Phil DiPofi has been president and CEO of Spokane-based Northwest Farm Credit Services for less than a year, but he says he's already feeling pretty settled in and optimistic about the outlook for the federally chartered ag-lending cooperative.

"I'm very bullish long term," DiPofi says.

"We're a reflection of our customers," and the region's ag industry is positioned well—despite some clearly volatile times ahead—to continue along the generally upward track that it has been enjoying for several years now, he says.

Northwest Farm Credit provides financing, related services, and crop insurances to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, and rural homeowners in Washington, Idaho, Montana, Oregon, and Alaska.

The association leases a 61,400-square-foot office building at 1700 S. Assembly on Sunset Hill, where it's headquarters is located, and operates 45 branches in the five states it serves. It employs about 640 employees overall, including 179 at its headquarters and 33 at a branch office in Airway Heights, and DiPofi says it expects to add another 25 to 30 employees here next year. The association is part of the 90-year-old Farm Credit System, which touts itself as the single largest provider of credit to American agriculture.

It hadn't released its third-quarter earnings by the time the Journal went to press, but it earlier reported total net income of $71.6 million through the first half of this year, and it said its total capital increased nearly 9 percent to $1.4 billion. The association had total assets of $8.51 billion at the end of the latest quarter.

"We've got a very strong capital position. We want to have the financial profile to be able to deal with that volatility," DiPofi says, referring to current and anticipated market-roiling factors that are keeping the industry cautious. Those factors, he says, include rising energy and input costs, such as for fertilizer, chemicals, fuel, and seed, plus the dollar's fluctuation abroad and geopolitical risks abroad.

Still, strong market demand for most commodities is bolstering crop prices, with the dairy industry being one of a couple of sectors that have struggled a bit, and the prospect for additional growth in overseas sales in coming years looks good, DiPofi says.

The association has about 12,500 voting stockholders, and a key cooperative principle is returning a portion of net earnings to stockholders based upon their use of the cooperative. To ensure equitability, Northwest Farm Credit allocates such money, called patronage, based on their eligible annual average loan volume. It distributes most of the cash in January, based on the association's overall financial performance in the previous calendar year.

For 2010, it paid stockholders 50 basis points, or one-half of 1 percent, of customers' average daily loan balance, equating to total patronage distributions of $36.1 million, "and this year we would expect to enhance that," DiPofi says. Last year's payouts were up from 35 basis points, or $25.9 million in total distributions, in 2009.

Since 1995, the association has returned nearly $367.5 million to its customers through stock retirements and patronage distributions.

DiPofi officially became the top executive at Northwest Farm Credit last Dec. 1, succeeding Jay Penick, who had led the association for 21 years and was retiring. DiPofi says, though, that he actually began prepping for the transition a couple of months earlier, meeting staffing members and attending association functions.

For a native New Yorker who started out as a real estate appraiser and didn't have much exposure to agriculture until a decade ago, the learning curve since taking over at the association here hasn't been daunting, DiPofi says.

He came to Spokane from a similar, but much larger cooperative, Denver-based CoBank, where he had been employed for nine years and was serving as chief banking officer. CoBank is a $66 billion institution serving industries across rural America. It provides loans, leases, export financing, and other financial services to agribusinesses and rural power, water, and communications providers in all 50 states, its website says.

It serves customers from regional banking centers across the U.S., maintains an international representative office in Singapore, and—like Northwest Credit Services—is a member of the Farm Credit System. It expects to grow to a more than $90 billion bank on Jan. 1 as the result of a recently approved merger with Wichita-based U.S. AgBank.

Among its diverse operations, CoBank provides wholesale loans and other products and services to Farm Credit associations such as the one here. In its July 2010 announcement of the selection of DiPofi to succeed Penick, Northwest Farm Credit said DiPofi had been instrumental in the Spokane-based cooperative's reaffiliation with CoBank in 2003 and since then had participated in its board planning sessions and other meetings.

That long-term professional relationship—and a personal one he and his wife, Jodi, developed with Penick and his wife, Pam—enabled him, he says, to start his position here with a lot of knowledge about his new employer, and vice versa.

"It was a nine-year interview," he says, jokingly.

"Culturally, it's been a good change," he adds, citing Northwest Farm Credit's intense focus on relationship lending, the extensive ag knowledge base of its employees, and the strong communications between its customers, board of directors, and management team.

Though he enjoyed his position at CoBank, where he had been recruited personally by CoBank President and CEO Bob Engel, a former banking colleague of his, DiPofi says the opening here was too attractive to pass up.

"CEO jobs only come around so often. You get these opportunities, and you have to grab ahold of them when they're there," he says. He adds that he expects to serve in his current position until he retires, assuming the board decides to keep him on the job that long.

Since arriving here, DiPofi says he has visited most of Northwest Farm Credit's branches at least once and has met with many of the association's customers.

"It's been great. We have a very high level of engagement from our customers," he says, noting the association also has an emotional connection with many of them, because they've turned to the cooperative for financing help during tough times.

The association has nearly 200 advisers spread throughout the area it serves who provide information to the board, and that group also serves as a pool from which to draw board members when openings occur, he says.

The cooperative culture and structure, part of which DiPoli says calls for "being conservative in the good times so you can be courageous in the tough times," is something that he says has become ingrained in him since in joined CoBank. He says he sees that same mindset among Northwest Farm Credit employees, many of whom come from agricultural backgrounds

On the lending side, he says, "Understanding that ag goes through cycles is pretty ingrained in this organization's base. We don't get frightened off when an ag cycle happens because it's pretty much expected."