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Baltimore Farm Credit Bank lists income drop for quarter


The Farm Credit Bank of Baltimore and its affiliates reported a 31 percent drop in second-quarter income yesterday. But bank officials were quick to point out that the decline does not properly reflect its own economic health or that of agriculture in the state.

Dick Chaffich, senior vice president of the state's largest agricultural lender, said the low earnings are a "blip" resulting from farmers refinancing their loans and paying a lower interest rate at a time when the bank still has to wait several months to recall callable bonds and replace them with new issues paying a lower rate.

"We have enough callable bonds coming due this year for things to level out by year's end," he said.

Income for the bank, which serves Maryland, Virginia, Pennsylvania, Delaware, West Virginia and Puerto Rico, dropped $5.4 million from $7.8 million at the end of the same quarter last year.

For the first six months of the year, the bank posted net income of $14.1 million, 1.1 percent more than in the same period last year.

During the quarter, The bank set aside $2.5 million as a provision for loan losses, bringing its total to $45.8 million.

Total allowance for loan losses represents only about 1.3 percent of the bank's $3.4 billion in loans outstanding, a percentage which Mr. Chaffich said is favorable within the banking industry.

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