Bankers: Growth continues in area

OMAHA, Neb. -- A survey of rural bankers in nine Midwestern and Plains states suggests the region will see slow economic growth in the coming months.

The overall economic index for the region increased to 54.1 in November from October's 52.1. That was the first increase since August, but the index remains lower than it was earlier this year and lower than last November.

An index greater than 50 indicates a growing economy over the next three to six months.

The survey includes Colorado, Illinois, Iowa, Kansas, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. The average community population covered in the survey is about 1,300.

Nearly 49 percent of the bankers agreed that ethanol production is helping the region's economy.

About 63 percent of the bankers surveyed believe ethanol's biggest benefit to the area will come as higher farm income. But 28 percent of the bankers said they believe ethanol production will benefit the region by creating higher paying jobs.

"At this point, ethanol's contribution to the local economy has come in the form of higher corn prices. This has boosted farm income locally," said Kent Siltman, president of Citizens First State Bank in Walnut, Ill. "However, I see much of this extra income going to pay down debt incurred during the last couple of years."

Creighton University economist Ernie Goss and Bill McQuillan, chief executive officer of City National Bank in Greeley, Neb., created the monthly survey of rural bank presidents and chief executives.

November's farmland-price index grew to a robust 68.8 from October's 65.4.

"While farmland prices continue to increase at a pace significantly above the long-term trend, we are beginning to see that growth rate move lower," Goss said.

The higher farm income helped keep the farm equipment sales index high at 60.1, which was down slightly from October's 61.3

"When farmers make money they spend it. And they spend it at the local businesses," said Steven Lane, CEO of Security Savings Bank in Farnhamville, Iowa.

Job growth remained weak in November with a new-hiring index of 50, up slightly from October's 49.3.

The confidence index fell to 47.6 in November from 49.3 in October and 56.7 in September, partly because bankers are worried about the national credit crunch and housing slump.

The November home sales index declined for the fifth straight month, to 29.8 from October's already weak 30.7.