Wisconsin agricultural bankers reported higher loan-to-deposit ratios, fewer funds for farm loans, and more non-real estate agricultural loans than neighboring states in a recent survey.
Overall, the Federal Reserve Bank of Chicago's quarterly poll of agricultural bankers in the Fed's seventh district found continued increases in farmland values and mixed trends on credit conditions.
Nearly 425 bankers responded from the district, which includes Iowa and parts of Illinois, Indiana, Michigan, and Wisconsin.
Loan-to-deposit ratios in the Badger State for the first quarter averaged 74.4% in the survey. Agricultural bankers' overall average in the district was 64.8%, the highest since the late 1970s and early 1980s.
"There has been a lot of loan demand in our state and our banks are funding it," said John Vater, assistant vice president at Banker's Bank, Madison, Wis., which serves bank clients throughout the state.
Bruce Jones, an associate professor of agriculture economics at the University of Wisconsin, Madison, said even though the respondents were agricultural bankers, many of their loans may not be farm-related.
"With the economy humming, we've got a lot of economic activity," he said. "It takes capital to finance that."
Wisconsin's agricultural bankers had the most growth in the district in non-real estate farm loans over the last five years.
"The credit demand of Wisconsin farmers is going to be in cows and machinery as opposed to buying land," Mr. Jones said.
Asked about fund availability to make farm loans, 16% of bankers in states not including Wisconsin indicated a decline over the previous year, while 17% noted an increase.
But in Wisconsin 40% of respondents said availability decreased and 10% noted an increase.
Jon Bruss, chairman of Fortress Bancshares, Hartland, Wis., which owns community banks in Wisconsin and Minnesota, said he is puzzled by the tight liquidity.
"At our banks, we use the Federal Home Loan Bank of Chicago," he said, noting that one of Fortress' Wisconsin subsidiaries, Westby-Coon Valley State Bank in Westby, has 8% to 9% of its total deposits from that source.
"I don't think other banks are doing that (using the Fed) and I don't know why," he said.
Gary L. Benjamin, an economic advisor and vice president at the Chicago Fed who analyzed the responses, said he was unsure why the responses of Wisconsin bankers differed from those in other states.
