKS & WIRES) Letters of Credit (IMPORT, EXPORT & STANDBY) Import & Export Advisory Services Count on us… JAMES BROWN James Brown has over 25 years of banking experience in Retail, Small Business, Corporate and Correspondent Banking. (502) 625-9330 james.brown@syb.com districts. Farm operating loans are defined as those used primarily to finance current crop production expenses and the care and feeding of livestock (including poultry). The most recent survey results suggest an average interest rate of 5.3% for the St. Louis region and 4.65% for the Chicago region. The rates are the lowest recorded in more than 50 years. Figure 2 similarly plots the average fixed interest rates on long-term farm real estate loans. The most recent survey results suggest an average farm mortgage rate of 4.8% in the St. Louis Fed district and 4.24% in the Chicago Fed district. Again, the rates are at the lowest recorded in more than 50 years. The decline in interest rates through 2020 was aided by the Federal Open Market Committee’s decision to cut the federal funds rate in response to spiking unemployment rates at the onset of the pandemic. The FOMC sets the federal funds rate, the rate at which commercial banks borrow and lend their excess reserves to each other overnight, in an effort to control unemployment and inflation. Previously, the Fed has held an inflation target of 2%. The Fed recently changed its stance on inflation, however, and is willing to allow inflation to rise above 2%. At the conclusion of the most recent FOMC meeting, Federal Reserve Chairman Jerome Powell reiterated that the Fed funds rate would remain at current levels until the overall economy reached maximum employment and the inflation target. This provides a relatively robust signal that low interest rates will likely continue. Demand for loans. The Federal Reserve Bank surveys ask agricultural bankers to rate the demand for loans at their institution relative to one year earlier. Demand for agricultural loans decreased in 2020 relative to 2019. This is the first period of declining loan demand since 2013. This finding is consistent with aggregate financial information reported by the Farm Income and Wealth Statistics of the U.S. Department of Continued on next page.
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