Farm Credit posts big jump in earnings
Net exceeds $116 million through first nine months as ag sector gains strengthNovember 18th, 2010
Northwest Farm Credit Services, of Spokane, has announced third-quarter earnings of $41 million, up sharply from $29.9 million in the year-earlier quarter.
Through the first nine months of the year, the federally chartered ag lender reported earnings of $116.2 million, compared with $65.6 million in the first three quarters of 2009.
The improvement this year is largely because of strengthening in the agricultural sector and because Northwest Farm Credit was able to set aside less money to cover loans for which it's uncertain it will be repaid, says Jay Penick, Northwest Farm Credit's president and CEO.
Even though markets have improved in some ag sectors, industries that depend on consumers' discretionary incomes still face significant challenges, Penick says.
"The nursery industry is still struggling a lot and probably will continue to do so into 2011," he says.
Northwest Farm Credit provides financing to some forestry producers, and their fortunes also continue to lag with the housing market, Penick says.
Grain growers are doing well, although a lot of the price improvement they've enjoyed came either at or shortly after harvest, so whether they have a great year or a good year depends on their marketing strategies and how much of their crops they sold into the futures market at guaranteed prices, he says. Penick adds that while dairy producers have rebounded nicely the last two quarters, their fortunes, and those of beef and poultry producers, will be affected by rising corn and soybean prices.
The association's total assets, meanwhile, rose to $8.69 billion, up slightly from $8.67 billion a year earlier. Its loan portfolio dipped slightly, to $8.18 billion, from $8.2 billion. Its capital rose to $1.32 billion from $1.18 billion a year earlier.
Nonaccrual loans, on which the association isn't accruing interest, increased slightly to 3.58 percent of its loan portfolio as of Sept. 30, compared with 3.38 percent a year earlier. Loan delinquencies, on which borrowers are behind on their payments, remained low at 1.46 percent.