Community Bankers of Iowa Monthly Banker Update June 2014 | Page 16

Creighton

Main Street
Economic Survey

U N I V E R S I T Y

Ernie Goss

Rural Mainstreet Economy for Strengthens in May:
90 Percent of Bank CEOs Support Keystone XL Pipeline

May Survey Results at a Glance:
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Rural Mainstreet Index rises for a third straight month
indicating modest growth.
Farmland prices decline for sixth straight month.
More than 90 percent of bank CEOs support completion of
construction of the Keystone XL pipeline.
Almost half the bankers indicated that the lack of fast
broadband access for businesses in their area was
constraining growth.

For Immediate Release: May 15, 2014
OMAHA, Neb. – After moving below growth neutral in February,
the Rural Mainstreet economy has moved above the 50.0
threshold for three straight months, according to the May survey
of bank CEOs in a 10-state area.
Overall: The Rural Mainstreet Index (RMI), which ranges
between 0 and 100, with 50.0 representing growth neutral,
increased to 55.6 from 53.2 in April.
“The overall index for the Rural Mainstreet Economy indicates
that economic conditions of the areas of the nation highly
dependent on agriculture and energy are improving. Recent
gains in agriculture commodity prices are boosting the farm/rural
economy,” said Ernie Goss, Ph.D., the Jack A. MacAllister Chair
in Regional Economics at Creighton University Heider College
of Business.
Bankers were asked three specific questions this month. First,
did they support construction of the northern portion of the
Keystone XL pipeline? More than 90 percent were supportive of
pipeline construction.
According to DeWayne Streyle, CEO of Unity Community Bank
of North Dakota in Leeds, N.D., “Farmer’s have shouldered the
cost of inadequate access to rail cars due to increasing oil car
shipments. The Keystone XL pipeline would benefit agriculture
and energy independence.”
Jeffrey Gerhart, chairman of the Bank of Newman Grove, in
Newman Grove, Neb., indicated that the pipeline should be built.
However other bankers offered conditional support for the
pipeline. For example, Terry Engelken, CEO of Federation Bank
in Washington, Iowa, said, “I support the Keystone Pipeline if the
United States is using the oil. If it is all being exported, then I do
not support it.”
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CBI BANKER UPDATE | JUNE 2014

The second question asked for May: Was the lack of fast
broadband access restraining business growth in their area?
Almost half, or 49.2 percent, indicated that this was a factor
slowing business expansion.
However, several bank CEOs indicated that their broadband
access was supportive of businesses in the area. Scott
Tewksbury, president of Heartland State Bank in Edgeley,
N.D., said, “Our rural telephone cooperative, Dickey Rural, has
upgraded almost their entire network to fiber optic including rural
farm homes. Broadband speeds are better than many urban
areas of Fargo, N.D., so no economic impact here.” Added
Michael Johnson, CEO of Swedish-American State Bank in
Courtland, Kan., “We have excellent broadband in Courtland. A
real plus for business and development.”
The third select question for the month: Do you expect the
expansion of Vermont’s recently passed law requiring labeling
of genetically modified food to other states to affect the Rural
Mainstreet economy? Slightly less than half, 49 percent, expect
this action to have negative economic consequences for the
Rural Mainstreet economy.
Jim Shafer, CEO of the First National Bank in Tremont, Ill.,
summarized much of the banker sentiment saying, “Overregulation always has a negative impact on all of us.”
Farming and Ranching: The farmland and ranchland-price
index for May advanced to 46.7 from 42.9 in April. “This is the
sixth straight month that the farmland and ranchland-price index
has moved below growth neutral. Stronger farm commodity
and grain prices over the last several months should put a floor
under farmland prices in the months ahead. I expect the index to
move above growth neutral before Labor Day,” said Goss.
Farm-equipment sales remained below growth neutral for
the 11th straight month. The May index sank to 33.6 from
April’s 36.7. “Propelled by rising farm income, farm equipment
manufacturers in the region have experienced healthy growth
since 2009. However agriculture equipment and implement
dealers in the region are experiencing very weak sales to
farmers in the region even as the farm equipment manufacturers
are experiencing positive growth due to healthy sales abroad,”
said Goss.
(Rural Mainstreet continued on next page)