Over the years, I have used this letter to increase awareness of how our people and business practices combine to create a progressive credit cooperative that is committed to Maine’s natural resource-based industries.

We believe that strong “relationships” are the building blocks of a strong cooperative bank. That’s why I’ve focused on the people part of our business, making sure that our customers know and trust their Farm Credit loan officer and loan assistant; and ensuring that we truly understand our customers’ businesses.

In recent issues, I shared information about your elected directors. We have maintained a blend of traditional cooperative board practices with progressive best practices to ensure the appropriate checks and balances in the governance of our organization.

I hope that my using this column in this way has helped new customers and many long-time customers better understand their lender. To live up to our goals of being truly customer driven, we think it makes sense to share this information with you over time.

I have not used this space to report our financial performance. Frankly, with the interest rate decreases in 2002, and even one in 2003, my interest rate letters were my opportunities to update you on financial issues.

But it’s been a while since interest rates have changed — and it could be a while longer — so I thought I’d share a brief summary of our financial results for 2003 with you.

"... a patronage refund of $1.4 million for 2003. This brings the total amount ... over the past six years to more than $7 million.”

2003 Was Another Good Year for Farm Credit.

• Loan growth for all types of loans combined was 15 percent, much more than we expected. All three lending groups (Aroostook, Coastal & Interior, and Corporate) had increases over the prior year.
• While our core loan portfolio is in good shape, we took some loan charge-offs in the electric utility sector, which we entered about six years ago to further diversify the portfolio through loan participation purchases. The net effect of these charge-offs, and the provisions taken to replenish our reserve, was our loan loss reserve ratio. Other balance sheet ratios remain well above industry standard, because of our high quality, diversified core loan portfolio and strong balance sheet.
• Operating expense increases have been in line with business growth. Our operating efficiency ratios are also very strong by industry standards.
• Measured as a ratio of after-tax net income in relation to our assets, our ROA (return on assets) was very solid at 1.6 percent, the same as 2002 and better than our 2003 business plan goal.
• 2004 is the final year of our current stock reduction plan, and 2005 will begin the return of the allocated portions of past years’ patronage refunds.
• At their January 29 board meeting, the board declared a patronage refund of $1.4 million for 2003. This brings the total amount of earnings shared with our members over the past six years to more than $7 million.

While many changes occur within Maine’s agricultural, forest products and fishing industries, business opportunities will continue for many of our customer-owners. We believe that we are in a unique position to expand our role in financing family businesses that can take advantage of these opportunities.

We hope to see many of you at our April annual meeting in Auburn. Please let me know what we can do better as your financial partner in 2004.

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