Farm Credit Mid-America, a farm and rural community lender operating in Indiana, Ohio, Kentucky and Tennessee, announced financial results for the third quarter of 2012. The cooperative reported a third quarter net income of $217 million, compared to $192 million for the same period last year. Farm Credit also noted that credit quality improved through the first nine months of 2012, as the percentage of adversely classified assets dropped from 3.9% as of December 31, 2011 to 3.5% as of September 30, 2012.
"Our progress mirrors that of our customers," says president and chief executive officer Bill Johnson. "Despite the challenges of the drought, wide swings in commodity prices and uncertainties of the global economy, agriculture is performing well for the most part. Farmers have built liquidity and solvency while applying risk mitigation strategies such as crop insurance and fixed rate farm real estate financing to help prepare them for these challenging times." The rural housing market continues to show improvement which is also reflected in the association's positive results.
Still, some area customers have certainly been hampered by this past summer's weather conditions. For instance, the extreme dry conditions throughout the Midwest have resulted in substantially higher feed costs which in turn are negatively impacting dairy and other livestock producers.
"We recognize that there are many facing hardships as a result of the drought," Johnson says. "Farm Credit's mission is to work with customers in both good and challenging times. As the full impact of the drought continues to unfold, we are given the opportunity to honor that mission and demonstrate our commitment to be a reliable funding source and valued partner for agriculture and rural America."
One way Farm Credit is living that mission, Johnson explains, is through the association's special conversion – or refinance – program. This year alone, Farm Credit converted more than 28,500 loans to lower interest rates, representing almost $5 billion in volume and an interest expense saving of almost $115 million over a three year period.
Another way the association provides value is through the availability of long-term fixed rate financing for farms. "Almost 40 percent of our customers have loans on fixed rates of 10 years or longer," Johnson says. "In today's volatile agricultural environment, it's critical that farmers look for ways manage their operational risk and one way to do so is to ensure that the cost of their financing remains consistent."
Headquartered in Louisville, Farm Credit provides more than $19 billion in financing and related services to agribusinesses, farmers and rural residents. For complete third quarter results, go to www.e-farmcredit.com.