Spokane-based Northwest Farm Credit Services has reported first-quarter earnings of $58.4 million, down 7 percent from $63.1 million for the 2015 first quarter. 

The Spokane-based agricultural lending cooperative attributed the decrease to sizable loan recoveries last year.

“We had significant loan recoveries in the first quarter of 2015, which reduced our provision for loan losses expense required in that quarter,” says Farm Credit CFO Tom Nakano. “These unusually significant loan recoveries are driving the slight reduction in earnings as compared to the prior year.”  

Nakano says the loan recoveries were related to specific situations with a small number of the association’s borrowers, and the proceeds received were unexpected. 

Phil DiPofi, the cooperative’s CEO, said in a press release that the association’s financial performance continues to remain strong in 2016. 

“Despite lower commodity prices, our customers remain well positioned to withstand the current market environment,” he says.

The cooperative also reported its total capital increased 1.7 percent during the quarter to $2.1 billion. Nakano attributed that capital growth to the association’s strong earnings.

“Although the earnings as compared to the same quarter of the prior year were down, the organization still reported strong earnings for the quarter,” he says. 

 Nakano says total loans were up 4.7 percent over the year-earlier quarter, with a total of $9.88 billion in loans outstanding as of March 31.  “Compared to Dec. 31, 2015, loan volume is down slightly, which we tend to see during the first quarter of each year and is expected,” he adds. 

“Being primarily an ag lender, we have to allow for some cyclicality in our portfolio,” he says. “After the end of the year, farmers will start to pay down on their loans, but as the seasons change and they get back to planting and field work, they will borrow more and volume will again increase.”

The cooperative’s board also recently approved an increase in patronage to its customer-members, boosting the return from 0.75 percent to 1 percent of a customer’s eligible average daily loan balance. 

“Patronage is only distributed annually early in each year based on a customer’s eligible average daily loan balance from the preceding year,” says Nakano. 

For 2015, Northwest Farm Credit distributed $91.9 million in cash patronage to its members, which was a record amount and marked a 43 percent increase compared with 2014’s total patronage. 

Since the patronage program began in 2000, Northwest Farm Credit has returned $591 million in cash patronage to customer-members.

Northwest Farm Credit is part of a nationwide group of cooperatives that provides more than $10 billion in financing, as well as other services to farms, ranches, and natural resource businesses in Montana, Idaho, Oregon, Washington and Alaska. 

This August, the cooperative plans to move its operations from its current offices here at 1700 S. Assembly to the newly remodeled former Ambassadors Group building at 2001 S. Flint Road, just north of the Spokane International Airport. The co-op purchased the property in November of 2014.