Denver-based CoBank and Northwest Farm Credit Services in Spokane, Wash., both posted second quarter reports reflecting a healthy ag lending environment.
CoBank says second quarter net income rose 40% to $252.4 million, compared with $180.7 million for the second quarter a year ago.
Northwest announced second quarter earnings of $56.1 million, up from $29.4 million for the second quarter of 2011.
Earnings for the first six months of 2012 were $101.1 million at Northwest, up from $71.6 million a year earlier. Increased income is primarily due to a reduced provision for loan losses and a refund of premiums previously paid to the Farm Credit System Insurance Corporation, a federally controlled corporation that ensures the timely payment of notes, bonds and other obligations issued on behalf of Farm Credit Service banks.
Northwest, the largest ag lending cooperative in the region, "has performed very well," reports President and Chief Executive Officer Phil DiPofi.
"Most producers have strengthened their balance sheets and are positioning themselves for growth opportunities," he adds. "However, weather volatility can significantly impact the economic environment for producers."
The Northwest's mild spring boosted production in dairy, wheat, potato and sugar beet industries, while it negatively impacted yields for hay, cherry and apple growers, he says. The extreme dry conditions in the Midwest and other parts of the U.S. will likely result in higher feed prices for dairy farmers and other protein industries such as cattle, poultry and swine, Northwest predicts.
CoBank, which serves agribusiness throughout the nation, reports a net interest income for the second quarter of 2012 at $307.1 million, well above the year-earlier mark of $276.5 million. Average loan volume for the quarter was $69.4 billion (cq), compared with $52.1 billion for the same period in 2011.
"We're pleased with CoBank's results through the midpoint of 2012," says Robert B. Engel, president and CEO.
He notes that conditions in the U.S. and global economies remain weak, putting downward pressure on loan demand in many of the industries served by the bank. Drought in the U.S. has the potential to reduce revenues at grain and supply c o-ops, he says, and increase costs in the protein and biofuels sectors.