Center for Agriculture and the Economy
Leveraging expertise from the Kansas City Fed, the Center provides timely analysis of industry developments and conducts ongoing research on the agricultural economy.
Earnings Performance at Agricultural Banks Remains Strong
By Chris Summers, Kalyn Yzaguirre, and Camryn Lucas
August 14, 2026
Earnings performance across commercial agricultural banks remained strong in the first quarter of 2026. The return on average assets increased to 1.4% through March, continuing to surpass earnings of all community banks. More specifically, net income improvement was largely driven by increases in net interest income related to recent loan growth. Community banks have also continued to report higher levels of noninterest and provision expenses than agricultural banks, further bolstering earnings. Net interest margins at all community banks and agricultural banks contracted slightly from the previous quarter as loan yields declined slightly more than funding costs; however, margins at highly concentrated agricultural banks continued an upward trend. This trend in margins was driven by cost of funds declining faster than earning asset yields.
Notes: ROAA = net income (year-to-date) divided by average assets - annualized. NIM = interest income net of interest expense (quarter) divided by average earning assets (quarter) - annualized. Community banking organizations (CBOs) are defined as commercial banks having less than $10 billion in assets. Agricultural banks are defined as commercial banks with agricultural production and farm real estate loans equaling 25 percent or more of total loans. Highly concentrated agricultural banks are defined as commercial banks with agricultural production and farm real estate loans equaling 300 percent or more of tier 1 capital plus the allowance for credit losses (ACL). This more stringent definition captures approximately the top one-third of all agricultural banks.
Sources: Consolidated Reports of Condition and Income, Reports of Conditions and Income
Chris Summers, Kalyn Yzaguirre, and Camryn Lucas are supervisory examiners at the Federal Reserve Bank of Kansas City.
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