1st Half: Greenstone Farm Credit’s Loan Volume Up 6%, Net Income Up 20%


Source: GreenStone Farm Credit news release

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Total owned and managed loan volume, including serviced volume on the real estate loans sold to AgriBank, was $8.6 billion at June 30, 2018, a $215.4 million increase from December 31, 2017. Our combined mortgage portfolio increased $267.1 million, or 4.2% from December 31, 2017.

Our short]term commercial loan portfolio decreased $51.8 million, or 2.5% from December 31, 2017. When compared to June 30, 2017, owned and managed total loan volume was up 6.1%. This increase was driven by growth in all market segments and led by our capital markets and country living segments that have increased 14.6% and 5.8% since June 30, 2017, respectively. Our current volume reflects an asset growth rate year over year that supports our 2018 Business Plan.

The credit quality of our loan portfolio slowly declined throughout 2017 and continued this trend during the first six months of 2018. We expect some further deterioration throughout the rest of 2018 due to generally lower commodity prices. Acceptable loan credit quality, as measured under the Uniform Classification System, was 93.4% which decreased 0.7% from December 31, 2017. Year over year, acceptable credit quality decreased 1.2% from 94.6% at June 30, 2017. Portfolio assets criticized as being less than acceptable were comprised of 3.4% other assets especially mentioned (OAEM) and 3.2% adversely classified. OAEM increased 0.8% while adversely classified decreased 0.1% from December 31, 2017.

Adversely classified loans are identified as having material credit weaknesses which, if left uncorrected, result in a greater than normal risk. Portfolio credit quality is considered when assessing the reasonableness of our allowance for loan losses. The credit quality of our core market of traditional production farm loans remains very sound. Weaker borrowers in our dairy, cash crop, and poultry portfolios continued to be challenged financially during the second quarter of 2018.

The resulting level of credit quality, when combined with our earnings and addition to capital surplus, resulted in an adverse assets to total regulatory capital ratio of 17.3%. This ratio has decreased 1.3% since December 31, 2017.

In certain circumstances, government guarantee programs are used to reduce the risk of loss. At June 30, 2018, $298.4 million of our loans were, to some level, guaranteed under these programs. The guaranteed loan volume increased from $291.6 million at December 31, 2017.


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