Farm Credit System Reports First Quarter 2006 Net Income.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- The Farm Credit System today reported combined net income of $554 million for the quarter ended March 31, 2006, as compared with combined net income of $498 million for the same period of the prior year. "The System's earnings reflected both a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. agricultural economic environment that has been sustained over the past few years and the System's strong capital position," remarked Jamie Jamie is a given name, derived as a pet form of James. However, it has been used as an independent given name in English speaking countries for several generations. Though Jamie was originally exclusively male, since the 1950s it has also been used as a female given name, B. Stewart Stewart, river, Canada Stewart, river, 331 mi (533 km) long, rising in the Mackenzie Mts., central Yukon Territory, Canada, and flowing generally W to the Yukon River S of Dawson. , Jr., President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of the Federal Farm Credit Banks Federal Farm Credit Bank An institution created by the government with the purpose of uniting the financing activities of the Federal Land Banks, the Federal Intermediate Credit Banks, and the banks for cooperatives. See: Federal Farm Credit System. Funding Corporation. "Credit quality indicators continued to reflect a healthy System loan portfolio, which contributed significantly to the System's sound financial position. The System remains well positioned to meet credit stress that may arise from current or future adverse agricultural economic events." Net interest income increased $79 million to $854 million during the first quarter of 2006, as compared with $775 million for the first quarter of the prior year. This increase in net interest income was the result of continued growth in the System's loan volume and investment securities. Average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin were $136.5 billion during the first quarter of 2006, $16.1 billion higher than the first quarter of the prior year. The net interest margin decreased seven basis points to 2.50% for the first quarter of 2006, as compared with the first quarter of 2005. The decline in net interest margin resulted from a decline in net interest spread of 25 basis points to 1.82% for the quarter ended March 31, 2006, as compared with 2.07% for the same period of 2005. The decrease in net interest spread was primarily due to competitive conditions resulting from a high level of liquidity in bank and capital debt markets and to a rising interest rate environment. Also contributing to the decline in spread was the change in asset mix that generally reduced the risk profile of earning assets. Partially offsetting the decline in spread was an increase in income earned from higher yields on earning assets funded by capital. The provision for loan losses was $5 million for the first quarter of 2006, as compared with $3 million for the first quarter of 2005. The first quarter of 2006 provision for loan losses consisted of loan loss provisions of $9 million recorded by certain System institutions, partially offset by loan loss reversals of $4 million recorded by other System institutions. The first quarter of 2005 provision for loan losses consisted of $14 million of loan loss provisions at certain System institutions, partially offset by loan loss reversals of $11 million at other System institutions. Noninterest income increased $7 million to $92 million for the three months ended March 31, 2006, as compared with $85 million for the same period of the prior year. Noninterest expense increased $29 million to $357 million for the first quarter of 2006, primarily due to continued increases in salaries and employee benefits and other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. at certain System institutions. The System recorded provisions for income taxes of $30 million and $31 million for the quarters ended March 31, 2006 and 2005. The effective tax rate decreased to 5.1% for the quarter ended March 31, 2006, as compared with 5.9% for the same period of the prior year. This decrease in the effective tax rate between the periods was primarily due to increased patronage Patronage See also Philanthropy. Alidoro fairy godfather to Italian Cinderella. [Ital. Opera: Rossini, Cinderella, Westerman, 120–121] Alphonso, Don supports Bias in return for political favors. [Fr. Lit. distributions by taxable System institutions. Gross loans increased $2.241 billion or 2.1% to $108.513 billion at March 31, 2006, as compared with $106.272 billion at December December: see month. 31, 2005. The increase resulted primarily from continued marketing efforts and increased loan demand due to increased seasonal agribusiness agribusiness Agriculture operated by business; specifically, that part of a modern national economy devoted to the production, processing, and distribution of food and fibre products and byproducts. lending and the overall strong agribusiness environment. Cash and investments increased $956 million to $29.383 billion at March 31, 2006, as compared with $28.427 billion at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005. The System's liquidity position was 182 days at March 31, 2006, as compared with 187 days at December 31, 2005. The System's accruing loan volume was $107.970 billion at March 31, 2006, as compared with $105.748 billion at December 31, 2005. Nonaccrual loans increased $19 million to $543 million at March 31, 2006, as compared with $524 million at December 31, 2005. At March 31, 2006, 59% of nonaccrual loans were current as to principal and interest, as compared with 62% at December 31, 2005. Nonperforming loans (which consist of nonaccrual loans, accruing restructured loans, and accruing loans 90 days or more past due) increased $53 million to $653 million at March 31, 2006, as compared with December 31, 2005. These loans represented 0.60% of the System's loans at March 31, 2006, a slight increase from 0.56% at December 31, 2005. In addition, other credit quality indicators remained strong. Loans classified under the regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. uniform classification system as acceptable and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. especially mentioned as a percentage of loans and accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. receivable were 98.0% at both March 31, 2006 and December 31, 2005. Loan delinquencies (accruing loans 30 days or more past due) as a percentage of accruing loans remained at a low level of 0.41% at March 31, 2006, as compared with 0.44% at March 31, 2005. Net loan recoveries of $3 million were recorded during the first quarter of 2006, as compared with net loan charge-offs of $8 million for the first quarter of 2005. The allowance for loan losses was $763 million at March 31, 2006, as compared with $755 million at December 31, 2005. The allowance for loan losses as a percentage of loans outstanding was 0.70% at March 31, 2006 and 0.71% at December 31, 2005. The allowance for loan losses was 117% of the System's total nonperforming loans and 141% of its nonaccrual loans at March 31, 2006, as compared with 126% and 144% at December 31, 2005. Risk funds (total capital and the allowance for loan losses), which is a measure of risk-bearing capacity, totaled $23.883 billion at March 31, 2006, representing 22.0% of System loans, as compared with $23.529 billion or 22.1% at December 31, 2005. Total capital increased $346 million during the first quarter of 2006 to $23.120 billion. The increase was primarily due to net income earned and retained. The System's surplus increased $380 million to $18.984 billion during the first quarter of 2006. Capital as a percentage of total assets was 16.1% at March 31, 2006, as compared with 16.3% at December 31, 2005. The Farm Credit System is a nationwide network of federally chartered agricultural and rural lending institutions Noun 1. lending institution - a financial institution that makes loans financial institution, financial organisation, financial organization - an institution (public or private) that collects funds (from the public or other institutions) and invests them in cooperatively co·op·er·a·tive adj. 1. Done in cooperation with others: a cooperative effort. 2. Marked by willingness to cooperate; compliant: a cooperative patient. owned by their borrowers. Copies of this news release, as well as other information regarding the System, including its annual and quarterly information statements, are available on the Federal Farm Credit Banks Funding Corporation's website at www.farmcredit-ffcb.com. For further information and copies of annual and quarterly information statements, contact: Daniel M. Bienz, Vice President Financial Analysis and Disclosure Federal Farm Credit Banks Funding Corporation 10 Exchange Place, Suite 1401 Jersey City, NJ 07302 (201) 200-8070 E-mail - DBienz@farmcredit-ffcb.com Certain statements in this news release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which are based on current expectations and are subject to uncertainty and changes in circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Actual results may differ materially from expectations due to a number of risks and uncertainties. More information about these risks and uncertainties is contained in the System's annual and quarterly information statements.
FARM CREDIT SYSTEM
COMBINED FINANCIAL STATEMENT DATA
(in millions)
STATEMENT OF CONDITION DATA March 31, December 31,
2006 2005
(unaudited)
Cash and investments $ 29,383 $ 28,427
Loans 108,513 106,272
Less: allowance for loan losses (763) (755)
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Net loans 107,750 105,517
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Accrued interest receivable 1,344 1,405
Other assets 2,695 2,475
Restricted assets 2,121 2,062
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Total assets $ 143,293 $ 139,886
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Systemwide Debt Securities:
Due within one year $ 41,009 $ 40,321
Due after one year 74,926 72,398
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Total Systemwide Debt Securities 115,935 112,719
Other bonds 527 857
Other liabilities 3,711 3,536
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Total liabilities 120,173 117,112
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Preferred stock 1,026 1,017
Capital stock 1,282 1,333
Restricted capital 2,121 2,062
Accumulated other comprehensive loss (293) (242)
Surplus 18,984 18,604
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Total capital 23,120 22,774
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Total liabilities and capital $ 143,293 $ 139,886
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STATEMENT OF INCOME DATA For The
Quarter Ended March 31,
(unaudited)
2006 2005
Interest income $ 2,143 $ 1,560
Interest expense (1,289) (785)
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Net interest income 854 775
Provision for loan losses (5) (3)
Noninterest income 92 85
Noninterest expense (357) (328)
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Income before income taxes 584 529
Provision for income taxes (30) (31)
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Net income $ 554 $ 498
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