In this article, we continue our series on U.S. Commercial Bank participation in agricultural lending. In our previous article (farmdoc daily, June 14, 2024), we looked at how the composition of commercial banks has changed since 2007. As of the fourth quarter of 2023, commercial banks specializing in agricultural lending have increased their loan volumes and market share. We extend this analysis by examining the differences in profitability between agricultural and non-agricultural commercial banks. We limit our analysis to FDIC-insured commercial banks that have outstanding farm real estate and farm operating loans on their balance sheets as of the fourth quarter of 2023. Two lending specializations are defined. Commercial banks whose sum of farm real estate and farm operating loans exceeds 25% of their net loans and leases are defined as agricultural banks, while all others are defined as non-agricultural banks. 1,022 commercial banks were categorized as agricultural banks, while 2,518 were categorized as non-agricultural banks.
