Farm Cooperative Plans To Return $28.6 Million In Profits To Farmers
Northwest farmers will reap an early harvest of $28 million this spring when a Spokane-based lending cooperative shares 1994 profits with its borrowers.
Northwest Farm Credit Services said Thursday that by June 1 it will return $28.6 million to about 20,000 borrowers throughout the Pacific Northwest. (Borrowers automatically become members of the cooperative.)
Farm Credit earned $52.3 million in 1994, up 168 percent from the $19.5 million it earned a year earlier.
“Our customers are the reason for our success, so now is the time to return some of that value,” Chief Financial Officer Mike Armstrong said from the cooperative’s headquarters downtown.
Farmers, timber producers, rural homeowners and others who borrow from the association will receive refunds in cash, or a payment applied to their loan balances.
The refunds will average $1,223, with payment made to 23,431 different loan accounts. Payments will be made to 7,186 accounts in Idaho; 4,962 in Washington.
The cooperative on May 1 also will lower the level of stock that memberborrowers are required to purchase when they take out a loan. The rate will drop from 4 percent to 3 percent of the loan, meaning members may borrow less to meet the stock requirement.
The change in stock requirements, Armstrong said, reflects Northwest Farm Credit’s desire to depend more on operating earnings than its membership to capitalize the association.
Total capital rose from $184.7 million on Dec. 31, 1993, to $238.4 million on Dec. 31, 1994.
The association is the largest agricultural lender in the Northwest, serving borrowers in Washington, Idaho, Montana, Oregon and Alaska.
Armstrong said the association benefited from last year’s merger of the Spokane and Omaha Farm Credit banks into AgAmerica Farm Credit Bank in Spokane. Terms of the merger required the bank, which provides funds to Northwest Farm Credit, to return 100 percent of the interest income to the association.
Total loans at Northwest Farm Credit grew from $954.8 million to $1.14 billion in 1994. Interest income rose from $27.1 million in 1993 to $35.3 million in 1994 despite a rise in interest rates.
AgAmerica, which provides funds for 62,000 farmers in nine states, also reported financial results for 1994.
The institution posted earnings of $133.5 million, down from $217 million in 1993.
The decline was attributed to accounting changes, merger costs and an increase in short-term interest rates. The bank also lost $10 million on the one-time sale of derivative bonds whose yields were tied to changing interest rates.
AgAmerica’s loan volume declined from $6.61 billion in 1993 to $6.5 billion at the end of 1994. However, the amount of nonperforming loans plummeted 26 percent, from $303.3 million to $225.8 million.