2001 Southern Region Agriculture
Conference
Regional Farm Financial Health
A Portfolio Perspective
2001 Southern Region Agriculture Conference
Using the 3rd Farm Credit
District regional portfolio….
A regional snapshot of farm
financial health.
May not be representative of
regional agricultural health.
First - we will look at the
portfolio characteristics…
Second - we will look at the
credit demand situation…
Third - we will look at the
financial health of the portfolio…
The portfolio characteristics…
$10.2 billion or
about 27 percent of
total farm debt.
Characterized by
a diversified
commodity
base…
Traditional Farming Still Predominant
80%
70%
60%
50%
40%
30%
20%
10%
0%
Traditio nal
Farming
No n-Traditio nal
1998
Timbe r
2000
Ho us ing
Representative of bankable
market…
Farm Credit
47%
53%
As Dec 31, 2000
Commercial
Banks
Borrowing
across region…
Seasonal &
intermediate
term only
= $200 Million
Increased Size of Relationships and
Proportion of Business…
$12,000,000,000
$10,000,000,000
$8,000,000,000
$1,451,614
$1,392,891
$6,000,000,000
$4,000,000,000
$2,000,000,000
34%
44%
$66,240
$75,123
66%
56%
$0
1996
1997
Retail <$500,000
1998
1999
Commercial $500,000 & Above
2000
A Look at the Credit Picture…
Financing Demand is Rising…
$12,000,000
53%
$10,000,000
$8,000,000
55%
$6,000,000
$4,000,000
$2,000,000
$0
1990
1991
1992
1993
1994
Farm Credit
1995
1996
1997
Commercial Banks
1998
1999
2000
Areas with Strong
Credit Growth…
$
$
$
$
Areas with >
12% growth
$
$
$
$
$
$
$
$
$
$
Controlled Use of Term Debt…
$Mil
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1996
Excludes residential homes
1997
Long Term
1998
1999
Operating & Intermediate
2000
Maturities are declining…….
130
120
110
10 Yrs
M100
O
N
T 90
H
9
Yrs
80
7.3 Yrs
70
6.5 Yrs
60
50
Jan99
Mar99
May99
Jul99
Sep99
Nov99
Jan00
Mar00
Weighted Average Remaining Months
May00
Jul00
Sep00
Nov00
Jan01
Mar01
Weighted Average Original Months
May01
Jul01
Favorable Impact to Interest Expense…
9.20%
9.00%
Avg. Interest Rate Paid
8.80%
8.60%
8.40%
8.20%
8.00%
Million saved
7.80%
7.60%
7.40%
7.20%
1996
1997
1998
1999
2000
2001
Farmers Accept Interest Rate Risk…
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
-
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
ARM
Fixed
Floating
Portfolio Financial
Health
The Portfolio is Very Healthy…
Why?
1. Reduced Interest Expense
2. Reduced Term Debt
3. Better Underwriting
Why is the Portfolio Healthy?…..
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
Expenses
6,000,000
4,000,000
2,000,000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Est.
Source: USDA,ERS
Crop Revenues
Govt Payments
Leading Indicator Favorable…
6.00%
5.00%
30 day delinquency rate
4.00%
3.00%
2.00%
1.00%
Ja
n9
Se 0
p9
Ma 0
y9
Ja 1
n9
Se 2
p9
Ma 2
y9
Ja 3
n9
Se 4
p9
Ma 4
y9
Ja 5
n9
Se 6
p9
Ma 6
y9
Ja 7
n9
Se 8
p9
Ma 8
y9
Ja 9
n0
Se 0
p0
Ma 0
y01
0.00%
Current Month Delinquency
Rolling Average Delinquency
National Standard
Only Slight Weakening in the Portfolio…
$12,000,000,000
$10,000,000,000
$8,000,000,000
$6,000,000,000
Weakening
$4,000,000,000
$2,000,000,000
$0
Dec-98 Mar-99 Jun-99 Sep-99 Dec-99 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01
1A
1B
1C
2
3
Areas with Strong
Credit Growth…
But worse than
average credit
quality..
$
$
$
$
$
$
$
$
$
$
$
$
$
Nonearning Loans Still Declining…
$250,000,000
Merge
r
$200,000,000
$150,000,000
$100,000,000
$50,000,000
Nonearning Loan Assets
1
Jun
-0
0
Jun
-0
9
Jun
-9
8
Jun
-9
7
Jun
-9
6
Jun
-9
5
Jun
-9
3
De
c- 9
2
De
c- 9
De
c- 9
1
$0
Linear (Nonearning Loan Assets)
Relative to Nation Fairing Well…
Non-performing
Loans as % of all
1.80%
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
1996
Sept 30
1997
1998
Farm Credit System
1999
Region
2000
Other Property Owned Stable…
0.10%
0.09%
0.08%
0.07%
0.06%
0.05%
0.04%
0.03%
0.02%
0.01%
0.00%
1996
1997
1998
Farm Credit System
Acquired property as % of Loans
1999
Region
2000
Lower Net Charge-Offs as % of Loans..
0.3
0.25
0.2
0.15
0.1
0.05
0
1996
1997
1998
Region
1999
Farm Credit System
2000
Land Values Adding Stability…
4000
3500
3000
2500
2000
1500
1000
500
0
1997
Source: NASS
1998
1999
Mississippi
Region
2000
Maryland
2001
In Summary…
Though not representative of all
does reflect those who borrow.
Financial health
good…outlook
uncertain.
Suggests credit demand has been
steady…Farm Bill?