CHICAGO Aug 1 The U.S. Farm Credit System, a
government sponsored enterprise and the single largest lender to
U.S. agriculture, said on Friday that second quarter earnings
rose 8.3 percent, reflecting a rise in interest income.
The System, which uses proceeds from debt securities issued
to domestic and foreign investors to fund farmers and
agribusiness, earned $1.196 billion for the April-June period,
up from $1.104 billion for the same period last year.
Quarterly net income rose $92 million, reflecting a jump in
net interest income of $53 million and a loan loss reversal of
$23 million, versus a provision for loan losses of $19 million
for the same period a year ago.
Gross loans increased $3.994 billion, or 2.0 percent to
$205.054 billion at June 30, 2014, as compared with $201.060
billion at December 31, 2013.
The increase reflected higher loan demand from food and
agribusiness companies, as well as a rise in real estate
mortgage loans, FCS said a statement. The increase was partially
offset by a drop in production and intermediate-term loans as
borrowers sold crops and paid down lines of credit.
The livestock, dairy and ethanol businesses under stress in
recent years due by pricey corn, the main feedstock used by all
three, are seeing margins improve as corn prices fell below $5 a
bushel during the quarter. The prices of corn and other grains
remain under pressure on outlooks for a bumper 2014 harvest,
which will mean lower income for grain farmers for the first
time in years.
Denver-based CoBank, the largest of the System's cooperative
banks, also on Friday posted a rise in quarterly earnings, up 10
percent as interest income rose.
For the quarter ending June 30, net income rose to $232.9
million, from $212.0 million in the same period a year ago.
Average loan volume for the quarter rose 7 percent to $76.9
billion, compared to $71.6 billion in the same quarter 2013,
The rise resulted from increased borrowing from food and
agribusiness companies, affiliated Farm Credit associations and
rural power providers, CoBank said.
(Reporting by Christine Stebbins. Editing by Andre Grenon)