Webinar: Farm Financial Resilience & Credit Outlook: What Ag Lenders Need to Know in 2026

Join us for a forward‑looking discussion on the financial position of Illinois grain farms as the agricultural economy enters 2026. Drawing on comprehensive data from the Illinois Farm Business Farm Management (FBFM) system, this webinar will examine how farm balance sheets and cash flow dynamics are evolving. These changes are occurring amid shifting economic and policy conditions.

Dr. Gerald Mashange, Assistant Professor at the University of Illinois Urbana‑Champaign, will highlight recent developments in liquidity, solvency, and debt service capacity. He will focus on what these trends signal for agricultural credit performance. The session will also explore how factors such as interest rate movements, input cost adjustments, commodity price volatility, and government program changes are influencing farm financial resilience.

Attendees will leave with practical perspective on where risks and opportunities may be emerging. In addition, you will learn how lenders can adapt credit strategies in a changing ag landscape.

Who Should Attend

Community bank leaders, directors, credit and risk professionals, and agricultural lending teams looking to strengthen credit decision‑making. This session will also help with portfolio monitoring in 2026.

Key Takeaways

Date: March 13, 2026
Time: 10:00 am CT
Duration: 60 minutes

REgister Today

FDICIA Thresholds Changed. Smart Controls Still Matter.

Community bankers have something new to factor into their 2026 planning: changes to the FDIC’s audit and internal control requirements under 12 CFR Part 363. The asset thresholds have been raised—moving from $500 million to $1 billion, and from $1 billion to $5 billion. As a result, many banks will soon find themselves outside the scope of certain FDICIA requirements.

For institutions that fall below these new thresholds as of December 31, 2025, the change brings real regulatory relief starting January 1, 2026. There will be less prescriptive compliance and fewer mandated reports. Consequently, banks will have more breathing room.

That’s the good news.

The more important question is what comes next.

While the rules may have changed, the risks facing community banks haven’t gone away. In fact, many of them have intensified. Digital banking continues to expand. Fraud schemes are becoming more sophisticated. Third-party and fintech relationships are more complex than ever. Additionally, staffing turnover—especially in key operational and finance roles—can quietly weaken controls. This risk is especially true if no one is paying close attention.

In other words, being below an FDICIA threshold doesn’t mean your risk profile suddenly dropped.

That’s why it would be a mistake to treat these changes as a signal to dismantle or significantly scale back your internal control framework. History shows that weak controls, management overrides, and limited oversight remain some of the leading contributors to fraud losses and operational breakdowns. This occurs regardless of asset size.

Boards and audit committees still need clear visibility into financial reporting, control effectiveness, and enterprise risk. Even with fewer formal FDICIA requirements, that responsibility doesn’t disappear. If anything, it becomes more important to ensure that regulatory relief doesn’t unintentionally open the door to new vulnerabilities.

The upside? This moment creates a real opportunity for community banks.

Instead of asking, “What can we eliminate?” the better question is, “How can we right-size our controls?” Strong internal controls don’t have to be overly complex or expensive to be effective. Furthermore, when they’re aligned with your bank’s actual risk profile, technology environment, and strategic goals, they can be both efficient and sustainable.

Now is the time to modernize—streamline manual processes, focus on higher-risk areas, and make sure controls evolve alongside digital delivery channels and third-party relationships. If done well, a right-sized control environment supports resilience and protects customers. Ultimately, it positions your bank for long-term success.

FDICIA relief may reduce the compliance burden, but sound controls are still a cornerstone of safe, well-run community banks. The smartest institutions will use this change not as a reason to step back—but as a chance to sharpen their focus.

Asset Tokenization: What Community Bankers Need to Know—and Why It Matters

When we announced the formation of the Bankers’ Bank Asset Tokenization Committee in our last Banker to Banker, we knew we were stepping into a fast-moving—and sometimes overwhelming—space. Since then, the committee has rolled up its sleeves to learn the business and technology fundamentals of asset tokenization.

That means digging into everything from digital wallets and blockchains to understanding the differences between bitcoin, stablecoins, and deposit coins. We’re also spending time on how secure custody actually works in these environments. It’s a lot to absorb, and the learning curve can feel endless. But this foundation is critical if we want to build real-world use cases and products that truly enhance the community banking experience for your customers.

Just as important are the basics bankers care deeply about every day: data integrity, error resolution, and auditability. In digital asset environments, these aren’t “nice-to-haves”—they’re essential. They can’t be assumed, and they shouldn’t be taken for granted.

As our focus shifts beyond cryptocurrencies and toward broader digital asset networks (which is why we’re called the Asset Tokenization Committee), we see real potential for simplifying the complex web of commercial banking transactions and relationships. Blockchain network architectures can improve efficiency and even enable core‑agnostic processes while supporting how banks operate today.

We’re also paying close attention to how existing banking utilities, such as The Depository Trust Company (DTCC), are thinking about their role in a more digital, tokenized future. These organizations are actively figuring out how to evolve alongside banks—and their approach offers valuable lessons.

Advanced capabilities like smart contracts and built-in regulatory compliance don’t automatically exist in banking-focused digital networks—but they should. For community banks, these features will be key. When aligned thoughtfully, they can help bridge digital asset networks with traditional finance. Additionally, they ensure community banks stay competitive and connected alongside larger institutions.

The good news? This “new” world of financial tokenization doesn’t have to feel mysterious or out of reach. With the right partners, practical guidance, and a clear focus on real banking needs, it can become another tool to better serve your customers.

Why Local‑Currency Wires Matter More Than Ever for Community Banks

As the global economy becomes more connected, community banks are playing an increasingly important role in helping customers move money across borders. International payments are no longer just a back‑office task. They’re a strategic capability that influences customer trust, competitiveness, and long‑term growth.

For business customers with international suppliers, vendors, or subsidiaries, the ability to transact in local foreign currencies can make a meaningful difference. Community banks that support local‑currency and foreign‑currency wires don’t just process payments. They help customers operate more efficiently and confidently on a global stage.

Why Local‑Currency Capabilities Matter for Community Banks

The Bottom Line for Community Bankers

International money movement is no longer optional or niche—it’s becoming a differentiator. Community banks that offer local international currency and foreign‑currency wire capabilities position themselves as strategic partners, not just service providers. In a competitive environment, that’s a powerful way to support your customers and strengthen your bank’s role in their success.

Small-Dollar Municipal Purchases? Leasing Just Makes More Sense

When a town needs a new fleet vehicle, public safety equipment, or updated public works machinery under $2 million, leasing often makes more sense than turning to bond financing. In many cases, leasing is the smarter, more efficient solution.

Bonds absolutely have their place, especially for large, long-term infrastructure projects. But for routine equipment purchases, they can introduce extra cost, complexity, and time delays. Those issues don’t serve the municipality, or the bank, particularly well.

Leasing starts with a clear financial advantage: lower upfront cost. Instead of tapping reserves or waiting to accumulate capital, municipalities can acquire essential equipment right away. They also can spread payments evenly over time. That flexibility helps towns preserve cash, manage budgets more predictably, and keep other priorities on track.

There’s also an important political and public-facing benefit. Leasing is often viewed as a more fiscally conservative approach—closer to “pay as you go” than “taking on debt.” Additionally, it can help municipalities sidestep tax increases, avoid lengthy bond approval processes, and reduce the risk of public pushback that sometimes comes with bond referendums.

From an operational standpoint, leasing checks a lot of boxes: it’s faster to execute, simpler to explain, and easier to align with annual budgets. Moreover, for purchases under $2 million, it delivers financial discipline without sacrificing transparency or accountability.

Finally, these transactions are best handled close to home. Community banks are well-positioned to be the go-to partners for municipal equipment leasing, thanks to local decision-making, personalized service, and a real understanding of a town’s financial goals. And when additional expertise or capacity is needed, Bankers’ Bank’s Leasing group can provide the support to help your bank confidently deliver these solutions. In short, leasing often provides the better answer for smaller municipal equipment needs.

10 Key Takeaways from Our Recent Ag Risk Webinar

If you work with agricultural borrowers, you know 2025 was a year of mixed signals. That was the big theme of our recent Ag webinar, Farm Financial Health & Credit Risk for Ag Lenders in 2025, where Dr. Gerald Meschangi from the University of Illinois walked through the current state of farm financial health, credit risk, and the broader economic forces shaping ag lending decisions. The good news? Much of the farm sector remains financially resilient. The challenge? That strength isn’t evenly distributed—and that’s where community bankers play a critical role.

Here’s a plain‑English rundown of what stood out most.

1. Fewer Farms, Bigger Operations—and Strong Productivity U.S. agriculture continues to consolidate. There are fewer farms today, but they’re larger and far more productive. Average farm size has grown to roughly 466 acres, while total agricultural output has tripled since the late 1940s—even though total farmland acres have declined. Why it matters for bankers: This is a long‑term efficiency story, not a short‑term concern. Larger operations tend to be more capital‑intensive, which can increase both borrowing needs and balance‑sheet complexity. Relationship banking and understanding scale differences are more important than ever.

2. A Tale of Two Ag Economies: Livestock vs. Crops One of the clearest themes from the webinar was the growing divergence between livestock and grain producers. – Livestock producers are benefiting from tight supplies and strong prices, especially in cattle. Herd liquidation has pushed inventories to historic lows, driving prices higher. – Grain producers, on the other hand, are facing pressure. Since grain prices peaked in 2022, declining prices have pulled down revenues and inventory values. Why it matters for bankers: Ag is not one homogenous portfolio. Credit risk looks very different depending on commodity exposure. Livestock borrowers may be seeing stronger cash flow, while grain producers may need closer monitoring—especially as margins tighten.

3. Farm Income Is Up—but That Doesn’t Tell the Whole Story USDA projects net farm income to rise to about $180 billion in 2025. Production expenses are expected to remain relatively flat, meaning more income flows to the bottom line. But averages can be misleading. Why it matters for bankers: Strong sector‑level numbers don’t eliminate borrower‑level risk. The webinar repeatedly emphasized looking at distributions—not just medians—when assessing liquidity, solvency, and repayment capacity

4. Liquidity Is Still Strong—But Trending Lower for Grain Farms Liquidity, measured by working capital relative to gross farm returns, remains solid overall. Most grain farms still fall into the “strong” category under the Farm Financial Scorecard. That said: – Working capital has declined as grain prices fell. – Current assets (especially inventories) are worth less. – Current liabilities have risen. Why it matters for bankers: This isn’t a crisis, but it is a trend. Borrowers may still look healthy on paper, but reduced liquidity cushions mean less room for error if prices fall further or costs rise unexpectedly.

 5. Solvency Remains a Bright Spot—for Now At the sector level, the farm debt‑to‑asset ratio remains low, hovering around 13–14%. Even at the farm level, most grain producers are still well within “strong” solvency thresholds. However, the most leveraged 25% of grain farms are edging into cautionary territory. Why it matters for bankers: Solvency is not the immediate concern—cash flow is. Highly leveraged borrowers are feeling the impact of higher interest rates more acutely, especially when margins are compressed.

6. Interest Expense Is Rising Where It Hurts Most Interest costs per tillable acre have increased sharply for the most indebted farms. While lower‑leveraged borrowers are absorbing rate increases reasonably well, highly leveraged operations are seeing meaningful pressure on cash flow. Why it matters for bankers: This reinforces the importance of stress testing. Even borrowers with acceptable collateral coverage may struggle if debt‑servicing costs outpace earnings.

7. Equipment Lending Is Softening—and There’s a Reason Farm machinery and equipment demand has cooled noticeably: – Borrower margins have compressed since 2022. – Capital replacement margins turned negative for many small and mid‑sized grain farms. – Manufacturers are cutting production and announcing layoffs. Why it matters for bankers: Slower equipment loan growth isn’t just a demand issue—it’s a borrower balance‑sheet issue. Many producers are choosing to defer purchases rather than stretch cash flow further.

8. Bird Flu Still Matters—Especially for Poultry and Dairy Bird flu continues to affect poultry markets, though inventories are beginning to recover. Egg prices have moderated after extreme volatility. The disease has also appeared in dairy cattle, adding uncertainty to milk production. Meanwhile, dairy continues to consolidate: – Fewer farms. – Larger herds. – Higher output per cow. – Lower milk prices. Why it matters for bankers: Volatility is now part of the operating environment for animal agriculture. Risk management tools and insurance programs are becoming more important in credit conversations.

9. Farmland Values Are High—but Showing Mixed Signals Farmland remains the backbone of the ag balance sheet, accounting for more than 80% of farm asset values. Nationally, values rose again in 2025, supported by: – Investor demand – Inflation‑hedging characteristics – Stable long‑term returns However, recent transaction data shows softening in some high‑quality markets, including parts of Illinois. Why it matters for bankers: Collateral values are still strong, but appreciation may slow. Conservative loan‑to‑value discipline remains prudent, especially in markets that saw rapid run‑ups.

10. Trade, Tariffs, and Global Competition Add Uncertainty Trade policy remains a wild card. China has significantly reduced its reliance on U.S. soybeans, while Brazil and Argentina have gained market share. Even when purchase agreements are announced, they remain tentative. Why it matters for bankers: Export‑dependent producers face ongoing price and demand risk. Trade disruptions can show up quickly in borrower cash flow—even when balance sheets look sound.

The Bottom Line for Community Bankers

The ag economy in 2025 is best described as stable, but uneven.

For community bankers, this is where local knowledge and proactive credit management make the difference. Understanding a borrower’s cost structure, liquidity trends, and repayment capacity—not just collateral values—are key in navigating the year ahead. As Dr. Meschangi summed it up, this is a year of recovery for parts of ag, but also a reminder that risk is rarely evenly distributed.

Want to listen to the Recording?

View REcording