#663
Cash Crop
Published:
Oct 10, 2026
Author:
Sarah Parsons Wolter
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Palmer Luckey says Erebor is the tech industry’s version of an agricultural bank. Eight months after launch, it has pulled in more than $7b of deposits, mostly from the defense and manufacturing startups Silicon Valley Bank used to serve. It’s a customer base that looks a lot like its founder's network.
The comparison is worth taking literally. Agricultural banks (lenders with at least 25% of their loans in farming) just posted their highest return on assets since Kansas City Fed records began in 1984, with delinquencies flat year on year. The edge is not mysterious. They know the crop cycle, the cattle market and what a field is worth, so they lend where generalists price from a distance. In May, the same Fed noted that bleak public narratives about farm finance had drifted away from the underlying data, exactly the kind of gap a specialist gets paid to exploit.
Now swap the field for the model. As AI makes every sector more particular, with its own data, its own cycles and its own odd collateral (Erebor already takes crypto and semiconductors), the lender that can read a vertical natively may price risk the rest of the market can't.
The caveat sits on the balance sheet. Ag banks lend around 80 cents of every deposit dollar. Erebor ended June with about $78m of loans against more than $4b in cash, and a $10.3m net loss. SVB looms as a reminder that a bank that understands its customers intimately also shares all their bad days.
Erebor has $4b in the silo... But, as Jeremy Clarkson might put it, diddly squat in the fields yet.
Portfolio News
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Cash Crop
Resilience, not crisis, in the U.S. agricultural economy - Kansas City Fed economists argue that bleak public narratives about U.S. farm finances diverge from the underlying data. Despite low crop prices and higher input costs, farm debt-to-asset ratios, delinquencies and bankruptcies remain near historical norms, and net farm income stays above its 25-year average. Read more
Palmer Luckey's Erebor surges past $7b in deposits - The eight-month-old tech-focused bank has added more than 500 customers and $3b of deposits in the past quarter as it targets early-stage companies once served by SVB. Lending remains small, at about $78m, with nearly 90% of assets held in cash. Read more
Agricultural bank returns hit highest level since 1984 - Strong farm loan growth in the first half of 2026 lifted agricultural bank earnings, with return on assets reaching its highest level since records began in 1984. Farm loan delinquencies were unchanged from a year ago, while loan-to-deposit ratios hit their highest since 2019. Read more
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