The shake-up in the agriculture finance industry is being played out within the banking community as well.
Small banks-those with less than $100 million of assets-historically have controlled the lion's share of ag loans held by banks. They still do, but since 1993 they have been losing ground to the big banks.
Small banks controlled 44.2% of the banking industry's $66.8 billion of agriculture loans in the third quarter of 1996, according to data from Sheshunoff Information Services. In 1993 it was 47.6%.
Farm consolidation is one reason for the slide, observers said. Community banks are losing their traditional small-farmer constituency and often can't meet the credit demands of the large producers that are taking their place.
"Farms are getting larger, so there's less to go around," said Bradley Keck, assistant vice president of $84 million-asset First Security State Bank, Charleston, Mo.
Banks with $100 million to $1 billion of assets have maintained relatively steady market share-30.8% in 1996, compared with 30.2% in 1993, according to Sheshunoff.
Meanwhile, large banks have grabbed market share by acquiring small banks and focusing on the niche. A list of big banks that have announced new agriculture lending initiatives in the past 12 months includes NationsBank Corp., Charlotte, N.C.; BankAmerica Corp., San Francisco; and Zions Bancorp., Salt Lake City.
Banks with $1 billion to $10 billion of assets have increased their share by more than 60% in the last three years, to 14.0%, according to Sheshunoff. Banks with more than $10 billion of assets have boosted their share to 11.0% in 1996 from 10.7% in 1993.
