Rural agricultural banks are similar in legal and operating structure to their urban counterparts yet they face several institutional and environmental conditions that are dissimilar from urban banks. Some of these are the rural banks relative inability to tap the national money markets with their financial instruments and their seasonal loan demand and liquidity requirement resulting from the seasonal agricultural crop production cycle. Because of seasonality of operations, the agricultural bank has normally found it necessary to remain more liquid by holding additional assets as investments, especially during the winter months. These investments, since they are short-term, usually yield a lower return than long-term investments. The lower yield can make many rural banks less profitable than similar-sized urban banks.
Tauer, Loren, "Use of the U.S. Treasury Bond Futures Market by Rural Commercial Banks to Increase Bond Portfolio Returns" (1978). Economic Staff Paper Series. 103.