Agricultural loans at Community State Bank, Indianola, Iowa, skyrocketed more than 297% between yearend 1993 and 1994, topping all other farm banks.

The bank's new management team aggressively booked almost $2 million in new farm loans in one year. That was no small feat in rural Iowa, starting with a bank that hadn't even been in the business.

Current management bought the bank in March 1993 from an elderly owner who had done virtually no lending, said Keith Welling, president and chief executive officer.

"Anything we did was a 100% increase," Mr. Welling said.

As in Community State's situation, acquisitions and sales of banks or branches played a role in many of the biggest increases and decreases in agricultural loans over the same period. In other cases, changes in farm management and in the agricultural sector targeted led to some large changes in farm loan portfolios.

Agricultural banks overall increased their farm loans 8.1% between yearend 1993 and 1994, according to Sheshunoff Information Services. The 2,794 ag banks each have at least 25% of their loan porfolio in farm credits. All together, they held $28 billion in farm loans at the end of 1994.

By comparison, the 100 farm banks with the biggest jumps in agricultural loans in 1994 showed an average increase of 62.4%, holding a total of $1.1 billion in agriculture loans.

At the other end of the spectrum, the 100 banks with the largest reduction in farm loans in 1994 had decreased their agricultural loans an average of 20.2%, to $663 million.

In Indianola, Mr. Welling explained, numerous items on Community State Bank's financial statements have increased. The smallest bank in Iowa, with $2.7 million in assets when Mr. Welling's team came on board, Community State now has $13 million in assets.

Agricultural loans, which account for about 30% of the bank's $10 million loan portfolio, rose to $2.29 million at yearend 1994 from $570,000 a year earlier. As of March 31, farm loans were $2.36 million.

"The overall philosophy is: If you're in Iowa, you're going to be in ag lending," said Mr. Welling, who finances various kinds of row crop and livestock producers.

At Elkhorn Valley Bank in Norfolk, Neb., farm loans soared almost 262% to $5.87 million over the same period.

"We were a brand new bank," said Lyle Droescher, vice president of the $27 million-asset bank, which opened in November 1993.

Its rapid loan growth was facilitated by the fact that the bank's holding company had opened a farm loan production office in Norfolk in 1989 and had cultivated many farm customers in the area.

Elkhorn Valley benefited from those existing relationships, getting many of the cattle, hog, and soybean loans that previously were sent to the company's other bank in Hoskins, Neb.

"It did provide some good earning assets right away for the new bank," Mr. Droescher said.

However, $35 million-asset Community Bank of El Dorado Springs, Mo., saw its farm loans jump 118%, to $4.04 million, at yearend 1994 just from increased loan demand from cattle and dairy farmers, said president Dennis Daugherty.

"We were just blessed," he said. "We try to provide low-rate financing and at the same time watch for solid, quality credits."

However, Mr. Daugherty said he didn't expect as large an increase this year.

A bank with one of the biggest decreases in farm loans, Willmar, Minn.- based Heritage Bank, cited its sale of a branch in Madelia, Minn., as the reason for its 43% decrease in agricultural loans to $8.50 million.

The branch was 120 miles away from Heritage's headquarters and the company decided to focus on a closer-in market, said Roland Boll, executive vice president.

That location had nearly $6 million in farm loans, Mr. Boll said.

Even after the sale, the $55 million-asset bank still has about a third of its loans to farm customers, which include corn, soybean, sugar beets, dairy, hog, and cattle producers. And it's not abandoning that market.

"We've been involved in ag all along," Mr. Boll said. "And we're growing."

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