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1ST HALF: FARM CREDIT SYSTEM'S NET INCOME UP 12%: $3.5 BILLION
Aug. 5, 2024
Source: Farm Credit System news release
NEW YORK - The Farm Credit System today reported that combined net income increased 8.1% to $1.9 billion and 11.9% to $3.9 billion for the three and six months ended June 30, 2024, as compared with net income of $1.8 billion and $3.5 billion for the same periods of the prior year.
"The System continued to support the financing needs of new and existing borrowers in rural America and agriculture," remarked Tracey McCabe, President and CEO of the Federal Farm Credit Banks Funding Corporation. "Overall credit quality remains favorable despite some deterioration resulting from lower commodity prices and continued elevated crop production costs."
Results of Operations
Net interest income increased $130 million or 4.6% to $2.9 billion for the second quarter of 2024 and $296 million or 5.3% to $5.9 billion for the six months ended June 30, 2024, as compared with the same periods of the prior year. The increases in net interest income primarily resulted from higher levels of average earning assets, driven by increased loan volume.
Average earning assets increased $23.6 billion or 5.0% to $492.0 billion for the three months ended June 30, 2024 and $24.5 billion or 5.3% to $489.1 billion for the six months ended June 30, 2024, as compared with the same periods of the prior year. The net interest margin was 2.40% for the three months ended June 30, 2024, as compared with 2.41% for the same period of the prior year. The net interest margin for the six months ended June 30, 2024 and 2023 was unchanged at 2.41%.
Net interest spread decreased 10 and 11 basis points to 1.83% and 1.85% for the three and six months ended June 30, 2024, as compared with 1.93% and 1.96% for the same periods of the prior year primarily due to higher debt costs and competitive market pressures impacting loan spreads in the sustained higher interest rate environment. The net interest margin during these periods was positively impacted by a 9 and 11 basis point increase in income earned on earning assets funded by non-interest bearing sources (principally capital).
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