Iowa Trust Association Quarterly News

ITA President's Message

I am excited for this year’s conference, Elevate Achievement September 26-28 at the West Des Moines Marriott. The speakers we have gathered will provide you great information and discussions on timely topics. 

This event includes much needed continuing education credits and will improve your knowledge base to perform your job better and more efficiently. At a $250 advance registration fee it would be hard to find a comparable and more cost effective way to get your credits and to network with others in the industry.

For those that can come on Wednesday, September 26, we will have our normal peer group meetings and a guest speaker.  This is always highly informative, and is a great addition to our normal day and a half conference.

To register and find out more information please go to the ITA website. See you there!

Jonathan Holthe, CFP®
CBI Bank & Trust and President of the Iowa Trust Association


Iowa Land Values

Peoples Company

As we progress through the second half of 2018, our appraisal team has documented a change in direction of land value trends. From the first quarter of 2016 through the fourth quarter of 2017, land values across the State of Iowa were trending upwards due to a low inventory of farms for sale and an abundance of capital in the market, among other things. Per the data provided by the Peoples Company Appraisal Team, the trend has shifted and begun to move downwards. As illustrated in the chart below, the average $/CSR2 was $122 in the fourth quarter of 2017 and $111 in the second quarter of 2018. This dataset includes tillable farms that sold at public auction and are 85% tillable row crop acres or greater.

 

Our team has been actively monitoring the auction calendar and gauging the activity at public auctions. The inventory of farms being marketed for auction is seasonally low but has started to increase in recent weeks and, if history repeats itself, will likely continue to increase throughout the remainder of the year. As I write this article, there are 93 tracts across the State of Iowa that are actively being marketed for auction. There have been a few large multi-tract auctions in recent weeks and there are a few more on the upcoming calendar. For the most part, farmers have still been the primary buyers at auction, but investors are actively participating and on occasion, are the successful bidder. Land values for recreational tracts and pasture tracts continue to be stable and have had little fluctuation in recent years.

During 2015, 2016 and 2017, our team saw an upward trend in land values in the fourth quarter during and following harvest. This was due in part to farmers who saw record yields the past two years which provided some optimism in the land market. Per the Land Value Tenure Survey provided by Iowa State University, 82% of farmland in Iowa is owned debt-free which continues to play a role in the overall strength of the land market. Per recent conversations, it sounds like most of the State will have great yields which, like previous years, could lead to an increase in the fourth quarter. However, the difference this year is commodity prices are lower than years past and the current trade disputes between the U.S. and the global market place. Furthermore, interest rates have increased in recent months. The optimism in the market may not be as prevalent this fall (compared to previous years) if profit margins continue to be squeezed.

As we begin to move towards the fall harvest, operators and lenders are beginning to have conversations about the outlook for 2019. Landlords, management firms, and operators are beginning to discuss 2019 rental rates. If profit margins continue to thin out due to low commodity prices, cash rental rates and land values will likely face some downward pressure.
?


Legislative Tool Helps you Connect with Legislators

  The Iowa Bankers Association's Legislative Action Center allows bankers to easily contact legislators electronically. Letters on key pending legislation and regulations are posted on the site and can be easily edited and/or personalized for bankers to send to their respective elected officials and regulators at the state and federal level. The Legislative Action Center is available online at www.iowabankers.com.


Contribute to the Iowa Trust Association

As a reminder, the Iowa Trust Association (ITA) welcomes contributors to their quarterly newsletter. If you would like to comment on recent activities in the industry or let us know about an upcoming event that would be of interest to our readers, please feel free to contact Darcy Burnett, at (800) 800-2353 or dburnett@iowabankers.com. Thank you for your interest in our publication and we look forward to hearing from you!


ITA Newsletter Subscription

If this message was forwarded to you and you would like to receive the ITA Newsletter, e-mail Darcy Burnett to subscribe.


Published by the Iowa Trust Association
8800 NW 62nd Avenue | PO Box 6200 | Johnston, Iowa | 50131-6200

(800) 800-2353 • FAX (515) 280-4140 • www.iatrust.com
Send comments to dburnett@iowabankers.com
To remove yourself from this mailing list, click here.