Northwest Farm Credit Services has reported $41.1 million in net income in the first quarter, boosting its quarterly earnings by 140 percent from $17.1 million in the year-earlier period.

Meanwhile, the Spokane-based ag-lending cooperative set aside $18 million in the quarter to cover potential losses on loans it believes it might not collect, down from $27.3 million in the year-earlier quarter.

"We had a very strong earnings quarter," says President and CEO Jay Penick, who adds that he believes the outlook for wheat growers here is good.

"The wheat industry is coming off of a pretty decent year," he says. "Some of it has to do with (crop) insurance that helped the guys a lot."

Because global wheat supplies are growing rapidly, prices have fallen somewhat, and 2010 isn't expected to be quite as strong a year as 2009, Penick says. Still, he says, the industry is expected to be able to hold things together, partly because it has had solid results in the recent past.

Also, he says, "the cost of production is going down," with fuel, fertilizer, and seed prices all easing.

Fruit growers also are expected to have a good year, Penick says.

"We've got a nice crop of cherries coming," and things look "pretty good" for the apple industry, he says.

For the first time in a while, the timber industry is enjoying an uptick in its fortunes, Penick says.

Inventories of wood products are being pulled down, and there had been a lack of production because a lot of mills have been shut down, both of which have helped improve prices, he says. The uptick will give the industry a couple of good quarters, "which will help hold them together. The export market has been very strong for our timber producers, which has really helped."

The lender set aside the $18 million for loan losses in the quarter principally because of difficulties faced by dairy producers, Penick says. He says most Pacific Northwest dairy producers are stressed financially because milk prices continue to lag behind the cost of production.

As of March 31, the cooperative's net loans, or loans minus reserves for loan losses, were at $7.86 billion, up from $7.6 billion a year earlier. Its assets totaled $8.32 billion, up from $8.04 billion, and its total capital had increased by 9.8 percent to $1.25 billion.

Nonaccrual loans, or "our most troubled loans," on which total collection of principal and interest is in doubt, were at 3.3 percent of the cooperative's loan portfolio as of March 31, Penick says. That was up from a year earlier, but down from about 3.5 percent on Dec. 31, he says.

Federally chartered Northwest Farm Credit Services provides financing and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners, and crop insurance customers throughout the Pacific Northwest.