Northwest Farm Credit Services, of Spokane, says it had second-quarter net income of $29.4 million, down from $34.1 million in the year-earlier quarter.

For the first six months of 2011, the federally chartered ag lender reported total earnings of $71.6 million, down from $75.2 million in the first half of 2010, and it said its total capital increased 8.6 percent to $1.4 billion.

"Our earnings and capital growth remain strong, reflecting the current condition of the general agricultural economy," says Phil DiPofi, Northwest Farm Credit's president and CEO.

"With most commodities having high prices and strong demand, many customers are paying down debt, which strengthens their balance sheets," DiPofi says. He adds, "While the long-term prosperity for agriculture in the Northwest remains positive, the markets will likely remain volatile, and Northwest FCS is continuing to build its financial strength to serve our customer-owners through the expected cycles in the future."

Total loans owned and serviced by the association stood at $10 billion at the end of the quarter, up 3.2 percent from the end of June last year. Meanwhile, nonaccrual loans, on which the association isn't collecting interest, fell to 3.2 percent of its loan portfolio from 3.4 percent a year earlier.

Loan delinquencies, on which borrowers are behind on their payments, fell to 0.9 percent as of June 30, down from an already low 1.3 percent at the end of 2010.

The association had total assets of $8.51 billion at the end of the latest quarter.

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

It has 45 branches in the five states and is part of the 90-year-old Farm Credit System, which claims to be the single largest provider of credit to American agriculture.