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1ST QUARTER: FARM CREDIT SYSTEM'S NET INCOME DOWN 2%: $1.7 BILLION
May 4, 2023
Source: Farm Credit System news release
NEW YORK - The Farm Credit System today reported that combined net income decreased 2.0% to $1.7 billion for the first quarter of 2023, as compared with $1.8 billion for the same period of the prior year.
"The System continued to generate strong earnings during the first quarter of 2023," remarked Tracey McCabe, President and CEO of the Federal Farm Credit Banks Funding Corporation.
"Credit quality remains robust despite ongoing challenges of higher interest rates, inflation and the moderation of commodity prices."
Results of Operations
First Quarter 2023 Compared to First Quarter 2022 Net interest income was $2.8 billion for the first quarter of 2023, as compared with $2.6 billion for the first quarter of 2022. The increase in net interest income primarily resulted from a higher level of average earning assets, driven by increased loan volume and, to a lesser extent, growth in investments held for liquidity. Average earning assets grew $32.6 billion or 7.6% to $460.8 billion for the first quarter of 2023, as compared with the first quarter of 2022.
The net interest margin increased two basis points to 2.41% for the quarter ended March 31, 2023, as compared with 2.39% for the same period of the prior year. The increase in the net interest margin resulted from a 31 basis point increase in income earned on earning assets funded by noninterest-bearing sources (principally capital). Partially offsetting the increase in net interest margin was a decrease in the net interest spread of 29 basis points to 1.98%, as compared with the first quarter of 2022, which was primarily due to higher debt costs in the rising interest rate environment and higher levels of liquidity investments, which have lower spreads commensurate with lower risk.
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