Farm Credit reports strong first quarter earnings

May 27, 2008 08:57 pm

— Louisville, Ky. — Farm Credit Services of Mid-America, an agricultural lender serving farmers throughout Kentucky, Ohio, Indiana and Tennessee, has released their first quarter results exhibiting unprecedented growth the first three months of the year. The agriculture cooperative announced first quarter earnings of $43.4 million, a 14 percent increase over the same period in 2007 and portfolio growth of 18.4 percent.
“While weakness in the economy and disruptions in the capital markets have taken their toll on many banks’ performance, Farm Credit continues to see good, strong growth,” Donnie Winters, president and chief executive officer, said. “In just over four years, our total assets have almost doubled to $13.8 billion.”
Winters attributes the growth to a number of organizational strategies, including portfolio diversification, a broad array of product offerings, quality loan standards and continued attention to strong customer service with responsible lending practices.
The agriculture lender continues to focus on the financial and expansion needs of their core customer base of traditional farm operations. However, like much of their customer base, FCS is also seeking new opportunities to diversify by financing farm-to-market operations, organic farming, lifestyle farming and rural homes which has served to strengthen their portfolio.
As one of the few agriculture lenders offering fixed rate financing for farm mortgages, Farm Credit placed more than 75 percent of new mortgage loans on fixed rates longer than five years during the first quarter, including many 15 and 25 fixed rate programs.
Additionally, the agriculture lender was not a participant in sub-prime lending which eventually led to the financial distress in the residential mortgage market. “We have always held a quality loan portfolio that contributes earnings and diversification and enables us to lend to farmers at even lower prices,” Winters said. Credit quality for the association remains strong with 98.9 percent of the association’s loan and lease portfolio in the two highest categories used to classify creditworthiness.
Even with good portfolio growth and strong earnings during the first quarter of 2008, Winters added that the agriculture lender recognizes that record feed costs and excess meat supplies are contributing to stress in the livestock industry. And while the grain industry is seeing robust demand amidst tight grain stocks and high grain prices, the question of the sustainability of the market should factor into a producer’s financial decisions on both a short and long term basis.
“Ultimately, it is our goal to meet our mission of providing the best and most competitive products and services available to farmers and rural residents,” Winters said. “We will continue to do what it takes to meet marketplace demands, whatever those demands might be.”