Tenth District Lenders Return 55 Percent of Earnings to Customers
The 20 lending cooperatives in the Tenth Farm Credit District declared a total of $133.7 million — more than half of their 2007 earnings — in patronage to their customers earlier this year.
That compares to 2006 and 2005, when they declared $124.8 million and $56.4 million, respectively, in patronage distributions.
"We hope that these patronage payments will help defray rising operating expenses for our agricultural producers," said Farm Credit Bank of Texas (FCBT) Board Chairman Ralph W. Cortese of Fort Sumner, N.M.
The record patronage distribution highlighted the strong 2007 year-end financial results for the Tenth District, which is composed of the 20 rural lenders and the Farm Credit Bank of Texas.
District net income totaled $242.5 million in 2007, compared with $240.1 million in 2006. Net interest income increased to $432.4 million in 2007 from $386.2 million the previous year, due largely to an increase in average interest-earning assets and, to a lesser extent, the higher interest-rate environment in 2007.
Gross loans totaled $15.11 billion at Dec. 31, 2007, a 17 percent increase from the $12.91 billion loan volume reported at year-end 2006. At the same time, the credit quality of the district’s portfolio remained strong, with 98.8 percent of the loan volume considered acceptable at year end.
The Farm Credit Bank of Texas also reported strong year-end results. FCBT net income of $74 million for 2007 was up 13.9 percent from the $65 million reported for 2006. The bank’s loan portfolio at Dec. 31, 2007, totaled $10.87 billion, reflecting an 8.1 percent increase from the $10.06 billion balance a year earlier.
"While we enjoyed tremendous growth and solid earnings last year, we are particularly proud that our lending associations once again provided excellent value to their stockholders in the form of patronage," said Larry Doyle, FCBT chief executive officer. "Patronage reduces our customers’ cost of borrowing. It is the cornerstone of the cooperative business model, and it’s what distinguishes Farm Credit from other lenders."
Nationally, the Farm Credit System reported combined net income of $2.7 billion at Dec. 31, 2007, an increase of approximately 12.5 percent from the $2.4 billion in net income the previous year.
President Appoints New FCA Chairman
Leland A. Strom, a corn and soybean farmer from Illinois, was designated chairman and chief executive officer of the Farm Credit Administration (FCA) by President George W. Bush, effective May 22. He succeeds Nancy C. Pellett, who had served as FCA chairman and CEO since May 2004.
The Farm Credit Administration is the federal regulator of the Farm Credit System. The FCA charters, regulates and examines the System’s 106 banks, lending associations and service corporations.
Strom has served as a member of the FCA board and concurrently as chairman of the Farm Credit System Insurance Corporation Board of Directors since his board appointment by President Bush in December 2006. His term on the FCA board will expire in October 2012.
Strom has been active in the agriculture industry for more than 30 years, serving on the boards of AgriBank, the national Farm Credit Council, 1st Farm Credit Services of Illinois, Country Mutual Funds Trust and Northern F.S., Inc., a farm-supply cooperative. Also, he was a member of the Federal Reserve Bank of Chicago Advisory Council on Agriculture, Labor and Small Business for six years.
2008 Marks 75 Years of Production Lending
This year marks important anniversaries in the history of the Farm Credit System.
In 1933, Congress passed the Farm Credit Act, which, among other things, established a new production credit system for farmers and ranchers through local customer-owned Production Credit Associations (PCAs). In the Tenth Farm Credit District, the first PCA was formed when 53 farmers gathered at the Tyler, Texas, courthouse on Dec. 9 and organized the Tyler PCA. Soon afterward, the association made its first loan for $80.
All PCAs in the Tenth District merged with Federal Land Bank Associations in recent years to create full-service Agricultural Credit Associations.
Also in 1933, President Franklin Roosevelt issued an executive order consolidating the supervision of all federally regulated agricultural credit agencies under the new Farm Credit Administration (FCA). These various cooperatively owned financial entities, with the FCA as their regulator, formed the basis of the Farm Credit System as it exists today.
The Farm Credit Act of 1933 also created 13 Banks for Cooperatives across the country.