In late autumn, the pastures at Jason and Donna Myers' dairy farm outside of New Windsor look as serene as they have for generations, but there was a new indication yesterday that times are rough down on the farm -- and that things may get worse before they get better.
The Farm Credit Bank of Baltimore, the state's leading agriculture lender, reported that it set aside $2.5 million to cover potential loan losses in the future. As an indication of how much things have changed over the past year, this compares with $400,000 for loan losses in the same quarter of 1990.
Benjamin H. Amoss, chief financial officer of the bank, said that the increase in provisions for loan losses reflects management's concerns that the economy may not be coming out of the recession any time soon. "We're looking 12 months ahead," he said, "and we don't see a lot of good things out there."
The banking cooperative also reported that its portfolio of loans with more than the normal risk of not being collected rose 43.4 percent, to $251 million, or 7.6 percent of its loans as of Sept. 30. At the end of last year, the figure was $174.9 million, 5.6 percent of its loans. Loan volume reached a record $3.3 billion at the end of the third quarter, up from $3.05 billion a year ago.
Helped along by higher net interest income, the bank and its 17 affiliated Agricultural Credit Associations throughout Maryland, Pennsylvania, Virginia, Delaware, West Virginia and Puerto Rico reported third-quarter net income of $8.7 million, up from $5.9 million in the third quarter of 1990.
For the first nine months of the year, net income was $22.7 million, compared with $14 million for the same part of last year.
Mr. Amoss said that farmers in Maryland and Pennsylvania appear to be suffering more than their counterparts in the bank's other marketing regions. He said that the situation was "spotty" in Maryland.
Mr. Myers, the Carroll County dairy farmer, said that the financial situation varies from farm to farm, but he estimated that the decline in profits among his colleagues would range between 15 percent and 50 percent this year.
"Most people can make it through one bad year," he added, "but if prices are low and there's a drought next year, it could be devastating."