CoBank third quarter 2014 results show a 4 percent drop in net income tom $208.1 million, down from the third quarter of 1212 net of $217.7 million.
For the first nine months of 2013, net income is down 10 percent for the lender.
Earnings were reduced in part due to lower net interest income and higher insurance fund premium expenses for the quarter and nine-month period.
Net interest income declined in the third quarter of 2013 by 9 percent to $276.4 million, the bank reports in its quarterly results.
For the first nine months of 2013, net interest income decreased by 5 percent to $875.5 million.
Average loan volume for the quarter was $70.3 billion, unchanged from the same period a year earlier. For the nine month period, average loan volume jumped 3 percent. Year-to-date increases are driven by higher levels of borrowing by affiliated Farm Credit associations and rural electric customers.
A decline in lending to agribusiness co-ops, partly driven by lower grain inventories, reduced demand for seasonal borrowing. Total loan and lease volume at Sept. 30 was $70.4 billion.
"We're pleased with the continued strength of CoBank's business and financial performance," says Bob Engel, chief executive officer. "In the broader financial services industry market conditions remain challenging.
"Weak loan demand and increased competition have pressured earnings for many banks, as has the low interest rate environment engineered by the Federal Reserve."
While CoBank's earnings and net interest income are down, the firm remains well positioned to serve borrowing needs of customers, he adds.
CoBank's credit quality continues to benefit from the general strength of the U.S. ag sector, notes the facility's chief financial officer, David P. Burlage.
Many believe that the Federal Reserve will not reduce its quantitative easing program until sometime in 2014, Engel observes.