Farm Credit posts fourth-quarter profits fall

February 26, 1994|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

The Farm Credit Bank of Baltimore, the Mid-Atlantic region's largest agricultural lender, yesterday reported a 74 percent drop in fourth-quarter profits.

A sharp jump in the amount reserved for future loan losses was the major factor in the bank's net income falling to $1.4 million for the quarter ended Dec. 31, down from $5.6 million in the fourth quarter of 1992. The bank set aside $6.9 million as a safeguard against bad loans in the most recent quarter, compared with $2.2 million in the same period of 1992.

The large set-aside, which is deducted from earnings, did not reflect the region's general agriculture economy, according to Reider J. White, a spokesman for the Sparks-based cooperative bank and its 16 affiliated credit associations. He said that the loan-loss provision was needed to cover a few large loans, more than $1 million each, that had been classified as nonaccrual, meaning that payments were not being made by borrowers.

For the full year the bank posted a 32.3 percent gain in net income to $32.9 million from $24.8 million in 1992. Last year's profit was boosted by a one-time gain of $7.2 million in the first quarter due to an accounting change.

Without the benefit of the accounting change, Mr. White said, 1993's profits would have been only slightly higher than in 1992.

Loans outstanding totaled $3.3 billion on Dec. 31, down from $3.4 billion the previous year. The bank ended the year with total assets of $3.6 billion, compared with $3.8 billion at the end of 1992.

Gene L. Swackhamer, president, said increased competition, along with some customers paying off their loans, combined to drive loan volume below the record level achieved in 1992.

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