- Key insight: USDA is shining a spotlight on credit quality in one of its lending programs by ejecting a group of lenders it said was responsible for the lion's share of its delinquent loans.
- Supporting Data: The agency attributed $620 million in delinquent loans to the 10 sanctioned lenders.
- Expert quote: "The Trump Administration has absolutely no tolerance for the irresponsible and noncompliant actions of these lenders," — Agriculture Secretary Brooke Rollins
The U.S. Department of Agriculture has barred 10 lenders, including five community banks, from participating in its OneRD rural development loan guarantee program citing large numbers of delinquent loans.
According to the agency, which made the announcement in a press release last week, the sanctioned lenders, including $4.8 billion-asset Celtic Bank in Salt Lake City, $9.9 billion-asset Byline Bancorp in Chicago and the
"The Trump Administration has absolutely no tolerance for the irresponsible and noncompliant actions of these lenders and has banned them from participating in USDA guaranteed lending programs," Secretary of Agriculture Brooke Rollins said in a press release.
The Department of Agriculture's lending programs date back to the New Deal, when Congress authorized it to make direct loans to farmers and sharecroppers. A later law, the Rural Development Act of 1972, authorized the USDA to guarantee rural development loans made by private lenders. OneRD was created in 2020 to streamline the application process.
While OneRD is relatively small — its fiscal 2026 funding authority is $2.9 billion — it has grown in recent years. In February, the Department of Agriculture disclosed that the dollar volume of active loans in the OneRD portfolio had topped $12 billion.
Delinquent loans have been increasing, too. USDA said in its February comments that problem OneRD loans topped $1 billion, adding it had doled out more than $300 million in repayments and losses in the preceding 12 months.
In the press release last week, USDA claimed 47% of OneRD's delinquent loans were attributable to the 10 lenders it sanctioned. "These lenders are not eligible for loan note guarantees under any circumstances," the department stated.
USDA had not responded at deadline to a reporter's queries about whether it had disqualified lenders previously and if sanctioned lenders would be able to appeal.
At least one lender, the $6.4 billion-asset Genisys Credit Union in Auburn Hills, Michigan, indicated it planned to seek discussions with USDA. "We still look forward to discussing the decision in more detail with them," CEO Jackie Buchanan told American Banker in an emailed statement. "While we respect the Department's oversight role, we strongly disagree with the allegations cited in their press release and their decision. Prior to the USDA's press release, Genisys had already notified the agency of its intent to seek an informal review through the established process under the applicable regulations."
In all, the 10 lenders tabbed by USDA included five banks, three credit unions and two nondepository lenders.
Many of the sanctioned lenders are also prominent participants in the Small Business Association's flagship 7(a) loan guarantee program. Celtic is currently the sixth-largest 7(a) lender, with fiscal 2026 loan volume of $355 million, according to the SBA. The nondepository Ready Capital in New York, has 7(a) loan volume of $289.5 million.
Ironically, the SBA has also grappled with credit quality issues in the 7(a) program. Last year, after revealing credit costs were outstripping program revenues, the agency
Community Bank & Trust, which failed May 1, saw a
Community Bank CEO Jeremy Gilpin, who did not respond to a reporter's request for comment, was a prominent USDA lender. He was past chairman of the National Rural Lenders Association, a trade group representing USDA lenders. Gilpin also served as a senior executive at another one of the sanctioned lenders, the $1.7 billion-asset Greater Nevada Credit Union in Carson City, from 2013 to 2024, when he joined Community Bank & Trust.
The other sanctioned lenders are the $1.5 billion-asset BOM Bank in Natchitoches, Louisiana, and the $1.5 billion-asset U.S. Eagle Federal Credit Union in Albuquerque, New Mexico, $778 million-asset Optus Bank in Columbia, South Carolina and North Avenue Capital, a nondepository specialty lender based in Ponte Vedra Beach, Florida.
