Farmer Mac Nets $18 Million in Income as Turnaround Continues

Farmer Mac had net income of nearly $18 million for the third quarter as the company continued its turnaround. A year ago, it had a third-quarter loss of $106 million. Farmer Mac is benefiting from increased guarantee and commitment fees as well as an improved net interest spread. During the quarter, it added $708 million to its portfolio of loans, guarantees and commitments, bringing that total to $10.8 billion as of Sept. 30. Nonperforming assets fell from $97 million at the end of the second quarter to $84.8 million at the end of the third. During the same timeframe, 90-day delinquencies increased from $42.3 million to $59.4 million. The decline in NPAs is because of the sale of three ethanol facilities that were classified as real estate owned. During the quarter Farmer Mac had an other-than-temporary impairment of $1.6 million to write down a $50 million investment in the unsecured debt of HSBC Finance to its fair market value. Since the end of the quarter, Farmer Mac sold $20 million of the debt for $19.5 million. But since the sales price was higher than the carrying value of the debt, the company will record a fourth-quarter gain of $100,000 on the sale.