Our survey of 360 agricultural bankers indicated that farmland values held steady, on average, during the fourth quarter of 1998 in the Seventh Federal Reserve District. District farmland values rose 1 percent for all of 1998, as weakness during the second half offset the gains registered earlier in the year. This is the smallest calendar-year increase since 1991 and comes on the heels of two consecutive annual 10-percent gains. However, these averages mask sharply divergent trends among the individual District states. In addition, the demand for new farm loans increased modestly from a year earlier, as did available funding for new farm loans. Interest rates registered a slight decline, but farm loan repayment rates continued to show weakness. As a result, bankers indicated that the quality of their agricultural loan portfolios declined. Furthermore, bankers reported that credit conditions were worse in Illinois, Indiana, and Iowa than in either Michigan or Wisconsin.