CHICAGO Feb 19 The U.S. Farm Credit System, a
government-sponsored enterprise and the single-largest lender to
U.S. agriculture, on Wednesday said fourth-quarter earnings rose
nearly 19 percent, boosted by strong demand for farm products.
The System, which uses proceeds from debt securities issued
to domestic and foreign investors to fund farmers and
agribusiness, earned $1.141 billion for the quarter ended Dec.
31, up from $960 million in the same period a year earlier.
Annual earnings for 2013 climbed to $4.640 billion, or 12.7
percent from $4.118 billion in 2012, a drought year for U.S.
"Strong global and domestic demand for U.S. agricultural
products continued throughout 2013, enhancing the earnings of
agricultural producers and contributing to solid earnings,"
Tracey McCabe, chief executive officer of the Federal Farm
Credit Banks Funding Corporation that funds FCS' securities,
said in a statement.
"Capitalization remains strong and the System is well
positioned to withstand adverse changes that may arise in future
agricultural economic conditions," she added.
Full-year earnings reflected a 3 percent rise in net
interest income to $6.674 billion due to higher loan volume and
a loan loss reversal of $31 million. That compared with a
provision for loan losses of $313 million in 2012.
Offsetting these partially was an increase in noninterest
expenses of $139 million.
For the fourth quarter, Farm Credit's net income increased
by $181 million, primarily reflecting a loan loss reversal of
$40 million in 2013, compared with a provision for loan losses
of $125 million in the fourth quarter of 2012.
DEMAND FOR REAL ESTATE LOANS RISES
Gross loans grew by $9.156 billion, or 4.8 percent, to
$201.06 billion at Dec. 31 from the end of 2012. Demand
increased for real estate mortgages, production, processing and
"Real estate mortgage loans increased primarily due to
continued strong demand for cropland in the Midwest," the System
Overall, borrowers' financial conditions remained very
favorable due to the high levels of farmers' net cash income
over the past several years, the System said.
FCS cited the U.S. Department of Agriculture's 2014 forecast
for farmers' net cash income to decrease to $101.9 billion, a
$28.2 billion decrease from 2013 but $11 billion above the
10-year average. The projected decrease is primarily due to an
expected drop in crop receipts of $26.7 billion, according to
Farm Credit also reported cash and investments rose by
$4.965 billion to $51.893 billion at Dec. 31, compared with a